Organizations Pursuit of Continuing Resources from their Environment - Research Paper Example

Organizations’ Pursuit of Continuing Resources from their Environment Table of Contents Introduction 2 Research objectives 2 Methodology 2 Analysis and Discussion 4 Conclusion 9 Bibliography 10 Introduction Organizations are competing in the same environment for the scarce and limited resources. These organizations adopt different forms to compete for the available resources. The forms nature of the organization forms vary depending upon their probability of being positively chosen. The positively chosen forms of organizations have a better for with the environment as compared to the organization forms which do not survive. In the highly competitive global environment, survival of organization by ensuring their access to limited resources has become more important as compared to the overall organizational effectiveness. However, successful organizations enjoy the growth and organizational effectiveness. With the increasing globalization, the competition among the organizations is increasing because in the previous years, only a few organizations used to compete for the resources in a specific geographical location whereas, today, the organizations across the geographical region can also enter to compete for resources. The aim of this study is to discuss the organizations’ pursuit of continuing resources from their environment. How organizations compete for resources? What are the consequences and costs of obtaining resources? How the attainment of resources varies based on the type of organization, environment and organizations’ stages of development? In this research study, the answers to all of these questions will be given. Research objectives Following are the research objectives of this research study. The primary aim of this research study is to determine the ways through which organizations compete for the resources in the same environment This research also aims to highlight the consequences and costs of obtaining resources from the environment Another objective of this research study is to determine whether the attainment of resources varies based on the kind of organization, environment and stages of development of organizations or not. Methodology In order to investigate the research objectives in this research study, a qualitative research methodology has been used. The secondary information and the research work of the other researchers have been used. The academic publications, theoretical framework, real examples and empirical research have been used to determine the answers to the mentioned questions. Because of the nature of the study and the adopted methodology, the critical analysis approach has been used to quantitatively analyze the collected data and literature. Analysis and Discussion The organizations are highly dependent on their environment to attain the resources for their survival and growth. The interdependence exists between the organizations and environment in the form of transactions, in which the limited resources are exchanged under a competitive environment. Since the organizations compete for these resources therefore, to what extent they have been able to access the resources over a period time, determine their success and organizational effectiveness (Yuchtman & Seashore, 1967).Various relationships exist among organizations such as cooperation, conflict and others and these relationships can be explained in terms of competition for autonomy and resources (Clark & Wilson, 1961). Therefore, in order to access the limited and scarce resources, the organizations compete for resources through various ways. The overall effectiveness of organizations depends on how they compete and to what extent they get successful. How organizations compete for resources and what are the costs and consequences of obtaining resources? Since organizations’ dependence can vary based on the nature of resources which they want for their operations and productivity therefore, their nature of competition also varies. The three primary resources, for which the organizations compete, include skilled workers, raw materials and finances. Australian economy is facing a steady low unemployment rate which is leading to the slowdowns of businesses and also showing the infrastructure initiatives (such as mining, health care and road improvements) of Australian federal government quit vulnerable. Although the economy has access to raw material and finances however, skills shortage in the mentioned industries is the major problem which the economy is facing. In order to compete for the skilled labor the Australian companies are offering higher pay packages to attract the labor (Roxas, 2010). The rivalry among the Australian companies for resources is not only increasing the labor costs for the company but it is also changing the pay structure of the market by indirectly forcing the other companies to offer the same pay scales to attract the labor. A similar situation is being faced by Germany where the industries are facing shortage of labor resources because of the declining birth rate and 70 percent of the companies report that they face problems in finding skilled labor. According to DELO Executive Director Sabine Herold of a company located near Munich, the company is trying to build close relationships with the universities and vocational training institutes and sponsoring events like business programs in the high schools to compete for skilled labor (Fuhrmans, 2010). Since labor shortage has become a threat for German economy therefore, government is promoting the foreign skilled labor. The government strategy is increasing diversity in the economy and cultural changes are taking place in the economy. Competition among the companies to access the raw material is increasing because of the limited natural and other resources. More than 2,200 companies are operating in the Vietnam Plastic