1. The External Environment11

2. The External Environment
Basics
Organizational environment is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of organization
An organization’s Domain is the chosen environmental field of action (niche)

3. The External Environment
Sectors
Environment comprises of various sectors:
Industry
Raw material
HR sector
Financial resource sector
Market sector
Technology sector
Economic conditions sector
Government sector
Sociocultural sector
International sector

4. Environmental Uncertainty
Simple/complex dimension
Stable/unstable dimension

5. Adapting to Environmental Uncertainty
Refer to open systems theory
Each sector in the external environment requires an employee or department to deal with it
Buffering departments
Boundary spanners
Departmental Differentiation & Integration

6. Adapting to Environmental Uncertainty
Organic and Mechanistic Design:
Stalker’s study: “When the external environment was stable, the internal organization was characterized by rules, procedures, and a clear hierarchy of authority….in a rapidly changing environment the internal organization was much loose, free-flowing, and adaptive.”

7. Adapting to Environmental Uncertainty
Mechanistic Form
Tasks are broken down into specialized separate parts
Tasks are rigidly defined
Strict hierarchy of authority and control, many rules
Knowledge and control of tasks are centralized at the top of the organization
Communication is vertical

8. Adapting to Environmental Uncertainty
Organic Form
Employees contribute to the common tasks of the department
Tasks are adjusted and redefined through teamwork
There’s less hierarchy of authority and control, a few rules
Knowledge and control of tasks are located anywhere in the organization
Communication is horizontal