Do Business Well

Since the pioneering work of Burns and Stalker (1961), it has been accepted that unpredictable market and technological environments may require ‘organic‘ organizational structures rather than the more traditional ‘mechanistic’ forms best suited to more stable conditions.

• An example of a ‘mechanistic’ structure would be the hierarchical and functionally divided arrangements still common in long-established organizations such as banks.
• An example of an ‘organic‘ structure would be the creation of flexible cross-functional project teams within a firm to develop specific new products as the occasion demands.

The assumption is that organic structures can generate a high degree of ‘fit’ between the external environment and the internal organizational form. However, the scenario of organic structures enabling ‘matching’ to take place with changing external conditions is increasingly problematic for several reasons:

• The capacity to ‘read’ the requirements of the external environment is seen as relatively straightforward.
• The boundary between the external environment and the organization is assumed to be clear and distinct.
• The achievement of optimum ‘fit’ is regarded as a stable and sustainable configuration.

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The key role of research in effective marketing planning was introduced. The marketing audit comprises research and analysis of the internal and external environment as follows:

• The internal audit reviews existing marketing activities and assesses their effectiveness in terms of contribution to revenue, brand enhancement, customer service, customer retention, market share or sales leads.
• The external audit considers the micro-environmental influences (customers, suppliers, partners, distributors and competitors) and macro-environmental influences (political, economic, social, technological and legal) within which the company operates.

The circles representing different aspects of the business environment show that from a company’s perspective, the various components of the micro-environment are intimately connected with the operations of its business, but the macro-environment is one step removed. This means that a company has some degree of control over the micro-environmental influences, but cannot directly influence the ‘bigger picture’ of the macro-environment, which would include such issues as interest rate changes, new legislation, etc. By conducting a marketing audit, a company can at least monitor and be aware of the implications of likely changes in the macro-environment, even if it cannot directly control them.

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