Understanding Operations and Stakeholder Theory

• Operations occur in manufacturing, services, private, and public sectors
• They are essential to any organization
• An organization's success is determined by its operational performance
• Operations encompass a wide range of responsibilities across various functions
• Operations transform basic inputs into outputs for end customers
• Inputs include materials, energy, and customer requirements
• Outputs are the products or services delivered to customers

The Basic Operations System

• Inputs go into processes, which produce outputs
• Feedback loops provide information for process improvement

Transformation Inputs

• Capital and technology transforms inputs, adding value throughout the entire process
• Energy, know-how and experience converts to finished goods and services

Stakeholder Theory

• Entrepreneurs create value by aligning the interests of all stakeholders
• Stakeholder interests sometimes conflict but should be shaped in the same direction over time
• Successful businesses create value for customers, suppliers, employees, communities, shareholders, financiers, and banks
• Focus must be on aligning the interests of all stakeholders
• Social value comes from satisfying stakeholders, not just a single factor
• Social value arises from collaboration

Value Creation

• Stakeholders seek specific value when starting relationships with organizations
• it starts by creating goods valued by consumers, given the competition
• Senior managers have the ultimate responsibility to leverage resources and devise processes that enable competitive advantage

Designing an Organization

• Organizational design arranges people and jobs to achieve goals
• It's graphically represented as an organizational chart
• It involves assigning responsibilities showing accountability through reporting structures, communication channels, and relationships
• Comprises the organizational components

Why Design an Organization?

• It shows formal authority and power locations and how authority flows
• Design provides a "home" and identity for employees
• Design dictates the position, groupings, and reporting sequences
• It defines individual and unit responsibilities

Organizational Structures

• The best structure depends on the type of work, employee size, revenue, geographic dispersion, and business range
• Vertically tall or horizontal flat are the structures used

Vertical Structure

• CEO is at the top of the management chain, making and delegating decisions
• Power flows from the top down
• Well-defined chain of command, with the top having the most power
• Employees report to their direct superiors
• Each person has specific duties

Advantages of Vertical structures

• Fast efficient decision-making
• Responsibility is placed at the highest levels of command.
• Specialized tasks and clearly defined duties.
• Easier to designate tasks

Disadvantages of Vertical Structures

• Can be rigid, with many rules
• Dependent on a strong top leader, with weak leaders causing frustration
• Lacks transparency, muddling information,
• Employees can feel stifled or that their input is not valued.

Horizontal Structure

• Less defined chain of command, and input is shared between employees
• Employees are assembled into working teams
• Employees can perform different functions, and report to supervisors
• Has limited middle management, with high-level managers handling the daily tasks

Advantages of Horizontal Structure

• Less rules
• More power to the employees
• increased employee satisfaction
• Employees can feel they are part of a team

Disadvantages of Horizontal Structure

• Decision making takes more time and uses more resources
• Employees need more skills leading to more stress
• Require a team environment for successful implementation

Horizontal vs Vertical structures

• A vertical company can frustrate project managers with a lack of authority
• Most new companies opt for a horizontal structure
• Horizontal structures lack a workforce, meaning styles are formal
• Horizontal need more middle management

Emerging trends

• The rapid rise of technology has made for virtual organizations, which are now boundary-less
• Interdependence of departments is emerging
• There is a response to rapid changing environments
• Organizations are streamlining to improve communication and decision-making
• Self-directed work teams now the basic production group
• Expanding jobs, solving problems and fostering communication makes up motivation

Need to Restructure

• A poor design can lead to lost profits and the failure of the institution
• A need to cut costs: removing layers of bureaucracy, increases competitiveness and enhances productivity/profits
• A need to respond to competition/JIT

Characteristics of Leadership

• Flexibility, Tenacity, Empathy, Transparency, Compassion, and Communicativeness
• Decisiveness, Clear vision, Passion, Protection, Understanding and Problem-solving
• Negotiation are some important characteristics of leadership