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BA 5201Organization and Management

Managing the environment

Instructor: Çağrı Topal

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AssumptionsOrganizations can and will obtain

information about the environmentOrganizations are flexible enough to

respond to the environmentOrganizations can sometimes

manipulate the environment

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TasksKnowing the environmentAdapting to the environmentChanging the environment

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Knowing-boundary spanningInvolving 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

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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

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Knowing-permeabilityThe 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

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Knowing-resilienceThe 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

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Knowing-maintenanceKeeping 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

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Adapting-forecasting and strategic planningForecasting 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

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Adapting-withdrawalSealing the organization off from

part of the environmentTemporary strategyFocusing on a narrow portion of the

marketBufferingCounterproductive in the long-run

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Adapting-differentiation and integrationHorizontal differentiation or

specializationVertical differentiationSpatial differentiationEnvironmentally suitable integration

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Adapting-structuringMechanistic structure for stable

environmentsOrganic structure for complex

environmentsShift from mechanistic to organic

structure

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Adapting-imitationImitating other successful

organizationsLess costlyBenchmarking: search for and

application of the best practiceInstitutional pressuresRisk of imitating the unsuitable and

obsolete

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Controlling-niche or domain selectionControlling a niche or selecting a

domainExiting the complex or unstable

marketSelecting through internal product

development, acquisition, or divestiture

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Controlling-linkage strategiesConnecting 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

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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

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Joint venturesCreating an inter-organizational link

for a specific purpose or projectPool resourcing and spreading riskNot giving complete control to any

one party

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Mergers and acquisitionsMerger: two or more companies joining

together to form a new companyAcquisition: one company purchasing

anotherVertical integrationHorizontal integrationDiversification• Related• Unrelated

Virtual organizationProblem of integration

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Board of directorsInside members as company

employeesOutside 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

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Management recruitingRecruiting outside expertise, skills,

and connectionsRaiding a competitor’s employees

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AssociationsCooperative organizations formed

by the companies in the same industry or market to promote common interests

Setting industry standardsLobbying government for favorable

legislationsMobilizing the power of an entire

industryCompeting with industry giants

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Advertising and public relations

Dealing or linking directly with the general public

Educating and addressing the public perception of the organization

Differentiating from competitorsFocusing on a specific market niche