Professional Documents
Culture Documents
Organizations and Organization Theory: Chapter Two: The External Environment
Organizations and Organization Theory: Chapter Two: The External Environment
Numerous factors in the external environment cause turbulence and uncertainty for
organizations. The external environment, including international competition and events, is
the source of major threats confronting todays organizations. The environment often imposes
significant constraints on the choices that managers make for an organization.
There are two major environmental forces on the organization:
The need for information
The need for resources
Organizations respond to these forces through structural design, planning systems, and
attempts to change and control elements in the environment.
Environmental Uncertainty:
Two essential ways the environment influences organizations:
1. The need for information about the environment
2. The need for resources from the environment
Organizations must cope with and manage uncertainty to be effective. Uncertainty means that
decision makers do not have sufficient information about environmental factors, and they
have a difficult time predicting external changes.
Simple-Complex Dimension
It concerns environmental complexity, which refers to heterogeneity, or the number and
dissimilarity of external elements relevant to an organizations operations. A complex
environment is one in which the organization interacts with and is influenced by numerous
diverse external elements. In a simple environment, the organization interacts with and is
influenced by only a few similar external elements.
Stable-Unstable Dimension
It refers to whether elements in the environment are dynamic. An environmental domain is
stable if it remains the same over a period of months or years. Instability may occur when
competitors react with aggressive moves and countermoves regarding advertising and new
product.
Framework
The simple-complex and stable-unstable dimensions are combined into a framework:
Tasks are broken down into specialized, Employees contribute to the common task of the
separate parts. department.
Tasks are rigidly defined. Tasks are adjusted and redefined through
teamwork.
There is a strict hierarchy of authority and There is less hierarchy of authority and control,
control, and there are many rules. and there are few rules.
Knowledge and control of tasks are centralized Knowledge and control of tasks are located
at the top of the organization. anywhere in the organization.