Understanding Managing the Environment BA 152 Todays Questions

Understanding & “Managing” the Environment BA 152

Today’s Questions 1. 2. 3. What are two different views of the business environment Can we develop two different ways to classify or categorize the business environment? What are the different ways in which organizations can react to and/or proact on their environment?

Characteristics of Organizations Environment ! T I F Cultures Goals Strategies Structures Technologies Systems People

What Does the Environment Do? n It makes demands; n It imposes constraints; and n It provides opportunities.

A Closed Systems View of the Environment Organization INPUT THROUGHPUT OUTPUT Environment

An Open Systems View of the Environment Organization INPUT THROUGHPUT Environment OUTPUT

Making Sense of the Environment Sectors of the Environment l a n o i t a n r e t t In x e t n o C Government/Political Sector Human Resources Technology Organization Financial INPUT Resources Material Resources Economic Sector Industry/ Competition THROUGHPUT OUTPUT Customers Cultural/ Demographic Sector

Environmental Sectors: The Banking Industry Customers Competitors Others The Fed Congress Communities Regulators Technology

Making Sense of the Environmental Uncertainty Number of Sectors Simple (Few) Complex (Many) Stable Volatility of Sectors Dynamic Moderate/Low Uncertainty High Moderate/High Uncertainty

Making Sense of the Environmental Uncertainty Number of Sectors Simple (Few) Complex (Many) Stable Volatility of Sectors Dynamic

Dealing with the Environment REACT Environment Manage the Firm Structures Processes

Environments and Organizing Options More Certain Environments Mechanistic Less Certain Environments Organic

Responses to the Environment Internal Process/Structural Profiles Factors Jobs In Certain In Uncertain Environments Specialized Generalized Rules Formal Informal Decisions Centralized Decentralized Work Units Simple Complex Communication Vertical All Ways GENERAL PROFILE MECHANISTIC ORGANIC

Dealing with the Environment PROACT Manage the Environment Linkages Domains

Managing the Environment What can organizations do? n Develop Linkages – – – n Use contracts and joint ventures, and/or alliances, etc. Build links to key sectors (directors/executives) Increase PR and advertising Manage Domains – – Choose to operate in different domain(s) (mergers, acquisitions, divestitures, etc. ) Modify existing domain(s) (lobbying/regulations) Make domain entry difficult for others Join trade associations

Dealing with the Environment REACT Environment PROACT Manage the Firm Manage the Environment Structures Processes Linkages Domains

Why Are Environments Mis-Managed n Because the firm is. . . – – – too small to worry too big to care unaware of key sectors looking at the wrong sectors unwilling to commit resources to manage the environment

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