OSTD2011

OSTD2011
ORGANIZATIONS AND ORGANIZATION THEORY
Current challenges
Global competition: Globalization:

Orgns have to learn to cross lines of time, culture and geography in order to survive. Ethics and social responsibility:
Large corporations can fall: Enron, Arthur Anderson, Satyam.

Speed of response: Todays customers expect products & services developed more often and delivered more rapidly.
Digital workplace:
Digital supply chain to keep connection with customers; Elimination of middlemen, Facebook, e-commerce. Diversity: Organizations have an international face.
CASE: Royal Dutch Shell
Organization?
Organizations are:
Social entities Goal directed Designed as deliberately structured and coordinated activity
Linked to an external environment

Orgns are made up of people and their relationships with each other. People interact with each other to perform essential functions that help attain goals. Managers deliberately structure and coordinate organizational resources to achieve organizations purpose.
Organization types
Large multi-national organizations

Small family owned shops Some manufacture goods, others provide services Some are for profit, others not for profit.
In profit orgns managers direct activities towards earning money.

Not for profit managers direct effort towards generating some social impact:
Finance comes from government appropriations, grants, donations
Need to measure intangible goals (improve public health)

Need to market services to attract clients but also volunteers & donors (doctors without frontiers)
Orgns exist to do the following
Bring together resources to achieve desired goals and outcomes.

Produce goods and services efficiently. Facilitate innovation Use modern manufacturing and information technology
Adapt to and influence a changing environment

Create value for owners, customers and employees. Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees.
Perspectives on orgns
1. -
Two important perspectives:

Open systems: A closed system will not be dependent on the environment: autonomous, enclosed and sealed off from outside world
Systems would be stable. Primary management issues would be to run the things efficiently.
Open systems: can be enormously comples. A system: set of interactions elements that acquire input from the environment, transforms them and discharges outputs into the external environment.
Perspectives on orgns
2.
a) b) c) d) e)
Open configurations: Henry Mintzberg:

Organizations have five parts: Technical core: People who do the basic work of the organization. Technical support: helps the orgn adapt to the environment; create, innovate, help orgns change and adapt. Administration support: Upkeep of orgn including physical and human element; (HRM, admin, OD, welfare, maintenance) Middle management: implement & coordinate at department levels Top management: Vision and strategy.
Dimensions of orgn design
a)
Dimensions that describe specific orgn design traits:

Two types a) Structural & b) Contextual. Structural dimensions provide labels to describe the internal characteristics of the orgn. create a basis for measuring and labeling organizations:\ i) Formalization: Amount of written documentation: procedures, job descriptions, regulation and policy manuals ii) Specialization: Degree to which orgn tasks are subdivided into separate jobs: division of labour, multi-skilling. iii) Hierarchy of authority: Who reports to whom and the span of control for each manager; tall and flat structure. iv) Centralization: Hierarchical levels that has authority to take decisions: Decision at top, centralization; delegated, decentralized

a)
Structural dimensions (contd):

v) Professionalism: Level of formal education and training of employee; High when employee needs long periods of training to hold jobs in the orgn.: measured as the average age of education and experience of an employee(20 yrs for medical professional) vi) Personal rations: deployment of people to various functions and depts: Admin ratio; prof to student ratio; direct to indirect emp ratio, etc.
b) -
Contextual dimensions: Characterize the whole orgn incl its size, technology, environment and goals. They describe the orgn setting that influences and shapes the structural dimensions.
Dimensions of orgn design:

b)
Contextual dimensions (contd.)

i) Size: the orgn magnitude as reflected in the no. of people in the orgn. typically measured by the no of employees. ii) Organizational technology: tools, techniques and actions used to transform inputs into outputs concerns how the orgn actually produces its products & services. iii) The environment: All outside the boundary of the orgn: industry, govt., customer, suppliers, etc. iv) The orgnss goals and strategy define the purpose, competitive techniques that set apart from other orgns Goals and strategies define the scope of operations and the relationship with employees, customers and competition

b)
Contextual dimensions:
v) Culture: Underlying set of key values, beliefs, understanding and norms shared by the employees
CASE: W L Gore and Associates

CASE: Knight Ridder
Efficient performance vs learning organization
Mechanical system design: Stable environment, efficient perf.

Natural system design: turbulent environment, learning organ. From vertical to horizontal structures from silos to collaboration across functions.
Routine tasks to empowered roles degree of formal structure and control on employees.
From formal control systems to shared info. formality & bureaucracy when the orgn is larger.
Competitive to collaborative strategy top mgnt prepare their own vision and mission and thrust on those below.
From rigid to adaptive culture For a healthy orgn its culture must encourage adaptation to the external envm; encourage openness; equality; continuous improvement and change.
STRATEGY, ORGNIZATION DESIGN & EFFECTIVENESS
Strategy direction in orgn
CASE : 3M Corporation
Top executives decide on the end purpose the orgn will strive for and the direction it will take to accomplish it. This purpose and direction shapes how the orgn is designed and managed. Middle mgrs do the same for major divisions & depts. Direction setting process begins with an assessment of SWOT incl the amount of change, uncertainty, resource availablility
Also assess internal strengths & weakness to define cos distinctive competence compared to other firms.
Orgn design is the admin and execution of the strategic plans.
Strategy direction in orgn.
Orgn direction, implemented through decisions about structural forms, including:

Designed for learning or an efficiency orientation Choices about information and control system.
Type of production technology; human resources policy; culture; inter-organizational linkages.
Organizational purpose
Orgns are created and continued to accomplish something:

Goals and mission The orgns reason for existence. Official goal statements define business operations, focus on values, markets, customers that distinguish the orgn. Mission statement communicates the current and prospective employees, customers, investors, suppliers and competitors what the orgn stands for and trying to achieve enable others to identify with the culture and join it. Operating goals explain what the orgnis trying to do: pertain typically to the primary tasks an orgn must perform.
Organizational purpose
a.
b. c.
Overall performance: profitability, growth, volume of sale.

Resources: acquisition of needed material and financial resources from the environment, professionals, etc. Market: market share, market standing desired by the orgn.
d.
e.
Employee development: training, performance, safety and growth of employees.

Innovation and change: internal flexibility and readiness to adapt to unexpected changes in the environment.
f.
g.
Productivity: amount of output achieved from available resources. Amount of resource inputs required to achieve a desired output.
Today we are looking also into sustainability and the triple Bottom Line.
CASE: Marriott Hotels
Assessing organizational effectiveness
A first step to understanding orgn effectiveness is to understand orgn goals and strategies as well as fitting design to various contingencies.
Effective evaluates the extent to which multiple goals are attained. Efficiency: limited and pertain to the internal workings of the orgn. Ratio of the output to input.
CASE: Nortel CASE: Chrysler corporation.
FUNDAMENTALS OF ORGANIZATIONAL STRUCTURES
Organization Structure
CASE: Cunningham Motors
1.
3 key components in the definition of an orgn structure: Orgn structure designates formal reporting relationships, incl the no. of levels in the hierarchy, and the span of control of managers and supervision. Orgn structure identifies the grouping together of individuals into departments and of departments into the total orgn. Orgn structure includes the design of systems to ensure effective communication, coordination and integration of efforts across departments and divisions.
2. 3.
Organization structure
The first two elements are the structural framework , which is the vertical hierarchy.
The third element pertains to the pattern of interaction among orgn employees. An ideal structure encourages employees to provide horizontal information and coordination where and when it is needed. The orgn structure is reflected in the orgn chart. Orgn chart is the visual representation of a whole set of underlying activities and processes in the orgn. It shows the various parts of an orgn and how they are interrelated and how each position and dept fits into the whole.
Structure: Info. Processing perspective.
Orgn to be designed to provide both vertical and horizontal info flow as necessary to accomplish orgn goals.
Inherent tension between vertical and horizontal mechanisms: Vertical linkages are designed primarily for control
Horizontal linkages designed for coordination and collaboration, which usually means reducing control.
Vertical linkages focus on efficient orgn Horizontal linkages focus on learning orgn
Vertical Orgns
Designed for efficiency

Specialized tasks Strict hierarchy, many roles Vertical communication and reporting systems
Centralized decision making

Problems and decisions are funneled to the top levels of hierarchy for resolution.
Horizontal orgns.
Designed for learning

Shared tasks, empowerment Relaxed hierarchy, few rules Horizontal communication, face to face
Many teams and task forces

Decentralized decision making: decision making authority is pushed down to lower levels in the hierarchy. Orgns may have to experiment to find the correct degree of centralization or decentralization to meet their needs.
CASE: Oracle Corporation. CASE: Nissan
Orgn design alternatives
Overall design of orgn structure indicates 3 things:

Required work activities Reporting relationships Departmental groupings
a)
Options here include: functional, divisional, multifocused, horizontal and modular groupings
Functional groupings places employees together who perform similar functions or work processes or who bring similar knowledge and skills to bear. Divisional groupings mean people are organized according to what the orgn produces.
b)
Orgn design alternatives

c)
d)
Multi focused groupings: orgn embraces two structural alternatives simultaneously; Matrix or Hybrid.
Horizontal groupings: means employees are organized around core work processes, the end-to-end work, information and material flows that provide value directly to the customer. Modular groupings: orgn is a loosely connected cluster of separate components; departments are separate orgns that are electronically connected for sharing of information and completion of tasks.
e)
Functional structures
Strengths & Weaknesses

Very few successful organizations can maintain a strictly functional organization structure.
CASE: Bell Ceramics
Orgns compensate for vertical functional hierarchy by installing horizontal linkages.

Use information systems, direct contact between depts, full-time integrators (project managers), task forces, teams.
Divisional structure (product, SBUs)
Strengths and weaknesses

Organized according to individual products, services, product groups, projects, divisions, business or profit centers. Groupings based on organizational outputs Geographical structures Based on organizations users or customers and locations.
CASE: Microsoft
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Matrix structure
Strengths and weaknesses.

