Organization and Environment Upul Abeyrathne, Senior Lecturer in Political Science, University of Ruhuna, Matara

Features of Environment It is indefinite It includes everything outside the and inside organization There are certain aspects that an organization must be sensitive and respond.

What is the Environment Elements that exist outside the boundary of an organization that have potential to affect part or whole of the organization. Organizations have got domains. Organizational domain is what it has chosen field of action. Every organizations stakes out for itself with respects to products, services and markets.

Role of Domain It defines its niche and those external sectors with which organization interacts to accomplish its goals

Two Dimensions of Environment 1. Task environment 2. General Environment.

Task Environment The task environment includes sectors with which organizations interact directly and that have a direct impact on organizations’ ability to achieve its goals. It typically includes the industry, raw materials, market sectors and perhaps, human resources and international sectors.

General Environment It includes sectors that might not have a direct impact on the daily operations of a firm But will influence indirectly. It includes the government, socio-cultural and economic conditions, technology and financial resources sectors.

International Context It may affect directly Have increased its significance in recent past. All domestic sectors can be influenced by it. Distinction between domestic and international has become irrelevant. Importance of international context implies that the organizations are becoming more and more complex and completive. Every organization faces uncertainty domestically as well as internationally.

Environment Uncertainty Patterns and events occurring in an organization can be described along several dimensions: Stable/ Unstable, Homogeneous/heterogeneous, Simple/Complex These dimensions boil down to two essential ways the organization ‘s intended domain. 1. Need for information About environment 2 The need for resources from environment. ;

Environment Uncertainty Both Task environment and General Environment creates Uncertainty. Uncertainty means that decisions makers do not have sufficient information about environmental factors and they have a difficult time predicting external changes

Simple Complex Dimension It concerns environmental complexity, which refers to heterogeneity, or the number and dissimilarity of external factors that regularly influence the organization and the greater operations More external Factor and many other companies compete in an organization domain, complexity is higher

Stable Unstable Dimension It refers to whether elements in the environment are dynamic. Environment domain remains stable if it is same for a longer period.

Simple +Stable = Low uncertainty Small no. of external elements Elements remains the same or change slowly.

Complex + Stable = Low Moderate Uncertainty Large no. of external elements and they are not similar. Elements remain same or change slowly.

Simple + Unstable = High moderate uncertainty Small no. of external elements and they are similar. Elements change frequently and unpredictably. E.g. Fashion clothing.

Complex + unstable = High uncertainly Large no. of elements and dissimilar Elements change frequently and unpredictably.

Adapting to Environment Changes effects to structure of organization and internal behaviour Organizations that face uncertainty generally have horizontal structure that encourages cross functional communication and collaboration to help them adapt to environment

How to deal with uncertainty Buffering: Role of the buffer is to absorb uncertainty from the environment. help the technical core of the organization Boundary spanning: Link and coordinate an organization with key elements in the external environment. It is concerned with the exchange of information 1. to detect and bring into the organization information about changes in the environment and 2. send information to present organization in favourable into the environment

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