MGMT 1136 3

The Organisational Environment / External Environment

General & Specific (Task) / Environmental Uncertainty

Internal Environment

Employee, Culture, Management

Basic Organisational Environment / External

General Environment + Specific or Task Environment

General Environment

Dimensions of the external environment affect organisations indirectly; Technological, Natural, Sociocultural, Economic, Legal/Political, International

Specific or Task Environment

External environment that directly impacts the organisation's operation and performance; Customers, Competition, Suppliers, Labour Market

Regulators

Government agencies that enforce laws, policies, and industry regulations

Environmental Uncertainty: Business Adaptation Strategies / External

Proactive + Reactive

Proactive

Anticipating Change

Reactive

Responding as they happen

Common Adaptation Strategies

Mergers & Partnerships, Digital Transformation, Lobbying & PR

Organisational Boundaries

Vertical Boundaries + Horizontal Boundaries

Vertical Boundaries

Define the scope of activities within an industry value chain (manufacturing, distribution, retail)

Horizontal Boundaries

Define the scope of product/market domains (expanding into new customer segments or industries)

Internal Environment: Organisational Boundaries (Efficiency Boundary)

Efficiency boundaries focus on choosing the most cost-effective way to structure the organization; Boundaries are set based on what governance model minimizes costs and maximizes success

Internal Environment: Organisational Boundaries (Power Boundary)

Power boundaries focus on how organizations control key external factors to reduce uncertainty and improve performance; Companies set their boundaries to maximize control over critical resources, markets, or regulations

Internal Environment: Organisational Boundaries (Competence Boundary)

Competence boundaries focus on what resources and skills an organization should have to succeed; Organizations should match their strengths to opportunities in the environment to stay competitive

Internal Environment: Organisational Boundaries (Identity Boundary)

Identity boundaries define who the organization is and ensure its activities align with its core identity; Boundaries are set to maintain brand, culture, and mission coherence