MGT 4153 Dr. Rebecca Long

Defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization. Domain – Chosen environmental field of action. Ten Sectors can be identified for most organizations. Sectors are usually divided into two subdivisions: Task and General Task – the industry, raw materials, market sectors, and perhaps HR and international sectors. General – Financial, Technology, Economic conditions, Government, Sociocultural

An Organization’s Environment (Task & General) Long 2 (a) Competitors, industry size and competitiveness, related issues (b) Suppliers, manufacturers, real estate, services (c) Labor market, employment agencies, universities, training schools, employees in other companies, unionization (d) Customers, clients, potential users of products and services (e) Stock markets, banks, S&L, private investors (f) Techniques of production, science, computers, information technology (g) Recession, unemployment rate, inflation rate, rate of investment, economics, growth (h) City, state, federal laws and regulations, taxes, services, court system, political processes (i) Age, values, beliefs, education, religion, work ethic, consumer and green movements (j) Competition from and acquisition by foreign firms, entry into overseas markets, foreign customs, regulations, exchange rates (j) International Sector (d) Market Sector (e) Financial Sector (f) Technology Sector (g) Economic Conditions Sector (a) Industry Sector (h) Government Sector (c) Human Resources Sector (b) Raw Materials Sector (i) Sociocultural Sector ORGANIZATION DOMAIN

Porter’s Five Competitive Forces and Strategies (Chapter 2) Long 4 Power of Buyers Power of Suppliers Degree of Rivalry Threat of New Entrants Threat of Substitutes

Long 5 Low Uncertainty 1. Small number of elements, and elements are similar 2. Elements remain the same or change slowly Examples: Bottlers, distributors, container mfrs, food processors 1. Small number of elements, and elements are similar 2. Elements remain the same or change slowly Examples: Bottlers, distributors, container mfrs, food processors High-Moderate Uncertainty 1. Small number of elements, and elements are similar 2. Elements change frequently and unpredictably Examples: E-commerce, fashion, music, toys 1. Small number of elements, and elements are similar 2. Elements change frequently and unpredictably Examples: E-commerce, fashion, music, toys High Uncertainty 1. Large number of elements, and elements are dissimilar 2. Elements change frequently and unpredictably Examples: Computer firms, aerospace, telecomms, airlines 1. Large number of elements, and elements are dissimilar 2. Elements change frequently and unpredictably Examples: Computer firms, aerospace, telecomms, airlines Low-Moderate Uncertainty 1. Large number of elements, and elements are dissimilar 2. Elements remain the same or change slowly Examples: Universities, appliance mfrs, chemicals, insurance 1. Large number of elements, and elements are dissimilar 2. Elements remain the same or change slowly Examples: Universities, appliance mfrs, chemicals, insurance ENVIRONMENTAL CHANGE STABLE ENVIRONMENTAL COMPLEXITY UNSTABLE SIMPLE COMPLEX

Adapting to Uncertainty Long 6 Positions and DepartmentsBuffering and Boundary SpanningDifferentiation and IntegrationOrganic versus MechanisticPlanning and Forecasting

Long 7 Low Uncertainty 1. Mechanistic structure; formal, centralized 2. Few departments 3. No integrating roles 4. Current operations orientation; low speed response 1. Mechanistic structure; formal, centralized 2. Few departments 3. No integrating roles 4. Current operations orientation; low speed response High-Moderate Uncertainty 1. Organic structure, teamwork; participative, decentralized 2. Few departments, much boundary spanning 3. Few integrating roles 4. Planning orientation; fast response 1. Organic structure, teamwork; participative, decentralized 2. Few departments, much boundary spanning 3. Few integrating roles 4. Planning orientation; fast response High Uncertainty 1. Organic structure, teamwork; participative, decentralized 2. Many departments differentiated, extensive boundary spanning 3. Many integrating roles 4. Extensive planning, forecasting; high speed response 1. Organic structure, teamwork; participative, decentralized 2. Many departments differentiated, extensive boundary spanning 3. Many integrating roles 4. Extensive planning, forecasting; high speed response Low-Moderate Uncertainty 1. Mechanistic structure; formal, centralized 2. Many departments, some boundary spanning 3. Few integrating roles 4. Some planning; moderate speed response 1. Mechanistic structure; formal, centralized 2. Many departments, some boundary spanning 3. Few integrating roles 4. Some planning; moderate speed response ENVIRONMENTAL CHANGE STABLE ENVIRONMENTAL COMPLEXITY UNSTABLE SIMPLE COMPLEX

Controlling Environmental Resources Long 8 Establishing Inter- organizational Linkages: Ownership Contracts, joint ventures Cooptation, interlocking directorates Executive recruitment Advertising, public relations Controlling the Environmental Domain: Change of domain Political activity, regulation Trade associations Illegitimate activities