All elements that exist outside organizations boundary and can potentially affect its operations

1
Organizational Environments

• All elements that exist outside organizations
  boundary and can potentially affect its
  operations
• General versus Specific Environments
• Managerial activities include
• monitor environment (threats opportunities)
• adapt or respond to the environment
• when possible, change the environment

2
Customers purchasers, clients, end users
Suppliers physical resources
SECTORS IN THE SPECIFIC ENVIRONMENT
Competitors labor markets, organizations
Govt Agencies/Administrators federal laws
regulations
Local Communities/Govts community groups
Activist Groups special interests
Unions labor
3
Social Forces organizations, markets influence
SECTORS IN THE GENERAL ENVIRONMENT
Technological Advances materials,
automation, business process support
Global Economic Forces recession, unemployment,
inflation, wages, taxes, disposable income
Global Political Forces govt attitudes, action
committees competition, customs, regulations
4
Evaluating the Environment

• (1) Uncertainty
• degree to which organization has insufficient
  information about environmental elements, and has
  a difficult time predicting environmental changes
• Two dimensions
• Complexity number and dissimilarity of external
  stakeholders
• Stability frequency and predictability of
  changes among external stakeholders

5
Simple Stable Low Uncertainty
Complex Stable Low/Moderate Uncertainty

• Small number of external
• stakeholders who are similar,
• remain the same, and
• change slowly
• Minimal need for
• knowledge about environment

• Large number of external
• stakeholders who are
• dissimilar, but who remain
• the same and change slowly
• High need for knowledge
• about environment

STABLE
Rate of Change
Simple Dynamic High-Moderate Uncertainty
Complex Dynamic High Uncertainty

• Small number of external
• stakeholders who are similar,
• but who change frequently
• and unpredictably
• Moderate need for
• knowledge about environment

• Large number of external
• stakeholders who are
• dissimilar, but who change
• frequently and unpredictably
• High need for knowledge
• about environment

DYNAMIC
SIMPLE Degree of Complexity COMPLEX
6
Evaluating the Environment

• (2) Stakeholder influence on creating or reducing
  environmental uncertainty
• Political power, resource power, economic power,
  bargaining power
• Stakeholders potential for threat and potential
  for cooperation
• (3) Role of strategic choice in determining
  interdependencies with (and potential influence
  of) stakeholders

7
Managing Stakeholders in the Specific
Environment
Potential for Threat to Organization
High Low
MIXED BLESSING Strategy Collaborate
SUPPORTIVE Strategy Involve
High
Potential for Cooperation with Organization
NON-SUPPORTIVE Strategy Defend or Control
MARGINAL Strategy Monitor
Low
8
If strategy is collaboration or involvement,
establish interorganizational linkages

• Mergers, joint ventures, strategic alliances
• Cooperative programs, task forces
• Interlocking directorates, boards of directors
• Executive recruitment

If strategy is to control, then change
the environment

• Change of domain
• Political activity, regulation
• Trade associations

9
Take Home Points

• Increase your ability to
• accurately map out organizations environmental
  domain
• evaluate the environment in terms of uncertainty
  (based on complexity stability)
• determine stakeholder importance (based on
  potential for threat/cooperation, impact on
  uncertainty, and organizational strategy)
• develop strategies for managing stakeholders

10
Evaluating the Environment

• Resource Dependence
• reliance on others for critical inputs
  (resources)
• concentration of resources among constituents
• scarcity of critical resources

11
Evaluating the Environment

• Control Tactics
• Legal coercion by enforcing compliance to
  government rules, laws, regulations
• Voluntary compliance by exerting normative
  pressure to follow widely accepted rules,
  structures, and practices within a sector