BMG 320/03
Organisational Theory and Design
Flexible · Affordable · Accessible
the people’s university
the people’s university
Flexible · Affordable · Accessible
1
Unit 3
The External Environment
Flexible · Affordable · Accessible
the people’s university
the people’s university
Flexible · Affordable · Accessible
2
3.1 The External Environment
An organisation’s environment is defined as all elements that exists outside the organisation and have the potential to affect the organisation
Domain defines the external sectors with which the organisation interacts with to accomplish its goals.
Task environment includes sectors with which the organisation interacts directly with such as the industry, raw materials, market sectors, human resources and the international sectors
General Environment includes sectors that may not have direct impact on the organisation such as Political-Legal, Economy, Sociocultural and Technology (PEST)
The international environment affects most organisation which have international operations.
the people’s university
Flexible · Affordable · Accessible
3.1 The External Environment
the people’s university
Flexible · Affordable · Accessible
3.2 Framework for Assessing Environmental Uncertainty & Adapting to a Changing Environment
Uncertainty means that decision makers do not have sufficient information about environment factors and have difficulty predicting external changes
Complex environment – organisation interacts and influenced by many external elements (eg.competitors, suppliers, industry changes )
Simple environment – the organisation interacts and is influenced by only a few external elements.
the people’s university
Flexible · Affordable · Accessible
3.2 Framework for Assessing Environmental Uncertainty & Adapting to a Changing Environment
Stable environment – the environment remains the same over a long period of time
Unstable environment – frequent changes in the environmental elements
the people’s university
Flexible · Affordable · Accessible
3.2 Framework for Assessing Environmental Uncertainty & Adapting to a Changing Environment
Simple + Stable = Low Uncertainty
Small number of external elements and elements are similar
Elements remain the same or
change slowly
Eg: Soft drink bottlers, beer
distributors, container manufacturers, food processors
Complex + Stable = Low – Moderate Uncertainty
Large number of external elements and elements are dissimilar
Elements remain the same or change slowly
Eg: Universities, appliance
manufacturers, chemical companies, insurance companies
the people’s university
Flexible · Affordable · Accessible
3.2 Framework for Assessing Environmental Uncertainty & Adapting to a Changing Environment
Simple + Unstable =
Moderate – High Uncertainty
Small number of external
elements, and elements are similar
Elements change frequently and unpredictably
Eg: E-commerce, fashion clothing,music industry, toy manufacturers
Complex + Unstable =
High Uncertainty
Large number of external elements,and elements are dissimilar
Elements change frequently and unpredictably
Eg: Computer firms, aerospace firms,telecommunication firms, airlines
the people’s university
Flexible · Affordable · Accessible
Adapting to a changing environment
Organisations can adapt to a changing environment in several ways by:
Adding positions and departments- for example, a company can create a new department to handle online sales; or
• Building Relationships – exposing the technical core who directly deal with customers and suppliers to the uncertain environment to find out customer or supplier concerns; or
the people’s university
Flexible · Affordable · Accessible
Adapting to a changing environment
Differentiation and integration- differentiation refers to the different orientation among managers in different functional departments and integration involves collaboration among departments with integrating personnel such as co-ordinators or project managers helping to integrate the activities of the different departments; or
Organic versus Mechanistic management processes – in a stable environment the internal organisation is characterised by rules, procedures and formal authority and is referred to as a mechanistic system while in a dynamic environment, the internal organisation is less formal,greater flexibility and is known as an organic system.
the people’s university
Flexible · Affordable · Accessible
3.3 Designing Organisation for the International Environment – International Divisional Structure
the people’s university
Flexible · Affordable · Accessible
3.3 Designing Organisation for the International Environment – Geographic Structure
the people’s university
Flexible · Affordable · Accessible
3.3 Designing Organisation for the International Environment – Global Product Structure
the people’s university
Flexible · Affordable · Accessible
3.3 Designing Organisation for the International Environment – Matrix Structure
the people’s university
Flexible · Affordable · Accessible
End of Slide
Thank you for your attention!
the people’s university
Flexible · Affordable · Accessible