BA 5201 Organization and Management Managing the environment Instructor: Ça ğ rı Topal 1

Assumptions Organizations can and will obtain information about the environment Organizations are flexible enough to respond to the environment Organizations can sometimes manipulate the environment 2

Tasks Knowing the environment Adapting to the environment Changing the environment 3

Knowing-boundary spanning Involving members of the organization spending some of their time interacting with people and organizations outside their own organization Gathering information and providing feedback about the environment Representing the organization to the outside world Performed by a variety of organizational departments and members, and outside partners 4

Knowing-environmental scanning Collecting and processing information, and assessing or projecting change in various sectors of the environment Reducing uncertainty that the organization faces Depending on the type of industry and environment in which the organization produces or serves 5

Knowing-permeability The extent to which the organization facilitates the inward and outward flow of information Depending on the degree of environmental uncertainty Mechanism to make sure that enough of the right information gets through Gatekeepers to assist in the filtering process 6

Knowing-resilience The degree to which boundary spanning units respond to changes in the mission and goals of the organization as well as changes in the environment Based on a smooth and close relationship with the top management Reflecting changes in the mission and environment in their policies and practices 7

Knowing-maintenance Keeping boundary spanning units focused on the organization’s mission and goals Preventing boundary spanning units and people from losing touch with the goals of the organization Performed through periodic resocialization 8

Adapting-forecasting and strategic planning Forecasting the future conditions and making predictions used to change or modify strategies Trend analysis: using historical data to determine future conditions Scenario forecasting: presenting a variety of event alternatives and assigning probabilities to those events Difficult and inaccurate when the environment is complex Less valuable when the environment is stable 9

Adapting-withdrawal Sealing the organization off from part of the environment Temporary strategy Focusing on a narrow portion of the market Buffering Counterproductive in the long-run 10

Adapting-differentiation and integration Horizontal differentiation or specialization Vertical differentiation Spatial differentiation Environmentally suitable integration 11

Adapting-structuring Mechanistic structure for stable environments Organic structure for complex environments Shift from mechanistic to organic structure 12

Adapting-imitation Imitating other successful organizations Less costly Benchmarking: search for and application of the best practice Institutional pressures Risk of imitating the unsuitable and obsolete 13

Controlling-niche or domain selection Controlling a niche or selecting a domain Exiting the complex or unstable market Selecting through internal product development, acquisition, or divestiture 14

Controlling-linkage strategies Connecting to other key players in the environment Agreements, norms, and contracts Joint ventures Mergers and acquisitions Boards of directors Management recruiting Associations Advertising and public relations 15

Agreements, norms, and contracts Agreements and norms: informal agreements based on reciprocity, mutual benefit, trust, and repeated interactions Contracts: legally binding agreements based on formally organized and documented interactions Expensive and time-consuming to develop or write Monitoring needed for noncompliance 16

Joint ventures Creating an inter-organizational link for a specific purpose or project Pool resourcing and spreading risk Not giving complete control to any one party 17

Mergers and acquisitions Merger: two or more companies joining together to form a new company Acquisition: one company purchasing another Vertical integration Horizontal integration Diversification Related Unrelated Virtual organization Problem of integration 18

Board of directors Inside members as company employees Outside members providing industry and market expertise, and connections to the environment Interlocking directorates serving on two or more boards Cooptation involving group or community leaders Agency problem 19

Management recruiting Recruiting outside expertise, skills, and connections Raiding a competitor’s employees 20

Associations Cooperative organizations formed by the companies in the same industry or market to promote common interests Setting industry standards Lobbying government for favorable legislations Mobilizing the power of an entire industry Competing with industry giants 21

Advertising and public relations Dealing or linking directly with the general public Educating and addressing the public perception of the organization Differentiating from competitors Focusing on a specific market niche 22