Is the subsystem responsible for directing and coordinating other parts of the organization?

Presentation on theme: "Organizations and Organization Theory"— Presentation transcript:

1 Organizations and Organization Theory
2nd Semester MS (Management Sciences) Program Tuesday, September 27, 2016 Chapter 1 Organizations and Organization Theory References: Organization Theory and Design (Richard L. Daft) Organizational Theory, Design, and Change (Gareth R. Jones) Management (W. Griffin) Resource Person: Furqan-ul-haq Siddiqui

2 (Decline Phase ) Xerox’s Palo Alto Research Center (PARC), established in 1970, became known around the world for innovation—many of the most revolutionary technologies in the computer industry, including the personal computer, graphical user interface, mouse, Ethernet, and laser printer, were invented at PARC.

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4 Organizations are all around us and shape our lives in many ways.
We hardly notice that we are born in a hospital, have our birth records registered in a government agency, are educated in schools and universities, are raised on food produced on corporate farms, Are treated by doctors engaged in a joint practice, buy a house built by a construction company and sold by a real estate agency, borrow money from a bank, turn to police and fire departments when trouble erupts, use moving companies to change residences, and receive an array of benefits from various government agencies. Organizations are all around us and shape our lives in many ways.

5 What is an Organization?
Social entities that are goal-directed Designed as deliberately structured and coordinated activity systems Linked to the external environment A group of people working together in a structured and coordinated fashion to achieve a set of goals. which controls its own performance, and has a boundary separating it from others.

6 The Importance of Organizations

7 A corporation is a legal entity that is separate and distinct from its owners. The most important aspect of a corporation is limited liability. That is, shareholders have the right to participate in the profits, through dividends and/or the appreciation of stock, but are not held personally liable for the company's debts. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.

8 A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. The most important aspect of a corporation is limited liability. That is, shareholders have the right to participate in the profits, through dividends and/or the appreciation of stock, but are not held personally liable for the company's debts.

9 Organizational Theory, Design, and Change:
Organizational theory: the study of how organizations function and how they affect and are affected by the environment in which they operate. Organization theory helps us explain what happened in the past, as well as what may happen in the future, so that we can manage organizations more effectively.

10 Organizational structure: the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals. Organizational culture: the set of shared values and norms that control organizational members’ interactions with each other and with suppliers, customers, and other people outside the organization

11 Organizational design: the process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve its goals Organizational change: the process by which organizations move from their present state to some desired future state to increase their effectiveness

12 Purpose of this course is to give answer of these Question (including many others).
How can the organization adapt to or control such external elements as competitors, customers, government, and creditors in a fast-paced environment? What strategic and structural changes are needed to help the organization attain effectiveness? How can the organization avoid management ethical lapses that could threaten its viability? How can managers cope with the problems of large size and bureaucracy? What is the appropriate use of power and politics among managers? How should internal conflict be managed? What kind of corporate culture is needed to enhance rather than stifle innovation and change, and how can that culture be shaped by managers?

13 Characteristics of Three Organizations

14 Performance and Effectiveness Outcomes
Efficiency – Amount of resources used to achieve the organization’s goals Effectiveness – the degree to which an organization achieves its goals Achieving effectiveness is not always a simple matter because different people want different things from the organization. Managers carefully balance the needs and interests of various stakeholders in setting goals and striving for effectiveness. This is referred to as the stakeholder Approach.

15 Major Stakeholder Groups and What They Expect
Fiscal responsibility is an economic concept that can have a couple of different definitions depending on the circumstances, though it almost always involves strategies for managing debt and adopting practices of so-called “smart” spending.

16 Customers love its efficiency and low prices, but the low-cost emphasis has caused friction with suppliers. Some activist groups argue that Walmart’s tactics are unethical because they force suppliers to lay off workers, close factories, and outsource to manufacturers from low-wage countries. One supplier said clothing is being sold at Walmart so cheaply that many U.S. companies couldn’t compete even if they paid their workers nothing. The example of Walmart provides a glimpse of how difficult it can be for managers to satisfy multiple stakeholders.

17 Balancing Effectiveness and Efficiency

18 Balancing Effectiveness and Efficiency

19 Balancing Effectiveness and Efficiency

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21 Porter Generic Strategies
Michael Porter has described three general types of strategies to achieve and maintain competitive advantage. These three generic strategies Cost Leadership Strategy- Being lowest cost producer within a industry. The organization aims to drive cost down through all the elements of the Business. The cost leader usually aims at a broad market, so sufficient sales can cover costs. Differentiation Strategy- Development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition at premium prices. Focus Strategy- Concentration on a arrow segment/niche and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it, resulting high degree of customer loyalty which discourages other firms from competing directly.

