Organizations and Environments Definitions of Organizations Social entity
- Slides: 34
Organizations and Environments
Definitions of Organizations • Social entity, goal directed, deliberately structured, identifiable boundaries (Daft) • Response to and means of creating value that satisfies human needs. Embodies collective knowledge, values, and vision (Jones) • Integration of specialized knowledges into a common task (Drucker)
Organizations • Human creations whose operations and products are results of the ways we govern them and of the social, institutional, and political structures within which they operate (i. e. , their environments) • Organizations are both products of these structures and de-stabilizers of these structures
Trends and Tensions in Contemporary Organizations • Small and flexible vs. large and vertically integrated • Technology as work saver vs. work producer • Networks vs. hierarchies • Knowledge workers vs. administrators as powerful organizational members • Manufacturing vs. service • Labor shortages vs. labor surpluses
Trends and Tensions in Contemporary Organizations • Production of high vs. low wage service jobs • Job as package of specific duties in specific time period vs. job as flexible in duties, time, and space • Need for organizational learning vs. poor memory capacity due to downsizing, merger, and acquisition activity
Trends and Tensions in Contemporary Organizations • Globalism vs. nationalism vs. environmentalism • Establishment of strong organizational cultural values vs. appreciating diversity • Multigenerational workplaces: Veterans vs. boomers vs. Gen. Xers, vs. Generation Y vs. “millennial” generation • New technologies vs. “old” human values (e. g. , biotechnology, wireless technology)
Essential Features of Organizations • Open system: input, transformation, output • Subsystems: boundary spanning, production, maintenance, adaptation, management • Domains: range of products and services produced for serving markets and customers • Environmental Transactions: dealing with factors outside the organizational boundaries
Open Systems View of Organization ENVIRONMENT Raw Materials Products Input Transformation Output Organization Resources Boundary Spanning Production Maintenance Adaptation Management Subsystems Services Boundary Spanning
Organization-Environment Interface • General factors – – – – Economic International Political/legal Technology Social/demographic Cultural Physical/natural resources • Task (specific) factors – – – – Customers Suppliers Distributors Regulatory agencies Competitors Unions Partners Special Interests
Environmental Uncertainty • Stability-Change Dimension – How fast and unpredictably elements change – Universities vs. telecommunications v. Determines how often you need to collect information • Simple -Complex Dimension – Number of elements and their similarity – Family restaurant vs. automobile manufacturer v Determines what information you need
Perceived Environmental Uncertainty • Simple vs. Complex Elements • Stable vs. Dynamic Elements • Richness vs. Poorness of Elements • More uncertainty results when organization has to deal with complex, changing, and/or poor quality elements.
Environmental Uncertainty Rate of Change Low Complexity High Low Uncertainty (Information known and available) Moderate Uncertainty (Information overload) High Moderate Uncertainty (Constantly need new information) High Uncertainty (Information needs unknown)
Theories of Organization. Environment Relationships • • • Contingency Theory Resource Dependence Strategic Choice Population Ecology Institutional Theory Transaction Cost Theory
Contingency Theory • Most effective way to organize is contingent on complexity and change in environment • Stable environments: Mechanistic structures (specialization, formality, hierarchy) • Changing environments: Organic structures (less specialization, informality, lateral relations)
Resource Dependence • Organizations obtain scarce and valued resources from environments • Desire to control these resources to minimize dependencies • Processes and transactions used to obtain resources develop dependencies • Balancing act of maintaining autonomy and recognizing dependencies
Strategic choice 1. Managers perceive environments 2. Make strategy and design structure 3. Re-strategize when changes are perceived 4. Managers enact environments through their decision-making choices 5. Since managers perceive differently, they bring organizations in different directions 6. Example: Sears vs. Montgomery Ward
Population Ecology • Focus is on whole population of organizations (e. g. , gasoline stations in Canada; wine industry in California) • Natural selection processes: Variation Selection Retention • Unsuccessful organizational forms die out • Environmental determinism
Institutional Theory • Societal institutions are powerful forces for ensuring control and order • In responding to institutional pressures, organizations develop isomorphic (similar) strategies, structures, and systems • Normative, coercive, and mimetic forces make “all organizations look the same” • Goal is to obtain social legitimacy • Example: banks, universities, discount stores
Transaction Cost Theory • Organizations try to reduce monitoring, negotiating, and governing exchanges with environmental elements (transaction costs) • Environmental uncertainty, opportunism, bounded rationality, small numbers bargaining, asset specificity, and risk levels increase transaction costs • Transaction and bureaucratic costs balanced
