THE EXTERNAL ENVIRONMENT In 1998, NOKIA was considered as the world’s leading maker of cell phone. But in 2004 the market share of NOKIA decreased because of a part of its product that doesn’t match consumer needs…Some of the factors that caused this decrease are, firstly, the fact of focusing in producing smart phones that are expensive; so a big part of its clients turn instead to cheaper stylish models of other marks. Secondly, NOKIA had stuck to the candy bar instead of the clamshell design that fueled a new cell phone boom in Europe and U. S.
And last but not least, NOKIA was slow to respond the demand of customized phone with features that the costumers of Mobile operators wanted. All these missteps got NOKIA back on track. So we can say that NOKIA was influenced negatively by its environment. The external environment, including international competition and events, is the source of major threats confronting today’s organizations. The environment often imposes significant constraints of the choices that managers make for an organization. The question raised is how does the environment influence an organization?
First of all, we have to identify the environmental domain. An organization’s domain is the chosen environmental field
On the other hand, the general environment includes those sectors that can have an indirect influence on the organization’s operations and it includes the government, socio-cultural , economic conditions … Two essential ways the environment influences organizations; the need for information about the environment, and the need for resources from the environment. Firstly we have to determine the organization’s environmental uncertainty. The total amount of uncertainty felt by an organization is then the uncertainty accumulated across environmental sectors.
Organizations must cope with and manage uncertainty to be effective . We have to notice that uncertainty increases the risk of failure for organizational responses. The environment can be described by several dimensions; stable or instable, homogeneous or heterogeneous, simple or complex …The simple-complex and stable-unstable dimensions can be combined into a framework for assessing environmental uncertainty (assessing uncertainty is related to the need for information) ; In the simple, stable environment, uncertainty is low as there are a few elements to contend with, and they tend to be stable.
In the complex, stable environment a large number of elements have to be scanned, analyzed and acted upon for the organization to perform well , and external elements can be manipulated as they don’t change rapidly or unexpectedly. Greater uncertainty is felt in the simple unstable environment because rapid changes create uncertainty for managers even there are just few external elements, those elements are hard to predict.. The greatest uncertainty for an organization is in the complex, unstable environment; many external elements characterized by their unpredictability and its big influence on the organization’s operations.
So we have seen that we can value the environment uncertainty by analyzing the environment dimensions (the environment the organization is dealing with). Now we will see how organizations adapt to each level of environmental uncertainty. Environmental uncertainty represents an important contingency for organization structure and internal behavior. We have to notice that the way the organization is managed and controlled is related to the level of uncertainty of its environment with respect to positions and departments, organizational differentiation and integration, control processes and future planning and forecasting.
As the complexity and uncertainty in the external environment increases, so does the number of positions and departments within the organization, which in turn increases internal complexity. Each sector in the external environment requires an employee or department to deal with it. Remarks: ? The traditional approach to coping with environmental uncertainty was to establish buffer departments that have as a purpose absorbing the uncertainty from the environment. ? boundary-spanning roles link and coordinate an organization with key elements in the external environment .
Boundary spanning is primarily concerned with the exchange of information to detect and bring into the organization information about changes in the environment and send information into the environment that presents the organization in a favorable light. Another response to environmental uncertainty is the amount of differentiation and integration among departments. When the external environment is complex and rapidly changing, organizational departments become highly specialized to handle the uncertainty in their external sector.
One outcome of high differentiation is that coordination among departments becomes difficult. Here comes the integration that can be defined as the quality of collaboration among departments . formal integrators are often required to coordinate departments. In brief, as environmental uncertainty increases, so does differentiation among departments; hence, the organization must assign a large percentage of managers to coordinating roles.
