Organizational Absorption

Over a million managers and consultants are working together on management issues via 12manage each month...

Description of Organizational Absorption. Explanation.

Definition Organizational Absorption. Description.

Organizational Absorption is the ability or capacity of a company or organization to withstand hard, severe or turbulent circumstances by creating buffers or defense mechanism against these sudden shifts in the external or Competitive Environment. While Organizational Agility tries to deal with these circumstances in an adapting, flexible and offensive way, the focus of organizational absorption is on defensive mechanisms.

Typical ways in which organizations can build absorption capacity and weather storms or unexpected crises are (Donald Sull in HBR, February 2009):

• Low fixed costs
• War Chest
• Diversification
• Vast Size (Economies of Scale)
• Tangible Assets (raw materials deposits, real estate)
• Intangible Assets (brand, expertise, technologies)
• Customer Lock-in (high Switching Costs)
• Protected Core Market (provides safe stream of cash)
• Powerful Patron (supporting government, regulator, investor or Loyal Customers)
• Excess Staff (can be shed)

Forum

Comment on this Page

Compare with: Organizational Agility  |  Agile Absorption  |  Anti Hostile Takeover Mechanisms  |  Organizational Resilience  |  Crisis Management  |  Strategic Risk Management

Return to Management Hub: Change & Organization  |  Finance & Investing  |  Knowledge & Intangibles  |  Strategy

More on Management  |  Return to Management Dictionary  | 

End of description Organizational Absorption. An explanation.