Introduction

The formula for business success requires two elements - the individual and the environment. Remove either value and success becomes impossible. Business environment consist of all those factors that have a bearing on the business. The term 'business environment implies those external forces, factors and institutions that are beyond the control of individual business organizations and their management and affect the business enterprise. It implies all external forces within which a business enterprise operates. Business environment influence the functioning of the business system. Thus, Business environment may be defined as all those conditions and forces which are External to the business and are beyond the individual business unit, but it operates within it. These forces are customer, creditors, competitors, government, socio-cultural Organizations, political parties national and international organizations etc. some of those Forces affect the business directly which some others have indirect effect on the business. Features of business environment Totality of external forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature. Specific and general forces: Business environment includes both specific and general forces. Specific forces affect individual enterprises directly and immediately in their day-to-day working. General forces have impact on all business enterprises and thus may affect an individual firm only indirectly. Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market. Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries. Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan.

TYPES OF ENVIRONMENT:
On the basis of the extent of intimacy with the firm , the environmental factors may be classified into different types-internal and external. INTERNAL ENVIRONMENT: The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the company has control over these factors. It can alter or modify such factors as its personnel, physical facilities, and organization and functional means, like marketing, to suit the environment. The important internal factors which have a bearing on the strategy and other decisions of internal organization are discussed below. Value system: The value system of the founders and those at the helm of affairs has important bearing on the choice of business, the mission and the objectives of the organization, business policies and practices. Mission and vision and objectives: Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved. Management structure and nature: The structure of the organization also influences the business decisions. The organizational structure like the composition of board of directors , influences the decisions of business as they are internal factors . The structure and style of the organization may delay a decision making or some other helps in making quick decisions. Internal power relationships: The relationship among the three levels of the organization also influences on the business. The mutual co-ordination among those three is a an important need for a business. The relationship among the people working in the three levels of the organization should be cordial.

Human resource: The human resource is the important factor for any organization as it contributes to the strength and weakness of any organization . the human resource in any organization must have characteristics like skills, quality, high morale, commitment towards the work , attitude, etc. T he involvement and initiative of the people in an organization at different levels may vary from organization to organization. The organizational culture and overall environment have bearing on them. Company image and brand equity: The image of the company in the outside market has the impact on the internal environment of the company. It helps in raising the finance , making joint ventures , other alliances, expansions and acquisitions , entering sale and purchase contracts , launching new products, etc. Brand equity also helps the company in same way. Miscellaneous factors : The other factors that contribute to the business success or failure are as follows: Physical assets and facilities :- facilities like production capacity, technology are among the factors which influences the competitiveness of the firm. The proper working of the assets is indeed for free flow of working of the company. Research and development: - Though R&D department is basically done external environment but it has a direct impact on the organization. This aspect mainly determine the companys ability to innovate and compete. Marketing resources: - Resources like the organization for marketing, quality of the marketing men, brand equity and distribution network have direct bearing on marketing efficiency of the company. Financial factors :- factors like financial policies . financial positions and capital structure are also important internal environment affecting business performances , strategies and decisions. EXTERNAL ENVIRONMENT : It refers to the environment that has an indirect influence on the business. The factors are

uncontrollable by the business. There are two types of external environment. Micro Environment : The micro environment is also known as the task environment and operating environment because the micro environmental forces have a direct bearing on the operations of the firm.The micro environment consist of the actors in the companys immediate environment that affect the performance of the company. These include the suppliers, marketing intermediaries, competitors, customers and the public The micro environmental factors are more intimately linked with the company than the macro factors. The micro forces need not necessarily affect all the firms in a particular industry in the same way. Some of the micro factors may be particular to a firm. When the competing firms in an industry have the same micro elements, the relative success of the firms depends on their relative effectiveness in dealing with these elements Suppliers : An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. The importance of reliable source/sources of supply to the smooth functioning of the business is obvious. Customer : The major task of a business is to create and sustain customers. A business exists only because of its customers. The choice of customer segments should be made by considering a number of factors including the relative profitability, dependability, stability of demand, growth prospects and the extent of competition. Competition not only include the other firms that produce same product but also those firms which compete for the income of the consumers the competition here among these products may be said as desire competition as the primary task here is to fulfill the desire of the customers. The competition that satisfies a particular category desire then it is called generic competition.. Marketing Intermediaries :

