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Introduction to Organization

• Organization theory operates from a macro perspective, analyzing the organization or its subunits, focusing on the overall ability to achieve goals and adapt to its environment
• Organizational behavior studies workplace behavior of individuals and teams, focusing on employee performance, attitudes, values, motivation, and team dynamics
• There's a potential overlap between micro and macro perspectives in organizational studies

Organizations Defined

• Organizations are social entities pursuing specific goals
• They feature deliberately structured and coordinated activity systems
• They are linked to the external environment

Types of Organizations

• Family-owned businesses
• Start-ups
• Non-profit Organizations
• Government-owned organizations
• Online Communities
• Crowd-based organizations
• Crowd-open organizations

Purposes of Organizations

• Create value for owners, customers, and employees
• Aggregate resources to achieve desired goals
• Produce goods and services
• Facilitate innovation
• Use modern technologies
• Adapt to changing environments
• Address diversity, ethics, and coordination challenges

Current Organizational Challenges

• Globalization increases market, technology, and organizational interconnectedness, leading to outsourcing and strategic partnering
• Intense competition creates pressure to reduce costs and innovate
• Calls for higher ethical standards drive "sustainability" as imperative
• Organizations must respond quickly to environmental changes, crises, and shifting expectations due to globalization and tech

Organization Design

• Emphasizes the management side of organization theory, focuses on constructing and adapting organizations to achieve strategic goals
• Organization structure is a key result of organization design

Organizational Structure

• Refers to how labor is divided into distinct tasks and coordinated
• It is depicted through organizational charts
• Differentiation and integration are key structural concepts achieved through formalization, specialization, centralization, and hierarchy

Dimensions of Organization Design

• Dimensions interact with eachother
• Key Dimensions are:
  • Contextual:
    • Size (number of employees or total sales/assets)
    • Organizational Theory (tools and techniques to transform inputs to outputs)
    • Environment (external elements like customers)
    • Strategy and goals (define competitive techniques and resource allocation)
    • Culture (values and norms)
  • Structural:
    • Formalization (number of written documents)
    • Specialization (division of labor)
    • Hierarchy of authority (span of control)
    • Centralization (decision-making authority)
    • Professionalism

Measuring Organizational Success:

• Efficiency is the measure of resource use to achieve goals, doing things right
• Effectiveness is the degree of goal achievement, doing the right thing

Stakeholder Approach

• Balances needs of groups inside and outside who have stake in the organization's performance
• A stakeholder is any group with a stake in the organization's performance

Major Stakeholder Groups

• Employees (satisfaction, pay, supervision)
• Customers (high-quality goods, services, value)
• Creditors (creditworthiness, fiscal responsibility)
• Management (efficiency, effectiveness)
• Government (obedience to laws, fair competition)
• Union (employee pay, benefits)
• Community (corporate citizenship, community affairs)
• Suppliers (satisfactory transactions, revenue from purchases)
• Owners/shareholders (financial return)

Two Organization Design Approaches

• Mechanical System Design: Appropriate for Routine tasks, Stable environment, and Efficiency Performance
• Natural System Design: Appropriate for Turbulent Environment, Learning organization, and Collaborative competitive Strategy

Role of Strategy in Organization Design

• Strategy interacts with the competitive environment to achieve goals
• Goals define the organization's desired outcomes

Strategic Vision and Mission

• Vision is an aspirational description of future state
• Mission defines reason for being, and legitimizes the business
• Value statements set out guiding principles

Operating Goals

• Guide employees toward goal accomplishment
• Act as guidelines for behavior

Goal Types

• Resource: acquisition of material and financial resources
• Market: market share and standing
• Employee development: training, safety, and growth
• Productivity: output achieved from available resources
• Innovation and change: internal flexibility and readiness to adapt

Framework for Selecting Strategy and Design

• Porter’s Competitive Strategies:
  • Differentiation: stand out from products or services from others
  • Low-Cost Leadership: increase the market share by keeping costs low compared to its competitors
• Organizations determine whether to focus broadly or narrowly on market segments

Miles and Snow’s Strategy Typology

• Managers create a strategy adapting to the external environment and its demands

Assessing Organizational Effectiveness

• Efficiency = resources to produce unit of output
• Effectiveness = degree to which organization achieves its goals

Ways to Measure Effectiveness

• Goal Approach: measures profitability, market share, growth, social responsibility, and product quality
• Resource-Based: considers bargaining position and use of tangible/intangible resources
• Internal Process Approach: measures corporate culture, employee trust, communication, coordination, and operational efficiency
• Strategic Constituents: assesses returns for owners, employee pay, and product quality for customers

Integrating Measures

• Effectiveness requires blending various values

Contingency Factors

• Call for fit, suggests best way to organize.

Fundamentals of Organization Structure

• Structure enables acheivement of its goals to enable information flow and coordination

Three elements of organization structure

• Formal reporting relationships (hierarchy levels and management span of control)
• Grouping of individuals (department creation
• Design of systems and processes (effective communication and coordination)
• Organization charts help visuall represent the structure of processes

Information Sharing

• Must have vertical and hoizontal information flow

Traditional Organizations

• It is the central authority, with a mechanistic design based to be more vertical, with a specialized tasks and a few inter department terms

Horizontal Organizations

• Focuses in shared decision making, more horizontal informtion and very few rules

Linking

• Hierarchical referral identifies chain of command
• Rules/plans create vertical links.

Horizontal

• Uses Liaison roles and full timeIntegrators

Horizontal Coordination

• It is resource intensive
• Ex. Apple is collaborative with "no committess"

Functional, Divisional and Geographical Grouping

• Focuses on reporting, work activities and grouping

Principle options of structural design

• It should be grouped on the basis of common function
• Slow response to environmental changes

Divisional structure

• Organize by product , service and product groups

Matrix structure

• Strong horizontal linkage
• Allows organization ot meet dual demands

Hybrid Structures

• Combine various structure approaches, tailored to specific needs
• Often used in rapidly changing environments

External Environment

• Include Industry, raw materials and market sector

Adapting to uncertainty in enviuronment

• Organizations must cope and manage uncertainty to be effective
• There are basic organization design option

Organic Form

• Employees should contribute to common tasks

Adapting to a changing environment

• Organizations need between internal structue and external environment
• Ex Blackburry failing in the modern day

Establishing inter organizational linkages

• Includes ownership or adverse public relations

Interorganization Relationships

• transactions, and linkages that occur

What is organizational culture good for?

• Proivdes a sense of organizaitonal identioty