BA 5201 Organization and Management Managing the environment

1. BA 5201Organization and ManagementManaging the environment Instructor: Çağrı Topal

2. Assumptions • Organizations can and will obtain information about the environment • Organizations are flexible enough to respond to the environment • Organizations can sometimes manipulate the environment

3. Tasks • Knowing the environment • Adapting to the environment • Changing the environment

4. Knowing-boundary spanning • Involving members of the organization spending some of their time interacting with people and organizations outside their own organization • Gathering information and providing feedback about the environment • Representing the organization to the outside world • Performed by a variety of organizational departments and members, and outside partners

5. Knowing-environmental scanning • Collecting and processing information, and assessing or projecting change in various sectors of the environment • Reducing uncertainty that the organization faces • Depending on the type of industry and environment in which the organization produces or serves

6. Knowing-permeability • The extent to which the organization facilitates the inward and outward flow of information • Depending on the degree of environmental uncertainty • Mechanism to make sure that enough of the right information gets through • Gatekeepers to assist in the filtering process

7. Knowing-resilience • The degree to which boundary spanning units respond to changes in the mission and goals of the organization as well as changes in the environment • Based on a smooth and close relationship with the top management • Reflecting changes in the mission and environment in their policies and practices

8. Knowing-maintenance • Keeping boundary spanning units focused on the organization’s mission and goals • Preventing boundary spanning units and people from losing touch with the goals of the organization • Performed through periodic resocialization

9. Adapting-forecasting and strategic planning • Forecasting the future conditions and making predictions used to change or modify strategies • Trend analysis: using historical data to determine future conditions • Scenario forecasting: presenting a variety of event alternatives and assigning probabilities to those events • Difficult and inaccurate when the environment is complex • Less valuable when the environment is stable

10. Adapting-withdrawal • Sealing the organization off from part of the environment • Temporary strategy • Focusing on a narrow portion of the market • Buffering • Counterproductive in the long-run

11. Adapting-differentiation and integration • Horizontal differentiation or specialization • Vertical differentiation • Spatial differentiation • Environmentally suitable integration

12. Adapting-structuring • Mechanistic structure for stable environments • Organic structure for complex environments • Shift from mechanistic to organic structure

13. Adapting-imitation • Imitating other successful organizations • Less costly • Benchmarking: search for and application of the best practice • Institutional pressures • Risk of imitating the unsuitableand obsolete

14. Controlling-niche or domain selection • Controlling a niche or selecting a domain • Exiting the complex or unstable market • Selecting through internal product development, acquisition, or divestiture

15. Controlling-linkage strategies • Connecting to other key players in the environment • Agreements, norms, and contracts • Joint ventures • Mergers and acquisitions • Boards of directors • Management recruiting • Associations • Advertising and public relations

16. Agreements, norms, and contracts • Agreements and norms: informal agreements based on reciprocity, mutual benefit, trust, and repeated interactions • Contracts: legally binding agreements based on formally organized and documented interactions • Expensive and time-consuming to develop or write • Monitoring needed for noncompliance

17. Joint ventures • Creating an inter-organizational link for a specific purpose or project • Pool resourcing and spreading risk • Not giving complete control to any one party

18. Mergers and acquisitions • Merger: two or more companies joining together to form a new company • Acquisition: one company purchasing another • Vertical integration • Horizontal integration • Diversification • Related • Unrelated • Virtual organization • Problem of integration

19. Board of directors • Inside members as company employees • Outside members providing industry and market expertise, and connections to the environment • Interlocking directorates serving on two or more boards • Cooptation involving group or community leaders • Agency problem

20. Management recruiting • Recruiting outside expertise, skills, and connections • Raiding a competitor’s employees

21. Associations • Cooperative organizations formed by the companies in the same industry or market to promote common interests • Setting industry standards • Lobbying government for favorable legislations • Mobilizing the power of an entire industry • Competing with industry giants

22. Advertising and public relations • Dealing or linking directly with the general public • Educating and addressing the public perception of the organization • Differentiating from competitors • Focusing on a specific market niche