The marketing intermediaries include middlemen such as agents and merchants that help the company find customers or close sales with them. The marketing intermediaries are vital links between the company and the final consumers . Financiers : The financiers are also important factors of internal environment. Along with financing capabilities of the company their policies and strategies, attitudes towards risk , ability to provide non-financial assistance etc. are very important. Public ; Public can be said as any group that has an actual or potential interest in or on an organizations ability to achieve its interest. Public include media and citizens. Growth of consumer public is an important development affecting business. Macro Environment : Macro environment is also known as General environment and remote environment. Macro factors are generally more uncontrollable than micro environment factors. When the macro factors become uncontrollable , the success of company depends upon its adaptability to the environment. Some of the macro environment factors are discussed below: Economic Environment : Economic environment refers to the aggregate of the nature of economic system of the country, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating prospective market situations and makes suitable to get the maximum with minimize cost. Social Environment : The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, mobility of labor etc. have farreaching impact on the business. These factors determine the work culture and mobility of labor, work groups etc. Political Environment : The political environment of a country is influenced by the political organizations

such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc. . The political environment of the country influences the business to a great extent. Legal Environment : Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to a great extent. Technical Environment : The business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used. Technological environment influences the business in terms of investment in technology, consistent application of technology and the effects of technology on markets.

ANALYSIS OF INTERNAL & EXTERNAL ENVIROMENT

The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets. Any analysis of company strengths should be market oriented/customer focused because strengths are only meaningful when they assist the firm in meeting customer needs. Weaknesses refer to any limitations a company faces in developing or implementing a strategy (?). Weaknesses should also be examined from a customer perspective because customers often perceive weaknesses that a company cannot see. Being market focused when analyzing strengths and weaknesses does not mean that non-market oriented strengths and weaknesses should be forgotten. Rather, it suggests that all firms should tie their strengths and weaknesses to customer requirements. Only those strengths that relate to satisfying a customer need should be considered true core competencies. (Marketing and Its Environment, pg 44) The following area analyses are used to look at all internal factors effecting a company:

Resources: Profitability, sales, product quality brand associations, existing overall brand, relative cost of this new product, employee capability, product portfolio analysis Capabilities: Goal: To identify internal strategic strengths, weaknesses, problems, constraints and uncertainties The External Analysis examines opportunities and threats that exist in the environment. Both opportunities and threats exist independently of the firm. The way to differentiate between a strength or weakness from an opportunity or threat is to ask: Would this issue exist if the company did not exist? If the answer is yes, it should be considered external to the firm. Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted upon properly. That is, opportunities are situations that exist but must be acted on if the firm is to benefit from them. Threats refer to conditions or barriers that may prevent the firms from reaching its objectives. (Marketing and Its Environment, pg 44) The following area analyses are used to look at all external factors effecting a company: Customer analysis: Segments, motivations, unmet needs Competitive analysis: Identify completely, put in strategic groups, evaluate performance, image, their objectives, strategies, culture, cost structure, strengths, weakness Market analysis: Overall size, projected growth, profitability, entry barriers, cost structure, distribution system, trends, key success factors Environmental analysis: Technological, governmental, economic, cultural, demographic, scenarios, information-need areas Goal: To identify external opportunities, threats, trends, and strategic uncertainties The SWOT Matrix helps visualize the analysis. Also, when executing this analysis it is important to understand how these element work together. When an organization matched internal strengths to external opportunities, it creates core competencies in meeting the needs of its customers. In addition, an organization should act to convert internal weaknesses into strengths and external threats into opportunities. SWOT Focus on your strengths. Shore up your weaknesses. Capitalize on your opportunities. Recognize your threats.

EXTERNAL ENVIRONMENT CAN BE DIVIDED INTO TWO PARTS:

GENAREL ENVIRONMENT:
The general environment in which a firm exists is demographic, economic, global, political/legal, technological and sociocultural. Using the company Verizon wireless, apply the analytical techniques for monitoring the general environment. Discuss one key trend from each of the categories from the General Environment segments that will likely have a significant impact on the industry in the next five years. Explain clearly why you think this trend will be important, in a sentence or two, with each of the six items.

