The Environment

and
Culture of Organizations
 Chapter Outline
• The Organization’s Environments
– The General Environment
– The Task Environment
– The Internal Environment
• Organization & Environment

2
 The Organization Environment

Organizational environments are

composed of forces or institutions
surrounding an organization that affect
performance, operations, and resources.
The Organization Environment

• External Environment
• Internal Environment
External Environment

Everything outside an organization that

might affect it…..

Examples: Economics, Technology,

Political, Legal etc.
Internal Environment

The condition and forces within the

organization…..

Examples: Owners, employees, board of

directors.
 External Environment

External Environment includes

General Environment
Task Environment
 Economic Dimension

Unemployment Rate
Interest Rate
Inflation rate
 Technological Dimension

Converting resources into products or

services…

Ford Cars..
 Socicultural Dimension

Norms, values, customs, beliefs..

McDonalds in India
 Political Dimension

Legal system partially defines what an

organization can do or not
Political stability.

Coca Cola in India faced political

problem to enter in India.
Organization – Environment Relationship

How Environment affects organization

How Organization adapt to their environments
How Environment affects organization

Environmental Change & Complexity

Competitive Forces
Environmental Turbulence
How Environment affects organization

Environmental Change & Complexity:

 Degree of change:
The extent to which environment is relatively
stable or dynamic.

Degree of homogeneity:
The extent to which environment is relatively
simple or complex.
How Environment affects organization
Environmental Change & Complexity:
 Degree of change:
Degree of homogeneity:

Leading uncertainty….
Environment Change, Complexity, and
uncertainly.

Simple

Least Moderate
Uncertainty Uncertainty

Moderate Most
Uncertainty Uncertainty
Complex

Stable Dynamic
Competitive Forces ( Michael E Porter)
How Organization Adapt to Environment

 Information Management
 Strategic Response
 Mergers, Takeover, Acquisitions and Alliances
 Organization Design and Flexibility
Information Management

Boundary Spanner
Environmental Scanning
Strategic Response:
Changing the strategy according to the requirement of
the market.

 Examples: If a company is growing up, it requires

more investment.
Mergers, Takeover, Acquisitions and Alliances:

 When two companies joint together and make new

company, it is called merger.

 Example: Exxon & Mobil

Acquisitions

 When a company purchases another one company, it

is Acquisitions.

 Example: Airtel purchased Warid

Strategic Alliances:

 When two different companies share their strategy, it

is Alliances.

 Example: Sony & Ericsson

How Organization Adapt to Environment

 Organization Design and Flexibility

Thank You