When we need to be multi-focused in that both product & function or product & geography and emphasized.
CASE: World wide steel
Horizontal structure
Strengths & weaknesses

Organizes employees around core processes After re-engineering, redesign of vertical orgn along its horizontal workflows & processes.
Structure created around cross-functional core processes rather than tasks, functions or geography.
Self-directed teams, not individuals, basis of orgn design and perf. Process owners have responsibility for each core process entirely
Individuals given skills, tools, motivation & authority to make decisions

Teams have freedom to think creatively and respond flexibly to new challenges that arise
Horizontal structure
Customers drive horizontal corpn

Effectiveness is measured by end-of-process performance objectives, as well as customer satisfaction, employee satisfaction and financial contribution Culture is one of openness, trust and collaboration, focused on continuous improvement.
CASE: G.E. Salisbury
Modular structure
Strengths & weaknesses.

With modular structure, the firm subcontracts many or most of its major processes to separate companies and coordinates activities from a small headquarters orgn. A central hub surrounded by a network of outside specialists.
Hybrid structures
Examples
Many structures in the real world do not exist in their pure form. Orgns often use a hybrid structure that combines characteristics of various approaches tailored to specific strategic needs.
E.g. combine functional and divisional when the orgn grows large.
THE EXTERNAL ENVIRONMENT
Orgn environment
CASE: Guiltless Gourmet
Orgn environment: defined as all elements that exist outside the boundary of the orgn and have the potential to affect all or part of the orgn. An orgns domain is the chosen environmental field of action: It is the territory an orgn states out for itself with respect to products, services and markets served. Domain defines the orgns niche and defines those external sectors with which the orgn will interact to accomplish its goals. The environment comprises several sectors or subdivisions of the external environment that contain similar elements. An orgns environment: (handout)
Orgns environment
The above sectors can be further subdivided into the task environment and general environment:
Task environment: includes the sectors with which the orgn interacts directly and that have a direct impact on the orgns ability to achieve goals: the industry, raw materials, market and sector, HR and international. General environment: Includes the sector that might not have a direct impact on the daily operation of a firm but will indirectly influence it: government, socio-cultural, economic condition, technology, financial resources.
International context
Even if you stay in your hometown, your company may be purchased tomorrow by an American, British, Korean, etc. company
Ford owns Swedens Volvo Tatas own British Tetly; Jaguar, etc.
Companies involved in various alliances with orgns around the world: Arcelor Mittal,
Thus, the environment for all orgns becomes extremely complex and extremely competitive.
CASE: Ford Motor company
Environmental uncertainty
Patterns and events occurring in the environment can be described along several dimensions: stable unstable; homogeneous heterogeneous; concentrated dispersed; simple complex; extent of turbulence; amount of resources available to support the orgn.
Envm influences the orgn in two ways: The need for info about the envm The need for resources from the envm. The envm conditions of complexity and change create a greater need to gather info and respond based on that info. Orgn also concerned with scarce material and financial resources and with the need to ensure availability of the resources. The total amount of uncertainty felt by the orgn is the uncertainty accumulated across environmental sectors.
Uncertainty means that decision makers do not have sufficient information about environmental factors and they have a difficult time predicting external changes.
Orgns facing uncertainty generally have a more horizontal structure that encourages cross-functional communication and collaboration to help the company adapt to changes in the environment. As complexity in the envm increases, so does the no of positions and depts within the orgn. Each section in the external envm requires an employee or dept to deal with it. Buffering roles to absorb uncertainty from the envm: e.g. purchase maintain inventory of received goods. However, opening the orgn to envm makes it more fluid and adaptable.
Boundary spanning roles: link and coordinate an orgn with key elements in the external environment:
Primarily concerned with exchange of info. To detect and bring into the orgn info about changes in the envm.
Send info into the envm that presents the orgn in a favourable light.
CASE: Tommy Hilfinger
Organic vs Mechanistic mgnt processes.

Another response to envm uncertainty is the amount of formal structures & control imposed on employees. When external envm was stable, internal orgn was characterized by rules, procedures and a clear hierarchy of authority. Orgns were formalized and centralized a mechanistic structure. In a rapidly changing envm, the internal orgn was much looser, free flowing and adaptive. an organic structure. Mechanistic & Organic forms a comparison. Resource dependence means that orgns depend on the envm but strive to acquire control over resources to minimize their dependence.
CASE: Rowe Furniture Company
CASE: Nokia Corporation
Establishing Interorganizational linkages

a)
Ownership: Companies use ownership to establish linkages when they buy a part of or a controlling interest in another company. Gives access to tech, products or other resources it does not have.
Formal strategic alliances: When there is a high level of complimentarity, between business lines, geographical positions or skills. contracts come in the form of license agreements (right to use an asset for a specific time) ; Supplier agreement that contract for the sale of one firms output to another ties customers and suppliers to specific prices & rates.
b)
Joint ventures: new orgns independent of parents with less control
Establishing Interorganizational linkages

c.
d) e)
Cooption, Interlocking directorates: occurs when the leaders from imp. Sectors of the envm are made part of the orgn.
Influential customers / suppliers made part of the board. Executive recruitment: transferring or exchanging executives, hiring retired govt servants to get influence. Advertising and public relations: Influence the taste of the customer. Public relations
INTER-ORGANIZATIONAL RELATIONSHIP
Inter organizational relationships
Orgns rethinking how to do business in response to todays chaotic envm.

Inter-organizational relationships relatively enduring resource transactions, flows and linkages occurring between two orgns. An orgns ecosystem is a system formed by interaction of a community of orgns and its environment. No co can go it alone under constant onslought of international competitors, changing technology & new regulations. Orgns worldwide embedded in complex networks of confusing networks. Collaborating in some markets competing fiercely in others. Large part of new alliances recently are between competitors. These alliances influence orgns competitive behaviour varidly.
Market shares can crumble overnight and no industry immune from almost instant obsolescence.
In an orgn ecosystem, conflict and cooperation frequently exists at the same time. By enforcing ordered uniformity, you miss opportunities for new and enduring external relationships. Important initiatives are not just top down; can cut across the boundaries separating orgn units. Suppliers and customers now become part of the team. Mgrs learn to see & appreciate rich envm of opportunities from cooperative relationships with others I the ecosystem.
Reasons for interorganizational collaborations include: sharing risks when entering new markets, mounting expensive new programs and reducing costs; and enhancing orgn profile in selected industries or technology.
Cooperation is a prerequisite for greater innovation, problem solving and performance Also the major avenue for entering global markets. Pfizer collaborates with more than 400 companies for research projects.
CASE: Bombardier
Established orgns have a hard time adapting to a rapidly changing envm.

Many limitations on the orgns ability to change. E.g. heavy investment in plant, eqpt & specialized personnel; limited information; established view points of decision makers; orgns own successful history that justifies current procedures; difficulty of changing corporate culture. True transformation is a rare and unlikely event in the face of all these barriers. Individual orgns suffer from structural inertia; find it difficult to change to environmental changes.
CASE: Starbucks coffee
DESIGNING ORGNS FOR THE INTERNATIONAL ENVIRONMENT
The global arena

CASE: Starbucks
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As recently as 25 years companies could well ignore the international envm. Today, companies must think globally or be left behind. The world is becoming a unified global field Primary factors motivating companies to expand internationally: Economies of scale Economies of scope Cheaper production factors
Economies of scale
Building a global presence expands an orgns scale of operations, enabling it to realize economies of scale.
You could achieve the lowest possible cost per unit of production. Also domestic markets are not big enough to absorb the produces.
You can also obtain volume discounts from the suppliers.
Economies of scope
Scope refers to the number and variety of products and services a company offers, as well as the no and variety of regions, countries and markets it serves.
Having a presence in multiple countries provide marketing power and synergy. E.g. suppliers serving MacDonalds Having an idea of the various markets the co is in can give an opportunity to look for new products and services to provide.
Low cost production factors
Opportunity to obtain raw materials and resources at the lowest cost possible.
Stages of International dev.
No company can become a global giant overnight.

The shift from domestic to global usually occurs through stages of development. In Stage 1: the domestic stage: Company is domestically oriented, but managers are aware of the global environment and may want to consider initial foreign involvement to expand production volume and realize economies of scale. Initial sales handled through an export dept. Details of freight forwarding, customs problems and foreign exchange are handled by outsiders.
Stages of international dev.
In stage 2: the international stage: Company takes export seriously and begins to think multi-dimensionally: companies deal with each country independently.
Concern is with international competitive positioning compared with other firms in the industry. An international division has replaced the export dept; specialists hired to handle sales, services & warehousing abroad. In Stage 3: The multi-national stage: Companies has extensive experiences in international markets; established mkt, manf., or R&D facilities in a no of foreign countries. Orgn has large % of sales outside the home country. Co has business units scattered around the world; along with suppliers, manufacturers and distributors.
Stages of international dev.
In Stage 4: the Global stage: the company transcends any single country.
The business is not merely a collection of domestic industries Subsidiaries are interlinked to the point where competitive position in one country significantly influences activities in another country. Truly global countries do not think of themselves as having a single home country called stateless corporations.
Strategic alliances
One of the most common ways companies involved in international operations is through strategic alliances.
Typical alliances include licensing, joint ventures and consortia. Licensing: Companies like Merck, Eli Lilly, Pfizer and Werner Lambert cross license their newest drugs to each other to support industry wide innovation and marketing and offset the high fixed costs of research and distribution. Joint venture is a separate entity created with two or more active firms or sponsors. May be with customer or competitor Consortia: group of independent companies including suppliers, and even competition that join together to share skills, resources, tasks and access to one anothers markets. Airbus; Keiritsu in Japan
CASE: ST Microelectronics.
Designing structure to fit global strategy
Managers must decide whether they want each global affiliate to act autonomously or whether activities should be standardized across countries.
Globalization strategy means the product design, manf, and mkt strategy are standardized throughout the world: Japanese companies TQM ; Coca Cola Can help companies reap economy of scale, efficiencies Large production facilities that use common suppliers.
Multi domestic strategy means the competition in each country is handled independently of competition in other countries.
Encourage product design, assembly, and marketing tailored to the specific needs of each country.
CASE: Colgate Palmolive.
MANUFACTURING & SERVICE TECHNOLOGIES
Core Manufacturing technology