Industry and in the last decade the growth in the industry has been between 15 and 25 percent per year. The Vietnamese plastic manufacturers use imported raw material which account for around 70 percent of their total production costs. The increasing dependence on these makers on imported raw material and unstable supply of raw material has enhanced the competition among the companies. Therefore, to keep the supply of raw material consistent, the makers are competing for the plastic waste, so that raw materials could be recycled (VBN, 2010). As a result of this competition for raw materials, the plastic recycling industry is expanding in Vietnam According to a recently published report of European Commission; availability of 14 raw materials has become critical because of the increasing demand of raw materials in the developing countries and because of new emerging technologies. The decline in the raw material resources has been attributed to low sustainability and low recycling rates. The decline in the supply of these materials can severely influence many of the European industries therefore; European Commission has provided a guideline to companies operating in Europe to access the resources. These guidelines suggest enterprises to play fairly in the external markets, to develop a good framework to foster sustainable raw materials supply, to improve resource utilization efficiency and to use recycling (Evertiq, 2010). As a result of this competition, the enterprises in Europe may indulge in unfair means of competition which can increase corruption and other social and economic issues. The third primary resource for any organization is the source of finance. Because of the increasing competition among organizations to access capital and finances, they rely on different means and ways. The competition to access finances is particular important in the non-profit sector such as NGOs. For example, many national and international NGOs are operating around the world and they compete for the sources of finance in the developing economies. By developing proposals, projecting their costs and showing their objectives, NGOs tend to convince their donors for financial support. Since all NGOs operate for the benefit of society therefore, one can assume a good collaboration and support among NGOs. However, in real picture, the NGOs are competing for the financial support and they are reluctant to collaborate with each other and support each other (Guler, 2008). If the NGOs fall in unfair competition for their self-interests such as expansion, then it can harm the deserving people as the funds will not be allocated for the right purposes. Therefore, organizations compete with each other for different resources through different means and not only the individual enterprises bear the costs and consequences of this competition but the entire society and people become the victims. How the attainment of resources varies based on the type of organization? The organizations can be classified into various types depending on their size, nature of organizational structure, nature of business, nature of industry etc. The nature of the organizations can also place the organizations in a better position to compete in the fast-changing global environment. The large organizations have better access to huge resources and economies of scales as compared to the small firms for example, only the large companies in Alaska has resources to build a massive pipeline (Daft, Organization Theory and Design, 10th Edition, 2009). The rapid internationalization of the bigger multinational giants and their movements towards China and developing economies to access cheap labor raw material shows the power of these companies. Small companies cannot think of getting international and get access to cheap labor of the developing economies that easily. These two examples actually show that size of the companies matter. Let me take the example of PC Industry to further elaborate on this point. In the world’s PC Industry, the PC makers like Dell, HP and Gateway are dependent on the memory chips and microprocessors manufacturing companies including Samsung and Intel (Jones & Mathew, 2009). Since these are the two major suppliers of the resource such as memory chips therefore, they enjoy the monopoly in the industry, has the greater power to influence the dependent organizations and they are in a better position to compete for the resources and opportunities. How the attainment of resources varies based on environment? The attainment of resources varies because the supply of the resources is primarily dependent on three factors including the complexity, dynamism and richness of the environment (Jones & Mathew, 2009). They argue that the type of environment changes as a change in the economic structure; lose of existing important customers, entrance of new competitors in the market. As a result the resources become more limited and scarce because uncertainty in environment increases. In this way the responsiveness of the companies to the changing environment for the attainment of the resources also change. The given table shows how resource attainment can differ based on environment. Environments can be classified into various dimensions which describe the content of organizations and affect their responses. Since organizations need information from environment to relate themselves to their environment therefore, based on information uncertainty, the dimensions of environment can be determined (Cummings & Worley, 2008). Environmental Dimensions and Organizational Transactions Resource Dependence Information uncertainty Low High Low Minimal environmental constraint and need to be responsive to environment Moderate constraint and responsiveness to environment High Moderate constraint and responsiveness to environment Maximal environment constraint and need to be responsive to environment Source: Cummings & Worley, 2008 The information uncertainty