The firm and its environment

Question 1

Name a model of the macro evironment

Answer 1

The Pestel is a good model to clarify a firms evironment, and which factors that can affect the firm.
Political
Economic
Social
Technological
Environmental
Legal

Question 2

What is Scanning theory

Answer 2

Scanning is the deliberate act of seeking information about events and relationships in the outside environment (Aguilar, 1967; Daft & Weick, 1984; Fahey & King, 1977).
– Dimensions include mode, type of sources, frequency… * Scanning aims to:
– recognize environmental changes (Sutcliffe, 1994)
– improve the match between the objective environment and the manager’s or organization’s perception of that environment (Bourgeois, 1985)
– correctly assign probabilities to the occurrence of potential changes or events (Milliken, 1990

Question 3

What is attention based view theory?

Answer 3

Ocasio did this theory 1997. What decision-makers do depends on what issues and answers they focus their attention on. (Focus of attention)
* This in turn depends on the particular context they find themselves in. (Situated attention)
* And this, as well as how they attend to the context, in turn depends on how the organization’s rules, resources and social relationships regulate and control the distribution and allocation of issues, answers and decision-makers into activities, communication and procedures. (Structural distribution of attention).

“The issues confronted by the firm constitute the cognitive categories of problems, opportunities, and threats that make up the agenda of the firm, which are then available to decision- makers to respond to or to ignore.” (Ocasio, 1997, p. 194)
* Decision-makers possess a repertoire of possible schemas for the problems and opportunities that have been encountered in the past.

Question 4

What is Sensemaking theory?

Answer 4

Karl Weick did this theory. This theory has 7 elements. Identity, restrospect, enactment, social, ongoing process, extracted cues & plausability. This theory is about how we act and why we act in the way we do.
The sensemaker and sense making.

Question 5

How is the interpretive process

Answer 5

3-step interpretation process: –
1. Scanning:
collecting data about the environment.
2. Interpretation:
giving meaning to the data.
3. Action/Learning:
responding to the data leading to
organisational learning
Proposed by Daft & Weick (1984)

• Organizations learn from actions, as these actions are in turn analyzed and their effects interpreted (Weick et al, 2005)

Question 6

What is interpretation

Answer 6

• Process of giving data meaning, or of translating external events into a shared understanding amongst organizational members (Daft & Weick, 1984)
  – It is during this phase that cognitive or mental maps play an important role.
• Managers use their collective knowledge and mental maps to label and categorize events (Thomas, Clark, & Gioia, 1993; Weick et al., 2005)

Question 7

Characteristics of the external environment

Answer 7

Rate of change (high to low)
Rate of complexity (high to low)
model in an square