CASE: French Rags
An orgns core technology is the work process that is directly related to the orgns mission, such as teaching in the high school, medical services in a health clinic, or manufacturing at GM. For a manufacturing firm the core process is the transformation process in manufacture of goods. Non-core process includes HR, Accounting, R&D, marketing. Manufacturing technologies include traditional manufacturing processes and new flexible manufacturing systems.
Classification of Manf Firms
Group 1: Small batch and unit production: these firms tend to be job shop operations that manufacture and assemble small orders to meet specific needs of customers. They rely heavily on the operator; is not highly mechanized.
Group 2: Large batch production: Is a manf process characterized by long production runs of standardized parts. Output often goes into inventory from which orders are filled, because customers do not have special needs. Group 3: In continuous process production, the entire process is mechanical. There is no starting and stopping. Automated machines control the continuous process, and outcomes are highly predictable. e.g. chemical plants, refineries.
CASE: Printronix
Flexible Manufacturing
New manf technologies include robots, Numerical Control (NC) machines, computerized software for product design, engineering analysis and remote control of machines.
FMS Flexible Manufacturing Systems ultimate automated factories: also called computer integrated manufacturing, smart factories, advanced manufacturing technologies, agile manf or factory of the future. FMS links together manf components that previously stood alone. Enables large factories to deliver a wide range of custom-made products at low mass production costs.
FMS result of 3 components:

1.
2.
Computer aided design (CAD):

Computers assist in drafting, design and engineering of new parts. Hundreds of design alternatives can be explored. Computer Aided manufacture (CAM):
Computer controlled machines in material handling, fabrication, production and assembly. Allows prodn line to shift rapidly from product to product.
Helps to quickly honour customer requests for change in product design and product mix. Lean manufacturing: uses highly trained employees of every stage of prodn processes, who take a painstaking approach to details and problem solving to cut waste and improve quality. To think lean employees attack waste and strive for continuous improvement in all areas.
3.
TPS Toyota Production System
TPS combines technique:

Just in time Continuous flow production Quick changeover of assemble lines
Continuous improvement
Preventive maintenance Management systems that encourage employee involvement and problem solving. Integration of FMS with flexible work processes have paved the way for mass customization: mass production of products designed to exact customer specifications.
CASE: Dell Computers
Service Firms
Most imp difference: service technology produces an intangible output: consists of knowledge and ideas , not a physical product.
Impact of customer contact on the orgn structure is reflected in the use of boundary roles and structural disaggregation. Boundary roles used in manf orgn to handle customers & reduce disruption to technical core. In service firms, used less as service is intangible and cannot be passed along by boundary spanner. Service customers must interact directly with tech employees such as doctors, brokers, service enginners. A service firm deals with info and intangible outputs and does not need to be larger. Greatest economies achieved through disaggregation into small units located close to customers.
CASE: Pret a Manager
INFORMATION TECHNOLOGY & CONTROL
IT Evolution
CASE: Progressive Insurance

Goal: to reduce labour costs. Transaction processing systems (TPS): which automate orgns routine day-to-day business transactions.
Data warehousing: use huge databases that combine all of a companys data and allow users to access the data directly, create reports, and obtain responses to what-if questions.
Data mining: helps users make sense of all this data. Use sophisticated decision making processes to search raw data for patterns and relationships that may be significant. With sophisticated computer-based systems, managers have tools to improve performance of depts and the orgn.
Orgn decision making system
MIS is a computer based system that provides info and support for managerial decision making.
Info. Reporting systems provide mid-level managers with reports that summarizes data and support day-to-day decision making. Executive info systems: higher-level mgnt applications can converge large amounts of complex data into pertinent information and provide timely info in timely fashion. Decision Support Systems (DSS): Helps users pose a series of what-if questions to test possible alternatives.
Mgnt control systems
Formal routines, reports, and procedures that use info to maintain or alter patterns in orgn activities.
The control systems include formalized info. Based activities for planning, budgeting, perf. Evaluation, resource allocation and employee rewards. Targets are set in advance, outcomes compared to targets and variance reported to managers for corrective action. Other systems include: budgets, P&L accounts, Balance sheet, etc. Mgrs use periodical statistical reports to evaluate and monitor nonfinancial performance like customer satisfaction, employee performance or rate of staff turnover. In e-commerce include stickiness conversion rate, etc.
CASE: TNT UK
Quality systems
Set targets for employee participation, establish benchmarking guidelines, assign and measure six sigma goals.
Six sigma specifies a goals of 3 to 4 defects per million.
Balanced Score Card
A comprehensive mgnt control system that balances traditional financial measures with operational measures relating to a companys critical success factors.
The four major parspectives include: Financial performance; customer service; internal business processes; orgns capacity for learning and growth. Financial perspectives: Reflects a concern that orgn activities contribute to improve short& long term financial perf. Customer service indicator: measure how customers view orgn as well as customer retention & satisfaction. Business process indicators: focus on prodn and operations statistics: order fulfillment, cost per order. Potential for learning and growth: focus on how well human resources are managed for the companys future.
Info tech tools
1.
3 primary info tech tools for internal coordination:

Intranets: Private companywide info systems that uses the communication protocol and standards of the internet and world wide web. However it is accessible only to people within the company. Enterprise Resource Planning (ERP): The system collects, process, and provide info about a companys entire enterprise, incl. order processing, product design, purchasing, inventory, distribution, HR, manf. receipts of payment s and forecasting of future demands.
2.
3.
Knowledge management: A new way to think about organizing and sharing an orgns intellectual and creative resources. Systematically find, organize and make available an orgns intellectual capital and foster a culture of continuous learning.
CASE: DPR Constructions Inc.
The integrated enterprise
An orgn that uses advanced info tech to enable close coordination within the company as well as with suppliers, customers and partners.
An important aspect is supply chain management. Managing the sequence of suppliers and purchasers covering all stages of processing from obtaining raw materials to distributing finished goods to customers. To operate efficiently and provide high quality items that satisfy customer needs, the co must have reliable deliveries of high quality, reasonably priced supplies and materials.
CASE: Corrugated supplies.

-
The integrated enterprise

-
It must also require an efficient and reliable system for distributing finished products, making them readily available to customers.
Two important requirements are: Information linkages between orgn and key partners for sharing and exchange of data. Horizontal relationships: the purpose of integrating the supply chain is for everyone to work closely together, moving in lockstep to meet customers product and time demands.
E-business orgn design
Defined as any business that takes place by business processes over a computer network rather in physical space.
Most commonly refers to electronic linkages over the internet with customers, partners, suppliers, employees or other key constituents. Managers need to make a decision about how best to integrate bricks and clicks.
CASE: Tesco.com
Setting up internet operation
1. -
Some strategies include:

In-house division: Offer tight integration between the internet operation and the orgns traditional operation. Orgn creates a separate unit within the companys function
2.
-
Spin-off: to give the internet operation greater organization autonomy, flexibility, focus, create a separate spin-off company.
Advantage include faster decision making, increased flexibility and responsiveness to changing market conditions; and entrepreneural culture; totally on-line focused management. Strategic partnership: Partnering with an established e-commerce company like Amazon.com.
3.
IT impact on orgn design
1. 2.
Some specific implications of these advances for orgn design:

Smaller orgns: Some internet based orgns almost entirely exist in cyberspace. One or a few people maintain site from home. Decentralized orgn structure: Advanced info tech enables orgn to reduce layers of mgnt and decentralize decision making. Info available to take decisions down the levels. Improved horizontal coordination: Intranets and other networks can connect people even when their offices and factories or stores are scattered around the world. Improved inter-organizational relationships: with external parties; using extranets link with contract manfs, outsourcers, etc. Enhanced modular structures: High level of inter organizational collaboration; outsourcing tie companies into a seamless flow.
3.
4. 5.
ORGANIZATION SIZE
Pressure for growth

CASE: Interpol
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Dream: to be among the Fortune 500 companies. Grow fast and grow large; sometimes more imp than making good products or show the greatest profits. Companies in all industries strive for growth, to acquire the size and resources to compete on a global stage, to invent new technology, control distribution channels and to guarantee access to markets. To stop growing is to stagnate. To be stable customers may not have their demand met fully or competitors will expand at your request. Scale crucial to economic health in mkt intensive orgns like Coke. Growing orgns are vibrant, exciting places to work, enables companies to attract and keep quality employees.
Dilemmas of large size
Compulsion to grow: how much? How large?

