THE EFFECT OF ENVIRONMENT ON ORGANIZATIONAL STRUCTURE A STUDY OF AFRIBANK NIGERIAN PLC, ENUGU REGIONAL OFFICE

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.