Resource dependency refers to the concept that organizations are dependent on external entities for important resources and inputs. Organizations must establish relationships and linkages with other organizations in their environment in order to access vital resources like materials, funding, customers, etc. This creates interdependence between organizations as they seek to balance obtaining necessary resources while maintaining their autonomy and independence.

1. Ch No 4
OTD
By
By Kaleem A. Barlas
The External Environment

2. Learning Objectives
The Environmental Domain
Task environment, general Environment International context
Environmental Uncertainty
Simple, complex dimension, stable un-stable
dimension, framework
Adapting to environmental uncertainty
positions and departments, boundary spanning, integration,
planning, forecasting and responsiveness
Framework for organizational responses to
uncertainty
Resource dependence, controlling resources, interrogational
linkages, controlling the environmental domain, integrative
frame work

3. The Environmental Domain
Environment include every thing out side the organization,
it’s the elements outside the boundary of the orgs. But has
the potential to affect all or the parts of the org. Ten sectors
can affect
Industry
Raw material
Human resource
Financial resources
Market
Technology
Economic conditions
Government
Socio-cultural n international

4. Task Environment
Task environment includes sectors with which the orgs.
Interacts directly for achievement of goals.
 Industrial sector
 Competitors
 Suppliers
 Labor market
 Stock market
 Customers
 MIS e-com. ICT
 Recession
 Demographics
 City state , IM

5. General Environment
The general environment includes those sectors
which may not have direct impact but will
indirectly influence the ops.
 Government Sector
 Shifting demographics
 General economic conditions
 Technology sector
 Financial sector/resources

6. International Context
The international sector can directly affect many
organizations. Many students fail to realize the
importance of international events and still think
domestically.
The distinction between the foreign n domestic
operations have become irrelevant, for example
Auto industry.
The growing importance of international sector
means the environment for all orgs. Is becoming
extremely complex n competitive
Orgs. Need to learn change management to face
domestic and global uncertainty.

7. Environmental uncertainty
environment can be described along several
dimensions, such as
 Stable
 Unstable
 Homogeneous
 Heterogeneous
 Simple
 Complex
 Resource availability
 Growth

8. Continued
Uncertainty means
 Decision makers do not have sufficient
information
 Difficult to predict external changes
 Leads to the risk of failure to respond
 Need to analyze task environment

9. Simple- complex Dimension
The simple-complex dimension relates to
dissimilarity of external elements relevant to orgs.
Ops. Complex means to deal with diverse
external elements, simple means where orgs has
to interact with similar external elements
Boeing co. is interacting with complex environment
as against a family owned hardware store faces
simple environment

10. Stable-unstable Dimension
The stable dimension means the environment
remains the same over a period f time.
The unstable dimension means environment is
dynamic and is likely to change frequently. The
environmental domain seems to be increasingly
unstable due to technological changes taking
place faster than expected
Instability also occurs when competitors react with
aggressive moves n counter moves regarding
advertising for new products.

11. Adapting to Environmental
Uncertainty
Can be achieved through internal structure n
external environment
Positions n departments
As the complexity n uncertainty in the external
environment increases, so does the number of
positions n depts. With in the co. which in turn
increases internal complexity. This relationship is
part of being open system. Each sector in the
external environment requires an employee or
dept. to deal with it.
The orgs. Need to respond positively if they want to
survive.

12. Buffering n boundary spanning
The traditional approach to coping with uncertainty
was to establish buffer depts. Buffer depts.
Surround the technical core n exchange material
,resources and money between the environment
n the organization, like purchasing dept. buffers
technical dept by stock piling supplies and raw
material.
They play enabling role to increase the productivity
n efficiency f the core depts.
Boundary spanning roles
Link n coordinate an orgs. With key elements in the
environment. Boundary spanning is concerned
with exchange of info.;

13. Continued
 Bring info. Into the orgs. About changes in the
environment
 Send info into the environment that that build
image
 Provide business intelligence
 Advertizing n sales promotion
 Public relationing
 purchaser may call on suppliers and describe
purchasing needs
 The legal dept. informs lobbyists n elected
officials orgs. Needs or political views

14. Differentiation n Integration
Differentiation
Means an autonomous depart to deal with external
affairs like in R&D dept. employees have unique
attitudes, values, goals, n education that distinguishes
them from employees in manufacturing dept. or sales
dept.
Integration
Is the quality of collaboration among depts. Integrators
or liaison officers are appointed for coordination and
information sharing. Like setting up a data base for
use of the entire org.

15. Organic vs Mechanistic Management
Process
Mechanistic
Means formalized structure, also centralized, following
rules, procedures and clear hierarchy of authority,
with most decision making at top.
Organic
The learning orgs. With horizontal n vertical network
structure are organic orgs. Suited to fast changing
environment. In these orgs. Decision making is down
loaded with authority and responsibility.

16. Planning, Forecasting, n
Responsiveness
 To enhance orgs. Ability to response to sudden changes
in uncertain environment
 it looks when every thing changing so rapidly then why
plan
 Planning and forecasting becomes more important
under such circumstances to be ready to response
 Under stable environment the org can focus on
operations
 Planning can soften the effect of adverse impact
 Planning can not substitute action

17. Frame work for orgs. Response to
uncertainty
Low uncertainty
Few departments
No integrating roles
Current ops orientation
High uncertainty
Organic structure
Many departments
Many integrating roles
Expensive planning
Low Moderate uncertainty
Mechanistic structure
Formal orgs.
Centralized
High Moderate uncertainty
Organic ,
Team work
Participative

18. Resource dependence
 Trade off between resources n autonomy
 Orgs. Are dependent on others for various resources.
 News papers are dependent on advertisers so they always keep
soft corner for news papers,
 Big cos. Like IBM n Motorola dictate terms to vendors to lower
their costs
Controlling environmental resources
 Balance between linkages n independence
 Try to modify, manipulate n controlee other orgs.
 Establish favorable linkages
 Shape the environmental domain

19. Establishing inter-organizational
linkages
 Ownership
 Contracts
 Joint ventures
 Executive exchanges
 Advertising public relations
Controlling the domain
 Change of domain
 Political activity (lobbying for favorable laws)
 Trade association
 Illegitimate activities
Orgs.- Environmental integrative frame-work
Deals with two themes
Amount of complexity n change in orgs. Domain
Scarcity of material and financial resources

20. Quiz
What is resource dependency? Explain briefly