Huge resources and economies of scale reqd by many orgns to compete globally. Only large orgns can build a pipeline in Alaska, only Boeing can build a 747, and only a large airline can buy that plane. Only large orgns can be supportive economic and social force in difficult times. Can get back to business quickly, give employees a sense of security, belongingness in uncertain times. Large orgns are standardized, mechanically run and complex. Large orgns, once established, can be a presence that stabilizes a market for years.
Small size
Critical reqm in a global economy are responsiveness and flexibility in fast changing markets.
One reqm large companies sometimes fail is that top leaders get too far from the nuts and bolts of running the business. The economic vitality of most countries is tied to small and midsized business. Growth of the internet and other information technologies making it easier for small companies to act big. Small companies have a flat structure and an organic free flowing mgnt style that encourages entrepreneurship and innovation.
Big company/small company hybrid
Small companies can become victims of their own success as they grow large, shifting to a mechanistic structure emphasizing vertical hierarchy and spawning orgn men rather than entrepreneurs.
Giant companies are built for optimization, not innovation. Big companies become committed to their existing products and technologies have a hard time supporting innovation for the future. A big company / small company hybrid combines a large corpns resources and reach with a small companys simplicity and flexibility. GE and J&J reorganize into groups of small companies to capture the mindset and advantage of smallness. J&J is actually a group of 180 separate companies. When a new product is created in one of J&Js 56 labs, a new company is created along with it.
ORGANIZATION LIFE CYCLE
Concepts
Orgns are born, grow older and eventually die.

Orgn structure, leadership style and administration systems follow a fairly predictable pattern through stages in the life cycle. Stages are sequential in nature and follow a natural progression. Four major stages characterize orgn development.
HANDOUT: Orgn life cycle.
1. Entrepreneurial stage
When an orgn is born emphasis is on creating a product and surviving in the market place.
Founders are entrepreneurs and devote full energy in technology activities of production and marketing. Orgn informal and non-bureaucratic Control based on owners personal supervision. Growth is from a creative product or services.
Crisis: need for leadership:
With growth, larger no of employees cause problems.

Owners look at tech and mkt issues, not mgnt issues. Entrepreneure must either adjust structure of the orgn to accommodate growth or bring in strong mgrs who can do.
2. Collectivity stage:
If leadership crisis is resolved, strong leadership is obtained; orgn begins to develop clear goals & direction.
Depts established with clear hierarchy, job assignments, etc. Employees identify with the mission of the orgn and spend long hours helping the orgn to succeed. Lower level mgrs begin to acquire confidence in their own functional areas and want more discretion.
Crisis: Need for delegation with control:
Autonomy crisis: Successful senior managers dont want to give off control.
Orgns need to find mechanisms to control and coordinate depts without direct supervision from the top.
3. Formalization stage
Involves the installation of rules, procedures, and control systems.

Communication less frequent and more formal. Experts in HR, engg. And other staff may be added. Top mgnt leave operations to middle mgnt. Proliferation of systems & programs may begin to strangle middle level executives. Orgn seems bureaucratized. Innovation may be restricted. Complexity may be increased.
Crisis: Too much red tape:
4. Elaboration stage:
Solution to red tape is a new sense of collaboration and team work.

Mgrs develop skills for confronting problems and working together. Social control & discipline reduce need for additional formal control. Formal systems simplified& replaced by teams & task forces.
Orgns may be split into divisions to maintain small co philosophy.

After reaching maturity may enter periods of temporary decline. A need for renewal may occur every 10 or 20 years. Orgns shifts out of alignment with environment, or become slow moving & over bureaucratized, and must go through a stage of streamlining and innovation.
Crisis: Need for revitilization:
CASE: Yahoo
Orgn characteristics during life cycle
1. -
As orgns evolve through the 4 stages of the life cycle, changes take place in structure, control systems, innovation and goals.
Entrepreneurial: Initially, orgn is small, non-bureaucratic & one person show.
2. -
The top managers provide the structure and control system.

Orgn energy devoted to survival & prodn of single product/service. Collectivity: Growth is rapid; employees excited & committed to orgn mission. Structure still mostly informal, same procedures emerges. Strong charismatic leaders provide direction & goals for the orgn Continued growth is a major goal
Orgn characteristics during growth cycle

3.
-
Formalization:
Orgn entering midlife; Bureaucratic characteristics emerge. Orgn adds support staff, formalizes procedures & establishes a clear hierarchy and division of labour.
4. -
Innovation through a separate R&D dept.

Major goals internal stability & mkt expansion Formal control systems implemented. Elaboration: Mature orgn, large, bureaucratic; control systems, rules, procedure Mgrs attempt team orientation to reduce bureaucracy. Innovation institutionalized through R&D Mgnt may attack bureaucracy and streamline it.
BUREAUCRACY
Concept
Bureaucracy has the ability to ensure more efficient functioning of orgns in both business and government settings.
Rules and standard procedures enabled orgn activities to be performed in a predictable, routine manner. Specialized duties meant that each employee had a clear task to perform. Hierarchy of authority provided a sensible mechanism for supervision and control. Technical competence was the basis for hiring people. Separation of position from the position holder: individuals did not own or have right to job, which promoted efficiency. Written records provided an organizational memory and continuity over time.
CASE: United Parcel Service
Large & Small orgns
1. 2. -
Large orgns are different from small orgns along several dimensions of bureaucratic structure:
Formalization: refers to rules, procedures and written documents such as policy manuals & job description. Large orgns rely on rules, procedure and paperwork to achieve standardization & control across large no of employees and dept. Top mgrs use personal observations to control a small orgn Centralization: Refers to the level of hierarchy with authority to make decisions: Decisions tend to be made at the top In large orgns sr. mgrs could be overloaded.
Large and small orgns

3.
-
Personal ratios:
Most frequently studied ratio is the administration ratio: Ratio of top admin to total employees smaller in large orgns orgns experience admin economies as they become bigger
Second is the clerical and professional support staff These group tends to increase in proportion to orgn size.
Bureaucracy some positives
By establishing a hierarchy of authority and specific rules & procedures, provides a effective way to bring order to a large group of people and prevent abuse of power.
Impersonal relationships based on roles rather than people reduced favouritism, nepotism characteristics of many pre industrial orgns Provided for systematic and rational ways to organize management tasks too complex to be understood & handled by few individuals However: The world is changing very rapidly Need to reduce formalization and bureaucracy Narrowly defined job descriptions tend to limit creativity, flexibility and rapid response needed in knowledge based orgn ideas.
Reducing bureaucracy some structural solutions
Incident command system:

Used to have to respond rapidly to emergency or crisis situations. Used to maintain the efficiency and control benefits of bureaucracy yet prevent problem of slow response to crisis.
During emergency, loosen the lines of command and enable work across depts and hierarchical lines. (e.g. on the deck of a nuclear aircraft carrier).
Despite the free flowing and flexible nature of crisis response, someone is always in charge. System is based on trust that lower level workers have a clear understanding of the mission and will take decisions and actions within guidelines that will support orgn goals.
Reducing bureaucracy
Other approaches:
Cut layers of hierarchy Keep HQ staff small Give lower level workers greater freedom to take decisions.
Professionalism helps get highly trained employees who act as needed; provide ongoing training to employees
Professional partnership: Medical, Law, Mgnt practicing firms: Branches have substantial autonomy and decentralized authority to make necessary decisions.
CASE: THE Salvation Army
Orgn control strategies
1. -
Every orgn needs systems for guiding & controlling the orgn:
Three primary strategies: Bureaucratic control: Use of rules, policies, hierarchy of authority, written documentation, standardization, etc. to standardize behaviour and assess performance. The primary purpose of bureaucratic rules and procedures is to standardize and control employee behaviour.
To make this control work, mgrs must have the authority to maintain control over the orgn. legitimate, rational authority granted to role.

2.
-
Marketing control:
Occurs when price control is used to evaluate the output and productivity of an orgn. Mgrs compare prices and profits to evaluate the efficiency of their corporations. Profit & loss statements used to compare perf of previous years. Competition should coexist or price will not accurately reflect internal efficiency.
Use competition with external agencies for internal services too.

Mkt control can only be used when output of a co., dividion, or dept can be assigned a rupee price and there is competition.
CASE: Imperial Oil Company

3.
-
Clan Control:
Is the use of social characteristics such as corporate culture, shared values, commitment, traditions, and beliefs to control behaviour. Orgns using clan control requires shared values & trust among employees. Is imp when ambiguity and uncertainty is high. High uncertainty implies orgn cannot put a price on its services; things change so fast that rules and regulations not able to specify every correct behaviour. People hired because they are committed to orgn purpose. New employees subjected to long period of socialization. Often used in small organizations.
CASE: Columbus Mills
ORGN DECLINE & DOWNSIZING
Concept
Reality that for some companies continual growth and expansion may not be possible.
Orgn decline: the term used to define a condition in which a substantial, absolute decrease in an orgns resource base occurs over a period of time. Often associated with environmental decline: An orgns domain experiences either: a reduction in size (shrinkage in customer demand); or a reduction in shape ( such as a shift in customer demand). 3 factors considered to cause orgn decline: Orgn atrophy; Vulnerability; environmental decline or competition.
1. Orgn atrophy
Atrophy occurs when orgn grow older, become inefficient and overly bureaucratized, and lose muscle tone.
Orgns ability to adapt to its environment deteriorates. Often follows a long period of success; orgn takes success for granted, attached to practices which had worked in the past, not now. Warning signs: excess staff personnel, cumbersome admin procedures, lack of effective communication and coordination and outdated orgn structure.
2. Vulnerability
Reflects the orgns strategic inability to prosper in its environment.

Happens to small orgns that are not yet fully established. Some orgns unable to define the correct strategy to fit the environment.
Vulnerable orgns typically need to redefine their environment domain to enter new industries or market.
3. Environmental decline or competition
Refers to reduced energy & resources available to support an orgn.

When the environment has less capacity to support the orgn, the orgn has to either scale down operations or shift to another domain. In a recession, advertisement should be cut first.
Model of decline stages
1. -
decline, if not managed properly, can move through five stages, resulting in orgn dissolution:
Blinded stage: First stage of decline is the internal & external change that threatens long-term survival and might require the orgn to tighten up. Excess personnel, cumbersome procedures, or a lack of harmony with customers. Leaders often miss signals; need to develop effective scanning & control systems. Inaction stage: Denial occurs despite signs of deteriorating performance. Leaders may persuade employees that all is well.
2. -

2.
3.
Inaction stage (contd.):

Creative accounting may make things look fine during that period. Acknowledge decline and take prompt action Faulty action stage:
Orgn facing serious problems and indications of poor perf cannot be ignored.
Failure to adjust to declining spiral lead to orgn failure. Leader forced to consider major changes Actions may involve retrenchment, downsizing personnel Reduce uncertainty by communicating to employees.

