Organization and Environment

Organization and Environment
Upul Abeyrathne,
Senior Lecturer in Political Science,
University of Ruhuna,
Features of Environment
• It is indefinite
• It includes everything outside the and inside
• There are certain aspects that an organization
must be sensitive and respond.
What is the Environment
• Elements that exist outside the boundary of
an organization that have potential to affect
part or whole of the organization.
• Organizations have got domains.
• Organizational domain is what it has chosen
field of action.
• Every organizations stakes out for itself with
respects to products, services and markets.
Role of Domain
• It defines its niche and those external sectors
with which organization interacts to
accomplish its goals
Two Dimensions of Environment
• 1. Task environment
• 2. General Environment.
Task Environment
• The task environment includes sectors with
which organizations interact directly and that
have a direct impact on organizations’ ability
to achieve its goals.
• It typically includes the industry, raw
materials, market sectors and perhaps, human
resources and international sectors.
General Environment
• It includes sectors that might not have a direct
impact on the daily operations of a firm
• But will influence indirectly.
• It includes the government, socio-cultural and
economic conditions, technology and financial
resources sectors.
International Context
It may affect directly
Have increased its significance in recent past.
All domestic sectors can be influenced by it.
Distinction between domestic and international
has become irrelevant.
• Importance of international context implies that
the organizations are becoming more and more
complex and completive.
• Every organization faces uncertainty domestically
as well as internationally.
Environment Uncertainty
Patterns and events occurring in an organization can be described along several dimensions: Stable/
Unstable, Homogeneous/heterogeneous, Simple/Complex
These dimensions boil down to two essential ways the organization ‘s intended domain.
1. Need for information About environment
2 The need for resources from environment.
Environment Uncertainty
• Both Task environment and General
Environment creates Uncertainty.
• Uncertainty means that decisions makers do
not have sufficient information about
environmental factors and they have a difficult
time predicting external changes
Simple Complex Dimension
• It concerns environmental complexity, which
refers to heterogeneity, or the number and
dissimilarity of external factors that regularly
influence the organization and the greater
• More external Factor and many other
companies compete in an organization
domain, complexity is higher
Stable Unstable Dimension
• It refers to whether elements in the
environment are dynamic.
• Environment domain remains stable if it is
same for a longer period.
Simple +Stable = Low uncertainty
• Small no. of external elements
• Elements remains the same or change slowly.
Complex + Stable = Low Moderate
• Large no. of external elements and they are
not similar.
• Elements remain same or change slowly.
Simple + Unstable = High moderate
• Small no. of external elements and they are
• Elements change frequently and
E.g. Fashion clothing.
Complex + unstable = High uncertainly
• Large no. of elements and dissimilar
• Elements change frequently and
Adapting to Environment
• Changes effects to structure of organization
and internal behaviour
• Organizations that face uncertainty generally
have horizontal structure that encourages
cross functional communication and
collaboration to help them adapt to
How to deal with uncertainty
• Buffering: Role of the buffer is to absorb
uncertainty from the environment. help the
technical core of the organization
• Boundary spanning: Link and coordinate an
organization with key elements in the external
environment. It is concerned with the exchange
of information 1. to detect and bring into the
organization information about changes in the
environment and 2. send information to present
organization in favourable into the environment

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