Organizational Environment TheoryMGT-5012

Spring Term 2010 GROUP 6

By: Angela Estevez-Cubilete

Alfredo SantaMariaItalo MoronLuis PajaresLuisa Rivera

Definition- The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources.

Application within an Organization- The study of the external environment and it’s impact on an organization has become a central issue in management thought.

Organizational Environment Theory

Organizational Environment Theory: Beginnings

Organizational Environmental Theory: External Factors

Organizational Environmental Theory: External Factors (cont’d)

Application of the Organizational Environment Theory within

Organizational Systems

-VS-

Open-System’s Recycling Method of Production

Organizational Systems

A System that is self-contained and thus is

not affected by occurring

in its external

environment.

Examples of Open Systems Organizations

Jackson Health System as an Open System

RECYCLING SHIFT

The Organizational Environment in a Closed System

By the 1900’s, closed system approaches were adopted within companies to minimize any external factors that could off track companies from maintaining their supply and demand chains. This system was extremely popular for its simplistic approach within the organizational culture and created benefits for companies. Some of the benefits were seen in productivity, product efficiency, and consistencies manufacturing. However, The closed system approach has evolved over time because of its external environment. Eventually it revealed its negative consequences from using this approach as a business strategy.

Organizations that opt for the closed systems approach would eventually minimize its value over time. As time has changed, many organizations have found that ignoring the external environment would be detrimental to the business performance and would minimize company value over time. The external environment needs to be examined to avoid Entropy. As part of the Value Driven Management Strategies , Closed System companies have now molded their rigid systems to include the external factors that may create implications over time.

IBM Industries as a Closed System

• Some IBM divisions have the capabilities to run with only IBM’s internal resources.

Financial Banks as Closed Systems

VISA CITIBANK

MASTERCARD BANK OF

AMERICAAMEX

• Banks have control, power and capabilities to run themselves.

References

Johnson, William C. & Weinstein, Art (2004) Superior Customer Service Value in the New Economy: Concepts and Cases, 2nd Edition, CRC Press, Boca Raton, Florida, pp. 230

Jones, Gareth R. & George, Jennifer M. (2009) Contemporary Management, 6th Edition, McGraw-Hill/ Irwin Inc., New York, N.Y., pp. 61-62

http://en.wikipedia.org/wiki/Daniel_Katz http://www.drda.umich.edu/news/michigangreats/kahn.html http://en.wikipedia.org/wiki/JamesD.Thompson http://epress.anu.edu.au/info_systems/mobile_devices/ch11s02.html