4.
-
Crisis stage:
Orgn is facing panic May experience chaos, efforts to go back to basics, sharp changes and anger.
Only soln. major reorganization.

Social fabric eroding; dramatic actions like replacing top leaders, revolutionary change in structures, strategy and culture needed. Workforce downsizing may be severe.
Model of decline stage

5.
-
Dissolution stage:
The stage of decline is irreversible. Orgn suffering loss of market and reputation Losses in best personnel and capital depletion
Only available strategy is to cut down orgn in an orderly fashion; reduces separation trauma of employees.
CASE: Arthur Andersen
Downsizing implementation
Downsizing is not always an effective option

Reengineering projects, mergers and acquisitions, global competition, and trend towards outsourcing have all led to job reduction. Massive downsizing could even harm orgns than give benefits. A number of techniques can help smooth the downsizing process and ease tension for employees who leave, as well as those who remain. Communicate more, not less Provide assistance to displaced workers Help the survivors thrive.
1. 2. 3.
ORGN CULTURE
Orgn Culture
CASE: PSS World
Negative culturral norms can damage a company just as powerfully as positive ones can strengthen it. e.g. Enron Corp.: culture that supported pushing everything to the limits: business practices, rules, personal behaviour, laws.
Social capital: consists of the embedded trust, mutual understandings and shared norms & values that enable members of an orgn to cooperate and coordinate their activities to achieve goals. One way to think of social capital is goodwill. It is based on honesty, trust and respect. High levels of social capital enables frictionless social interactions and exchanges, helping smooth orgn functioning.
Orgn culture
Culture: is the set of values, norms and guiding beliefs and understanding that is shared by members of an orgn and taught to new members as current.
It represents the unwritten feelings part of the orgn. Everyone participates in culture, but culture generally goes unnoticed. Only when orgns try to implement new strategies or process that goes against basic culture norms & values that they come face to face with the power of culture. Orgn culture exists at two levels: On the surface are visible artifacts and observable behaviour; the way people dress and act and the symbols, stories and ceremonies orgn members share.
Orgn culture
Below the surface are the underlying values, assumptions, beliefs and thought processes that demonstrate the true culture.
The attributes of culture demonstrate themselves in many ways but typically evolve into a patterned set of activities carried out through social interactions. Culture provides members with a sense of orgn identity and generates a commitment to beliefs and values that are larger than themselves. The culture generally starts with the founder.
Orgn culture
Culture serves 2 critical functions in the orgn:

To integrate members so that they know how to relate to one another; and to help orgn adapt to the external environment. Internal integration: means that members develop a collective identity and know how to work together effectively. It is the culture that guides day-to-day working relationships and determines how people communicate within the orgn; what behaviour is acceptable or not acceptable, and how power and status are allocated. External adaptation: refers to how orgns meet goals and deals with outsiders. Orgn culture also guides employees decision making in the absence of written rules or policies.
Orgn design and culture
Corporate culture should reinforce the strategy & structural design that the orgn needs to be effective in its environment.
e.g. if the external envm require flexibility & responsiveness the culture should encourage adaptability.
The correct relationships among cultural values, orgn strategy and structure, and the envm can enhance orgn performance. Culture can be assessed among many dimensiong, such as the extent of collaboration versus isolation among people and departments, the importance of control, where control is concentrated,,or, whether the orgns time orientation is short or long term. There are 4 kinds of culture:
1. Adaptability culture
Culture is characterized by strategic focus on the external environment through flexibility and change to meet customer needs.
Culture encourages entrepreneurial values, norms and beliefs that support the capacity of the orgn to detect, intepret and translate signals from the environment into new behaviour responses. Such a company also actively creates change. Innovation, creativity and risk taking are valued and rewarded. e.g. 3M: values promote individual initiative and entrepreneurship.
2. Mission culture
The orgn concerned with servicing specific customers in the external environment, but without the need for rapid change.
Characterized by an emphasis on a clear vision of the orgns purpose and on the achievement of goals. Individual employees made resp for a specified level of performance and orgn promises specified rewards in return. Managers shape behaviours by envisioning and communicating a desired future state for their orgn. Generally a stable environment. e.g. Pepsi Co.
3. Clan culture
Primary focus on the involvement and participation of the orgns members and on rapidly changing expectations from the external environment.
Culture focuses on the needs of employees as the route to high performance. Involvement and participation create a sense of resp and ownership, hence greater commitment to the orgn. Important value is taking care of employees and making sure they have whatever they need to help them be satisfied as well as productive. e.g. fashion business
CASE: MTW Corp.
4. Bureaucratic culture
It has an internal focus and a consistency orientation for a stable environment.

Orgn has a culture that supports a methodical approach for doing business. Symbols, heros and ceremonies support cooperation, tradition and following established policies and practices as ways to achieve goals Personal involvement is low, but outweighed by a high level of consistency, conformity, and collaboration among its members. Orgn succeeds by being highly integrated and efficient.
Culture strength
Refers to the degree of agreement among members of an orgn about the importance of specific values.
If wide spread consensus exists about the importance of these values, the culture is cohesive and strong. If little agreement exists, the culture is weak. Culture is not always uniform throughout the orgn: Sub cultures develop to reflect the common problems, goals, and experiences that members of a team, dept, or other unit share.
e.g. a branch of a bank physically separated from the main office.
Culture & learning orgn
One of the primary characteristic of a learning orgn is that it has a strong organizational culture.
Also, the culture encourages change and adaptation. A danger for may successful orgns is that the culture becomes set and the company fails to adapt as the environment changes. When orgns are successful, the values, ideas and practices that helped attain success become institutionalized. As the environment changes, these values may become detrimental to future performance.
Learning orgn defining characteristics

1.
-
A strong adaptive culture that incorporates the following values:

The whole is more important than the parts and boundaries between the parts are minimized People aware of the whole system and how the parts fit together
Free flow of people, ideas and info allows coordinated action and continuous learning.
Everyones primary attitudes and behaviours reflect the orgns dominant culture.
2.
3.
Equality and trust are primary value

The culture encourages risk taking, change and improvement.
ETHICAL VALUES
Ethical values in orgns
Wide spread corporate accounting scandals; top managers making personal use of company funds; charges of insider trading.
Top managers are under scrutiny from the public as never before. Strict ethical standards are becoming part of the formal policies and informal cultures of many orgns. Ethics is the code of moral principles and values that govern the behaviours of a person or group with respect to what is right or wrong. Ethical values set standards as to what is good or bad in conduct and decision making. Ethics goes far beyond behaviour governed by law.
Ethical values in orgn.
The rule of law arises from a set of codified principles and regulations that describe how people are required to act, are generally accepted in society, and are enforceable in the courts.
Managerial ethics are principles that guide the decisions and behaviours of managers with regard to whether they are right or wrong in a moral sense. Social resp: refers to managements obligation to make choices and take action so that the orgn contribute to the welfare and interest of society as well as to itself.
CASE: Commerce Bank
Sources of ethical behaviour
1. -
The standard for ethical or socially responsible conduct are embedded within each employee as well as within the orgn itself.
In addition, external stakeholders can influence standard of what is ethical and socially responsible. Personal ethics: Every individual brings a set of personal beliefs and values into the workplace. The family backgrounds and spiritual values of managers provides principles by which they carry out business. In addition, people go through stages of moral development that affect their ability to translate values into behaviour. At the highest level of moral development are people who develop an internal set of standards.

2.
-
Organizational culture:
Because business practices reflect the values, attitudes, and behaviour patterns of an orgns culture, ethics is as much an orgn issue as a personal one. To promote ethical behaviour in the workplace, companies should make ethics an integral part of the orgns culture. Orgns culture helps to guide employees in making daily decisions When the culture supports wrong doing it is easier for the employees to go along. Organizational systems: This includes the basic architecture, such as whether ethical values are incorporated into policies and rules.
3.

4. -
Whether an explicit code of conduct is available and issued to its members.

Whether orgn rewards, including praise, attention, and promotion are linked to ethical behaviour. Whether ethics is a consideration in the selection and training of its employees. External stakeholders: Ethical and socially resp decision making recognizes the the orgn is part of a larger community and considers the impact of a decision or action on all stake holders. Cos must operate within the limits of certain govt regulations, such as safety laws, envm protection regulations and others. The concept of sustainable development; Triple Bottom Lines.
How leaders shape culture & ethics
Top mgnt must provide commitment, leadership & examples for ethical values.
The CEO and other top mgrs must be committed to specific values & provide constant leadership in tending & renewing these values. Values can be communicated in a no of ways: speeches, company publications, policy statements and personal actions. Top mgs must take the lead. Leaders have a relationship with followers which is based on shared, strongly internalized values that are advocated and acted upon by the leader. Employees learn about values, beliefs and goals from watching managers.
CASE: Kingston Technologies
Formal structure & systems
Mgr can assign resp for ethical values to a specific position or to an ethics committee.
Ethics offices also sometimes work as counselling centers to help employees resolve difficult ethical dileammas. Function is more on helping employees make the right decisions than on disciplining wrong doers. Many have confidential ethical hotlines that employees can use to seek guidance as well as report questionable behaviour. Establish supportive policies and procedures to support whistle blowers. Have a code of ethics. Have employee trg programmes on ethical behaviours.
CASE: Holt Companies
INNOVATION & CHANGE
Concepts
CASE: Procter & Gamble