TASK ENVIROMENT:
The task environment of a company is basically the environment and the factors in the environment that affect the working of the organization in terms of diet The task environment consists of Suppliers, distributors, customers and competitors. Thus, the factors that directly influence the working of a company from the outside are called external task environment. The competitors, suppliers and distributors are considered as external task environment Environmental Analysis An environmental analysis is the four dimension of the External Analysis. The interest is in environmental trends and events that have the potential to affect strategy. This analysis should identify such trends and events and the estimate their likelihood and impact. When conducting this type of analysis, it is easy to get bogged down in an extensive, broad survey of trends. It is necessary to restrict the analysis to those areas relevant enough to have significant impact on strategy. This analysis is divided into five areas: economic, technological, political-legal, sociocultural, and future. Economic: What economic trends might have an impact on business activity? (Interest rates, inflation, unemployment levels, energy availability, disposable income, etc)

Technological:To what extent are existing technologies maturing? What technological developments or trends are affecting or could affect our industry? Government: What changes in regulation are possible? What will their impact be on our industry? What tax or other incentives are being developed that might affect strategy development? Are there political or government stability risks? Sociocultural; What are the current or emerging trends in lifestyle, fashions, and other components of culture? What are there implications? What demographic trends will affect the market size of the industry? (growth rate, income, population shifts) Do these trends represent an opportunity or a threat? Future: What are significant trends and future events? What are the key areas of uncertainty as to trends or events that have the potential to impact strategy? Internal Analysis Understanding a business in depth is the goal of internal analysis. This analysis is based resources and capabilities of the firm. Resources A good starting point to identify company resources is to look at tangible, intangible and human resources.

HOW ENVIROMENT AFFECT ORGANIZATION

An uncontrollable environment will negatively affect any organization's efforts whatever they might be. You need to have a heavily structured method and environment to process information into relevant bits for each department to produce results. Team environments are the backbone of any organization. Nothing can work without a collaborative effort on all departments. Political/Legal forces Economic forces Competitive forces Level of technology Structure of distribution Geography and infrastructure Cultural forces 9

Self-reference criterion (SRC) The Economic factors affecting business environment Both internal and operational environment are the creation of the enterprise itself. The factors of external or general environment are broad in scope and least controlled and influenced by the management of the enterprises. Now we discuss those factors in details as below: Economic dimensions of environment Economic environment refers to the aggregate of the nature of economic system of the country, the structural anatomy of the economy to economic policies of the government the organisation of the capital market, the nature of factor endowment, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating the prospective market situations and makes suitable to get the maximum with minimize cost. Social dimensions or environment The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, cultural heritage, view toward wealth and income and scientific methods, respect for seniority, mobility of labour etc. have farreaching impact on the business. These factors determines the work culture and mobility of labour, work groups etc. For instance, the nature of goods and services to be produced depends upon the demand of the people which in turn is affected by their attitudes, customs, so as cultural values fashion etc. Socio-cultural environment determines the code of conduct the business should follow. The social groups such as trade unions or consumer forum will intervene if the business follows the unethical practices. For instance, if the firm is not paying fair wages to its business in indulging in black marketing or adulteration, consumers forums and various government agencies will take action against the business. Political environment

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The political environment of a country is influenced by the political organisations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc. political stability in the country, foreign policy, Defence and military policy, image of the country and its leaders in and outside the country. The political environment of the country influences the business to a great extent. For instance, the Government of India, bottling and sale of cocoa-cola was discontinued in India in the late seventies following policy of restricting the growth of multinationals in Indian markets. But, its entry was allowed under the New Industrial policy of 1991. Under this new policy, government allowed liberalized licensing, imports and exports, inflow of foreign capital and technology on more liberal terms. The trend towards globalization and signing of GATT in 1993 have posed new challenges before Indian business. Legal regulatory environment Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to a great extent. For instance, in 1992, the Supreme Court ordered the closure of a number of tanneries in Kanpur as they were polluting Holi Ganga. In August 1993 several foundries around the famous Taj Mahal were ordered to be closed down because of air-pollution caused by them had adverse impact on the whiteness of Taj Mahal. Technical environment The business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used. Technological environment influences the business in terms of investment in technology, consistent application of technology and the effects of technology on markets. In India, advancements in automation and information technology have posed the challenging situation for the organisation in future.

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HOW ORGANIZATION RESPOND TO THEIR ENVIROMENTS

Information Management in Organization: The functions associated with managing the information assets of an enterprise, typically a corporation or government organization. Increasingly, companies are taking the view that information is an asset of the enterprise in much the same way that a company's financial resources, capital equipment, and real estate are assets. Properly employed, assets create additional value with a measurable return on investment. Forward-looking companies carry this view a step further, considering information as a strategic asset that can be leveraged into a competitive advantage in the markets served by the company. The scope of the information management function may vary between organizations. As a minimum, it will usually include the origination or acquisition of data, its storage in databases, its manipulation or processing to produce new (value-added) data and reports via application programs, and the transmission (communication) of the data or resulting reports. Many companies include the management of voice communications (telephone systems, voice messaging, and, increasingly, computer-telephony integration or CTI), and even intellectual property and other knowledge assets. There is a significant difference between the terms data and information. Superficially, information results from the processing of raw data. However, the real issue is getting the right information to the right person at the right time and in a usable form. In this sense, information may be a perishable commodity. Thus, perhaps the most critical issue facing information managers is requirements definition, or aligning the focus of the information systems with the mission of the enterprise. The best technical solution is of little value if the final product fails to meet the needs of users. One formal approach to determining requirements is information engineering. By using processes identified variously as business systems planning or information systems planning, information engineering focuses initially on how the organization does its business, identifying the lines from where information originates to where it is needed, all within the context of a model of the organization and its functions. While information systems personnel may be the primary agents in the information engineering process,

