Organizational Theory and Design Lesson 1
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Questions and Answers

What is an organization?

Organizations are social entities that are goal directed, deliberately structured and coordinated activity systems linked to the external environment.

What are the two types of organizations based on their relationship with the external environment?

  • Hybrid systems
  • Open systems (correct)
  • Static systems
  • Closed systems (correct)

    • Organization is both a social entity and a system.

    True

    Structural dimensions describe the internal features of the organization, while ______ dimensions describe both internal and external factors.

    <p>contextual</p> Signup and view all the answers

    Which of the following is a key factor in structural dimensions of an organization?

    <p>Formalization</p> Signup and view all the answers

    What is the purpose of an organization chart (organigram)?

    <p>To represent the formal structure and line of authority of an organization.</p> Signup and view all the answers

    Human Resource Management involves making decisions on resources and aligning them with the organization's strategy.

    <p>True</p> Signup and view all the answers

    Define 'Culture' in the context of an organization.

    <p>Culture refers to the values, beliefs, and understanding of the organization that influence employee behavior.</p> Signup and view all the answers

    ________ problems have the highest level of uncertainty and are difficult to forecast or face.

    <p>Unstructured</p> Signup and view all the answers

    What is the purpose of Request for Proposals (RFPs)?

    <p>To write down a synthetic report formalizing the wealth status of the organization for presentation to external providers.</p> Signup and view all the answers

    What are the types of sourcing mentioned in the text?

    <p>Multiple-supplier sourcing</p> Signup and view all the answers

    In Total Outsourcing, organizations rely on multiple suppliers for different services.

    <p>False</p> Signup and view all the answers

    The ____________ must be maintained in-house according to the text.

    <p>core business</p> Signup and view all the answers

    Match the organizational tool with its purpose:

    <p>Retention = Control of monitoring inside the organization Governance model = Defining the proper governance structure Value for money mechanism = Ensuring value creation for all parties involved Duties and responsibilities allocation = Clear allocation of responsibilities</p> Signup and view all the answers

    What is insourcing?

    <p>Insourcing is when a function or organizational unit is closely connected with the core business of the organization and is handled with internal resources.</p> Signup and view all the answers

    What is the purpose of the organization design?

    <p>To create roles, processes, and structures to achieve organizational goals.</p> Signup and view all the answers

    The external environment is considered a contingency factor in organization design.

    <p>True</p> Signup and view all the answers

    ______ is the extent to which goals are realized within an organization.

    <p>Effectiveness</p> Signup and view all the answers

    Match the following strategy with its description:

    <p>Differentiation strategy = Distinguishing products/services in the industry to increase customer loyalty Low-Cost leadership = Increasing market shares by keeping costs low compared to competitors</p> Signup and view all the answers

    What are the four types of strategic behavior according to Miles and Snow's Strategy Typology?

    <p>Reactor</p> Signup and view all the answers

    What is the main focus of a company following the Defender strategic behavior?

    <p>Stability, internal efficiency, and maintaining existing customers</p> Signup and view all the answers

    A Prospector organization typically values innovation, risk-taking, and creativity.

    <p>True</p> Signup and view all the answers

    In an Analyzer strategy, the organization tries to balance efficiency and ________.

    <p>learning</p> Signup and view all the answers

    What is the Competing Values Model used for?

    <p>The Competing Values Model is used to help organizations understand how they can focus on different perspectives.</p> Signup and view all the answers

    Which sectors are part of the task environment of an organization? (Select all that apply)

    <p>Market sector</p> Signup and view all the answers

    Organizations cannot choose their general environment.

    <p>True</p> Signup and view all the answers

    _________ uncertainty refers to factors that an organization deals with regularly on a day-to-day basis.

    <p>Environmental</p> Signup and view all the answers

    What is the purpose of boundary-spanning roles within an organization?

    <p>Boundary-spanning roles aim to breach external information and connect the organization with the external environment.</p> Signup and view all the answers

    What is the main purpose of differentiation in organizational departments?

    <p>To meet the needs of the sub-environment</p> Signup and view all the answers

    In a mechanistic organizational form, centralization is supposed to be high.

    <p>True</p> Signup and view all the answers

    What kind of environment is suitable for implementing an organic organizational form?

    <p>rapidly changing environment</p> Signup and view all the answers

    _______ firms can be properly implemented in unstable environments with rapidly changing conditions.

    <p>Organic</p> Signup and view all the answers

    Match the following strategies to reduce dependence on external resources:

    <p>Establish linkages with other companies = Acquire ownership or resources Shape the environmental domain = Change the task environment</p> Signup and view all the answers

    In the Entrepreneurial Stage, what are the fundamental functions that need emphasis?

    <p>Production and marketing</p> Signup and view all the answers

    What is the primary need when facing a crisis in the organization?

    <p>Leadership</p> Signup and view all the answers

    Why is delegation important in the Collectivity Stage? Select the correct option.

    <p>To avoid overwhelming top management</p> Signup and view all the answers

    In the Formalization Stage, the organization invests in internal systems, including codified internal systems for the recruitment, selection, promotion, and monitoring of ______ resources.

    <p>human</p> Signup and view all the answers

    What is the importance of studying organizational culture?

    <p>Organizational culture is important because it guides employee decision-making and deals with two critical functions.</p> Signup and view all the answers

    What are the two different types of organizational culture mentioned in the text?

    <p>Non-constructive</p> Signup and view all the answers

    Adaptability culture, represented by the color ______, focuses on investing in the ability to detect, interpret, and translate signals from the environment into new responses.

    <p>yellow</p> Signup and view all the answers

    Mission culture is characterized by an internal focus and high level of specialization.

    <p>True</p> Signup and view all the answers

    Match the following organizational culture types with their primary characteristics:

    <p>Clan Culture = Focus on human resources and high commitment of employees Bureaucratic Culture = Methodical approach, high formalization, and low commitment Adaptability Culture = Investing in flexibility and detecting signals from the environment Mission Culture = External focus, stability, and high level of specialization</p> Signup and view all the answers

    Study Notes

    What is an Organization?

    • An organization is a social entity that is goal-directed and deliberately structured and coordinated activity system.
    • It is linked to the external environment, and managers deliberately structure and coordinate organizational resources to achieve the organization's purpose.

    Key Features of an Organization

    • An organization is a system composed of two forms: formal (human resources) and informal (human behavior).
    • There are different types of goals: individual, group/team, and corporate goals.
    • Organizations exist to achieve complex goals that individuals cannot achieve on their own.
    • They produce goods and services efficiently, facilitate innovation, and adapt to and influence the environment.

    Organization as an Open System

    • An open system interacts with the external environment, and boundaries exist to delimit the organization from the environment.
    • The organization is a consumer and exporter of resources, and decision-makers must find a structure that permits interaction with the external environment.

    Mintzberg's Five Subsystems

    • Top Management: responsible for defining targets and strategies.
    • Middle Management: responsible for translating top management's instructions to other parts of the organization.
    • Technical Core: responsible for transforming raw materials into products and services.
    • Technical Support Staff: responsible for scanning the environment for problems and opportunities.
    • Administrative Support Staff: responsible for the smooth operation of the organization.

    Structural and Contextual Dimensions

    • Structural Dimensions:
      • Formalization: the degree to which organizational tasks are standardized and written down.
      • Specialization: the degree to which tasks are subdivided into different and separated jobs.
      • Hierarchy of Authority: who reports to whom and the span of control.
      • Complexity: the number of variables composing the system.
      • Centralization: the hierarchical level of the organization responsible for making strategic decisions.
    • Contextual Dimensions:
      • Size: the number of employees composing the organization.
      • Organizational Technology: the tools, techniques, and actions used to transform inputs into outputs.
      • Environment: the external factors that affect the organization, including the general environment and task environment.
      • Goals and Strategy: the plan of action to achieve defined goals.

    Uncertainty and Problem-Solving

    • Uncertainty is a crucial problem for organizations, and managers must deal with structured, semi-structured, and unstructured problems.

    Organization Chart and Designing Boundaries

    • The organization chart represents the formal structure of the organization, but does not capture the informal structure.
    • Designing boundaries involves defining the system's limits and considering internalization, externalization, and outsourcing options.

    Human Resource Management

    • Human Resource Management is about aligning the strategy with human resource decisions, such as hiring, training, and rewarding employees.
    • The HR director's duties include strategic and operative decisions about human resources.### Outsourcing Phases
    • Preliminary phases: internal analysis, evaluation of criticalities/problems, and selection of activities to be outsourced
    • Request for Proposals (RFPs): a synthetic report of the organization's wealth status, useful for presentation to external providers
    • Meeting with potential suppliers, discussion, and selection of the best candidates
    • Definition of the relationship with the supplier, including withdrawal clauses and collaborative relationship
    • Signing of the outsourcing agreement, including costs and management of the relationship

    Cost Containment

    • Costs associated with outsourcing: fee, indirect costs, and management of the relationship
    • Cost containment is not always true; risks and benefits must be considered

    Strategic Reasons

    • Reasons for outsourcing: focus on core business, access to world-class capabilities, and reduction of costs
    • Benefits of outsourcing: cost savings, improved quality, and increased efficiency

    Problems with Outsourcing

    • Reduction of autonomy: dependence on external provider increases uncertainty
    • Loss of control of critical variables: reliance on external provider can lead to loss of control
    • Risk of cost underestimation: need to consider all phases' costs, including indirect ones
    • Incorrect evaluation of timing: period of time between identifying technicality and signing the contract
    • Possibility of receiving poor-quality service: need to establish a Service Level Agreement (SLA)
    • Possibility of running into an irreversible process: need to consider exit barriers and withdrawal clauses

    Contract Monitor

    • Responsible for benchmarking activities to check the quality of the service received
    • Ensures the Service Level Agreement (SLA) is respected

    Sourcing

    • Types of sourcing: total/global outsourcing, multiple-supplier sourcing, and insourcing
    • Total/global outsourcing: long-term contract with a single supplier, 1-to-1 relationship
    • Multiple-supplier sourcing: multiple suppliers for different activities and services, 1-to-many relationship
    • Insourcing: keeping the function/organizational unit in-house, closely connected to the core business

    Total Outsourcing

    • Long-term contract with a single supplier
    • 1-to-1 relationship, mutual, and collaborative
    • In-house retention of strategic control: maintaining in-house monitoring activities

    Multiple-Supplier Sourcing

    • Multiple suppliers for different activities and services
    • 1-to-many relationship, with a single out-source
    • Coordination costs: adding to the monitoring costs
    • Standardization and coordination of operations: essential for achieving a common goal

    Contractual Relationship

    • Formal part: written contract between the out-sourcee and outsourcers
    • Informal part: exchange of information and knowledge between vendors
    • Polymorphism: both formal and informal structures

    Risks and Tools

    • Risks: inaccurate agreements, bad contracts, and wrong outsourcing partners
    • Tools to mitigate risks: retention of control, governance model, allocation of services, value for money mechanism, and standard/codified processes

    Insourcing

    • When the function/organizational unit is closely connected to the core business
    • When in-house skills are sufficient to deal with the problem
    • When the market cannot provide the required competencies

    Organization Design

    • Creation of roles, processes, and structures to ensure the organization reaches its goals
    • Definition of mission, operative goals, and strategy
    • Interrelationship between strategy, organization design, and effectiveness
    • Role of top management: fundamental in centralized organizations
    • External environment: contingency factor, important for defining the organization's direction
    • Internal analysis: awareness of the organization's strengths and weaknesses, leadership, and past performances### Organizational Design and Strategy
    • There is a double exchange of information between strategic intent and organizational design.
    • Organizational design is about defining the structural form, which can be oriented towards learning/human resources or efficiency.

    Elements of Organizational Design

    • Definition of structural form
    • Information and control system
    • Communication and interdependencies
    • Human resource management
    • Organizational culture
    • Inter-organizational linkages

    Effectiveness Outcome

    • Effectiveness is the extent to which goals are realized.
    • Performance management is essential to measure effectiveness.
    • Feedback is crucial to influence the internal situation.

    Strategic Intent

    • The strategic intent is the mission of the organization, which is defined by top managers.
    • The mission conveys the organization's vision, shared values, and beliefs.
    • Operative goals are specific, measurable, and linked to short-term goals.

    Types of Operative Goals

    • Overall performance: profitability, growth, and output volume.
    • Resources: acquisition of needed material and financial resources.
    • Market and market shares: growth or reduction of market shares.
    • Employee development: training, promotions, and health and safety.
    • Innovation and change: number of products made using acquired resources.

    Strategy

    • Strategy is a plan for interacting with the competitive external environment.
    • Managers must select specific strategy design to achieve organizational goals.
    • Models exist to aid in formulating strategy, such as Porter's Competitive Strategy.

    Porter's Competitive Strategy

    • Differentiation strategy: distinguishing products or services from others in the industry.
    • Low-cost leadership strategy: increasing market shares by keeping costs low compared to competitors.

    Miles and Snows Strategy Typology

    • Prospectors: learning-oriented, flexible, and decentralized, with a focus on innovation and risk-taking.
    • Defenders: efficiency-oriented, centralized, and focused on internal control and stability.
    • Analyzers: hybrid, balancing efficiency and learning, with a focus on maintaining traditional customers and reaching new ones.
    • Reactors: responding to the environment, threats, and opportunities in a customized way.

    The Organizational Design

    • The strategy and design of the organization mutually influence each other.
    • Managers must design the organization to support the firm's competitive strategy.

    Mechanistic and Organic Design

    • Mechanistic design: centralized, formalized, and specialized, with a focus on efficiency and control.
    • Organic design: decentralized, empowered, and flexible, with a focus on innovation and learning.

    Contingency Factors

    • Strategy
    • Environment
    • Technology
    • Size/life cycle
    • Culture
    • Dimension

    Effectiveness

    • Effectiveness is a broad concept, evaluating the extent to which multiple goals are attained.
    • Efficiency is a narrow concept, referring to the internal workings of the organization.
    • Effectiveness approaches:
      • Goals approach: focuses on the output side of the organization.
      • Resource-based approach: focuses on the ability to obtain resources from the environment.
      • Internal process approach: focuses on the internal organization of the system.
      • Strategic constituents approach: relies on the satisfaction of internal-external stakeholders.

    Integrated Effectiveness Model

    • Combines different perspectives to overcome the limitations of the other approaches.
    • Demonstrates how different perspectives can exist inside the same organization.

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    Description

    This quiz covers the basics of organizational theory, including the concept of uncertainty and its impact on organizations, polymorphism, and the multi-contingent approach. It also explores the contextual dimension of organizational design.

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