OB assignment 3 Q 5

Why must organizations respond to their external environment?

They depend on external resources + conditions for survival

What problem does environment create for organizations?

Uncertainty + dependence on external factors

What is resource dependence theory?

Organizations depend on external resources → creates uncertainty + need to manage environment

Why is resource dependence a problem?

External actors control critical resources → limits organizational control

What is the principle of loose coupling?

Organizations reduce dependence on environment to avoid disruption from external changes

Why is loose coupling important?

Less dependence → less vulnerability to environmental shocks

What is the external environment?

All outside forces affecting organization decisions + performance

How do customers create dependence?

Organization relies on them to purchase outputs

How do suppliers create dependence?

Organization relies on them for inputs/materials

How do competitors create dependence?

They affect pricing, strategy, and market share

How does the economy create dependence?

Affects demand, costs, and financial resources

How do social/political factors create dependence?

Laws, regulations, and norms constrain decisions

How does technology create dependence?

Forces adaptation to new systems + innovation

What creates environmental uncertainty?

Complexity (number of factors) + rate of change

What are the 4 quadrants in Duncan’s model

Complexity (simple vs complex) + rate of change (stable vs unstable)

1. Simple + Stable

2. Complex + Stable

3. Simple + Unstable

4. Complex + Unstable

Quadrant 1

Simple + Stable environment.

Few factors + little change → low uncertainty → mechanistic structure

Quadrant 2

Complex + Stable environment.

Many factors + little change → low–moderate uncertainty → mostly mechanistic structure

Quadrant 3

Simple + Unstable environment

Few factors + rapid change → moderate–high uncertainty → more organic structure

Quadrant 4

Complex + Unstable environment

Many factors + rapid change → high uncertainty → organic structure

What is a mechanistic structure?

Rigid, centralized, formalized structure suited to stable environments

What is an organic structure?

Flexible, decentralized, less formalized structure suited to uncertainty

Key rule from Duncan model?

Higher uncertainty → more organic structure

What is anticipation strategy?

Predict + prepare for environmental changes

Anticipation examples?

• Environmental scanning

• Forecasting future trends

What is negotiation strategy?

Influence environment through relationships

Negotiation examples?

• Lobbying government

• Public relations / influencing stakeholders

What is control strategy?

Directly manage environment to reduce dependence

Control examples?

• Vertical integration (control suppliers/distribution)

• Strategic alliances / mergers

Why do organizations use strategies to manage environment?

Reduce uncertainty + secure resources

What happens if dependence is not managed?

Loss of control + poor performance

Why must structure match environment?

Structure determines ability to handle uncertainty

Example of loose coupling in practice?

Multiple suppliers used → reduces reliance on one

Example of high uncertainty environment?

Tech industry → rapid change + many variables