Textbook Notes (362,797)
Canada (158,054)
Business (2,364)
BU398 (130)
Chapter 9

Chapter 9 BU398.docx

5 Pages
Unlock Document

Wilfrid Laurier University
Shawn Komar

BU398 Chapter 9 – Orientation Size, Life Cycle, and Decline Week 7 Orientation Size: Is Bigger Better? Pressures for Growth -Many executives have observed that firms must grow to stay economically health and believe that to stop growing is to stagnate -To be stable means that customers may not have their demands fully met or that competitors will increase market share at the expense of your organization -Scale is crucial to economic success in marketing-intensive companies such as Coca Cola – greater size gives them power in the marketplace and thus increases revenues -Growing organizations can be vibrant, exciting places to work, which enables these companies to attach and keep quality employees Dilemmas of Large Size Large -Huge resources and economies of scale are needed for many organizations to compete globally -Large organizations have the resources to be a supportive economic and social force in difficult time -Large organizations are also able to get back to business more quickly following a disaster, giving employees a sense of security and belonging during an uncertain time -Large companies are standardized and complex -The organization can provide longevity, raises, and promotions Small -Provides quick reaction to changing customer needs or shifting environmental and market conditions -Have a flat structure and an organic, free-flowing management style that encourages entrepreneurship and innovation -Smaller organizations have become the norm -The growth of the Internet and other information technologies is making it easier for small companies to act big Big Organization/Small Organization Hybrid -The advantage of small organizations sometimes enable them to succeed and grow large -“Big-organization/small organization hybrid” – combines a large corporation’s resources and reach with a small company’s simplicity and flexibility -The development of new organizational forms, with an emphasis on decentralization authority and cutting out layers of the hierarchy, combined with the increasing use of information technology is making it easier than ever or organizations to be simultaneously large and small, thus capturing the advantages of each Organizational Life Cycle -Suggests that organizations are born, grow older, and eventually die -Organization structure, leadership style, and administrative systems follow a fairly predictable pattern through stages in the life cycle -Stages are sequential and follow a natural progression Stages of Life-Cycle Development 1. Entrepreneurial stage – the start-up of an organization, when an organization is born, the emphasis is on creating a product or service and surviving in the marketplace -Crisis: Need for leadership – as the organization starts to grow, the larger number of employees causes problems BU398 Chapter 9 – Orientation Size, Life Cycle, and Decline Week 7 2. Collectivity Stage – The organization grows and develops a more elaborated design. Strong leadership is obtained if leadership crisis is overcome -Crisis: Need for delegation with control – if the new management has been successful, lower- level employees gradually find themselves restricted by the strong top-down leadership. Lower- level managers begin to acquire confidence in their own functional areas and want more discretion. 3. Formalization Stage – Involves the installation and use of rules, procedures, and control systems. Communication is less frequent and more formal -Crisis: Need to deal with too much red tape – The organization seems too large and complex to be managed through formal programs 4. Elaboration Stage – The organization becomes more flexible in its design. The solution to the red-tape crisis is a new sense of collaboration and teamwork. Managers develop skills for confronting problems and working together. -Crisis: Need for revitalization – After the organization reaches maturity, it may enter periods of temporary decline. Top managers are often replaced during this period Organizational Characteristics during the Life Cycle Characteristic Entrepreneurial Collectivity Formalization Elaboration Structure Informal, one-person Mostly informal, Formal procedures, Teamwork within show some procedures division of labour, bureaucracy, small- new specialties company thinking added Products or services Single product or Major product or Line of products or Multiple product or service service, with services service lines variations Reward and control Personal, Personal, Impersonal, Extensive, tailored to systems paternalistic contribution to formalized systems product and success department Innovation By owner-manager By employees and By separate By institutionalized managers innovation group R&D department Goal Survival Growth Internal stability, Reputation, complete market expansion organization Top management Individualistic, Charismatic, Delegation with Team approach, style entrepreneurial direction-giving control attack bureaucracy Organizational Bureaucracy and Control -As organizations progress through the life cycle, they usually take on bureaucratic characteristics as they grow larger and more complex What is Bureaucracy? -Most efficient possible system of organizing -Bureaucracy – rules and standard procedures enable organizational activities to be performed in a predictable, routine manner -Specialized duties mean that each employee had a clear task to perform -Bureaucratic characteristics: -Rules and procedures -Specialization and division of labour -Hierarchy of authority -Technically qualified personnel -Separate position from position holder -Written communications and records BU398 Chapter 9 – Orientation Size, Life Cycle, and Decline Week 7 Size and Structural Control -Organization size has been described as an important variable that influences structural design and methods on control -Large organizations differ from small organizations on the basis of formalization, centralization and personnel ratios Formalization and Centralization -Formalization – rules, procedures, and written documentation, such as policy manuals and job descriptions, that prescribe the rights and duties of employees -Large organizations are more formalized -The reason for this is because large organizations rely on rules, procedures, and paperwork to achieve standardization and control across their large number of employees and departments -Centralization – level of hierarchy with authority to make decisions -In centralized organizations, decisions tend to be made at the top -As organizations grow larger, decisions cannot be passed to the top -In small organizations the top exec can effectively be involved in every decision; large and small Personnel Ratios -The ratio of top admin to total employees is actually smaller in large organizations, indicating that organizations experience admin economies as they grow larger
More Less

Related notes for BU398

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.