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success is critically dependent on the active participation of the end users, from the chief executive officer down through the functional staffs. A major advantage of the application of information engineering is that it virtually forces the organization to address the entire spectrum of its information systems requirements, resulting in a functionally integrated set of enterprise systems. In contrast, ad hoc requirements may result in a fragmented set of systems (islands of automation), which at their worst may be incompatible, contain duplicate (perhaps inconsistent) information, and omit critical elements of information. Strategic Responses: When an issue is detected, there are generally six ways of responding to them: opposition strategy - try to influence the environmental forces so as to negate their impact - this is only successful where you have some control over the environmental variable in question adaptation strategy - adapt your marketing plan to the new environmental conditions offensive strategy - try to turn the new influence into an advantage - quick response can give you a competitive advantage redeployment strategy - redeploy your assets into another industry contingency strategies - determine a broad range of possible reactions - find substitutes passive strategy - no response - study the situation further

Mergers,Acquisitions,Alliances
One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind M&A. This rationale is particularly alluring to companies when times are tough. Strong companies will act to buy other companies to create a more competitive, cost-efficient company. The companies will come together hoping to gain a greater market share or to achieve greater efficiency. Because of these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone. Distinction between Mergers and Acquisitions:

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Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things. When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable. A purchase deal will also be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want to be purchased - it is always regarded as an acquisition. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders.

Synergy is the magic force that allows for enhanced cost efficiencies of the new business. Synergy takes the form of revenue enhancement and cost savings. By merging, the companies hope to benefit from the following:

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Staff reductions - As every employee knows, mergers tend to mean job losses. Consider all the money saved from reducing the number of staff members from accounting, marketing and other departments. Job cuts will also include the former CEO, who typically leaves with a compensation package. Economies of scale - Yes, size matters. Whether it's purchasing stationery or a new corporate IT system, a bigger company placing the orders can save more on costs. Mergers also translate into improved purchasing power to buy equipment or office supplies - when placing larger orders, companies have a greater ability to negotiate prices with their suppliers. Acquiring new technology - To stay competitive, companies need to stay on top of technological developments and their business applications. By buying a smaller company with unique technologies, a large company can maintain or develop a competitive edge. Improved market reach and industry visibility - Companies buy companies to reach new markets and grow revenues and earnings. A merge may expand two companies' marketing and distribution, giving them new sales opportunities. A merger can also improve a company's standing in the investment community: bigger firms often have an easier time raising capital than smaller ones. That said, achieving synergy is easier said than done - it is not automatically realized once two companies merge. Sure, there ought to be economies of scale when two businesses are combined, but sometimes a merger does just the opposite. In many cases, one and one add up to less than two. Sadly, synergy opportunities may exist only in the minds of the corporate leaders and the deal makers. Where there is no value to be created, the CEO and investment bankers who have much to gain from a successful M&A deal - will try to create an image of enhanced value. The market, however, eventually sees through this and penalizes the company by assigning it a discounted share price. We'll talk more about why M&A may fail in a later section of this tutorial.

Varieties of Mergers :

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From the perspective of business structures, there is a whole host of different mergers. Here are a few types, distinguished by the relationship between the two companies that are merging: Horizontal merger - Two companies that are in direct competition and share the same product lines and markets. Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. Market-extension merger - Two companies that sell the same products in different markets. Product-extension merger - Two companies selling different but related products in the same market. Conglomeration - Two companies that have no common business areas. There are two types of mergers that are distinguished by how the merger is financed. Each has certain implications for the companies involved and for investors: Purchase Mergers - As the name suggests, this kind of merger occurs when one company purchases another. The purchase is made with cash or through the issue of some kind of debt instrument; the sale is taxable. Acquiring companies often prefer this type of merger because it can provide them with a tax benefit. Acquired assets can be written-up to the actual purchase price, and the difference between the book value and the purchase price of the assets can depreciate annually, reducing taxes payable by the acquiring company. We will discuss this further in part four of this tutorial. Consolidation Mergers - With this merger, a brand new company is formed and both companies are bought and combined under the new entity. The tax terms are the same as those of a purchase merger.

