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Chapter 4

Chapter 4 Notes

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Department
Administrative Studies
Course
ADMS 1000
Professor
Eytan Lasry
Semester
Fall

Description
Readings – Chapter 4 The Changing Nature of Organizations Bureaucratic style= tall/hierarchical, rigid, rule oriented, buffered from environment, narrow market Modern organizations: flat, fluid, integrated, global Flat Organizations De-layering of organizational hierarchies Wider spans of control Due to downsizing Increased speed of decision making Organizations react faster to demands of changing environment More responsibility & self-managing from the lower levels People closest to customers or producing the product are more involved in the decision making process Fluid Organizations More flexible “just-in-time” inventory Minimizes costs No longer need to maintain a fixed supply of labour; make as demands come Temporary/contract-based employment Integrated Organizations Less focus on the need for unity of command & authority Not important for hierarchies More integration among departments is encouraged cross-functional work groups Leads to information sharing Building a close relationship with external environment; organization has a close relationship with suppliers or others companies www.notesolution.com Global Organizations Globalization increase in competition, greater access to more markets An organization may have networks of members from across the world What is an Organization? Social entities they are generated & maintained by people; involve human interaction Interact with the environment organizations obtain inputs from its environment (raw materials, people, technology etc), then they are transformed into outputs (goods, services etc) Created to achieve goals goal directed Possess some sort of structure structures to ensure work is properly allocated & coordinated Metaphors for What an Organization Means It can be a machine, living organism, political system, theatre, sports team, family etc Organizations as Systems Interdependent elements working together to achieve goals Open system organizations are entities that are embedded in, & dependent on exchanges with the environment they operate within (see diagram in notebook) Closed systems fully self-sufficient entities requiring no interaction with the environment What Constitutes an Organization’s Structure? 1. Work Specialization Horizontal differentiation degree of differentiation between horizontal units of the organization, based on things like orientation of the members, the nature of their jobs & their education or training. The greater the number of occupations in an organizations that require specialized knowledge/skills, the more complex the organization. 2 types functional & social specialization Functional specialization division of job into simple, repetitive tasks Social specialization level of professionalism among employees 2. Centralization Decision making power can be at the top of the organization * high centralized www.notesolution.com Decision making power can be at the lower part of the organization * decentralized More organizations shifting towards decentralized decision making to make decisions more efficient/fast 3. Span of Control (see notebook for diagram) The number of people reporting to a supervisor This determines the number of managers & levels there are in the organizational hierarchy (vertical differentiation) A narrow span of control reflects a tall organization; wide span of control reflects a flat organization Easier to manage narrow spans of control, however it’s costly & more time consuming & discourages employee’s autonomy & self-management 4. Formalization The degree to which jobs within the organization are standardized High level of formalization = high standardized work clear rules; little self discretion Intended to ensure that performance was consistent & reliable What Determines Organizational Structure? Mechanistic organizations maintain jobs that are narrow in scope; decision making is centralized at the top of the hierarchy & work is conducted within highly formalized rules & procedures Organic organizations tend to have jobs that are enriched with more variety & task responsibilities; team-based approach to authority & control decision making is decentralized throughout the organization. The worker is less restricted with fewer rules & regulations Sources of Influence on the Structure of Organizations 1. Strategy Structure should follow strategy Organic organization would focus on innovation; mechanistic would focus on cost & efficiency 2. Organizational Size Larger organizations tend to be like mechanistic structure – the need of control. Some large organizations (Microsoft) can have an organic structure—based on innovation, has team-based approach www.notesolution.com 3. Technology How an organization transforms its inputs into services/products. Ie, assembly line Routine technology: automated & standardized operations (mass production) Non-routine technology: not standardized. Ie, conducting genetic research or custom- made furniture Routine = mechanistic; non-routine = organic 4. Environment Environment consists of suppliers, customers, competitors, the government, general Static environment: little if any change – no new competitors, technology, government regulatory changes etc = mechanistic structure Dynamic environment: much uncertainty & undergoes much change = organic The Importance of the Environment Contingency theory: a natural outgrowth of systems theory; all organizations are open systems that can only survive through continuous & successful interaction with their environment; organizations adapt to “fit” their environment Focuses on the contextual factors that can influence the structure & management of organizations There is no ideal way to organize ; but there is one best way to organize Organizations can adapt to changing environmental conditions Factors that can influence organizational design Environmental uncertainty: the rate at which market conditions & production technologies change. lessons for managers: the need for managers to take great caution in the way they interpret the organization’s environment; managers must accurately define environmental factors in order to
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