The Organisational Domain
The Organisational Domain is the organisations chosen field of action, the part of the environment which they choose to be vital to their company, so if that part changes, they must react. It is the area which the organisation will sell its products and services, in a way their niche (even though it may not be that small).
It is said that there is ten different sectors which make up the environment for an organisation, each of which affect different organisations in different ways. These are shown below;
- Industry
- Raw Materials
- Human Resources
- Financial Resources
- Market
- Technology
- Economic Conditions
- Government
- Sociocultural
- International
A good way to remember these is to make an anagram, such as ‘FISH M’ TIGER’ diagram which shows these off quite well is the following;
The above are known as the Task Environments and General Environments,
Task Environments
These are sectors which an organisation will interact with directly and therefore have a direct impact on the company itself. This includes the sectors;
- Industry
- Raw Materials
- Market Sectors
- Human Resource
- International Sectors
General Environment
These are sectors which an organisation will interact with indirectly, not directly every day, but it will indirectly influence the firm. The sectors which are included are the following;
- Government
- Sociocultural
- Economic Conditions
- Technology
- Financial Resources Sector
Environmental Uncertainty
The organisational environment can be very uncertain, with many factors affecting the way an organisational will have to cope and react to what is around them. The uncertainty which organisations have to deal with come mainly from the sectors in which that specific organisation will have to deal with the most,t his is because these will be the areas where the quickest changes will have to be made, with sectors where interaction isn’t as common an organisation doesn’t need to spend as much time on making sure that it is up-to-date with that sector, it just needs to unsure that whenever it does interact, that it is. From this we can see that organisations should focus on the Task Environments.
To analyse these Task Environments, and to some extent the General Environments we can use three main techniques, which are the following;
- Change
- Complexity
- Need for Resources
The whole point of uncertainty is that organisations need to be able to cope with it so that their business can be successful. But the problem here is that uncertainty means that there isnt enough information for businesses to be sure on what is happening and therefore its hard to fight off more uncertainty.
Complex Environment Dimensions
A complex environment is one which has many different external influences on an organisation and also there are many companies in that sector, making it harder to react to change and do the correct thing, as a different company in the same market might do something better, which in turn make your changes pointless, or next to pointless.
Simple Environment Dimensions
A simple environment is one which the organisation interacts with, but there are only a few external elements, which tend to be quite similar affecting the organisation.
Stable-Unstable Environment Dimensions
A stable environment is one which stays the same over a long period of time, months or years in the common situations.
An unstable environment is one which changes often and suddenly.
Nowadays most environments are becoming unstable due to the nature of how we see things, such as through the internet, Twitter campaigns, Facebook fan pages etc. All of these are meaning even companies in small niches have to react and make sure they are fighting on all front.
There are a couple of diagrams which show the uncertainty of the environment in more straightforward ways, these are shown below:
Staying In-line With Environmental Uncertainty
With more complex environments, you will find the organisations within that environment with have a more complex culture and structure. For example they are likely to have more departments, as each of the sectors which the organisation has to deal with will need someone, an employee, looking after that sector and making sure that the organisation can cope with the changes. This is known as an open system.
Buffering Roles
One way to cope with environmental uncertainty has been to make buffering roles and departments within the organisation, this involves having a department which protects the inner core of the organisation from the uncertainty in the environment. However, in many ways this way of dealing with the environment is slowly dying as communication between different organisations becomes more important. For example a company will get on much better with its suppliers if it directly communicates with them, instead of having a buffering role doing it.
Another way is to use Boundary-spanning roles, which help to link and therefore coordinate between the external and internal environments. These roles are all about information, sending to people in the external environment and sending this information in a favourable light, so that a companies brand image can be built upon, not only does this help sales, but it will help in the long-run in every aspect of the organisation. One of the most important aspects of an organisations success is trying to keep up with the environment, and this is way the above information is so important to collect, the poorer the ability to keep up with the uncertainty of the environment, the more likely the end of failure is.
Differentiation and Integration
When dealing with the uncertainty of the environment one aspect of departments is very important, their attitudes, abilities and their specialised approach to certain changes. Success in each sector requires different people to have different abilities so the best way of tackling the situation can be found.
Integration is how well departments work together, in more complex environments this often proves tougher, with only the best organisations achieving good integration. Most of the time these integrations will have to be put in place by the organisation to make sure that departments will work together, as the majority of the time problems will try and be solved internally within the department. It is very important within complex environments to have departments integrated as this means that communication can be done more smoothly and therefore changes can be made quicker, consequently allowing the company to keep up.
High uncertain environments again about 22% of management to integration roles.
The Affect Environment has on Culture
From research it has been found that companies in more stable, simple environments have more standard, formalised cultures which are lead in a central way, not allowing much innovation or out-of-the-box thinking. This is most likely to do with the fact that their isn’t much to change all the time and therefore employees are expected to just get on with their job.
This is in contrast to complex, unstable environments, where the culture is more likely to be informal, free-flowing and adaptable, as this leads to innovations, ideas to make change and ideas to help come back when a competitor, or another sector, has made a change.
The Environments Resources
Another aspect which makes interaction with the environment vital is the resources it provides organisation with. The environment provides us with financial support, raw materials and other important aspect which help us succeed, such as people to become employees, help and ideas. All of this leads to dependency on resources (Resource Dependency), however this also leads to organisations trying their hardest to take control of these resources so that they no longer have to rely upon them. This is fro example making more profit, so they rely less on banks for finance, buying an oil rig, so that they don’t need to go through suppliers to acquire the oil and therefore they don’t risk not being supplied.
Another way to try and make dependencies less it so being partnerships and agreements with other organisations, such as outsourcing some parts of the business to other organisations. This will reduce the cost, but may lead to poorer quality, slower production, and many other problems.