Organization Environment

Introduction
Organization affect their environment and in turn affected by them. Organization need to align themselves with the change in environment continually for survival and sustained growth.

The environment include socio-economic, technological, political, and other forces lying outside its boundary

Dimension of environment
Pace of change Degree of connectedness Extent of similarity Degree of uncertainity

Pace of change
If the change is evolutionary and relatively slow then the environment is called stable. Exampletraditional industry sector like jute and sugar

If the change is transformational in nature, the environment can be called dynamic. Example- IT sector encounter a dynamic environment.

Degree of connectedness
The extent to which factors in the environment are connected to each other will also have varying degree of impact on the organization. Environment is considered simple if connectedness of various environmental forces is relatively low. In a complex environment various forces interact with each other Now a days most of the environment in the organisation is complex due to forces of globalization and revolution in IT

Extent of similarity
Homogenous- various forces share the similar properties and common characteristics. Example- organization catering to only one market segment Heterogeneous- if different external forces in the environment tend to vary and are dissimilar to each other. Example- revenue department of the government

Degree of uncertainty
Dimension of environmental uncertainty 1. Strength of social, political, and economic pressures on the organization 2. Frequency of technological breakthroughs in the industry 3. Reliability of resources and suppliers 4. Stability of demand for the organizations products and services

Managing Environment
The environement of organization is characterized by increase in turbulence and uncertainties. Organizations have to exercise control over the environment forces in order to survive. Traditionally organizations have been diversifying their businesses through vertical and horizontal integration. Most strategic decision relating to alliances, acquisition, mergers and the like are attemps for increasing control over the environment

Contd
The combined strengths of several organisation with complementary competencies result in reduction in uncertainties on account of suppliers, customer satisfaction. Management of environment thus becomes a central area of concerns as the environmental forces move towards high degree of turbulence.

Causal texture of Environment

Movement Connectedness Characteristics Appropriate coping technologies
tactics Strategies

Placid Placid

Randomized Clustered

Unchanging, evolutionary change, low uncertainty Cluster of threats, suppliers or customer may join hands to form powerful coalition More complex, many competitors seeking similar trends Most dynamic, high uncertanity, disconnected in the environment

Disturbed

Reactive

Operations

Turbulent

Field

Multilateral agreement

Recent trends
There are 3 dimension of environment which organization consider critical to developing their appropriate design Capacity Volatility complexity

Capacity
Refers to resource availability, market demands, and other environmental factors for an organization which can be abundant or scarce. 1. Under abundant capacity situation there is no compulsion for the organisation to achieve comparative excellence 2. Under scarce capacity there will be heightened pressure on the organisation to perform and deliver value added products and services.

volatility
Rate of change in the environment. Stable or dynamic If the change is evolutionary and relatively slow then the environment is called stableIf the change is transformational in nature, the environment can be called dynamic.

complexity
Refers to homogeneity and heterogeneity amongst different elements in the environment of the enterprise.