MGT363H5 Study Guide - Final Guide: Organizational Culture, Learning Organization, Walmart
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CH1: Organizations and Organizational Theory
Closed System: would not depend on its environment; it would be autonomous, enclosed, and sealed off from the outside world. True closed systems cannot exist.
Open System: must interact w/ the environment to survive; it both consumes resources and exports resources to the environment.
-Today‘s orgs have to feel ―at home‖ anywhere in the world
Every Org has 5 Parts (15):
1. Technical Core – ppl who do the basic work for the organization 2. Technical Support – functions that help the org adapt to the environment 3. Administrative
Support – responsible for the smooth op and upkeep of the org, including its physical and human elements 4. Top Management – responsible for directing and
coordinating other parts of the organization 5. Middle Management – responsible for mediating between top mgm and the technical core
~Design the org so that the 5 basic parts adequately perform the subsystem functions of production, maintenance, adaptation, management, and boundary spanning. Try
to maintain a balance among the 5 parts so that they work together for organizational effectiveness.
ORG TYPES AND BASIC COMPONENTS (16)
Structural Dimensions (16): provide levels to describe the internal characteristics of an organization. They create a basis for measuring and comparing organizations.
1. Formalization – pertains to the amount of written documentation in the organization.
2. Specialization – the degree to which organizational tasks are subdivided into separate jobs.
3. Hierarchy of Authority – describes who reports to whom and the span of control for each manager
4. Centralization – refers to the hierarchical level that has authority to make a decision
5. Professionalism – the level of formal education and training of employees
6. Personnel Ratios – refer to the deployment of people to various functions and departments
Contextual Dimensions (19): characterize the whole org, including its size, technology environment, and goals.
1. Size – the organization‘s magnitude as reflected in the number of people in the organization
2. Organizational Technology – refers to the tools, techniques, and actions used to transform inputs into outputs
3. Environment – includes all elements outside the boundary of the organization
4. Goals and Strategy – define the purpose and competitive techniques that set it apart from other organizations
5. Culture – the underlying set of key values, beliefs, understandings, and norms shared by employees
Efficiency (21): refers to the amount of resources used to achieve the org‘s goals. It is based on the quantity if raw materials, money, and employees necessary to
produce a given level of output
Effectiveness: a broader term, meaning the degree to which an organization achieves its goals.
-Efficiency is ―doing things right‖ while effectiveness is ―doing the right thing.‖
- to be effective, orgs need clear, focused goals and appropriate strategies for achieving them
Scientific Management (24): postulates that decisions about orgs and job design should be based on precise, scientific study of individual situationsdevelop precise,
standard procedures for doing each job, select workers with appropriate abilities; train workers in the standard procedures; carefully plan work; provide wage incentives
to increase output. Good for machine-like orgs
Contingency: means that 1 thing depends on other things, and for organizations to be effective, there must be a good ―goodness of fit‖ btwn their structure and the
conditions in their external environment. The correct management approach is contingent—depends on—the organization‘s situation.
-many orgs are shifting from strict vertical hierarchies to flexible, decentralized structures that emphasize horizontal collaboration, widespread information sharing, and
Learning Organization (27): promotes communication and collaboration so that everyone is engaged in identifying and solving problems, enabling the organization to
continuously experiment, improve, and increase its capability based on equality, open information, little hierarchy, and a culture that encourages adaptability and
participation, enabling ideas to bubble up from anywhere to help the organization seize opportunities and handle crises.
Chaos theory: relationships in complex, adaptive systems – including organizations – are nonlinear and made up of numerous interconnections and divergent choice that
create unintended effects and render the universe unpredictable.
Therefore, organizations should be viewed more as natural systems than well-oiled predictable machines (we now have e-business, globalization, diversity, ethical
concerns, shift in technology). Now:
Decentralized structure (vertical to horizontal)
Learning organizations (flexibility and adaptability)
Routine tasks to empowered roles
Formal control systems to shared information
Competitive to collaborative strategy (with suppliers, customer even competition)
Rigid to adaptive culture
CH2: Strategy, Organizational Design, and Effectiveness
Strategies are derived from analyzing the environment. If the org. design constrains goals and strategy the design is changed, also past performance is assessed to set
new goals. Therefore, the goals, strategy and organizational design structure greatly impact effectiveness in today‘s required learning structure.
