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Copyright 2002 by South-Western 41

Chapter 4

Environmental Influences External

Internal

Closed systems, Open Systems

Mechanistic, Organic Systems


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Organizational Environments

External environment The environment that is outside the formal boundaries

of the organization; having a set of conditions,

circumstances, and influences that surround and affect

the functioning of an organization.Effective organizations develop management

systems that integrate management

practices and organizational design

with the characteristics of theirexternal environment.


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Organizational Environments (contd)

External environment partitions (contd) The general environmentthe broader milieu

(environment, political setting, surroundings) in which

an organization operates along with many other

organizations. The task environmentthe more specific and

immediate (localized) environment in which the

organization conducts its business.


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Relationship between the Task and GeneralEnvironments and the Organization

General Environment

Sociocultural

Economic

TechnologicalLegal/Political

International

Task Environment

Suppliers

Customers/markets

Regulatory and influence

groupsCompetitors

Allies

Manager

and

Organization

FIGURE 4

1


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Organizational Environments (contd)

Internal environmentAll that is the organizationsuch as its space, climate,

machines/equipment, work and work processes,

management and management processes, and

organizational members.


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The Organization-Environment

Relationship

Problems of environmental uncertainty

Managers can neither control nor predict everything

that will happen in the organizations interaction with

the external environment.

Problems of interdependence

Organizations develop exchange relationships

with other organizations that create

interdependencies between

the partners.


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Managing Uncertainty and

InterdependenceStrategies for dealing with uncertainty and

interdependence:

Managing the boundary that separates the organizationfrom its external environment to reduce its impact on

the organization.

Reducing the level of uncertainty and dependency on

the environment by increasing the organization control

over the external environment.

Integrating the organization with its external

environment to create a boundaryless organization.


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Environmental Conditions

Stable/Homogeneous

Low Uncertainty

Stable/HeterogeneousModerate Uncertainty

Shifting/HeterogeneousHigh Uncertainty

Shifting/Homogeneous

Moderate Uncertainty

Low

Low

High

High

Degree of

Environmental

Segmentation

Degree of Environmental Change

FIGURE 4

2

Source: J. D. Thompson. 1967. Organization in

action. New York: McGraw-Hill, 72.

Boundary spanners,

specialized roles

Rules, regulations,

SOPs


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The Organization-Environmental

RelationshipCauses of Differentiation

in Design and

Management PracticeExternal Task

Environment

Organization

Design

andManagement

Practice

FIGURE 4

3


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Burns and Stalker

A study of the relationships environmental conditions, management practice, and

organizational design

between organizations and their environments.

Identified two types of organizations:

Organic organization

An organization whose structure is f luid and f lexible.

Mechanistic organization An organization whose structure is f ixed and ri gid

(also referred to as a bureaucracy).


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Mechanistic and Organic Organizations

Relationship Mechanistic Organic

Structure Rigid Flexible

Tasks Well defined, stable,standardized

Dynamic, loosely defined

Change Resistant Receptive

Authority source From hierarchy andposition

From knowledge andexpertise

Control Hierarchy From self and peers

Communication direction Command-type anddownward

Consultative-type, up,down, horizontal, anddiagonal

Communication content Instructions anddecisions issued bysuperiors

Information and advice

TABLE 4

1

Source: T. Burns and G. Stalker. 1961. The

management of innovation. London: Tavistock.


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Closed and Open Organizational Systems

Closed systemAn organization that is shut off to its external

environment and one in which managers look internally

for ideas on productivity and efficiency improvements.

Open systemAn organization that attempts to integrate itself with its

external environment and looks to the outside for ideas

on productivity and efficiency improvements.


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Closed Systems of Management

FIGURE 4

4

Note: The arrows represent forces in the

environment that attempt to penetrate the system.

Closed System

Institutional Level

Administrative Level

Technical

Core


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Open Systems of Management

FIGURE 4

4

Note: The arrows represent forces in the

environment that attempt to penetrate the system.

Open System

Institutional

Level

Administrative Level

Technical Core

Environmental Information,

Ideas, Beliefs, . . .


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The Influence ofEnvironmental

Uncertainty

Moderate

High Uncertainty

Moderate

Low Uncertainty

Control-Oriented Management,Mechanistic and ClosedOrganizations

Homogeneous

Stable Shifting

Heterogeneous

Involvement-OrientedManagement, Organicand Open Organizations

FIGURE 4

5


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Linking Environments and Organizations

The boundary-spanning process The means by which managers link the organization

with its external environment.

Boundary rolesthose positions in organizations that

link the organization with its external environment.Boundary spannersindividuals whose job

it is to span the organizations

boundaries and integrate

the organization withthe external environment.


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The Internal Environment

Structures How are the jobs/work

that employees do

designed?

What is the structuralarrangement of the

organization?

What types of

technology are used toproduce products

and/or services?

ProcessesHow is coordination of

organizational

components

maintained?How is decision making

conducted in the

organization?

How is information(communications)

disseminated in the

organization?


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People and their Beliefs

Organizations social system Includes organizational membersmanagement, formal

leaders, and nonmanagerial employees and the beliefs

and values they share.

Organizational cultureA pattern of basic assumptions invented, discovered, or

developed by a given group as it learns to cope with

problems of external adaptation and internal integration.

Culture is stable and resistant to change once it isestablished.

Cultures have a strong effect on the performance of

organizations.


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Managerial and Organizational Functions

Organizational climate The prevailing organizational condition that reflects the

overall organizational tone or character.

A companys personality that is a function of both its

environment and its reactions to the externalenvironment.


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The Internal Environmentand Organizational

ClimateJob DesignWork Unit and Organization DesignTechnology

Structure

CoordinatingDecision MakingCommunicating

Processes

Climate

Management and Formal LeadersNonmanagerial EmployeesCulture

People and Their Beliefs

FIGURE 4

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