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Lesson 5: Systems Theories of Organizations
Understanding Organizations as Organisms: Scanning Your Environment
As identified earlier, system theorists believe that organizations are involved in ongoing interactions with their environments and leader must understand the nature of such broader environments, discover ways to objectively "measure" of such environments, and decide how best to interact with broader system in light of such measures.
Research has shown that five key environmental factors can be measured in an environmental scan.
- Societal Values: cultures of surrounding society.
- Political: legal norms and statutes impacting on organization.
- Economic: markets, competition, overall economy, etc.
- Informational and Technological: telecommunications and technology issues.
- Physical: Geography, natural resources, climate.
Even a brief glance at the above factors would underscore that finding exact and accurate measures would be hard (or impossible).
Thus managers assess such factors using judgment calls on several continuums to help provide better quantification of such variables.
- Stability vs Turbulence: How changing is the sector of the environment? How stable?
- Diversity vs Homogeneity: How diverse is the sector? Coping with diversity requires more adjustment. For Example, a car manufacturer focusing on many types of cars.
- Clustering vs Randomness: How organized is the sector of the environment? Highly structured require more compliance, while low structure offer more freedom, but more peril.
- Scarcity vs Munificence: How rich is this sector? Are resources abundant or scarce?