H2 the enviroment of the firm Flashcards
the evironment of the firm
= alle elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization
the 3 levels of environment
1) internal environment= the firm
2) task environment (external)= competitors, customers, strategic partners
3) general environment (external)= international dimension, economic dimension, technological dimension
WHY STUDY THE ENVIRONMENT
ecological view
fittest survives –> companies that survive, fit the environment the most
explains the survival or death of companies by their fitting of environment or not
WHY STUDY THE ENVIRONMENT
contingency view
organizational structures and control systems wich managers choose depend on characterisitcs of the external environment in wich the organization operates
organizations in stable environment choose a mechanic structure
organizations in a changing environment choose a organic structure (decentralized authority,…)
3 dimenties van enviroment
dimensie 1: environment as a source of encertainty
dimensie 2: environment as a source of recourses
dimensie 3: environment as a source of variation
Environmental uncertainty
STATE UNCETRAINTY
= inability to assign probabilities to likelihood of future events:
1) STATE UNCETRAINTY= what wil the future look like –> incomplete understanding of the interrelationships between elements in the environment
Bv: uncertainty about what actions suppliers will take
–> adaptions to state uncertainty:
- delayed response (behavioral)= expenditure of time and resources on environmental scanning and forecasting to better understand the environment. scanning efforts directed toward the understanding of probabilities of various events
- organizational (structural)= structural adaptation, creating slack recourses
interorganizational relationships: - interorganizational relationships= reducing uncertrainty regarding potentially disruptive technologies via relationships
Environmental uncertainty
EFFECT UNCETRAINTY
= what do these events mean for u as organisation
= inability to predict what the nature of impact of a future stat of the environment or environmental change will be on the organization
–> lack of cause-effect understanding
possible effects on strategic decision-making
- no response= you are unsure you don’t do anything
- delayed response= expending time and resources in the “environmental threat and opportunity analysis phase”
- ## paralysis= could paralyze strategic planning process as administrators argue how significant significantly their organization is likely to be effected –> stuck in conflict
Environmental uncertainty
EFFECT UNCETRAINTY
= what do these events mean for u as organisation
= inability to predict what the nature of impact of a future stat of the environment or environmental change will be on the organization
–> lack of cause-effect understanding
possible effects on strategic decision-making
- no response= you are unsure you don’t do anything
- delayed response= expending time and resources in the “environmental threat and opportunity analysis phase”
- ## paralysis= could paralyze strategic planning process as administrators argue how significant significantly their organization is likely to be effected –> stuck in conflict
Environmental uncertainty
RESPONSE UNCETRAINTY
= what should we do about it
= lack of knowledge of response options and or inability to predict the likely consequences of a response choice –> presents when there is a percieed need to act because a pending event or change is percieved to pose a threat or to provide some unique oppo to the organization
((we know what the weather is going to be like and the effect of it on us BUT WE DONT KNOW WHAT TO DO ABOUT IT))
complexity uncertainty
level of complex knowledge that understanding the environment requires
–> the degree of environmental complexity in a firm directly impact the amount that has to be processed by decision makers
effects on strategic decision-making:
- cognitive= affects strategic decision process characteristics such as comprehensiveness, rationality,…
- cognitive= greater use of cognitive simplifications processes such as selective perception, heuristics and biases
- structural= centralization is high when complexity and political cleavage is high
- structural= structural adaptations
–> the greater the complexity, strategists move to make incremental decisions
munifence uncertainty
= environment with lots of resources, the more is available, they behave and operate differently
= an environment’s ability to support sustainable growth of an organization
3 different kinds of munificence:
1) capacity= level of recourses available
2) growth/decline= change in capacity
3)opportunity/threat= extend of unexploited capacity
effects on strategic decision making:
-pressure
-structural= under low munificence making structural changes
- structural= organizations facing scarcity respond by restricting channels of communication
- behavioral= in non-minificent environment more likely to commit illegal acts
industrial environment
5 forces porter
