Advanced Organization & Management 3379 Exam_1
Factors Causing Uncertainty
- Complexity - Dynamism - Financial Resources
Miles and Snow's Strategy Typology
- Prospector - Defender - Analyzer - Reactor Managers should seek to formulate strategy that matches the demands of the external environment
Vertical Organization (Mechanistic)
- Specialized tasks - Strict hierarchy, many rules - Vertical communication and reporting systems - few teams, task forces, or integrators - centralized decision making
Horizontal Organization (Organic)
- shared tasks, empowerment - relaxed hierarchy, few rules - Horizontal communications, face to face - Many teams and task forces - decentralized decision making
Organic Forms
-Employees contribute to the common task of the department -Tasks are adjusted and redefined through teamwork -Less hierarchy of authority and control -Knowledge and control of tasks are located anywhere in the organization -Communication is horizontal
Mechanistic Forms
-Tasks are specialized -Tasks are rigidly defined -Strict hierarchy of authority and control -Knowledge and control of tasks are centralized -Communication is vertical
Organization Structure 3 Key Components
1) Formal Reporting Relationships - Number of levels in the hierarchy - Span of control of managers 2) Grouping of Individuals - Creation of departments 3) Design of Systems - to ensure effective communication, coordination, and integration of efforts across departments Horizontal information and coordination reflected in organization chart
Selecting Strategy and Design
A STRATEGY is a plan for interacting with the competitive environment Managers must select specific strategy design Models exist to aid in formulating strategy: - Porter's Five Forces - Miles and Snow's Strategy Typology
Functional Structure
Activities grouped by common function All specific skills and knowledge are consolidated Promotes economies of scale Slow response to environmental changes Prevalent approach but few companies can respond in today's environment without horizontal linkages
The Organization Environment
All the elements that exist outside the boundary of the organization Potential to affect all or part of the organization - Domain is the chosen environmental field of action - Sectors or subdivisions that contain similar elements
The Changing Environment
As the environment becomes more complex, - Events become less stable - Financial resources become less available - The level of uncertainty increases The environment influences organizations - Need for information changes - Need for resources changes
Influencing Financial Resources
Balance linkages and independence Reach out and change or control elements in the environment -Establish favorable relationships with key elements of the environment -Shape the environment by influencing key sectors
Analyzer
Balances efficiency and learning; tight cost control with flexibility and adaptability Emphasis on creativity, research, risk-taking for innovation
International Environment
Can directly affect many organizations Has grown in importance International events influence domestic sectors of the environment All organizations face domestic and global uncertainty
Major Stakeholder Groups and What They Expect
Ch 1 - Slide 12
Organization Design Outcomes of Strategy
Ch 2 - Slide 12
Indicators of Organizational Effectiveness
Ch 2 - Slide 15
Departmental Grouping Options
Ch 3 - Slide 13
Functional: Strengths & Weaknesses
Ch 3 - Slide 15
Divisional: Strengths & Weaknesses
Ch 3 - Slide 18
Matrix: Strengths & Weaknesses
Ch 3 - Slide 24
Horizontal: Strengths & Weaknesses
Ch 3 - Slide 29
Virtual Network Strengths and Weaknesses
Ch 3 - Slide 32
Different Goals and Orientations among Departments
Ch 4 - Slide 14
Contingency Framework for Uncertainty and Organizational Responses
Ch 4 - Slide 17
Hybrid Structure
Combination of various structure approaches Tailored to specific needs Often used in rapidly changing environments Greater flexibility
An Integrated Effectiveness Model
Competing values model tries to balance concern with various parts of the organization The human relations emphasis incorporates the values of an internal focus and flexible structure
Virtual Network
Core focuses on product development and marketing
Organic vs. Mechanistic
Depends upon: Structure Tasks/Roles System Formality Communication Hierarchy versus Collaboration
Porter's Competitive Strategy
Differentiation strategy - to distinguish products or services from others in the industry Low-Cost Leadership - increase market share by keeping costs low compared to competitors Organizations may choose to focus broad or narrow in reaching multiple markets. Managers choose which to emphasize
Design Essentials Ch 4
Dynamism and complexity have major implications for organizations Organizational environments differ regarding uncertainty and resource dependence The goal for organizations is managing efficiencies and survival Managers must understand how the environment influences the structure and functioning of an organization When risk is great, organizations can establish linkages to maintain a supply of resources Organizations can learn and adapt to the environment and change and control the environment
Application of Structural Design
Each structure meets different needs and is a tool that can help managers be more effective Structural alignment aligns structure with organizational goals Symptoms of Structural Deficiency: - Decision making is delayed or lacking quality - Organization cannot meet changing needs - Employee performance declines, needs are not meet - Too much conflict
Assessing Organizational Effectiveness
Effectiveness takes into consideration a range of variables at both the organizational and departmental levels. Efficiency relates to the working of the organization and amount of resources used to produce output.