in the global environment is increasing because of the increasing uncertain global environment and rapidly changing market structures. Companies have adopted more and more smart ways to compete. The dependence of business executives is increasing the processes like competitive intelligence which allow the business executives to collect and use the public information about their rivals to make better decisions (Daft, 2009). Christopher Sheehan, director of M&A research at HIS, many oil and gas companies in 2010 focused on restructuring and expanding their portfolios after seeing and improvement in the global economy. The improvement in the global economy endangered the confidence of these companies in steady high oil process (OGJ editors , 2010). Moreover, as a result of high dependence of these companies on resources in a relatively high uncertain environment (because of lack of information), the companies changed their forms. How the attainment of resources varies based on organizations’ stages of development? The competition among the companies for the attainment of resources also varies based on the organizations’ stages of development. For example, the green concerns are increasing for the car manufacturers. Car makers are investing in green technology to improve their social image and corporate social responsibility. The demand of electric-powered vehicles has increased and various startups are taking interest to enter into the industry. However, these startups face huge competition from the big auto giants like Toyota and General Motors. General Motors has invested millions of dollars in bringing its electric-vehicle in the market by 2012 and GM is better able to compete with the small startups for electric transportation and distribution network (Staff, 2009). The higher the monopoly in an industry, the survival of the small companies becomes more difficult. At their early growth stage, the companies may face very severe competition from the existing companies who are at their maturity because they have already established their networks and they are in a better position to compete for resources. Because of the attractiveness of the Japanese retail industry, the world’s retail giants have started moving towards the Japanese market. The Japanese government has enhanced the laws and regulations to save the small and new businesses in the Japanese retail sector. The government has imposed a law of limited space because of which no retail chain can establish the stores greater than to a certain size limit (Guffey, 2008). Through this step, Japanese government discourages monopoly in the Japanese retail sector and encouraged competitive environment. The government has take this step because the expansion of large retailers like Walmart will reduce the ability of small companies to compete for resources. Conclusion Based on the above analysis, it can be concluded that organizations are highly dependent on their external environment for the resources like skilled labor, raw material and finances. The ability of the organizations to access the resources determines the success and effectiveness of the organization in the highly competitive environment. Since the resources are limited therefore, companies compete for the resources. The nature of this competition varies based on various factors such as nature of resources, nature of companies, nature of environment and stage of organization development. The organizations should play very fairly for these resources because the consequences and costs of the competition are not only faced by the individual organizations but the whole society and the people face the results. Bibliography Clark, P. B., & Wilson, J. Q. (1961). Incentive Systems: A Theory of Organizations. Johnson Graduate School of Management, Cornell University , Vol. 6, No. 2, pp. 129-166. Cummings, T. G., & Worley, C. G. (2008). Organization development & change, 9th Edition. Cengage Learning. Daft, R. L. (2009). Organization Theory and Design, 10th Edition. Cengage Learning. Daft, R. L. (2009). Organization Theory and Design, 10th Edition. Cengage Learning. Evertiq. (2010, June 21). EU warns on 14 raw material shortage. Retrieved January 5, 2011, from http://www.evertiq.com/news/17210 FUHRMANS, V. (2010, August 8). Germany Suffers a Labor Shortage. Retrieved January 4, 2011, from http://www.d-transition.info/western-demographic-winter-2/germany-suffers-labor-shortage-15/ Guffey, E. M. (2008). Business Communication Process and Product. 6th Edition. . Cengage Learning. pp.80. Guler, E. (2008, February 18). HOW TO IMPROVE NGO EFFECTIVENESS IN DEVELOPMENT? A DISCUSSION ON LESSONS LEARNED. Retrieved January 6, 2010, from http://www.ngomanager.org/dcd/2_Organisational_Development/Capacity_building/NGO_Effectiveness.pdf Jones, G. R., & Mathew, M. (2009). Organizational Theory, Design and Change, 5/e. India: Pearson Education. OGJ editors. (2010, Januray 5). IHS: Global upstream sales hit record $107 billion in 2010. Retrieved January 4, 2011, from http://www.ogj.com/index/article-display/9074359844/articles/oil-gas-journal/general-interest-2/economics-markets/20100/01/ihs_-global_upstream.html Roxas, R. (2010, October 17). Australian businesses dangle higher wages to compete for dwindling skilled workers. Retrieved January 4, 2011, from http://www.ibtimes.com/articles/72748/20101018/australian-businesses-dangle-higher-wages-to-compete-for-dwindling-skilled-workers.htm Staff, G. (2009, Januray 14). E-Car stratups try to compete with major car companies. Retrieved January 6, 2010, from http://www.greenmomentum.com/wb3/wb/gm/gm_content?id_content=1080 VBN. (2010, April 26). Plastics industry struggles to compete. Retrieved January 5, 2011, from http://vietnambusiness.asia/plastics-industry-struggles-to-compete/ Yuchtman, E., & Seashore, S. E. (1967). A System Resource Approach to Organizational Effectiveness. American Sociological Association , Vol. 32, No. 6, pp. 891-903. Read More