___ .~.,- A vital of the external environment. inviting both independent and cooperative actions. is climate change."2 Scientists are certain and unied in the knowledge that global warming and severe weather events are worsening, and that carbon emissions are the overwhelming cause.'33 Climate change harms not just the iconic polar bear and other wildlife. but just about every aspect of human existence. from food and water to human migration. conflict. and local economies.64 Even managers who don't "believe\" or care about climate change must consider sustain- able practices and products due to pressure from customers, competitors, and investors Whatever their opinions about climate change and other societal issues. managers have to decide how to deal with them. Chapter 5 asks you to think about ethics and corporate responsibilities, broad domains that include climate change and other difcult challenges. Adapting to the Environment: Changing the Organization To cope with environmental uncertainty and change. organizations can adjust their struc- tures and work processes. To cope with changing circumstances. organizations can establish more exible structures. In today's business world. the term burearu'mqr generally has a bad connotation. Most of us recognize that bureaucratic organizations tend to be formal and stable; frequently they are unable to adjust to changes or exceptional circumstances that don't \"t the rules." Although bureaucratic organizations can be efcient if the environ ment is stable. they tend to be slow-moving and plodding. When products. technologies. customers. or competitors are changing. organic structures give organizations the exibility to adjust to change. We will discuss organic structures in more detail in Chapter 9. Adapting at the Boundaries Because they are open systems, organizations are exposed to uncertainties regarding both their inputs and outputs. To compete, they can cre- buffering ate buffers on both the input and output boundaries with the environment. Buffering creates Creating supplies of excess supplies of excess resources to meet unpredictable needs. resources in case of On the input side. organizations establish relationships with employment agencies to unpredictable needs. hire part-time and temporary help during rush periods when labor demand is difcult to The External and Internal Environments Chapter 2 57 predict. In the United States. these workers. known as contingent workers. buffer labor input uncertainties.\" 0n the output side of the system. most organizations use inventories that allow them to keep merchandise on hand in case a rush of customers decide to buy their products. Auto dealers are a common example of this use of buffers. but we see buffer inventories in fast- food restaurants. bookstores. clothing stores. and even real estate agencies.\" Organizations also may try smoothing. or leveling fluctuations occurring at environmen smoothing tal boundaries. For example. during winter months in the north. when automobile sales drop Leveling normal fluctuations off. dealers cut the price of their instock vehicles to increase demand. At the end of each at the boundaries of the clothing season. retailers discount their merchandise to make room for incoming inventories. environment. Such smoothing helps reduce demand fluctuations. making it more Predictable. In today's business world, the term Adapting at the Core BulTerinc and smooth- bureaucracy generally has a bad connotation. ing manage uncertainties at system boundaries. firms also can establish exible processes that allow for . adaptation in their technical core. For example. firms customize their goods and services tiextble processes to meet the varied and changing demands of customers. Even in manufacturing. where it is Methodsfor adapting the difficult to change basic core processes. firms adopt techniques of mass customization that technical COTE '0 Changes in help them create flexible factories. Instead of mass-producing large quantities ofa "one-size- the enVlmnmem- fitsall" product. organizations use mass customization to produce individually customized products at low cost. Bottom Line Whereas Henry Ford used to claim that "you could have a Model T in any color you online shoppmg lets wanted. as long as it was black." auto companies now offera wide array ofcolors. trim lines. customers quickly find accessories. and navigation and onboard entertainment options. Mass customization uses 21 products at the cost and network of independent operating units to perform a specific process or task such as mak quality 'GVEIS They wamv ing a dashboard assembly on an automobile. When an order comes in. different modules What mtgm \"WEXIDFE processes\" mean for a groceries home delivery company? join forces to deliver the product or service as specified by the customer."7 We will discuss mass customization and exible factories in more depth in Chapter 9. Choosing an Approach In choosing your approach to managing the external environment. three general consid- ' erations provide guidance. First. environmental actions are most useful when aimed at elements of the environment that (i) cause the company problems. (2) provide it with opportunities. and (3) allow the company to change successfully. Second. organizations should choose responses that lit the environmental component of interest. Competitive actions help manage the competitive environment. political action influences the legal environment.\" and contracting helps manage customers and suppliers. Third. companies should choose actions that offer the most benefit at the lowest cost. Return-on-investment calculations should incorporate short-term financial considerations as well as long-term impact. Strategic managers who consider these factors carefully will more effectively guide their organizations to competitive advantage