ABSTRACT
This research work examined how the environment affects the
structure of an organization. It focused on the types of environment
in which the business organization operates and how to choose the
structure to match the turbulence in the environment based on Griffin
1999.
To solve the problem under investigation a study of Afribank Nigeria
Plc Enugu was undertaken. The major findings of this study are;
1,Organizations must interact with their environment in order to
survive.
2,Organizations face different types of environment.
3,Organizations respond to changes in their environment by
Creating new structures.
4,There is need for an organization to identify homogenous segment
outside the organization and respond appropriately.
5,Organizational performance is low when there is no structural
response to changes in the environment.
Based on the above findings, the researcher concluded that the
environments have impact on organization structure and hence
organization survival and recommends that the organizations should
provide flexible organization structure that will easily adapt to
changes in the environment.
CHAPTER ONE
1.0 INTRODUCTION
1.1 CONCEPTUAL FRAMEWORK
The conceptual framework of this study is drawn from business policy
and strategic management. Strategic management focuses interest
on how the general management of an organization relates such an
organization to the changes in the environment so that the
organization will not be taken by surprise, thereby, incurring
unnecessary losses due to inability to anticipate and take necessary
actions to contain the impact or ultimate consequences of
environmental changes. So, understanding the concept of business
environment is very important in understanding strategic
management responses Onwuchekwa (2000). The importance of
strategic management can be understood from the limited variety
theorem and requisite variety imperative theorem viewed from the
law of limited variety theorem (see Pondy and Mitredf, 1979). “A
system will exhibit no more than the variety to which it has been
exposed in its environment” and the requisite variety imperative
which states that the complexity and subtlety of firms response must
match the complexity and subtlety of the environment.
From the open system conception about organization, environment
has direct impact on the organizational structure Lawrence and
Lorche (1967), Thompson (1967) so, when the business environment
changes, the organization studies the pattern of expected
organizational responsiveness and respond to those changes.
1.2 BACKGROUND OF THE STUDY
Normally, changes occur in the environment of business organization
in their day to day managerial activities. Managers encounter series of
changes. Some of the changes are superiseful and unintended, and
they posses threats and opportunities for a particular organization.
So, there is a compulsory need to consider the business environment
before designing organizational structure this made many authors to
carryout studies in organization in order to determine the effect of
environment on organizational structure and how organization
attends to its environmental demand.
Churchman (1968) defines environment as something that lies
outside the organization system and determines in part how systems
performs. Onwuchekwa (1993) sees environment as those
individuals, institutions, organization suppliers who in one way or the
other render productive services to an organization but such
organization cannot control the activities of these entities. Hence
organization must adapt to the demands. Burns and Stalker (1961)
found out that the effectiveness of a particular organizational design
varies under different environment conditions. Two forms of
organizational structures know as mechanistic and organic structure
were discovered. The mechanistic structure is more effective in stable
environment while the organic structure is more effective in changing
environment.
Based on the uncertainties and changes faced by different
organization, this study will analyse different business environment
and suggest strategies for survival and maintenance of growth in
such environment.
1.3 STATEMENT OF PROBLEM
The statement of problem in this study is to investigate if changes in
the business environment have impact on organizational structure or
how do managers respond to changes in the business environment.
When the managers do not respond to changes in the environment
what happens? These are the major issues that will be studied in this
thesis. On the basis of the knowledge gained from this study, a
recommendation will be made for improvement.
1.4 OBJECTIVES OF THE STUDY
The major objectives of this study are;
1. To investigate how mangers respond to changes in the
business environment.
2. To investigate if changes in the business environment induce
structural changes within the organizational structure.
3. When business organizations adapt to changes in the business
environment do their performances increase.
4. To make suggestions on how to adapt organization to their
environment.
1.5 HYPOTHESES FOR THIS STUDY
Hypothesis One
The organizational structure of an organization does not become
more complex with structures and processes when an organization
responds to a complex environment.
Hypothesis Two
The corresponding Organisational structure of an organization will not
be simple when the environment of the Organization is simple.
Hypothesis Three
Organisational performance will not be low when the environment
expects some aspect of organizational responsiveness from the
structure and the organizational structure cannot provide that
responsiveness.
Hypothesis Four
An organization will not identify homogenous segments of the
organizational environment and respond appropriately when the
changes in the business environment are complex and shifting.
Hypothesis Five
Organisational structure will not become stable and static when the
business environment is stable and repetitive.
1.6 SIGNIFICANCE OF STUDY
The recommendation of this study will be to magnify the
environmental factors that affect the operative activities of an
organization and the strategies to be adopted by the organization in
dealing with those environmental influences in order to maintain a
maximum level of performance. Consequently, this study will also
enable the management to learn how to reduce structural
complexities by choosing appropriate structure that matches the
turbulence which the organization faces overtime.
Finally, it will add to existing literature in Business Administration and
management and also be a reference material for further research on
business management and environmental influence.
1.7 MOTIVATION FOR THE STUDY
The motive behind this study is paramount to the high level of
influence of environment on organizational structure and these may
affect the organization from accomplishing its stated goals. Business
organizations encounter series of changes in their environment. Some
of the changes are surpriseful and unintended and these posses a lot
of threats and opportunities for a particular organization depending
on how they respond to changes.
The researcher was also motivated to choose this topic in order to
find out how consistent the previous findings on these issue and also
to identify and recommend to organizations on how to respond to
constant environmental Changes and influences in order to survive.
1.8 FORMAT OF THIS STUDY
This study will be divided into five (6) chapters for easy
understanding. The headings under the chapters will include;
1. Chapter One – Introduction
2. Chapter Two – Literature Review
3. Chapter Three – Design and Methodology
4. Chapter Four – Data Presentation and Analysis
5. Discussion from the findings on the effect of environment on
organization structure.
6. Chapter Five – Findings, Conclusions and Recommendation
1.9 DEFINITION OF TERMS AND CONCEPTS
1. ORGANIZATION: It is the association of two or more
people working together towards a common purpose under
leadership and authority.
2. BUSINESS ORGANIZATION: It is an organization that is
primarily oriented towards economic production, which aims
towards long survival through effective structural
development and efficient economic performance.
3. ORGANIZATIONAL STRUCTURE: It is the way in which
an organization activities are divided, grouped and
coordinated into relationship between managers and
employees, managers and managers.
4. ENVIRONMENT: They are the institutions or forces outside
the organizations that potentially affects the organization
performance but are not subjected under their control.
5. DOMAIN: It is the sphere of action through which an
organization carries out its economic activities.
6. MANAGEMENT: it is a process of organizational design. it
is also defined as the process of planning, organizing,
leading and controlling the efforts of organization members
and the using all other organizational resources to achieve
stated organizational objectives.
7. STRATEGIC MANAGEMENT: It is increasingly the
responsibility of management to respond to changes in the
business environment through strategic planning, capability
planning, strategic issue management and management of
resistance to change.
8. ENVIRONMENTAL CONSTRAINTS: These are
uncertainities facing business organizations, which if not
properly managed can increase environmental dependence
and reduce organizational effectiveness.
9. STRATEGY: It is a pattern in a stream of decisions or
actions, the pattern being a product of whatever intended
(planned) strategies are actually realized and of any
emergent (unplanned) strategies.
10. INFORMATION MANAGEMENT: It is a way in which the
organization adapts to the environment.
11. TECHNOLOGY: It is the means through which an
organization produces product and it is the complex of
techniques for manipulating materials in a
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