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Ch1 - Organizations and Organizational Theory

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Joel Marcus

Chapter 1 Organizations and Organizational Theory Current Challenges  Biggest issues is coping with rapid change and being able to adapt to the environment  Globalization: contracting different components of the business or partner with foreign companies to gain global advantages such as cheap labour, or specialization in a certain area. This makes the environment extremely complex and competitive  Ethics and Social Responsibility: leaders face tremendous pressure from the government and the public to hold their organizations and employees to high ethical and professional standards  Speed of Responsiveness: responding quickly to environmental changes, organizational crises, or shifting customer expectations. Customers want products tailored to their exact needs; information must be shared; employees need more decision making capabilities  The digital workplace: technology-driven workplace; virtual teams; e-business; trend toward disintermediation (elimination of middle man); organizational leaders need to be technology savvy and build relationships / e-links between their suppliers, customers, partners, and employees  Diversity: organizations need to capitalize on the benefits that a diverse workforce has to offer Organizational Theory helps us understand, diagnose, and respond to emerging organizational needs and problems. What is an Organization? Organizations are comprised of people and their relationships, who interact with one another to perform essential functions that help attain goals: (1) Social entities, (2) Goal directed, (3) Designed as deliberately structured and coordinated activity systems, (4) Linked to the external environment – cannot exist without interacting with customers, suppliers, competitors, and etc. Types of Organizations  Managers in businesses direct their efforts toward profits whereas managers in nonprofits direct their efforts toward creating social impact  Financial resources for nonprofits come from government grants and individual and corporate donations, rather than from the sales of products or services to customer like businesses  Nonprofits have to measure intangible goals such as “improve public health” whereas businesses have conventional “bottom line” Importance of Organizations  Bring together resources to achieve desired goals and outcomes  Produce goods and services efficiently at competitive prices  Facilitate innovation  Use modern manufacturing and information technologies  Adapt to and influence a changing environment  Create value for owners, customers and employees  Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees Perspectives on Organizations  Open Systems: must interact with the environment and continuously adapt to it to survive o To understand the whole organization we must view it as a system, a set of interacting elements that acquires inputs from the environment (e.g. raw material and other physical resources, employees, information, and financial resources), transforms them, and discharges outputs to the external environment (e.g. P/S, pollution, employee satisfaction, and byproducts of the transformation process). o A system comprises several subsystems, which perform the specific functions required for organizational survival, such as boundary spanning (interaction with external environment), production, maintenance, adaptation, and management (smooth operations, adaptation, and management of subsystems) o E.g. the human being, planet Earth, Air Canada  Organizational Configuration o Henry Mintzberg suggests that every organization have five parts: o (1) Technical Core – includes people who do the basic work of the organization  Primary transformation of inputs to outputs  E.g. production department in a manufacturing firm, teachers and classes in a university o Management – responsible for directing and coordinating other parts of the organization  (2) Top management is responsible for setting goals and strategies for the entire organization  (3) Middle management is responsible for implementation and coordination at the departmental level o (4) Technical Support – helps the organization change and adapt to the environment  Scans the environment for problems, opportunities, and technological developments o (5) Administrative Support – responsible for the smooth operation and upkeep of the organization  E.g. HR activities and maintenance activities Dimensions of Organizational Design Structural Dimensions provide labels to desc
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