Mission: org‘s reason for existence – what they are working towards
Operative goals: performance, resources, market goals (share in market), employee development, R&D,
Productivity: What they have to do to get there
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Framework for selecting strategy and design:
Porters 4 strategies:
1 Low-cost leadership
3 Focused low-cost leadership
4 Focused differentiation
Miles and snow‘s strategy typology:
Prospector strategy: (a) learning orientation, (b) fluid, flexible and decentralized structure, (c) strong research capability and (d) values creativity, innovation and risk-
Defender strategy: (a) efficiency orientation, (b) centralized authority and tight cost control and (c) close supervision and little employee empowerment
Analyzer strategy: (a) balances learning and efficiency, (b) tight cost control with adaptability, (c) efficient production for stable product lines and (d) values
creativity, innovation and risk-taking
Reactor strategy: (a) no clear organizational approach, (b) ‗knee jerk‘ responses to changing conditions and (c) design characteristics may shift abruptly
Effectiveness Approaches (65):
Resource-based: focus is on obtaining and managing resources successfully.
It is useful when other indicators of performance are difficult to obtain. E.g. it is hard for a non-profit to measure output goals or internal efficiencies.
Shortcomings: Since it assumes stability in market, it fails to adequately consider the changing value of various resources as the competitive environment and
customer needs change.
Internal – focus is on efficient use of resources and harmonious internal functioning.
Focus based on human relations effectiveness as happy, committed, actively involved employees and a positive org. culture are considered important measures of
effectiveness. Shortcomings: Total output and relationship with external environment are not considered. Evaluations of internal health are often subjective b/c
they‘re not quantifiable.
Goals – focus is on identifying an organization‘s output goals and seeing how the organization achieves them. Eg. level of output, profit or client satisfaction.
Important to consider operative goals as official goals are abstract and difficult to measure. Problems: Multiple goals and subjective indicators of goals attainment.
i.e. there are multiple indicators and different departments have different goals. E.g. Walmart wants to take a hit to revenue by decreasing margins while
increasing expenses, yet they want to increase profit margins.
Integrated effectiveness model – The competing-values model: tries to balance b/w various parts of the organization rather than focusing on one combining several
indicators into one. It considers different expectations from different stakeholders.
It considers following dimensions:
Focus: The dominant values concern issues that are internal or external
Structure: Stable (management values efficiency and top-down control or Flexibility (values learning and change). Result=4 approaches: (sub goals facilitate primary
Conclusion: 4 competing values exist but depending on the type of organization priority is given to some over the others. E.g. a young organization is focused on open
system and human relation b/c they are not well established and is in a learning phase.
Human relations emphasis (internal focus and flexible
Primary goal: human resource development
Sub goals: cohesion, morale, training
Open-systems emphasis (external focus and flexible structure)
Primary goals: growth and resource acquisition
Sub goals: flexibility, readiness, external evaluation
Internal-process emphasis (internal focus and structural
Primary goal: stability, equilibrium
Sub goals: information management, communication
Rational-goal emphasis (structural control and external focus)
Primary goals: productivity, efficiency, profit
Sub goals: planning, goal setting
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CH3: Org Structure
Components of organizational structure:
Reporting relationships (chain of command)
Departmental grouping options e.g. Functional, divisional, departmental
Structure should be designed to provide both vertical and horizontal information flow. Hence, it should meet the information requirements of an organization.
It is necessary to find the best combination between the 2
situations: centralization or decentralization
Structural devices for vertical integration::
1. Hierarchical referral – chain of command; referred
up as problems arise and answer passed down
2. Rules and plans (standards) – established so
employees know how to respond without communicating directly
3. Vertical information systems – incr. Information
capacity making the hierarchy more efficient
Horizontal linkages: amount of communication and coordination horizontally across organizational departments. Tools used include: information systems, direct
contact (b/w management and employees) i.e. May use a liaison position, task forces, full-time integrator (for purpose of coordination across departments e.g. Project
Horizontal linkages and coordination
Functional structure – group of people performing similar function or work process.
• Allows economies of scale within functional departments
• Enables in-depth knowledge & skill development
• Enables organization to accomplish functional goals
• Best with only one or a few products
• Slow response time to environmental changes
• May cause decisions to pile on top, hierarchy overload
• Leads to poor horizontal coordination among departments
• Results in less innovation
• Involves restricted view of organizational goals
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