Organization?

n What?
n Why?

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 Value Creation
n Value creation takes place at three stages:
input, conversion and output


n Inputs: people, skills, knowledge, r/m,

capital
n Conversion: manner of using people
and technology that converts input
into output
n Output: finished product produced that
is used by the environment

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Why need an Organization? Why not ithe
entrepreneur/individual?

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Why an Organization? Why not
individual?

n Specialization and Division of Labor

n Large-scale use of technology
n Economies of scale

n Economies of scope (different products

with same facilities, same assembly

lines)
n Manage external environment effectively
n Lower transaction costs
n Exercise Power and Control

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Organizational Theory

n how organizations function

n how they affect and are
affected by the environment
in which they operate

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Organization Structure

n the formal system of task and authority

relationships that
n control how people coordinate their
actions and use resources
n to achieve organizational goals

Can you relate this to the case?

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Organization Culture

n the set of shared values and norms that

n control organizational members’ interactions
with each other and with suppliers,
customers, and other people outside the
organization

Bureaucrat ic? Rule Bound? HRD

Orient ed?

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Organization Design

n the process by which managers select and

manage
n aspects of structure and culture so that
n an organization can control the activities
necessary to achieve its goals

Market Orientation?, Management of Change – Change

What? Technology, Automation, Work Culture, Product
Groupings/Managers

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Organizational Change

n the process by which organizations move

from their present state to some desired
future state to increase their effectiveness

Why Modernize? What happens when Modernization Takes

Place? Why change ‘whole systems’? Why change from a
divisional structure to a Product Structure? And how do you
do it? What is happening with BSNL?

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Importance of Organizational Design and
Change
n Dealing with contingencies
n Gaining competitive advantage
n The ability to outperform other

companies because of the capacity to

create more value from resources
n Core competences

n Strategy

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n Managing diversity
n Differences in the race, gender, and

national origin of organizational

members have important implications
for organizational culture and
effectiveness
n Promoting efficiency, speed, and innovation
n The better organizations function, the

more value they create



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Consequences of Poor Organizational
Design

n Decline of the organization

n Talented employees leave to take
positions in growing
organizations
n Resources become harder to
acquire
n Resulting crisis impels managers
to change organizational
structure and culture
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Organizational
Effectiveness?
n Control: external resource approach
n Method evaluates how effectively an
organization manages and controls
its external environment
n Innovation: internal system
approach
n Method allows managers to evaluate
how effectively an organization
functions and operates
n Efficiency: technical approach
n Method evaluates how efficiently an
organization converts a fixed amount
of resources into finished goods and
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So, why study Organizational
Effectiveness?

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Organizational Effectiveness

What is OE?
Why is it Important?
Approaches to Study OE
Comparing the Approaches

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What is OE?

Indian Oil Corporation/ONGC? Largest

Profits?
Reliance? Shareholder Value?
TATA STEEL? Lowest Cost Steel Producer,
5th Largest Steel Company? Value Based
Company?
TVS Group? Highest Productivity? Winner of
Deming Award? Strong systems and
Processes?
Bennet Coleman? Profitability with Social
Responsibility?
L&T? Pioneers in Engineering?
BCCI? For producing a world beating team
and richest Board? For managing the
constituencies? 1-
Why is it Important?

To an aspiring employee?
To an investor
To an employee?
To a Customer?
To a Creditor?
To the Community?

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Control, Innovation, Efficiency
Goals? Whose Goals? What kind of Goals should an
organization have to measure effectiveness?

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