Orgns must run fast to keep up with the changes taking place around them. Large orgns must find ways to act like small, flexible orgns.
Manf firms need to reach out to new, flexible manf technology and service firms for new info. Tech.
Need innovation only to survive. Many orgns respond to global threats by adapting self-directed teams; horizontal structures that enhance communication & collaboration; streamlining supply and distribution channels and overcoming barriers of time and place through e-business. Others get involved in joint ventures or consortia to exploit opportunities and extend operations and markets internationally.
Concepts
Some adopt structural innovations such as modular approach to focus on their core areas, while outside specialists handle all other activities.
Change, rather than stability is the order of the day.
Incremental vs Radical change
Change used to adapt to the environment can be evaluated according to scope the extent to which the changes are incremental or radical.
Incremental change represents a series of continual progressions that maintain the orgns general equilibrium and often affect only one orgn part. Radical change breaks the frame of reference for the orgn, often transforming the orgn. Most part incremental change occurs through the established structure and mgnt processes, may include technical improvements or product improvement.
Incremental vs Radical change
Radical change involves the creation of a new structure and new management processes:
Technology is likely to be breakthrough, and new products thereby created will establish new markets. Lou Gerstners transformation of IBM Major turnarounds involve changes in all areas of the orgn incl. structures, management systems, culture, technology and products and services.
Strategic types of changes
1. 2.
Managers can focus on 4 types of change within orgns to achieve strategic advantage:
Technology changes: are changes in the orgns processes, incl knowledge and skill base; they enable distinctive competence: These changes are designed to make production more efficient or to product grester volume. Product or service changes: Pertain to the product or service outputs of an orgn. Could be adaptations to existing products or entirely new product lines.
Strategic types of changes

3.
Strategy and structure changes: Pertain to the administration domain in an orgn involves supervision and management of the orgn.
Include changes in the orgn structure, strategic management, policies, rewards, labour relations, MIS and accounting & budgeting system. Culture changes: Refer to changes in the values, attitudes, expectations, beliefs, abilities and behaviour of employees. Pertain in changes in how employees think These are changes in the mindsets of people. The four types of changes are interdependent.
4.
Elements of successful change
Regardless of type or scope of change, there are identifiable stages of innovation:

Occurs as a consequence of events. Orgn change: adaptation of a new idea or behaviour by an orgn.
Orgn innovation: is the adoption of an idea or behaviour that is new to the orgn, industry, market or general environment.
Innovation typically are assimilated into the orgn through a series of steps or elements:
Orgn members first become aware of a possible innovation, evaluate its opportunities and then evaluate and choose the idea.
1.
For a change to be successfully implemented, managers must make sure each element occurs in the orgn.
If even one of the element is missing, the change process will fail. Ideas: No company can remain competitive without new ideas:
2.
Creativity is the generation of novel ideas that may meet perceived needs.
Need: Ideas are not seriously considered unless there is a perceived need for change when a gap between actual performance and desired performance is perceived. Adoption: When decision makers choose to go ahead with a proposed idea key managers & employees need to be in agreement to support the change.
3.

4.
Implementation: Occurs when orgn members actually use a new idea, technique or behaviour equipment procured, employee trained.
Resources: Human energy and activity are required to bring about change.
5.
CASE: Google CASE: Nokia CASE: Mattle
CASE: Hire Quality

CASE: EDS
Barriers to change
Visionary leadership is crucial for change

However, resistance will be there Barriers to change include: Excessive focus on oosts
Failure to perceive benefits

Lack of coordination and cooperation Uncertainty avoidance Fear of loss
DECISION MAKING PROCESSES
Concept
CASE: Avon Products
Every orgn grows, prospers or fails as a result of decisions by its managers, and decisions can be risky and uncertain, without any guarantee of success. Sometimes, decision making is a trial and error process. Decision making is done amid constantly changing factors, unclear information, and conflicting points of view. Orgn decision making is defined as the process of identifying and solving problems.
Orgn decision making
The process has two stages:

In the problem identification stage, info about the environmental and orgn conditions is monitored to determined if performance is satisfactory and to dialogue the cause of shortcomings. The problem solving stage is when alternative courses of action are considered and one alternative is selected and implemented. Orgn decisions vary in complexity and can be categorized as programmed and non-programmed: Programmed decisions are repetitive and well defined, and procedures exist for solving the problem. They are well structured because criteria for perf are normally clear; good info is available about current perf; alternatives are easily specified,and there is relative certainty that the chosen alternative will be successful.
1.
Orgn decision making

2.
-
Non-programmed decisions are novel and poorly defined, and no procedure exists for solving the problem.
Used when an orgn has not seen a problem before and may not know how to respond. Clear cut decision criteria does not exist. Alternatives are fuzzy There is uncertainty whether a proposed solution will solve the problem
Typically, few alternatives can be developed for a non-programmed decision, so a single solution is custom tailored to the problem.
Particularly complex non-programmed decisions have been referred to as wicked decisions, because simply defining the problem can turn into a major task.
Individual decision making
Individual decision making by managers can be described in two ways:

First the rational approach: which suggests how managers should try to make a decision. Second is the bounded rationality perspective: which describes how decisions actually have to be made under severe time and resource constraints. The rational approach is how an ideal manager may work towards but never reach.
Rational approach
The rational approach to individual decision making stresses the need for systematic analysis of a problem followed by choice and implementation in a logical step-by-step sequence.
Acc. to this approach, decision can be broken down into 8 steps: Monitor the decision environment Define the decision problem Specify decision objectives Diagnose the decision objectives
1. 2. 3. 4.
5.
6. 7. 8.
Develop alternative solutions

Evaluate alternatives Choose the best alternative Implement the chosen alternative.
CASE: Alberta Consulting
Bounded Rationality Perspective
When orgns are facing little competition and are dealing with wellunderstood issues, mgrs generally use rational procedures to make decisions.
However: Decisions often have to be made quickly Time pressure: a lot of internal and external factors affecting a decision. Ill defined nature of many problems make systematic analysis virtually impossible. Mgrs have only so much time and mental capacity, hence cannot evaluate every goal, problem and alternative. The attempt to rationalize is bounded (limited) by the enormous complexity of many problems. A manager simply selects the first alternative and attempts soln.
Bounded Rationality Perspective
Bounded rationality perspective often associated with intuitive decision process.

In intuitive decision making, experience and judgment rather than sequential logic or explicit reasoning used for decision making. Intuition is not arbitrary or irrational as it is based on years of practice and hands on experience, often stored in the sub-conscious. In a situation of great complexity or ambiguity, previous experience and judgment are needed to incorporate intangible elements at both the problem identification and problem solving stages.
CASE: Motek CASE: Paramount Pictures.
Organizational Decision Making
Decisions are not usually made by a single manager.

Problem identification and solution involve many depts, multiple viewpoints and even other orgns, beyond the scope of a single mgr. There are four types of orgn. Decision making processes:
1.
-
The Management Science Approach:

Similar to the rational approach Came into being during the second world war. Mathematical and statistical techniques were applied to large scale military problems. E.g. firing at a ship from another. Need to identify relevant variables and model them using mathematical equations. Excellent when problems are analyzable; when variables can be identified and measured.
CASE: National Broadcasting company

2.
-
Carnegie Model:
Research in Carnegie University helped formulate the bounded rationality approach to individual decision making as well as provide new insight about orgn decisions. Orgn level decisions involved many mgrs and a final choice was based on a coalition among those mgrs. When goals are ambiguous and inconsistent, mgrs disagree about problem priorities. They must bargain about problems and build a coalition around the question of which problems to solve. Mgrs do not have the time, resources and mental capacity to identify all dimensions and to process all info relevant to the decision.

-
In coalition, however, decisions are made to satisfice rather than to optimize problem solution satisfactory to all coalition members.
Mgrs are concerned with immediate problems and short-run solutions for which they engage in problematic search look for a solution to quickly solve the problem. Carnegie model says that managers typically adapt the most satisfactory solution that emerges. The model also points out that building agreement through managerial coalition is a major part of orgn decision making.
CASE: Encyclopaedia Britannica
Organizational Decision making

3.
-
Incremental Decision Making Model:

Approach places less emphasis on political and social factors as in the Carnagie model, but tells more about the structured sequence of activities undertaken from the discovery of a problem to its solution. Major orgn choices are usually a series of choices that combine to produce the major decision. Orgns move through several decision points and may hit barriers along the way called decision interrupts. An interrupt may mean an orgn has to cycle back through a previous decision and try something new. The ultimate soln may be very different from what was initially anticipated.
a. b. -
The step takes place in 3 major decision phases: Identification, development, and selection.
Identification phase: begins with the recognition of a problem and need to make a decision Recognition usually stimulated by a problem or an opportunity. Diagnosis is done when more info is gathered if needed to define the problem situation. Development phase: a soln is shaped to solve the problem defined in the identification phase. The dev takes one of two directions: First, search procedures may be used to seek out alternatives within the orgns repertoire of skills. The second direction is to design a custom soln when the problem is new.

c.
Selection Phase: when the solution is chosen. The custom made solution is more an evaluation of the single alternative that seems feasible.
The judgment form selection is used when a final choice falls upon a single decision maker, and the choice involves judgment based on experience. Bargaining occurs when the selection involves a group of decision makers. Each decision maker may have a different stake in the outcome so conflict emerges.
When the decision is finally accepted by the orgn, authorization takes place.
Throughout the processes, minor problems arise that force a loop back to the earlier stage. These are decision interrupts.
CASE: Gillette Company

4.
-
Garbage Can Model:

Deals with the pattern or flow of multiple decisions within orgn. Helps you think about the whole orgn and the frequent decisions being made by the managers throughout.
Helps explain pattern of decision making in orgns that experience extremely high uncertainty, such as growth and change in a learning orgn.
Highly uncertain conditions called organized anarchy.
a. b.
They result from 3 characteristics:

Problematic preferences: goals, problems, alternatives, and solns ill defined. Ambiguity characterizes each step of the decision process. Unclear, poorly understood technology: Cause-and-effect relationships within the orgn are difficult to identify. An explicit database that applies to decisions is not available.
Organizational Decision making

c.
Turnover: Orgn positions experience turnover of participants. In addition, employees are busy and have only limited time to allocate to any one problem decision. Participation in any decision will be fluid and limited.
Unique characteristics of the Garbage Can model is that decision process is not seen as a sequence of steps that begin with a problem and end with a solution: Indeed problem identification & soln may not be connected with each other.
An idea may be proposed as a soln when no problem is specified.

