Essays on Altering Environment, Part 1

Essays on Altering Environment, Part 1
Essays on Altering Environment, Part 1
The following essay talks about vertical and horizontal mergers and their impact on the organizations. Read the sample and create your own masterpiece! If you need help or any kind of assistance with writing essay, feel free to use our writing services at any time of day and night. We are open 24/7!

Vertical and horizontal mergers, diversification, and increased organizational size are the principle ways organizations restructure interdependence and achieve stability in the environment. This restructuring involves extending control over vital environmental exchanges, making other organizations more dependent on the focal organization and decreasing the need for any single critical exchange.

Pfeffer and Salancik argue that mergers are not entered into to increase profits or achieve economies of scale. Rather, organizations merge primarily to stabilize critical interactions in their environment. Vertical mergers extend organizational control over a wide variety of exchanges vital to survival, that is, reduction of symbiotic interdependence or "natural dependence between unlike organisms". Horizontal mergers increase an organization's dominance in an environment, that is, reduction of competitive interdependence or the interdependence arising from competitive relationships between two or more parties in the same industry. Diversification -- that is, the acquisition of an organization that is not in the same business -- further reduces dependence. Finally, organizational size provides an organization with more general power over its environment and encourages the development of more parties interested in its continued existence. Large organizations are more able to resist pressures for change and have more time to recognize and adapt to external threats. Also, a large organization develops groups interested in its problems, and these groups become very willing to assist in its survival.

Dependence is best reduced when its source is controlled. When mergers fail or are not possible, e.g., courts cannot merge with police, other informal or semiformal mechanisms are used to provide increased environmental stability and reduced uncertainty. These mechanisms include cooptation, trade associations, cartels, reciprocal trade agreements, coordinating councils, advisory boards, boards of directors, joint ventures, and social norms. Each element contributes to sharing power and stabilizing interdependence and is very useful when coordination is only required occasionally. A disadvantage of these informal linkages is that they provide less than complete control over other organizations. Mergers or ownerships solve the control problem directly, whereas coordination through these informal mechanisms depends heavily on voluntary behavior, and significant discretion remains with external organizations. However, these semiformal linkages provide four primary benefits: greater information about activities of other organizations impinging on the focal organization, e.g., interlocking directors of competitive companies discussing price and market strategies; greater communications channels with other organizations, e.g., a banker on the board of directors of a hospital being informed of the hospital's need for funds; increased commitments of support from one organization to the other, e.g., outside board directors becoming involved with the focal organization's problems; and legitimacy for the focal organization, e.g., prestigious outside board directors endowing the focal organization with value and worth. http://custom-essay-writing-service.org/blog/page/56

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