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Week 3. Chapter 4 Environments

The other internal and external environments of a business and the impact it has on a business.

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gabriel
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24 views34 pages

Week 3. Chapter 4 Environments

The other internal and external environments of a business and the impact it has on a business.

Uploaded by

gabriel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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External and Internal

Organizational Environments
C hapter 4
Objectives

• Define the external environment


of organizations.
• Identify different types of
organizational structures and
their strengths and weaknesses.
• Identify the fit between
organizational cultures and the
external environment.
What happenedto these companies?

Many businesses with traditional business models, however, have failed or are not
succeeding strategically, operationally, and organizationally by not realizing and/or
adapting to changing external environments. Both companies are an example of
firms that were once successful but did not anticipate and then adapt to changes.
Contemporary External Environments

• Digital technologies and artificial intelligence (AI) - increase efficient


operations and service to customers - Amazon

• Blockchain technologies – a public electronic ledger (an unchangeable record


of transaction) - the banking industry

• Sharing-economy cultural and economic value-added business models –Airbnb,


Uber

• Shifts in learning and learning credentials – online resources, self-learning

• Ethics – public awareness through social media has awakened the consumers of
dangers and drawbacks of unethical activities of certain larger corporations
External Environment
General environmentis a concept that involves all outside factors and
influences that impact the operation of a business that an organization
must respond or react to maintain its flow of operations.
Click
HERE to
watch

PESTEL
PESTLE
PEST
Weighted Averages

Which of the PESTEL factors would you think are most


important for the following industry categories?

• Agriculture
• Apparel
• Automotive
• Banking
• Computer Hardware
• Computer Software
• Medical Devices
• Pharmaceuticals
External Forces Pressuring Organizations

Identify
Predict
Trends
Manage
Issues
Anticipate
Opportunities
Create
Adapt
identifying the uncertainty of the environmental forces
Company Industry Fit

Shows how well


industries and
organizations
align with and
perform in
different types of
environments.
Organizational External (and internal) organizational complexity is the amount of complexity
derived from the environment where the organization operates, such as:

Complexity • External Org Complexity: the country, the markets, suppliers, customers
and stakeholders
• Internal Org Complexity: products, technologies, human resources,
processes and organizational structure.
Organizational
Design and
Structures
The way high-performing organizations
operate today is radically different from
how they op erated 10 years ag o.Yet
many other org anizations continue to
op erate accord ing to ind ustrial-ag e
mod els that are 100 years old or more.
What is the difference? Think of examples. Is one better that the other?
Evolution of Organizational Structure
Types of
Organizational
Structures
Horizontal Design (Division Of Labour):
Departmentation
Functional Structure

When a business organizes itself around the major business functions of production,
marketing, finance and personnel.

Promotes specialization and builds valuable expertise - but, if an employee’s interest and loyalty
are limited to their department, the organization cannot benefit and prosper as a whole.
Advantages Disadvantages
➔ Allows for high degree ➔ Has the potential to create barriers
of specialization for employees between different functions

➔ Easily scalable should ➔ Functions tend to silo,


the organization grow creating communication issues

➔ Functional experts can perform job ➔ C an create cross-functional inefficiency


with high levels of speed if a company has many products or
and accuracy services
Divisional Structure

Product Departmentation

When a business produces two or


more products, and groups its
activities and personnel around
those products.

A llows a large organization to


concentrate on and promote the
growth and development of each of
its major products.Top management
hands over considerable control of
decision-making to division
managers.
Advantages Disadvantages
➔ C an shorten product development ➔ Departments tend to
cycle for company with many create completely different
products processes for similar work

➔ Teams can focus on one product ➔ Departments compete for resources


and become separate entities
➔ Supports common cultures
each division, increasing harmony ➔ Duplicate resources and
internal competition can make it
difficult for an organization to grow
Geographic Structure

When all activities of an


organization are performed in the
region where the unit operates.

A llows local managers to make


decisions quickly
on labour supply, customers,
language and governments.Similar
to product departmentation, top
managers experience loss of control.
Advantages Disadvantages
➔ Decreases overall
➔ Increases efficiency for
organizational efficiency as local
regions bundling different
regions become more autonomous
functions together

➔ Local regions have to compete for


➔ Easier to coordinate to meet unique
resources
challenges of specific regions

➔ Each region supports its own functions


➔ Regional groupings focuses
who are not internally connected
all worker efforts on
common objectives
Matrix Structure

A horizontal structure where the


project manager acts as a
coordinator,specifying what is to
be done while allowing the
functional department to decide
how it is to be done.

A llows the form to utilize group of


people with specialized skills to
work on a particular project.
Advantages Disadvantages
➔ Improved communication ➔Reporting lines become unclear
➔Breaks down departmental silo ➔ Lack of specialization
'bubble' ➔ Organizational politics
➔ Minimal hierarchy ➔ Lack of consistency
➔ Harnesses intellectual capital ➔ Decisions made impulsively
➔ Transparency and teamwork ➔ Too complex for new employees
➔ Speeds up decision making ➔ Provokes unnecessary conflict
➔ Improves accountability
➔ Job enrichment
Click
HERE to
watch

View the video


7½Types of
Business
Organizational
Structures from
Pingboard and
you will notice a
somewhat
different take on
structuring
organizations?

Two more
structures in the
book on pages
99 and 100.
Often an organization will use more than one
method of departmentation.

Example:
An automotive manufacturer with branch plants
in several countries mayuse geographical
departmentation; each plant mayuse product
departmentation; while each product division
mayuse functional departmentation.
The open systems model serves as a feedback loop continually

Open System taking in resources from the environment (Inputs), processing


and transforming (Throughputs) them into outputs that are
returned to the environment. This model explains organizational

Model of an survival that emphasizes long-term goals.

Organization O p e n or Closed systems - depending on the organization’s sensitivity to the


environment. Closed systems are less sensitive to environmental resources and
possibilities, and open systems are more responsive and adaptive
to environmental changes.
Internal
Organization

There are other internal functions not listed here, such as


research and development, accounting and finance, production, and human resources.
McKinsey 7-S Model
Revolves around and shows
how all elements are
interconnected with shared
values (or culture)in an
organization.
SWOT
A N A LYSIS

Strengths
Weaknesses

O pportunities
Threats

Click
HERE to
watch
In practice, no internal
organizational
The Internal Organization alignment with its
external environment is
and External Environments perfect or permanent.
Q uite the opposite.

Companies and
organizations change
leadership and strategies
and make structural, and
systemschanges to meet
changing competition,
market forces,and
customers and end users’
needs and demands.
Corporate Culture
Cultural Types

Think of companies as examples.

Hint: book page 109


Rethink Hiring
Section 4.5 used Amazon and in
particular CEO Jeff Bezos as
examples for both positive and
negative aspects of culture in an
organization. One area that
comes up frequently in job
interviews are questions
designed to determine not if the
candidate has the right set of
work skills, but rather whether or
not that person is likely to be a
good cultural “fit”, as it’s called.
Review the various explanations
of different types of cultures in
this Section, and then watch the
Talent on Tap video from Linked
In.
1. You have just been assigned to work with a strategy team in an
Thinking organization to predict issues and opportunities that might be
expected for the next 2 years. Using this chapter, explain what
Tasks information you would provide to this team?

2. You have been selected to lead a team to decide on a different type of


structure in your organization to better serve customers who are
complaining about poor service that is slow, impersonal, and not
meeting their needs to be heard. Presently, the functional structure isn’t
working well. Outline some information from your knowledge using
this chapter that would help the team in its assignment.

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