A problem may exist and never generate a soln. Decisions are the outcome of independent streams of events within the orgn.
a. b.
Four streams relevant to orgn decision making are:

Problems: Points of dissatisfaction with current events and perf. Potential solutions: An idea someone proposes for adoption. Such ideas form a flow of alternative solutions through the orgn. Solutions exist independent of problems. Participants: People working in orgns.; hired, reassigned, fired. Problems and solutions recognized by the manager may differ from that of the other. Choice opportunities: Occasions when an orgn usually makes a decision. Occur when contracts are signed, people hired or a new product authorized. Match up of problems and solutions often result in decisions.
c.
d.
Problems, solns, participants & choices all flow through the orgn.
Thus, the orgn is a large garbage can in which these streams are being stirred. Consequences are four:
a.
b. c. d.
Solns may be proposed even when problems do not exist.

Choices are made without solving a problem. Problems may persist without being solved. A few problems are solved.
CASE: Casablanca.
Special Decision Circumstances
1.
In a highly competitive world beset by global competition and rapid change, decision making seldom fits the traditional rational model.
Todays managers have to make high stake decisions more often and faster in an envm that is increasingly less predictable. Three issues of particular concern for todays decision makers are: Coping with high velocity envms, learning from decision mistakes, and avoiding escalating commitments. High velocity envms:
In some industries rate of competitive & technological change is so extreme that market data are either unavailable or obsolete.
Strategic windows open and close quickly and the cost of poor decisions is company failure.
Successful decision makers track info. Real-time to develop a deep & intuitive grasp of the business.
Two or three intense meetings per week with all key players usual Unsuccessful firms were more concerned with future planning and forward looking info, with a loose grip on immediate happenings. During a major decision, successful companies began immediately to build multiple alternatives. Implementation sometimes ran in parallel before they finally settled on a final choice. Companies that made decisions slowly developed just one alternative, moving to another only after the first failed.
Fast, successful decision makers sought advice from everyone and depended heavily on one or two savvy, trusted colleagues.
Slow companies unable to build trust. Fast successful companies involved everyone in the decision and tried for consensus; if consensus did not emerge, top mgrs made the choice and moved on. Slow companies delayed decisions to achieve consensus. Fast successful companies were well integrated with other decisions and the overall strategic directions of the company. Less successful companies considered the decisions in isolation. When speed matters, a slow decision is as ineffective as the wrong decision.
Decision Mistakes and learning
Orgn decisions results in many errors esp. when made in conditions of uncertainty.
Mgrs simply cannot determine or predict which alternatives will solve the problem. In such cases, the orgn must make the decision and take the risk often in the spirit of trial and error. If an alternative fails, the orgn can learn from it and try another that better fits the situation. Each failurs provides new info. And insights. In many cases mgrs encouraged to instill climate of experimentation, even foolishness for creative decisions. Only mistakes help orgns & mgrs to go through process of decision learning and acquire experience to perform effectively in future.
Escalating Commitment
A much more dangerous mistake is to persist in a course of action when it is failing.

Some mgrs continue to invest time & money in a soln, despite strong evidence that it is not working. Mgrs block or distort ve info when they are personally resp for ve decision. In some case they continue good money after bad even when a strategy seems incorrect and goals not being met. Again, consistency and persistence valued in our society. Results in a course of action being maintained , resources squandered and learning inhibited. Failure to admit mistake and adopt a new course of action is far worse than an attitude that encourages mistakes and learning.
CONFLICT
Concept
CASE: Pacific Medical Center
Conflict is a natural and inevitable outcome of close interaction of people who may have diverse opinion & values, pursue diff obj. and have differential access to info and resources within an orgn. Individual and groups will use power and political activity to handle their differences and manage conflict. Conflict can also be a positive force as it challenges the status quo, encourages new ideas & approaches and leads to change. Conflict ot necessarily a negative force; results from normal interaction of varying human interests. In learning orgns which encourages a democratic push and pull of ideas, the forces of conflict, power and politics may be particularly evident.
Inter-group Conflict in Orgn
Inter-group conflict requires 3 ingredients: group identification, observable group differences and frustration.
First, the employees have to perceive themselves as part of an identifiable group or dept. Second, there has to be an observable group difference of some form. The above two factors are necessary for conflict. The third ingredient is frustration; the idea that if one group achieves its goal, the other will not; it will be blocked. inter-group conflict will appear when one group tries to advance its position in relation to the other groups. Inter-group conflict can be defined as the behaviour that occurs among orgn groups when participants identify with one group and perceive that other groups may block their goal achievement.
Inter-group Conflict in Orgn.
Conflict means that groups clash directly, that they are in fundamental opposition.
Competition means rivalry among groups in the pursuit of a common prize, while conflict presumes direct interference with goal achievement. Sources of conflict: They are : Incompatibility
Differentiation
Task interdependence Limited resources
Goal incompatibility
Goals of each dept reflect the specific objectives members are trying to achieve:
Achievement of one depts goals often interferes with other dsepts goals. E.g. goals of marketing and operations.
Differentiation
The differences in cognitive and emotional orientation among managers in different functional depts.
Functional differentiation requires people with specific education, skills attitudes and time horizons. Different depts or divisions within an orgn can differ in values, attitudes and standards of behaviour and these sub-cultural differences lead to conflict. A lack of trust within the orgn can magnify these natural differences and increase the potential for conflict among depts and with top mgrs.
CASE: Advanced Cardiovascular Systems.
Task Interdependence
Refers to the dependence of one unit on another for materials, resources or info.
Pooled interdependence means little interaction. Sequential interdependence means the output of one dept goes to the next dept. Reciprocal interdependence means depts mutually exchange materials and info. Generally as interdependence increases the potential for conflict increases. In case of pooled interdependence, units have little need to interact. Conflict is minimum. Sequential and reciprocal interdependence require employees to spend time coordinating and sharing info.
Limited Resources
Competition between groups for what members perceive as limited resources.

Orgn has limited means, physical facilities, staff resources. In their desire to achieve goals, groups want to increase their resources. This throws them into conflict. Resources also symbolize power and influence within an orgn. The ability to obtain resources enhance prestige. Depts typically claim they have a legitimate claim on additional resources. However, exercising this claim results in conflict. E.g. during the annual budgeting activity.
Rational vs Political Model
The degree of goal incompatibility, differentiation, interdependence & conflict over ltd sources determines whether a rational or political model of behaviour is used within the orgn to accomplish goals.
When goals are in alignment, little differentiation, depts characterized by pooled interdependence, and resources seem abundant ; mgrs can use a rational model of orgn. Goals can be consistent across participants. Power and control centralized Decision process orderly, logical and rational Rules and norms of efficiency Information extensive, systematic and accurate. The rational model is an ideal that is not fully achievable in the real world.
Rational & Political model
In the political model:

Differences are great, orgn groups have separate interests, goals and values. Disagreement and conflict are normal, so power and influence are need to reach decisions. Groups will engage in push and pull of debate to decide goals and reach decisions. Information are ambiguous and incomplete.
The political model describes orgns that strive for democracy and participates in decision making by empowering workers.
Purely rational procedures do not work in democratic orgns such as learning orgns.
POWER IN ORGANIZATIONS
Concepts
Power is an intangible force in orgns it cannot be seen but its effects can be felt .
Power is often defined as the potential ability of one person to influence other persons to carry out orders or to do something they would not otherwise have done. Power is ability to achieve goals, outcomes the power holders desire. Power exists only in relationships between two or more people, can be exercised in vertical or horizontal direction. Sources of power often derives from an exchange relationship in which one position or dept provides scarce value to another. Whenone is dependent on another, power relationship emerges in which the person with the resources has the greater power. When power exists in a relationship, the power holder can achieve compliance with their requests.
Individual and organizational power
1. 2. 3. 4. 5.
Managers have 5 sources of personal power:

Legitimate power: is the authority granted by the orgn to the formal mgnt position a manager holds. Reward power: stems from the ability to bestow rewards: promotions, raise, pat on the back to other people. Coercive power: is the authority to punish or recommend punishment. Expert power: derives from a persons greater skill or knowledge about the tasks being performed. Referent power: derives from personal characteristics such that people admire the manager and want to be like or identify with the manager out of respect and admiration.
Individual and organizational power
Power in orgns, however, is often the result of structural characteristics.

