BUSN 205 Exam 2 (ch 4-7) Dr. Smartt

Organizational size

total number of full time equivalent employees

Hybrid designs

two or more of the common forms of organizational design

Nominal groups

used most often to generate creative and innovative alternatives or ideas.

Delphi grousp

solicits inputs from a panel of experts who contribute individually. Their opinions are combined and, in effect, averaged

Unity of command

suggest that each person within an organization must have a clear reporting relationship to one and only one boss

Options for starting a new business

1. buy an existing business 2. start from scratch

Functional departmentalization

Grouping jobs involving the same or similar activities

EBM

Evidence based management Jeffrey Pfeffer and Bob Sutton define EBM as "a commitment to finding and using the best theory and date available at the time to make decisions"

Technical innovation

A change in the appearance of a product or service or of the physical processes through which a product or service is manufactured

Interacting groups or teams

A decision making group/team openly discuss, argues, and agree on the best alternative

Radical innovation

A new product, service, or technology that completely replaces an existing one

Incremental innovation

A new product, service, or technology that modifies an existing one

Coalition

A positive or negative political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal

Classical model of decision making

A prescriptive approach that tells managers how they should make decisions. It rest on the assumptions that managers are logical and rational and that they make decisions that are in the organization's best interests

Matrix design

Based on two overlapping bases of departmentalization. The foundation of a matrix is a set of functional departments. A set of product groups, or temporary departments, is then superimposed across the functional departments. Employees in a matrix are simultaneously members of a functional department and of a project team

Environment

Burns and Stalker - identified 2 extreme forms of organizational environment: stable (one that remains relatively constant over time) and unstable (subject to uncertainty and rapid change). Next, they studied the designs of organizations in each type of environment. The two kinds of designs that emerged were called mechanistic and organic organization

4 basic situational factors in organizational design

Core technology Environment Organization size and life cycle

OD techniques

Diagnostic activities Team building Survey feedback Third party peace making Process consultation Life and career planning Coaching and counseling

Basic forms of organizational design

Functional U-from Conglomerate H-form Divisional M-form design

Product departmentalization

Grouping activities around products or product groups

Customer departmentalization

Grouping activities to respond to and interact with specific customers or customer groups

Location departmentalization

Grouping jobs on the basis defined geographic sites or areas

Administrative model of decision making

Herbert A. Simon Rather than prescribing how decisions should be made, his view of decision making, now called the administrative model, describes how decisions often actually are made. The model holds that decision makers (1) use incomplete and information, (2) are constrained by bounding rationality, and (3) tend to "satisfice" when making decisions

Decision making

It is the act of choosing one alternative from among a set of alternatives.

Failure to innovate

Lack of resources Failure to recognize opportunities Resistance to change Promoting innovation in organization The reward system Organization culture Intrapreneurship in larger organizations

Advantages of group/team decision making

More information and knowledge are available More alternatives are likely to be generated More acceptance of the final decision is likely Enhanced communication of the decision may result Better decisions usually emerge

Mechanistic organization

Organizations structured their activities in rather predictable ways by means of rules, specialized jobs, and centralized authority

Overcoming resistance in change

Participation Education and communication Facilitation Force-field analysis

Steps in rational decision making

Recognize and define the decision situation identify appropriate alternatives evaluate each alternative in terms of its feasibility, satisfactoriness, and consequences; select the best alternative implement the chosen alternative follow up and evaluate the results of the chosen alternative

SBA

Small Business Association Investor owned companies that borrow money from the SBA to loan to small business with high growth potential

Bounded rationality

The concept that decision makers are limited by their values and unconscious reflexes, skill, and habits

Job specialization

The degree to which the overall task of the organization is broken down and divided into smaller component parts The 1st building block of organization structure.

Disadvantages of group/team decision making

The process takes longer than individual decision making, so it is costlier Compromise decisions resulting from indecisiveness may emerge One person may dominate the group Groupthink may occur

Hierarchy

To ensure coordination and minimize conflict, one manager is in charge of the whole operation

Force field analysis

To facilitate the change, managers start by listing each set of forces and then trying to tip the balance so that the forces facilitating the change outweigh those hindering the change. It is especially important to try to remove or at least minimize some of the forces acting against the change

Understanding resistance in change

Uncertainty Threatened self-interest Different perceptions Feelings of loss

Decision making under risk

Under a state of risk, the availability of each alternative and its potential payoffs and costs are all associated with probability estimates

Investors for new businesses

Venture capital companies, SBA

Decision making under certainty

When the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative, a state of certainty exists

Small business

a business that is privately owned by one individual or a small group of individuals and has sales and assets that are not large enough to meaningfully influence its environment

Managerial innovation

a change in the management process in an organization

Product innovation

a change in the physical characteristics or performance of an existing product or service or the creation of a new one

Process innovation

a change in the way a product or service is manufactured, creating, or distributed

Chain of command

a clear and distinct line of authority among the positions in an organization (unity of command/scalar principle)

Franchising agreements

a contract between an entrepreneur (the franchisee) and a parent company (the franchiser); the entrepreneur pays the parent company for the use of its trademarks, products, formulas, and business plan

Work teams

a group is given responsibility for designing the work system to be used in performing an interrelated set of tasks

Bureaucracy

a model of organization design based on a legitimate and formal system of authority

Entropy

a normal process leading to system decline

Reactive change

a piecemeal response to circumstances as they develop

Organizational development

a planned effort that is organization-wide, managed from the top, and intended to increase organizational effectiveness and health through planned interventions in the organization's process, using behavioral science knowledge

Niche

a segment of a market not currently being exploited

First mover advantage

advantage that comes to a firm because it exploits an opportunity before any other firm does

Job enlargement

all workers perform a wide variety of tasks, some disadvantages: (1) training costs usually increase, (2) unions have argued that pay should increase because the worker is doing more tasks, and (3) in many cases the work remains boring and routine

Job characteristics approach

an alternative to job specialization that does take into account the work system and employee preference.

