Managing External Dependence

Abstract

The article discusses an organization's external dependence and basic approaches to managing external elements such as supply chains, bank loans, competition for market share and customers, a major stockholder, and labor markets. Two ways to manage external dependence are: to reduce external demands and increase countervailing power by the choice of a domain or niche market for products or services, expansion through diversification, favorable relations with external elements, and control of operations in the domain; and to minimize the cost of complying with external demands by modifying organizational design to adapt to the external environment.