Orgns are large, complex systems that contain hundreds, even thousands of people. These systems have a formal hierarchy in which some tasks are more imp regardless of who performs them. In addition, some positions have access to greater resources or their contribution to the orgn is more critical. Orgn power is usually vested in the position, not the person.
Power versus Authority
Authority is a force for achieving desired outcomes, but only as prescribed by the formal hierarchy and reporting relationships.
Three properties identify authority: Authority is vested in organizational positions
Authority is accepted by subordinates

Authority flows down the vertical hierarchy Orgn power can be exercised upward, downward, and horizontally in orgns.
Formal authority is exercised downward along the hierarchy and is the same as vertical power and legitimate power.
Vertical sources of Power
1. -
Four major sources of vertical power: formal position, Resources, Control of decision premises, Network centrality.
Formal position: Certain rights, resp. and prerogatives accrue to top positions.
People throughout the orgn accept the legitimate right of top mgrs to set goals, make decisions, and direct activities.
Sometimes called legitimate power. The amount of power provided to middle mgrs and lower level participants can be built into the orgns structural desigh. Allocation of power to middle & lower mgrs enable them to be productive.
Vertical sources of power
When job tasks are non-routine, and when employees participate in self-directed teams and problem solving task forces, this encourages employees to be flexible and creative and to use their own discretion.
Allowing people to make their own decisions increases their power. Power is also increased when a position encourages contact with high-level people. Access to powerful people and a development of a relationship with them provide a strong base of influence. Resources: In most cases top mgrs control the resources and, hence, can determine their distribution. Resources can be used as rewards and punishments, which are additional sources of power.
2.
Resource allocation also create a dependency relationship

Lower level participants depend on top mgrs for financilal and physical resources needed to perform their tasks. Top management can exchange resources in the form of salaries and bonuses, personnel, promotion, and physical facilities for compliance with the outcomes they desire. Control of decision premise and information: Top mgrs place constraints on decisions made at lower levels by specifying a decision frame of reference and guidelines. Top mgrs actions and decisions place limits on the decision of lower level managers and thereby influence the outcome of their decision The control of info can also be a source of power; the info from top mgnt can be released as needed to shape decision outcomes of other people.
3.
For info travelling from bottom to top, middle mgrs can manipulate the info they provide to top mgrs in order to influence decision outcomes.
Network Centrality: Means being centrally located in the orgn and having access to info and people that are critical to the companys success. Top executives often increase their power by surrounding themselves with a network of loyal subordinates and using the network to learn about events throughout the orgn. They can use their central positions to build alliances and yield substantial power in the orgn.
4.
CASE: Morgan Stanley Dean Witter
Employees also have more power when their jobs are related to current area of concern or opportunity when jobs pertain to pressing orgn problems, power is more easily accumulated.
Employees increase their network centrality by becoming knowledgeable and expert about certain activities by taking on difficult activities, by taking on difficult tasks, and acquiring specialized knowledge that makes them indispensable to managers above them. Central location (HQ), lets a person be visible to key people and become part of important interactions and networks.
Horizontal sources of power
Horizontal power pertains to relationships across depts.

Power not determined by formal hierarchy or orgn chart. Horizontal power difficult ti measure as power differences not defined on the orgn chart.
The theoretical concept that explains relative power is called strategic contingencies.
Strategic contingencies are events and activities both inside and outside an orgn that are essential to attaining orgn goals.
Depts involved with strategic contingencies for orgn tend to have greater power.
Dept. activities are imp whe they provide strategic value by solving problems or crises for the orgn. E.g. Lots of lawsuits; legal dept imp.
1. -
Depts rated as powerful may possess one or more of the characteristics below:
Dependencies: Inter departmental dependency is a key element underlying relative power. Power is derived from having something someone else wants. The power of dept A over dept B is greater when dept A depends on Dept B. When resources flows, dept receiving resources is in a lower power position than dept providing them. The no and strength of dependencies is also important. A critical machine maintenance could be the strength of the maintenance crew.

2.
-
Financial resources:
Control over resources is an imp sources of power in orgns. Money can be converted into other kind of resources that are needed by other depts.
Depts that provide financial resources have something that other depts want depts that generate income for an orgn have greater power. Centrality:
Refers to the depts role in the primary activity of the orgn. One measure is the extent to which the work of the dept affects the final output of the orgn. e.g. the line depts are always central to the staff functions.
CASE: University of Illinois

3.
-

4.
-
Non substitutability:
Means that a depts function cannot be performed by other readily available resources. If an employee cannot be readily replaced, he has greater power.
5. -
Consultants might be used as substitutes for staff people to reduce the power of staff groups.
Coping with uncertainty: Elements in the envm can change swiftly and can be unpredictable and complex. In the face of uncertainty, little info available for appropriate action. Depts that reduce this uncertainty will increase their power.
CASE: Crystal manufacturing
POLITICAL PROCESSES IN ORGN
Concepts
Politics, like power ,is intangible and difficult to measure.

It is hidden from view and hard to observe in a systematic way. Power has been described as the available force or potential for achieving desired outcomes.
Politics is the use of power to influence decisions in order to achieve those outcomes.
The exercise of power and influence has led to two ways to define politics as self-serving behaviour or as a natural orgn decision process. When we see politics as self-serving, it involves deception and dishonesty for purpose of individual self-interest and leads to conflict and disharmony within the work environment.
Tactics for increasing power

1.
-
Enter areas of uncertainty:

If dept mgrs can identify key uncertainties and take steps to remove those uncertainties, the dept s power base will be enhanced. The trial and error process provides experience and expertise that cannot easily be duplicated by other depts. Create dependencies: When orgn depends on a dept for info, matls, knowledge or skills, the dept will hold power over others. This power can be increased by incurring obligations. Power accumulated by creating a dependency can be used to resolve future disagreements in the depts favour.
2. -
Tactics for increasing power

3.
-
Provide scarce resources:

Depts that accumulate resources and provide them to an orgn in the form of money, info. Or facilities will be powerful (e.g. sales dept, univ. depts getting grants) Satisfy strategic contingencies: Strategic contingencies say that some elements in the external envm and within the orgn are especially imp for orgn success. A contingency will be a critical event, a task for which there are no substitutes or a central task that is interdependent with many others in the envm. An examination of the orgn and its changing envm will reveal strategic contingencies.
4. -
Political tactics for using power
The use of power in orgns requires both skill and willingness.

Many decisions are made through political processes because rational decision processes do not fit uncertainty or disagreement is too high. Political tactics for using power to influence decision outcomes include the following: Build coalitions Taking time to talk with other managers to persuade them to your point of view. Most imp decisions are made outside formal meetings. Mgrs discuss issues with each other and reach agreements on a one-to-one basis. Effective mgrs are those who huddle, meeting in groups of two and three and resolve key issues.
1. -

2.
Good interpersonal relations are built on liking, trust & respect.

Reliability and the motivation to work with other rather than exploit others are part of coalition building. Expand networks:
Networks can be expanded (1) by reaching out to establish contacts with additional managers and (2) by co-opting dissenters.
The first approach is to build new alliances through hiring, transfer, and promotion process.
Placing in key positions people who are sympathetic to the outcomes of the dept can help achieve depts goals.
Cooption is the act of bringing dissenters into ones network.

3
-
Control decision premises:

Means to constrain the boundaries of a decision One technique is to choose or limit info provided to other mgrs. A common method is to selectively present favourable criteria.
4. -
A variety of statistics can be assembled to support dept view.

Decisions can be influenced by the items put on the agenda for an imp meeting or even by the sequence in which items are discussed. Calling attention to specific problems and suggesting alternatives also will affect outcomes. Enhance legitimacy and expertise: Mgrs can exert the greatest influence in areas in which they have recognized legitimacy and expertise.
Members can assemble external consultants to support cause.

5.
-
Make a direct appeal:

If mgrs do not ask, they seldom receive. Political activity is affective only when goals and needs are made explicit so that orgn can respond.
Mgrs can bargain persuasively and be persuasive.

An assertive proposal may be accepted because other mgrs have no better alternatives. Effective political behaviour requires sufficient forcefulness and risk taking to at least ask for what you need to achieve desired outcomes. Power works best when used quietly.
CASE: Yahoo

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ORGANIZATIONS AND ORGANIZATION THEORY

Global competition: Globalization:

Large corporations can fall: Enron, Arthur Anderson, Satyam.

CASE: Royal Dutch Shell

Linked to an external environment

Large multi-national organizations

In profit orgns managers direct activities towards earning money.

Need to measure intangible goals (improve public health)

Orgns exist to do the following

Bring together resources to achieve desired goals and outcomes.

Adapt to and influence a changing environment

Two important perspectives:

Open configurations: Henry Mintzberg:

Dimensions of orgn design

Dimensions that describe specific orgn design traits:

Dimensions of orgn design

Structural dimensions (contd):

Dimensions of orgn design:

Contextual dimensions (contd.)

Dimensions of orgn design

CASE: W L Gore and Associates

Efficient performance vs learning organization

Mechanical system design: Stable environment, efficient perf.

STRATEGY, ORGNIZATION DESIGN & EFFECTIVENESS

Strategy direction in orgn

Strategy direction in orgn.

Orgn direction, implemented through decisions about structural forms, including:

Type of production technology; human resources policy; culture; inter-organizational linkages.

Orgns are created and continued to accomplish something:

Overall performance: profitability, growth, volume of sale.

Employee development: training, performance, safety and growth of employees.

CASE: Marriott Hotels

Assessing organizational effectiveness

CASE: Nortel CASE: Chrysler corporation.

FUNDAMENTALS OF ORGANIZATIONAL STRUCTURES

Structure: Info. Processing perspective.

Designed for efficiency

Centralized decision making

Designed for learning

Many teams and task forces

CASE: Oracle Corporation. CASE: Nissan

Orgn design alternatives

Overall design of orgn structure indicates 3 things:

Orgn design alternatives

Strengths & Weaknesses

CASE: Bell Ceramics

Orgns compensate for vertical functional hierarchy by installing horizontal linkages.

Divisional structure (product, SBUs)

Strengths and weaknesses

Strengths and weaknesses.

CASE: World wide steel

Strengths & weaknesses

Individuals given skills, tools, motivation & authority to make decisions

Customers drive horizontal corpn

CASE: G.E. Salisbury

Strengths & weaknesses.

THE EXTERNAL ENVIRONMENT

CASE: Ford Motor company

CASE: Tommy Hilfinger

Organic vs Mechanistic mgnt processes.

CASE: Rowe Furniture Company

CASE: Nokia Corporation