Venture capital companies

are groups of small investors seeking to make profits on companies with rapid growth potential. Most of the firms do not lend money: they invest it, supplying capital in return for stock

Programmed decisions

are relatively structured or recur with some frequency (or both)

Non programmed decisions

are relatively unstructured and occur much less often than programmed decisions.

Job enrichment

attempts to increase both the number of tasks a worker does and the control the worker has over the job. To implement, managers remove some controls from the job, delegate more authority to employees, and structure the work in complete, natural units.

Situational views on organization design

based on the assumption that the optimal design for any given organization depends on a set of relevant situational factors

Planned change

change that is designed and implemented in an orderly and timely fashion in anticipation of future events

Core technology

conversion process used to transform inputs into outputs • Unit or small batch technology - the product is custom made to customer specifications or produced in small quantities • Large batch - the product is manufactured in assembly-line fashion •Continuous process technology - raw materials are transformed to a finished product by a series of machine or process transformations.

Liaison role

coordinates interdependent units by acting as a common point of contact. This individual may not have any formal authority over the groups but instead, simply facilitates the flow of information between units.

Integration

degree to which the various subunits must work together in a coordinated fashion

The innovation process

development application launch growth maturity decline

Task force

drawing one representative might assemble a task force from each group. The coordination function is thus spread across several individuals, each of whom has special information about one of the groups involved. When the project is completed, task force members return to their original positions

H-form

essentially a holding company that results from unrelated diversification. This approach is based loosely on the product form of departmentalization. Each business or set of businesses is operated by a general manager who is responsible for its profits or losses, and each general manager functions independently of the others

Reciprocal interdependence

exists when activities flow both ways between units. Most complex form

M-form

for multidivisional approach, is based on multiple businesses in related areas operating within a larger organizational framework. This design results from a strategy of related diversification

Job rotation

involves systematically moving employees from one job to another. The jobs do not change, but instead workers move from job to job. Workers who are rotated to a "new" job may be more satisfied at first, but satisfaction soon wanes

Alternatives to job specialization

job rotation, job enlargement, job enrichment, job characteristic approach, and work teams

Established market

market in which several large firms compete according to relatively well defined criteria

U-form

members and units in the organization are grouped into functional departments such as marketing and production. For the organization to operate efficiently in this design, there must be considerable coordination across departments

Integrating departments

permanent members who are assigned temporarily from units that are particularly in need of coordination. An integrating department usually has more authority than a task force and may even be given some budgetary control by the organization

Financing a new business

personal resources strategic alliances lenders (banks, Small Business Association - SBA) Venture capital companies Small-business Investment Companies

Types of decisions

programmed/nonprogrammed

organizational life cycle

progression through which organizations evolve as they grow and mature •first stage - the birth of the organization •Second stage (youth) - characterized by growth and the expansion of organizational resources •Third stage (midlife) - a period of gradual growth evolving eventually into stability •Final stage (maturity) - a period of stability, perhaps eventually evolving into decline

Pooled interdependence

represents the lowest level of interdependence, units with pooled interdependence operate with little interaction - the output of the units is pooled at the organizational level

rules and procedures

routine coordination activities can be handled through rules and standard procedures

Satisficing

suggests that rather than conducting an exhaustive search for the best possible alternative, decision makers tend to search only until they identify an alternative that meets some minimum standard of sufficiency

Scalar principle

suggests that there must be a clear and unbroken line of authority that extends from the lowest to the highest position in the organization

Distinctive competencies of small business

the aspects of business that the firm performs better than its competitors 1. the ability to identify new niches in established markets 2. the ability to identify new markets, 3. the ability to move quickly to take advantage of new opportunities

Decision making under uncertainty

the decision maker does not know all the alternatives, the risks associated with each, or the likely consequences of each alternative

Risk propensity

the extent to which a decision maker is willing to gamble when making a decision

Differentiation

the extent to which the organization is broken down into subunits

Innovation

the managed effort of an organization to develop new products or services or new uses for existing products or services

Span of management

the number of people who report to a particular manager

Sequential interdependence

the output of one unit becomes the input for another in a sequential fashion. This creates moderate level of interdependence

Authority

the power that has been legitimized by the organization.

The need for coordination

the primary reason is that departments and work groups are interdependent - they depend on one another for information and resources to perform their respective activities.

The delegation process

the process by which managers assign a portion of their total workload to others. - managers assigns responsibility - managers give the individual the authority to do the job - the manager establishes the subordinates accountability

Sales forecast

the process of a company predicting what its future sales will be

Departmentalization

the process of grouping jobs according to some logical arrangement

Coordination

the process of linking the activities of the various departments of the organization

Entrepreneurship

the process of planning, organizing, operating, and assuming the risks of a business venture

Decentralization

the process of systematically delegating power and authority throughout the organization to middle and lower level managers

Centralization

the process of systematically retaining power and authority in the hands of higher level managers

Structural coordination techniques

useful devices for maintaining coordination among interdependent units are the managerial hierarchy, rules and procedures, liaison roles, task force, and integrating departments

Organic organization

very flexible and informal model of organization design, most often found in unstable and unpredictable environments.

Max Weber

viewed the bureaucratic form of organization as a logical, rational, and efficient. He offered the model as a framework to which all organizations should aspire - the "one best way" of doing things.

Escalation of commitment

when a decision maker stays with a decision even when it appears to be bad