Understanding and Managing the Business Environment in Today's Context

1. Understanding & “Managing”the Environment BA 152

2. Today’s Questions 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?

3. Characteristics of Organizations Environment Goals Strategies Structures FIT! Technologies Systems People Cultures

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

5. A Closed Systems Viewof the Environment Organization INPUT THROUGHPUT OUTPUT Environment

6. INPUT THROUGHPUT An Open Systems Viewof the Environment Organization OUTPUT Environment

7. Making Sense of the EnvironmentSectors of the Environment Government/Political Sector International Context Technology Industry/ Competition Human Resources Organization Financial Resources INPUT THROUGHPUT OUTPUT Cultural/ Demographic Sector Material Resources Customers Economic Sector

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

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

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

11. REACT Dealing with the Environment Environment Manage the Firm Structures Processes

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

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

14. PROACT Dealing with the Environment Environment Manage the Environment Linkages Domains

15. Managing the EnvironmentWhat can organizations do? • Develop Linkages • 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

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

17. Why Are Environments Mis-Managed • 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

18. Next Time Acme and Omega