Chapter 3: Organizing in a Changing Global Environment

Vocabulary flashcards covering the key terms, mechanisms, and theories associated with managing an organization in a changing global environment.

Organizational Environment

The set of pressures and forces surrounding an organization that have the potential to affect the way it operates and its ability to acquire scarce resources.

Organizational Domain

The particular range of goods and services that an organization produces, and the customers and other stakeholders it serves.

Specific Environment

Forces from outside stakeholder groups—including customers, distributors, unions, competitors, suppliers, and the government—that directly affect an organization's ability to secure resources.

Global Supply Chain Management

The process of planning and controlling supply and distribution activities such as acquiring and storing raw materials, controlling work-in-process inventory, and moving finished goods from point of manufacture to point of sale as efficiently as possible.

General Environment

Forces that shape the specific environment and affect the ability of all organizations in a particular environment to obtain resources, including economic, technological, political, ethical, environmental, demographic, cultural, and social forces.

Environmental Complexity

A function of the strength, number, and interconnectedness of the specific and general forces that an organization has to manage.

Environmental Dynamism

A function of how much and how quickly forces in the specific and general environments change over time, thereby increasing environmental uncertainty.

Environmental Richness

A function of the amount of resources available to support an organization's domain.

Resource Dependence Theory

A theory arguing that the goal of an organization is to minimize its dependence on other organizations for the supply of scarce resources and find ways of influencing them to make resources available.

Symbiotic Interdependencies

Interdependencies that exist between an organization and its suppliers and distributors.

Competitive Interdependencies

Interdependencies that exist among organizations that compete for scarce inputs and outputs.

Reputation

A state in which an organization is held in high regard and trusted by other parties because of its fair and honest business practices.

Cooptation

A strategy that manages symbiotic interdependencies by neutralizing problematic forces in the specific environment through giving opponents a stake or claim in what the organization does.

Interlocking Directorate

A linkage that results when a director from one company sits on the board of another company, helping ensure capital supplies, exchange information, and strengthen organizational ties.

Strategic Alliance

An agreement that commits two or more companies to share their resources to develop joint new business opportunities.

Network

A cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority.

Keiretsu

A Japanese group of organizations, each of which owns shares in the other organizations in the group, and all of which work together to further the group's interests.

Capital Keiretsu

A form of keiretsu used specifically to manage input and output linkages.

Financial Keiretsu

A form of keiretsu used to manage linkages among many diverse companies, usually centered around a large bank.

Joint Venture

A strategic alliance among two or more organizations that agree to establish and share the ownership of a new business bound by a formal legal agreement.

Collusion

A secret agreement among competitors to share information for a deceitful or illegal purpose, such as keeping prices high.

Cartel

An association of firms that explicitly agree to coordinate their activities to reduce competitive uncertainty.

Third-Party Linkage Mechanism

A regulatory body, such as a trade association, that allows competing organizations to share information and regulate the way they compete.

Transaction Costs

The costs of negotiating, monitoring, and governing exchanges between people and organizations.

Transaction Cost Theory

A theory arguing that the goal of an organization is to minimize the costs of exchanging resources in the environment and the costs of managing exchanges inside the organization.

Bounded Rationality

The limited ability of humans to process information and understand the environment surrounding them.

Specific Assets

Investments in skills, machinery, knowledge, and information that create value in one particular exchange relationship but have no value in any other exchange relationship.

Bureaucratic Costs

Internal transaction costs incurred in formal linkage mechanisms, including communication, integration, and time spent in meetings.

Franchise

A business authorized to sell a company's products in a certain area.

Outsourcing

The process of moving a value creation activity that was performed inside an organization to outside where it is done by another company.