Chapter 3
6 basic mechanisms organizations adapt to environment
- Information management - Strategic response - Mergers, acquisitions and alliances - Organization design and flexibility - Direct influence - Social responsibility
Task environments include:
- competitors - customers - suppliers - strategic partners - regulators
Thompson's dimensions of environment
- degree of change - degree of homogeneity
Two external environments are
- general - task
Important economic factors
- general econoic growth - inflation - interest rates - unemployment
Strategic response options
- maintaining status quo - altering strategy a bit - adopting an entirely new strategy
Two important kinds of regulators
- regulatory agencies - interest groiup
How can culture affect an organization
- shape of the market - ethics of political influence - attitudes in the workforce
Models of organizational effectiveness
- system resource approach - internal process approach - goal approach - strategic constituencies approach
Dimensions of general environment
- technological - sociocultural - political-legal - international dimensions
Importance of political-legal dimension
- the legal system partially defines what an organization can and cannot do - pro or antibusiness sentiment in government influences business activity - political stability has ramifications for planning
Organization culture
The set of values, beliefs, behaviors, customs and attitudes that helps the members of ther organization understand what it stands for, how it does things, and what it considers important
Uncertainty
Unpredictability created by environmental change and complexity. Driving force that influences many organizational decisions
What determines the feel of the organization?
culture
Task environment
specific organizations or groups that influence an organization
Five competititve forces
the threat of new entrants, competitive rivalry, the threat of substitute products, the power of buyers, and the power of suppliers
Key to achieve organizational effectiveness
understanding the environment in which the organization functions
When is information management most important
when forming initial understanding of the environments and when monitoring the enviroments for signs of change
Acquisition
when one firm buys another, sometimes against its will (hostile takeover)
Direct influence
when organizations are able to directly influence their environments in may different ways
Merger
when two or more firms combine to form a new firm
Customer
whoever pays money to acquire an organization's products or services
Interest group
A group organized by its members to attempt to influence business
Regulator
A unit that has the potential to control, legislate, or otherwise influence the organization's policies and practicies
Regulatory agencies
An agency created by the governement to regulate business activities
Competitor
An organization that competes with other organizations for resources
Supplier
An organization that provides resources for other organizations
Strategic partners/allies
An organization working together with one or more other organizations in a joint ventire or similar arrangement
Board of directors
Governing body elected by a corporation's stockholders and charged with overseeing the general management of the firm to ensure that it is being run in a way that best serves the stockholder's interests
Owner
Whoever can claim property rights to an organization
Boundary spanner
an employee such as sales respresentative or a purchasing agent, who spends much of his/her time in contact with others outside the organization
Internal environment
conditions and forces with in the organization
Organic design
considerably more flexible and permits the organization to respond quickly to environmental change
Internal process approach
deals with the internal mechanisms of the organization and focuses on smooth and efficient operations, focuses on transformation process
Importance of socioculture processes
determin the products, services, and standards of conduct that the society is likely to value
External environment
everything outside an organization's boundaries that might affect it
Goal approach
focuses on the degree to which an organization reaches its goals, focuses on outputs
System resource approach
focuses on the extent to which the organization can acquire the resources it needs, focuses on inputs
Strategic constituencies approach
focuses on the groups that have a stake in the organization, focuses on feedback
computer-based information system
gather and organize relevant information for managers and to assist in summarizing that information in the form most pertinent to each manager's needs
Organization desing and flexibility
incorporating flexibility in its structural design
Mechanistic organization design
is charecterized by formal and rigid rules and relationships
What can culture doe for an organization?
it can shape the firm's overall effectiveness and long-term success
Socioculture dimension
the customs, mores, values, and demographic charecteristics of the society in whcih the organization functions
Degree of change
the extent in which the environment is relatively stable or relatively dynamic
Threat of substitute products
the extent to which alternative products or services may supplant or diminish the need for existing products or services
International dimension
the extent to which an organization is involved in or affected by business in other countries
Power of buyers
the extent to which buyers of the product or services in an industry have the ability to influence the suppliers
Threat of new entrants
the extent to which new competitors can easily enter a market or market segment
Power of suppliers
the extent to which suppliers have the ability to influence potential buyers
Degree of homogeneity
the extent to which the environment is relatively simple (few elements, little segmentation) or relatively complex (many elements, much segmentation)
Alliance/partnership
the firm undertakes a new venture with another firm
Political-legal dimension
the government regulation of business and the relationship between business and government
Technological dimension
the methods available for converting resources into products or services
Competitive rivalry
the nature of the competitive relationship between dominant firms in the industry
Economic dimension
the overall health and vitality of the economic system in which the organization operates
Environmental scanning
the process of actively moinitoring the environments through activities such as observation and reading
General environment
the set of broad dimensions and forces in an organiztion's surroundings that creat its overall context