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8/13/2019 Adapting Organization to Environment Uncertainty
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Adapting Organization to
Environment Uncertainty
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Purpose
The purpose is to develop the framework forassessing environments and how organizationsrespond to it
Need to identify the organizational domain and the
sectors that influence the organization Need to explore two major environmental forces
the need for information and the need forresources
Organizations respond to these forces throughstructure design, and attempts to change & controlthe environmental elements
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An Organizations Environment
IndustrySector Raw
Materials
Sector
Human
ResourcesSector
Financial
Sector
MarketSector
Technology
Sector
Economic
Conditions
Sector
Government
Sector
Sociocultural
Sector
International
Sector
ORGANIZATIONAL
ENVIRONMENT
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Task Environment
Includes sectors with which organization interacts
directly and have a direct impact on organizations
ability to reach its goals
General Environment
Includes those sectors that might not have a direct
impact on the daily operations of the firm, but
indirectly influence it
An Organizations Environment
contd
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Environmental Uncertainty
Patterns/events occurring in the environment aredescribed along these dimensions:
Environment is stable or unstable
Homogeneous or HeterogeneousSimple or complex
The amount of resources available, how are theseresources concentrated or dispersed
These leads to two essential ways the environmentinfluences organization
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1) The need for information about the environment
2) The need for resources from the environment
Environmental Uncertainty deals primarily with theTask Environment
Uncertainty means that decision makers do nothave sufficient information about environment
factors. Task Environment can be analyzed along
dimensions such as stability or instability anddegree of complexity
Environmental Uncertainty
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Simple-Complex Dimension
It is the degree to which organization interacts
with different or similar, few or large number
of external elements of the environment
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Stable-Unstable Dimension
Refers to how far the elements are dynamic
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FrameworkSimple + Stable= Low Uncertainty
1. Small number of externalelements, & elements are similar
2. Elements change slowly
Examples: Soft Drink bottlers, Foodprocessors,
Complex + Stable= Low-
Moderate Uncertainty
1. Large number of externalelements & elements are dissimilar
2. Elements change slowly
Examples: Universities, Chemicalcompanies, Insurance companies
Simple + Unstable= High
Moderate Uncertainty
1. Small number of externalelements, elements are similar
2. Elements change frequently +Unpredictability
Examples: Toy Manufacturers,
fashion, Music Industry
Complex + Unstable=High
Uncertainty
1. Large number of externalelements + elements are dissimilar
2. Elements change frequently +unpredictability
Examples: Aerospace, aviation
industry, telecommunications
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Adapting to Environmental
Uncertainty
Environment Uncertainty represents important
contingency for organizational structure
Organizations with higher uncertaintyhavemore horizontal structure-encouraging cross-
functional communication & collaboration
Organizations need to have the right fit
between internal structure and external
environment
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An organization in certain environment be
managed and controlled differently from an
organization in an uncertain environment with
respect to:
Positions & departments
Organizational differentiation and integration Control processes
Future planning & forecasting
Adapting to Environmental
Uncertainty
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Positions and Departments
As the complexity and uncertainty increases,
the number of positions and departments also
increases
Concept of Buffering and Boundary
Spanning
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Differentiation and Integration
Organizational differentiation is the differencesin cognitive and emotional orientations among
managers in different functional departments,
and difference in formal structure among thesedepartments
As the env. Becomes more complex, depts.
Become highly specialized to handle & adapt Each department evolves different orientation
& structure to deal with specialized parts of the
environment (study-Lawrence & Lorsch)
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Differences in Goals and Orientations
Characteristics R&D Department Manufacturing
Department
Sales
Department
GOALS New developments,
Quality
Efficient
Production
Customer
Satisfaction
TIME HORIZON Long Short Short
INTERPERSONAL
ORIENTATION
Mostly Task Task Social
FORMALITY OF
STRUCTURE
Low High High
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Integration
Integration is the quality of collaboration
among departments
With high uncertainty, high differentiation,
integration becomes challenge
Frequent dynamic changes need more
horizontal coordination
Formal Integrators are required to coordinate
departments. ( project managers, coordinators,
brand managers)
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Environment Uncertainty and
Organizational Integrators
INDUSTRY PLASTICS FOOD CONTAINERS
Environmental
Uncertainty
High Moderate Low
Departmental
Differentiation
High Moderate Low
% management inintegrating roles
22% 17% 0%
Source: Based on Lorsch and Lawrence study
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LOW UNCERTAINTY
- Mechanistic structure
- Few departments
-No integrating roles
- Current operations orientation
LOW-MODERATE
UNCERTAINTY
- Mechanistic structure
-Many departments, someboundary spanning
- Few integrating roles
- Some planning
HIGH-MODERATE UNCERTAINTY
- Organic structure, participative
- Few departments, much boundaryspanning
- Few integrating roles
- Planning orientation, fast response
HIGH UNCERTAINTY
- Organic structure
- Many departmentsdifferentiated, extensive boundaryspanning
- Many integrating roles
- Extensive planning, high speedresponse
Framework for organizational
responses to uncertainty
STABLE
UNSTABL
E
SIMPLE COMPLEX
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Controlling Environmental
Resources
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