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 Stakeholder Approach - balancing the needs of groups in and outside of the organization that has a stake in the organization's performance
Historical Perspectives
Efficiency is Everything Scientific Management: Pioneered by Frederick Winslow Taylor How to Get Organized Administrative Principles Contributed to Bureaucratic Organizations What about People? Hawthorne Studies Can Bureaucracies Be Flexible? Flexible and lean; focused on service, quality, and engaged employees (1980s) It All Depends: Key Contingencies Contingency: there is no "one best way"
Defender
Efficiency orientation; centralized authority and tight cost control Emphasis on production efficiency, low overhead
Organizing Strategies for Controlling the External Environment
Establish Formal Relationships Influencing Key Sectors Ch 4 - Slide 20
Virtual Networks and Outsourcing
Extend horizontal coordination beyond the boundaries of the organization Most common strategy is outsourcing - Contract out certain tasks/functions Virtual or modular structures subcontract most of its major functions to separate companies The virtual network organization serves as a central hub with contracted experts
Four Levels of Analysis in Organizations
External Environment Organization level of analysis Group level of analysis Individual level of analysis
Low-cost Leadership
Focus on efficiency, low cost Broad Scope: Walmart Narrow Scope: Allegiant Travel
Differentiation
Focus on uniqueness Broad Scope: Apple Narrow Scope: Edward Jones Investments
Structural Dimensions
Formalization Specialization Hierarchy of Authority Complexity Centralization
Framework for the Book
Four levels of analysis characterize organizations Organizational behavior is the micro approach Organization theory and design is the macro examination Organization design is concerned with the big picture of the organization and its major departments
Current Challenges
Globalization Intense Competition Ethics and the Green Movement Speed and Responsiveness Social Business and Big Data
Relational Coordination
High level of horizontal coordination Frequent, timely, problem-solving communication Relationships of shared goals, shared knowledge, and mutual respect
The Evolution of Organization Theory and Design
Historical perspectives provide insight into how organization design and management practices have varied over time in response to changes in society.
Four Approaches to Effectiveness Values
Human Relations Emphasis Internal Process Emphasis Open Systems Emphasis Rational Goal Emphasis
Prospector
Learning orientation; flexible, fluid, decentralized structure Values creativity, risk-taking, and innovation
Organizational Purpose
Mission Competitive Advantage Core Competence
Goals Types and Puposes
Mission, Official Goals - communicate purpose and values - bestow legitimacy Operating Goals - provide employee direction and motivation - offer decision guidelines - define standards of performance
Matrix Structure
Multifocused with strong horizontal linkage Conditions for Matrix: - Share resources across the organization - Two or more critical outputs required: products and technical knowledge - Environment is complex and uncertain Allows organization to meet dual demands Largest weakness is that employees have two bosses and conflicting demands
Conditions for Matrix Structure
Need for shared and flexible use of people across products Two or more critical outputs like new products and technical knowledge The environment is complex and uncertain
Reactor
No clear organizational approach; design characteristics may shift abruptly depending on current needs
Horizontal Structure
Organization around core processes - Processes refers to tasks and activities Shift towards horizontal structure during re-engineering Eliminates vertical hierarchy and departmental boundaries
Design Essentials (Chapter 1)
Organization design provides tools for a changing environment. Managers face new challenges including globalization and ethical scrutiny. Organizations are open systems that obtain inputs from the environment, add value, and discharge products and services. Managers shape organizations to perform well for society Organization design perspectives have varied over time. Organization designs range from mechanistic to organic. Most concepts pertain to the top and middle management levels of the organization.