22 Stuck in the Middle? if a firm differentiates itself by supplying very high quality products then it cant become a cost leader. Michael Porter argued that to be successful over the long-term, a firm must select only one of these three generic strategies. Otherwise, with more than one single generic strategy the firm will be "stuck in the middle" and will not achieve a competitive advantage.

23 Manager- Someone who plans and makes decisions, organizes, leads, and controls human, financial, physical, and information resources.

24 Mitzberg’s Organizational Types
Mintzberg proposed that the five parts could fit together in any type of organization In real-life organizations, the five parts are interrelated and often serve more than one function

25 Organizational Configuration Five Basic Parts of an Organization
Technical Core. People who do the basic work of the organization. This part actually produces the product and service outputs of the organization. This is where the primary transformation from inputs to outputs takes place. The technical core is the production department in a manufacturing firm, the teachers and classes in a university, and the medical activities in a hospital.

26 Technical Support. The technical support function helps the organization adapt to the environment. Technical support employees such as engineers, researchers, and information technology professionals scan the environment for problems, opportunities, and technological developments. Technical support is responsible for creating innovations in the technical core, helping the organization change and adapt.

27 Administrative Support
Administrative Support. The administrative support function is responsible for the smooth operation and upkeep of the organization, including its physical and human elements. This includes human resource activities such as recruiting and hiring, establishing compensation and benefits, and employee training and development, as well as maintenance activities such as cleaning of buildings and service and repair of machines.

28 Management. Management is a distinct function, responsible for directing and coordinating other parts of the organization. Top management provides direction, planning, strategy, goals, and policies for the entire organization or major divisions. Middle management is responsible for implementation and coordination at the departmental level. In traditional organizations, middle managers are responsible for mediating between top management and the technical core, such as implementing rules and passing information up and down the hierarchy.

29 Mintzberg’s Five Organization Types

30 Entrepreneurial Structure. Typically a new, small start-up company
Entrepreneurial Structure. Typically a new, small start-up company. It consists mainly of a top manager and workers in the technical core. The organization is managed and coordinated by direct supervision from the top rather than by middle managers or support departments. Few support staff are needed. The primary goal of the organization is to survive and become established in its industry. There is little formalization or specialization. This form is suited to a dynamic environment.

31 Machine Bureaucracy. It is very large, typically mature, and the technical core is often oriented to mass production. It has fully elaborated technical and administrative departments, including engineers, market researchers, and financial analysts who scrutinize, routinize, and formalize work in the high-volume production center. Technostructure, standardization of work process, limited horizontal decentralization. Mass-production firms, service firms with simple, repetitive works

32 Professional Bureaucracy
Professional Bureaucracy. The distinguishing feature is the size and power of the technical core, which is made up of highly skilled professionals, such as in hospitals, universities, law firms, and consulting firms. A large administrative support staff is needed. Although there is some specialization and formalization, professionals in the technical core have autonomy. Professional organizations typically provide services rather than tangible goods, and they exist in complex environments.

33 Diversified Form. Mature firms that are extremely large and are subdivided into product or market groups. There is a relatively small top management and a small technical support group for the top level. There is a larger administrative support staff to handle paperwork to and from the divisions. Independent divisions illustrates a machine bureaucracy, but on occasion a division may resemble the entrepreneurial structure, professional bureaucracy, or even adhocracy. The diversified form helps to solve the problem of inflexibility experienced by a too-large machine bureaucracy by dividing it into smaller parts.

34 Adhocracy. The design goal is frequent innovation and meeting continually changing needs, as in the aerospace and defense industries. The various parts (middle management, technical, and administrative support) merged together into an amorphous mass in the middle. The main structure consists of many overlapping teams rather than a vertical hierarchy. Adhocracies are usually young or middle-aged and can grow quite large.

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36 A Strategic Framework Factors in the firm's context that indicate the most appropriate managerial strategy and organizational structure. The means through which an organization generates the behaviors necessary to execute its corporate strategy.

37 Organic vs. Mechanistic
Mechanistic – characterized by machine-like standard rules and procedures with clear authority. Organic – design of organization is looser, free-flowing, and adaptive

38 Organic and Mechanistic Designs

39 Chaos theory The world is full of uncertainty, characterized by surprise, rapid change, and confusion. Managers can’t measure, predict, or control in traditional ways the unfolding drama inside or outside the organization. However, The ideas of chaos theory suggest that organizations should be viewed more as natural systems than as well-oiled, predictable machines, leading to an increase in the use of organic design approaches.

40 Answers

Which of the following is a main function of organizations quizlet?

Which term describes the degree to which an organization achieves its goals?