The Nature of Organizations

Lecture #2

Ripple Effects Interconnectedness between

organizations

Sears Roebuck example 1993:

Sears decided to eliminate catalog sales

Ripple effects of that decision

Ripple Effects from Sears Company that photographed home

furnishings for Sears lost sales of $400k/yr

Company that provided flowers for the photography company lost sales of $8k/yr

Ripple Effects from Sears The store that sold the film lost

sales of $10k/yr

The company that processed the film lost sales of $16k/yr

Ripple Effects of Sears The company that built the sets for

the photos lost sales of $25k/yr

The company that printed the catalogs eliminated 800 jobs

Ripple Effects of Sears The U.S. Postal Service estimated

it lost $90 - $100 million/yr in revenues from delivering the catalogs

Environmental Awareness Political

Economic

Social

Technological

Political Environment Domestic Government

Foreign Government

Legal Environment

Special Interest Groups

Economic Environment Customers

Suppliers

Competitors

Investors

Social Environment Demographics

Culture

Demographics Which state would be a good

choice to test-market products for retired people?

Venn Diagram: Music Today

Venn Diagram: NKOTB

Concert Revenues: 1989 Rolling Stones: $44 million

NKOTB: $17 million

Concert Revenues: 1990 Rolling Stones: $44 million

NKOTB: $

Back to P.E.S.T.

Technological Environment Technology Transfer

Lasers for eye surgery, dental work

Technology Transfer CDs play for approximately 75

minutes

Technology Transfer With blue lasers, CDs will play 5

hours

External Environments Political

Economic

Social

Technological

Internal Resources Financial

Physical

Human

Technological and System

Financial Resources Cash

Stocks

Bonds

Net Income

Physical Resources Plant facilities

Equipment

Raw Materials

Human Resources Specialized Personnel

Managerial Personnel

Human Resources Specialized Personnel

Managerial Personnel

Sometimes dependent on demographics

Technological and System Resources

Technological and System Resources

Technological and System Resources