Importance of Organizations
Organizations are a means to an end The corporation has played a significant role in the last 100 years Produce goods and services efficiently Facilitate innovation 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
Adapting to Complexity and Dynamism
Organizations need the right fit between internal structure and the external environment - Adding Positions and Departments - Building Relationships Boundary-spanning roles Business intelligence - Differentiation and Integration - Organic vs. Mechanistic Management Process - Planning, Forecasting, and Responsiveness
Geographic Structure
Organizing to meet needs of users/customers by geography Many multinational corporations are organized by country Focuses managers and employees on specific geographic regions Strengths and weaknesses similar to divisional organization
Operating Goals
Overall Performance Resources Market Employee Development Innovation and Change Productivity
Open Systems Emphasis
Primary goal: growth and resource acquisition Sub-goals: flexibility, readiness, external evaluation Structure: Flexibility Focus: External
Human Relations Emphasis
Primary goal: human resource development Sub-goals: cohesion, morale, training Structure: Flexibility Focus: Internal
Rational Goal Emphasis
Primary goal: productivity, efficiency, profit Sub-goals: planning, goal setting Structure: Control Focus: External
Internal Process Emphasis
Primary goal: stability, equilibrium Sub-goals: information management, communication Structure: Control Focus: Internal
Divisional Structure
Product structure or strategic business units Divisions organized according to products, services, product groups Good for achieving coordination across functional departments Suited for fast change Loses economies of scale Lacks technical specialization
Vertical Information Systems
Reports, computer systems, and written information
Organization Design Alternatives
Required Work Activities Reporting Relationships Departmental Grouping Options
General Environment
Sectors that indirectly impact a firm - Government sector: regulation - Natural sector: sustainability - Sociocultural sector: working conditions - Economic conditions: global recession - Technology sector: massive and constant changes - Financial resources: important to entrepreneurs
The Task Environment
Sectors that the organization interacts with directly to achieve goals - Industry Sector - Raw Materials Sector - Market Sector - Human Resources Sector - International Sector
Dimensions of Environmental Uncertainty
Simple, stable environment: uncertainty is low Complex, stable environment: greater uncertainty Simple, unstable environment: even greater uncertainty Complex, unstable environment: greatest uncertainty
Contingency Factors
Size Organizational technology Environment Goals and strategy Culture
What is an Organization?
Social entities that are goal-directed Designed as deliberately structured and coordinated activity systems Linked to the external environment
Design Essentials (Chapter 2)
Strategic intent includes competitive advantage and core competence Strategies may include many techniques Organizational effectiveness must be assessed No guaranteed measure provides an unequivocal assessment of performance No approach is suitable for every organization
Contingency Factors Affecting Organizational Strucure and Design
Strategy Environment Technology Size/Life Cycle Culture The right mix of design characteristics fits the contingency factors
How Strategy Affects Organization Design
Strategy impacts internal organization characteristics Managers must design the organization to support the firm's competitive strategy
Dimensions of Organizational Design
Structural Dimensions & Contingency Factors
Characteristics of Horizontal Structure
Structure is created around cross-functional processes Self-directed teams, not individuals, are dominant players Process owners are responsible for entire process People on the team are given authority for decisions Can increase organization's flexibility Customers drive the organization, measured by customer satisfaction, employee satisfaction, and financial contribution Culture is one of openness, trust, and collaboration; focus on continuous improvement
Design Essentials Ch 3
Structure must provide a framework, linking organization into whole Provide vertical and horizontal linkages Variety of alternatives for grouping Virtual network extends horizontal coordination Matrix structure attempts to achieve balance Managers must find right balance The purpose of the organization chart is to encourage and direct activities
Measuring Effectiveness
The Goal Approach The Resource-Based Approach The Internal Process Approach The Strategic Constituents Approach Ch 2 - Slide 16
Contemporary Ideas
Today's organizations are still imprinted with hierarchical, formalized mechanistic approach A few organizations have shifted to an organic "bossless" design Open Systems are adaptive and interact with the environment Culture has to engage employees to support a non-hierarchical environment
Organizational Goal
a desired state of affairs that an organization attempts to reach
hierarchical referral
are the vertical lines which identify the chain of command
Mechanistic
characterized by machine-like standard rules and procedures with clear authority Typical Contingency Factors: Large Size Efficiency Strategy Stable Environment Rigid Culture Manufacturing Technology
vertical linkages
coordinate activities between the top and the bottom of the organization
horizontal linkage
coordinates activities across organizational departments - not traditionally drawn on the organizational chart Includes: Information Systems Liaison Roles Task Forces Full-Time Integrator Teams
Rules and Plans
create vertical links
Organic
design of organization is looser, free-flowing, and adaptive Typical Contingency Factors: Small Size Innovation Strategy Changing Environment Adaptive Culture Service Technology
Traditional organization
designed for efficiency Centralized authority focused on top level decision-making
Learning organization
designed for learning emphasizes communication and collaboration Decentralized authority focused on shared tasks and decisions
Organization Design
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
Uncertianty
lack of sufficient information about environmental factors
Resource-dependence perspective
means organizations depend on the environment -Strive to acquire control over resources to minimize dependence -Organizations are vulnerable if resources are controlled by other organizations -Minimize vulnerabilities -Will team up with others when resources are scarce
Complexity
number and dissimilarity of external elements
The Organization is an Open System
obtains Inputs from the external environment adds value through a Transformation Process and discharges Outputs (Products & Services) back to the environment
Strategic Intent
organization's energies and resources are directed toward a focused, unifying, and compelling goal
Inter-organizational relationships
resource transactions, flows, and linkages that occur among two organizations
Dynamism
whether the organization operates in a stable or unstable environment