1. Understanding & “Managing” the Environment BA 152

2. Today’s Questions 1. What are two different views of the business environment 2. Can we develop two different ways to classify or categorize the business environment? 3. What are the different ways in which organizations can react to and/or proact on their environment?

3. Characteristics of Organizations Environment Cultures Systems Technologies Structures Strategies Goals FIT! People

4. What Does the Environment Do? n It makes demands; n It imposes constraints; and n It provides opportunities.

5. A Closed Systems View of the Environment INPUTTHROUGHPUTOUTPUT Organization Environment

6. An Open Systems View of the Environment OUTPUTINPUTTHROUGHPUT Organization Environment

7. INPUTTHROUGHPUTOUTPUT Organization Human Resources TechnologyIndustry/ Competition Customers Material Resources Financial Resources Government/Political Sector Economic Sector Cultural/ Demographic Sector Making Sense of the Environment Sectors of the Environment International Context

8. Environmental Sectors: The Banking Industry Customers Competitors The Fed Congress Regulators Technology Communities Others

9. Number of Sectors Simple (Few)Complex (Many) Stable Low Uncertainty Moderate/Low Uncertainty Volatility of Sectors Dynamic High Uncertainty Moderate/High Uncertainty Making Sense of the Environment Environmental Uncertainty

10. Number of Sectors Simple (Few)Complex (Many) Stable Volatility of Sectors Dynamic Making Sense of the Environment Environmental Uncertainty

11. Dealing with the Environment Environment Manage the Firm Structures Processes REACT

12. Environments and Organizing Options MechanisticOrganic More Certain Environments Less Certain Environments

13. In Certain Environments In Uncertain Environments SpecializedGeneralized FormalInformal CentralizedDecentralized SimpleComplex VerticalAll Ways Factors MECHANISTICORGANIC Jobs Rules Decisions Work Units Communication GENERAL PROFILE Responses to the Environment Internal Process/Structural Profiles

14. Dealing with the Environment Environment Manage the Environment Linkages Domains PROACT

15. Managing the Environment What can organizations do? n Develop Linkages – Use contracts and joint ventures, and/or alliances, etc. – Build links to key sectors (directors/executives) – Increase PR and advertising n Manage Domains – Choose to operate in different domain(s) (mergers, acquisitions, divestitures, etc.) – Modify existing domain(s) (lobbying/regulations) – Make domain entry difficult for others – Join trade associations

16. Dealing with the Environment Environment Manage the Firm Structures Processes Manage the Environment Linkages Domains REACTPROACT

17. Why Are Environments Mis-Managed n Because the firm is... – too small to worry – too big to care – unaware of key sectors – looking at the wrong sectors – unwilling to commit resources to manage the environment

18. Next Time Acme and Omega