Introduction

In our step-by-step approach, you have described the goals and strategy for your unit of analysis. In this chapter, we focus on the environment that surrounds an organization. The environment is everything outside the boundary of the organizational unit of analysis. When you think about the environment for a firm, think about what could have an effect on the way the organization performs. It could be: its customers, its competitors, its suppliers, the financial market, or the political system. If your unit of analysis is a department, then the other departments in the organization are a part of its environment. The environmental imperative states that the organizational design is determined in large part by the environment of an organization. In brief, the environment is for the most part given for a firm, and the firm should then adjust its design to fit the environment. The performance of the firm depends upon how a firm makes the organization fit with the environment. Scott (1998) calls this the rational view of organizing. This also fits with the open systems view of organizational design: