Organizational Theory Overview

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Questions and Answers

What is a major risk associated with the unitary structure (U-form) in large organizations?

Increased efficiency from specialized roles.

Overwhelming administrative load at the top. (correct)

Difficulties in managing functional differentiation.

Heightened employee satisfaction due to clear roles.

Which assumption about individuals in classical organization theories suggests that control is necessary within organizations?

Individuals seek autonomy and freedom.

Individuals are inherently reliable.

Individuals are exclusively motivated materially. (correct)

Individuals are motivated by altruism.

According to classical organization theory, which principle is emphasized as a method for managing efficiently?

Hierarchy as the only way to manage efficiently. (correct)

Democratic decision-making processes.

Flat organizational structures.

Team-based management systems.

What is highlighted as a severe shortcoming of classical organization theories?

Their simplistic focus on formal features and authority. Signup and view all the answers

What does the principle of 'division of labour' imply in classical organization theory?

It increases efficiency through specialization. Signup and view all the answers

In the context of classical organization theories, what does the term 'functional differentiation' refer to?

The establishment of sub-units focusing on distinct tasks. Signup and view all the answers

Which assumption regarding organizations asserts that only efficiency is important, excluding irrational elements?

All that matters in an organization is efficiency. Signup and view all the answers

What is the main aim of organization theory according to classical perspectives?

To formulate generally applicable rules. Signup and view all the answers

What is the primary aim of the multidivisional structure (M-form)?

Avoid challenges associated with the unitary form (U-form) Signup and view all the answers

Which of the following is NOT a potential criterion for divisionalization in the M-form?

Economic sectors Signup and view all the answers

What major dilemma is associated with the M-form structure?

Decentralization increasing efficiency versus loss of control Signup and view all the answers

What is a key characteristic of the Matrix organization?

Focuses on integration of production with function leadership Signup and view all the answers

Which of the following is a downside of the Matrix organization?

Increased opacity in communication Signup and view all the answers

What challenge do organizations face regarding differentiation and integration?

Complexity due to specialization versus the need for integration Signup and view all the answers

Which strategy is NOT considered a mode of integration?

Increased specialization in departments Signup and view all the answers

What is a potential reason large organizations undergo frequent re-organization?

Mergers and acquisitions Signup and view all the answers

What is a primary characteristic of bureaucracy as defined by Weber?

Hierarchy Signup and view all the answers

Which of the following is a key criticism of Taylor’s scientific management?

Monotony and alienation of workers Signup and view all the answers

Which form of authority does Weber consider as the 'purest' form of organization?

Legal authority Signup and view all the answers

What was a fundamental principle of Fayol's administrative approach to management?

Planning, organizing, coordinating, commanding, controlling Signup and view all the answers

What is one of the major drawbacks of bureaucratic organizations as suggested by critiques?

Inflexibility in adapting to change Signup and view all the answers

How does specialization contribute to efficiency in large organizations?

Promoting learning effects and economies of scale Signup and view all the answers

Which structural evolution is characterized by overcoming the limitations of U-form and M-form organizations?

Network organizations Signup and view all the answers

What was one of the critical aspects lacking in Fayol's principles of administrative management?

Empirical evidence supporting its effectiveness Signup and view all the answers

What led to the perception of bureaucracy as inefficient?

Blind adherence to rules at the expense of goals Signup and view all the answers

In what way did Weber view bureaucracy's impact on individuals within an organization?

It can create one-dimensional individuals Signup and view all the answers

Study Notes

Basic Puzzle

Organization design is crucial for task completion
Traditional production relied on single individuals with all skills, limiting scale
Modern technologies led to large-scale production, necessitating specialization and coordination
Planning and execution roles evolved in larger organizations

Overview

Early organizational theories (Weber, Taylor, Fayol) influenced organizational structuring
Different organizational structures evolved (U-form, M-form)
Classical theories have limitations, leading to new structures
ABB's organizational evolution illustrates this
Evolution and structure are context-dependent

Bureaucracy (1): Weber (1921)

Max Weber, a German sociologist, developed important theories on organizations
His work stemmed from society's rationalization, leading to bureaucratic principles
Bureaucracy is a form of legal authority with rules, specified competencies, hierarchy and accountability for organizational efficiency.

Critique and Re-assessment of Bureaucracy

Bureaucracy is efficient, but can also be rigid and inflexible
Propagation of rules might create 'one-dimensional' individuals
Rules and procedures may not always respond to changing situations and needs

Taylor's Scientific Management (1911)

Taylor focused on optimizing labor processes, viewing organizations as machines requiring careful control
Scientific management involved separating planning from execution, establishing measurable tasks, and focusing on worker efficiency using time-and-motion studies
Specialization increases efficiency due to learning effects, and economies of scale

Fayol's Administrative Approach (1918)

Fayol focused on the managerial processes, rather than the overall design
Organizing is the core function and involves establishing structured organization structures
Five Functions of Management (planning, organizing, commanding, coordinating, controlling) for efficient organizational procedures

Basic Assumptions of Classical Works in Organization Theory

Individuals are inherently unreliable, requiring control
Individuals lack organizational understanding and require direction from above.
Individuals are primarily motivated by material rewards (money).
Organizations are viewed as machines, and formal structure is a central element of operation

Emergence of the Large Corporation

The unitary (U-form) structure emerged due to economies of scale and labor specialization
Growing companies needed new structures (like functional differentiation) to manage complexity
U-form structure can become complex with increasing size

Limits of the Unitary Structure

U-form structure faces limitations due to complex systems and management's need for control.
Interface issues (e.g., communication, responsibility) arise
Administrative burden becomes overwhelming in large organizations, affecting efficiency

Multidivisional Structure (M-form)

The M-form structure evolved to overcome U-form issues by creating semi-autonomous divisions
Divisions allowed increased organizational flexibility
Centralizing management allowed for greater control.

Alternative Design Choices for the M-form

Different organizational alternatives include decentralized departments or the structure for independent firms
The centralization of control in the CEO can reduce efficiency and produce problems within the organization
Efforts to overcome M-form downsides led to alternative solutions such as matrix organizations and project-based structures

Organizational Structure in Practice: The Case of ABB

ABB, a multinational company, demonstrates real-world adaptation to organizational structures.
Acquisitions, mergers, and strategic reorganizations create an evolving organizational structure
A change in structures often mirrors the changes in company strategy, goals, and markets

Solution: Integration

Integration is crucial for successful processing tasks and enabling consistent functioning in an organization.
Two forms of integration (vertical and horizontal) are required
Successful integration balances differentiation and coordination.

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Description

Explore the evolution of organizational design from traditional individual skills to modern specialized roles. This quiz covers key theories by Weber, Taylor, and Fayol, along with different structures like U-form and M-form. Understand the importance of bureaucracy and its impact on modern organizations.