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Acquisitions
As you can see, an acquisition may be only slightly different from a merger. In fact, it may be different in name only. Like mergers, acquisitions are actions through which companies seek economies of scale, efficiencies and enhanced market visibility. Unlike all mergers, all acquisitions involve one firm purchasing another - there is no exchange of stock or consolidation as a new company. Acquisitions are often congenial, and all parties feel satisfied with the deal. Other times, acquisitions are more hostile. In an acquisition, as in some of the merger deals we discuss above, a company can buy another company with cash, stock or a combination of the two. Another possibility, which is common in smaller deals, is for one company to acquire all the assets of another company. Company X buys all of Company Y's assets for cash, which means that Company Y will have only cash (and debt, if they had debt before). Of course, Company Y becomes merely a shell and will eventually liquidate or enter another area of business. Another type of acquisition is a reverse merger, a deal that enables a private company to get publicly-listed in a relatively short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publiclylisted shell company, usually one with no business and limited assets. The private company reverse merges into the public company, and together they become an entirely new public corporation with tradable shares. Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved.

Direct Influence of the Environment:

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An organization may attempt to change the nature of the comities conditions In its environment to suit its needs. Pursuing new or changed relationship with suppliers ,customer ,and regulators can alter the organizations environment in a way that favors the organization.

Organizational Design and Flexibilty: A. Good organizational design promotes clear lines of authority; responsibilities coupled with corresponding authorities; flexibility to adjust to changing conditions, missions, and technologies; free flowing communications and ideas up and down the chain and between work units; cooperation and trust; smooth and timely flow of work; employee understanding of the mission and responsibilities of the organization; and cost efficiency. All positions in an organization should facilitate the organizations mission, with the workload fairly distributed to the greatest extent possible, so that all employees are kept busy but not overloaded. The structure of the organization should reflect a balance between effectiveness and economy. The following questions can help in planning for both gaining and losing organizations: What work cannot be assigned to other units or reconfigured without degrading mission essential operations? How can flexibility to meet workload shifts and new requirements be maintained? How many and what levels of supervisors are needed to oversee and guide the workforce, while allowing employees discretion appropriate to the type of work? What is the proper balance between direct mission work and support work? Does the organizations structure allow for employee growth and career progression? Does the assignment of higher-level work among employees maximize employee skills? How well will the proposed structure and workflow of the organization promote communication, decision-making and flexibility? Losing organizations in particular should consider these points: How many intern and other developmental positions must be retained despite righ sizing to ensure future leadership?

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 How can a diminished workforce be structured so that knowledge and information important to the changed mission is retained and passed on to new employees? . The obverse is poor organizational design, which eventually leads to problems in many areas affecting managers, employees, customers, and the organization itself. A poorly designed organization is often characterized by bottlenecks and backlogs, employee frustration, excessive turnover and absenteeism, recruiting problems, internal conflict and mistrust, low productivity, high error rates, duplication of effort, problems in assigning responsibility and accountability, and high costs. Three typical problems in organization design are fragmentation, excessive layering, and poorly designed spans of control. Fragmentation occurs when the organization is unnecessarily split into many small segments. Small units may be so specialized that they restrict employees ability to contribute to the mission beyond their immediate task. Communications between units is restricted and efficiency is reduced. There is difficulty in adjusting to workload fluctuations. Questions of whos responsible and whos in charge result. Excessive layering occurs when the organization has too many levels in the chain of command. Top management is often unaware of how or why decisions at lower levels have been made. They are unaware of controversies and proposed alternative solutions. Innovations and ideas have difficulty reaching top management since they are screened by multiple intervening supervisory layers. Lower level supervisors and employees have little freedom or discretion and often become frustrated. Span of control issues arise when there are too many supervisors in an organization (narrow span) or too few (broad span). An overly narrow span stifles initiative and dampens individual responsibility for work quality; it also increases overhead expenses. An overly broad span slows workflow, can result in snap decisions and too much time putting out fires rather than planning work, and lead to manager burnout. A subset of both excessive layering and overly narrow span of control is creation of unnecessary deputy and special assistant positions. This produces duplication of effort, overlap of responsibility, and concomitant issues of accountability. Communications and workflow are slowed, and overhead expenses increase.

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A set of scenarios illustrating poor organizational design, with accompanying discussion points, is available in hard copy. The scenarios can be used as exercises or springboards for discussion in training courses.

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