What specific adaptation devices do organizations use? • Structural Responses – Develop new positions or units – Boundary-spanning activities – Buffering roles and units – Planning Groups – Forecasting – Management Information Systems
Specific Adaptation Devices Inter-organizational Linkages: • Symbiotic interdependencies • Benefit both organizations • Competitive interdependencies • Direct competition for scarce resources
Symbiotic Interdependencies • Good reputation • Cooptation • Interlocking directorates • Strategic alliances • Long-term Contracts • Equity ownership in other firms • Joint ventures • Mergers, acquisitions, and takeovers • Licensing • Consortia • Marketing or distribution agreements • Franchising
Competitive Interdependencies • • Collusions Signaling Cartels Trade associations • Regulatory bodies • Competitive strategic alliances • Networking
How do we assess if an organization is effective in its environment? • Goals approach – Official vs. operative goals – Achieving organizational goals is effectiveness • Systems resource approach – Obtaining scarce and valued inputs – Measured by quality and costs of inputs; stock price and market share – Example: Software firm hires the best engineers with competitive compensation
What is organizational effectiveness? • Internal Systems Approach – Innovation and quick response to changes – Measured by decision making time, product innovation rate, time to get new products to market, reduction of conflict and motivation problems – Example: 3 M: 25% of sales must come from products less than 5 years old
What is organizational effectiveness? • Technical efficiency approach – Ability to convert skills and resources into goods and services efficiently – Measured by rate of reduction of defects, reduction of product costs and delivery times, increases in customer service and product quality – Example: TQM processes at Stanley Engineering
What is organizational effectiveness? • Stakeholder Approach – Stakeholders are any individuals, groups, or organizations that have an interest in the firm’s activities and ultimate survival – Internal stakeholders: owners or shareholders, employees, and managers – External stakeholders: customers, suppliers, government, unions, local community, general public, natural environment
Managing Stakeholders • Inducements and contributions balance – Inducements are what the firm provides for stakeholder – Contributions are what the stakeholder provides for the firm – Firms would like to provide as little inducement as possible for adequate levels of stakeholder contribution and vice versa
Managing Stakeholders • Assess importance of stakeholders – Power, legitimate rights, and urgency • Assess potential for threat vs. potential for cooperation – Opportunity, capacity, and willingness • Determine appropriate strategies for managing the stakeholder
Potential for Threat High Potential for Cooperation Low Mixed Blessing Stakeholder: Supportive Stakeholder: Collaborative strategies Get Involvement Non-supportive Stakeholder: Marginal Stakeholder: Defensive strategies Monitor
Managing Stakeholders • Managing multiple goals of stakeholders – setting priorities or preference ordering – sequential attention – bargaining and compromise – satisficing ØAt least minimal satisfaction of all current stakeholders is organizational effectiveness.
Total Responsibility Management Systems • Focus is on the triple bottom line: – Economic (profits) – Social (people) – Environmental (place) TRM can be significant source of competitive advantage for firms who take the lead in these initiatives
Pressures for TRM • Primary stakeholders: owners, employees, customers, and suppliers • Secondary stakeholders: NGO’s, activists, communities, and governments • Social and institutional pressures and trends: “best of” rankings and awards; emerging global standards (e. g. , UN’s Global Compact); and reporting/accountability initiatives (e. g. , GRI or SA 8000 or AA 1000)
Three Processes in the TRM Approach • Institutionalizing a vision and set of values regarding responsible practice through the enterprise (inspiration) • Integration of the responsibility into practice through strategy, management systems, and human resource capacity • Improvement and innovation through measurement, feedback systems, and learning and remediation
- Cardinality ratio constraint
- Simbol weak entity
- Public interest entity
- Public interest entity vs listed entity
- Social groups and formal organizations
- The widening set of interdependent relationships
- Internal and external environment of the school system
- Known vs unknown environment
- Any change in the environment
- International business chapter 5
- International business environments and operations
- Exercise in hot and cold environments
- International business environments and operations
- Social thinking and social influence
- Social thinking social influence social relations
- Machine reference model
- The business environment
- Chapter 13 natural environments of europe
- Stable prediction across unknown environments
- Psychologically informed environments
- Psychologically informed environments
- Creating supportive environments smoking
- High quality supportive environments
- Chapter 13 natural environments of europe
- Jonassen constructivist learning environment
- Chapter 7 natural environments of north america
- Economic activity
- Spectrum protect for virtual environments
- The marketing environment is the actors and forces outside
- Information-intensive operating environments
- Different environments
- The global marketing environment
- Diverse learning environments survey
- Enabling environments eyfs
- Diverse learning environments survey