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Organizational Theory Essay

3243 words - 13 pages

1) Describe the relationship between the organizational environment and organizational structure and design. Explore the differences between internal and external environmental factors. What factors are important and why?

An organizational environment usually sets boundaries to what an organization can and cannot do because of the factors which influence that organization. The term is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization. Where the organization physically takes place, or its domain and how the sectors play a role on the organization all have an impact on the structures to react to ...view middle of the document...

The complex is where there are numerous and diverse external elements and a simple environment the organization interacts with few external elements. Companies with very important tasks, like aerospace firms have very complex environment because of the many regulations they must go through. But a yogurt shop will have a very simple environment because they will only have to make sure their product is not expired and their store is sanitized. The other factor is how stable-unstable the environment is. The domain is stable if it remains the same over a long period of time and the elements do not shift abruptly. Instability may happen when competitors come out with better product and advertizing, which hurts one organization. These two dimensions are combined into a framework which conducts the environmental uncertainty. Based on the elements from the two dimensions, the prediction of external changes can be either easy or extremely difficult to compute.
Therefore, an organizations structure and design is greatly determined on the environment. When the organizational environment is overall stable, most of the companies in this situation are highly centralized and mechanistic. These are usually companies that are fairly large, and established, with a good product already being produced. They are content with their company, and simply plan to stay where they are, complacent with their success. People have established roles, with little room for creation, and continue to produce their product without innovation. An example of a company like this would be the Coca-Cola beverage company. Already having success in the market, and the environment stable due to the fact that when things are good or bad people still buy and drink their product. Also Coca-Cola does not have to try to change anything, or waste any money on new research and development. It is an industry that will always be there, with low uncertainty of a changing environment.
Now on the other end of the spectrum, when the organizational environment has very high uncertainty, it forces the structure to become much more organic in the way the organization has to do things. With the organic structure, the companies are usually a lot smaller, and need some kind of competitive edge in order to keep up with the larger, much more established companies. These organic companies are decentralized, where the roles of employees are not necessarily in only one subject. Communication is horizontal, there are fewer rules and knowledge is shared amongst all employees. With the instability of the environment, an organic company has to be able to be very aware of the specific environment, which they can control regarding: customers, distributors, suppliers, competitors, government, and union. These are usually more rigid structures, and don’t change too much. The laws of the government don’t change often, you have a certain customer base, you can choose your suppliers and distributors, etc. Not only do...

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