Chapter 1 Introduction to Organization Scope of Chapter

Chapter 1 Introduction to Organization

Scope of Chapter 1 Purpose and coverage of the book Ø Key terms: organizing, organizations, and organization Ø Components of organization Ø Main organizational choices Ø Signs of organizational deficiencies Ø Strategic contribution of organization Ø

What is Organization? Organization assists the management of a collective activity by providing: 1. Structure and procedures 2. Ways of managing fundamental processes 3. Arrangements for transacting across corporate and national boundaries

Organizing, Organization, and Organizations Organizing: the process of arranging collective effort to achieve an outcome superior to that of individuals working alone Organization: the regularities of organizing in terms of a structure of roles, tasks, and procedures; processes; and arrangements to transact across the boundaries of an organization Organizations: the units within which organizing takes place – usually having a formal identity

Components of Organization (1) Structure and procedures Ø Basic structure: Hierarchy – levels, layers, designated authority, reporting lines Specialization – roles, groups, and units Ø Procedures: Rules and standards Schedules Systems

Components of Organization (2) Ways of managing fundamental processes Ø Integration & coordination Ø Control Ø Reward

Components of Organization (3) Boundary-crossing Ø Ø Outsourcing Virtual Organization Alliances Organizing across borders

Fundamental Purpose of Organization It enables members of an organization to: Ø undertake wide variety of activities according to a division of labor (specialization) Ø coordinate their activities It also defines the boundaries of the organization and its interfaces with the environment

Main Organizational Choices See Box 1. 2 Chapter 1

How Does Organization Contribute to Performance? Ø Ø Management has long been defined as: “getting things done through other people” Therefore how people are organized will affect the contribution they make through their collective effort

Organizational Arrangements can Affect People’s Performance Ø They can motivate behavior - e. g. via defining jobs & goals, reward systems Ø They can facilitate behavior - e. g. via providing for communication Ø They can constrain behavior - e. g. via restrictive rules & procedures

Signs of Organizational Deficiencies Ø Depressed motivation and morale Ø Decision making is slow and of poor quality Ø Conflict and lack of co-ordination Ø Failure to respond innovatively to changing circumstances Ø Rapidly rising costs, especially in administration

The Strategic Contribution of Organization

“Organizational Capabilities Represent the Last Truly Sustainable Source of Competitive Advantage” Ø People are the key strategic resource Ø Organization is concerned with the ability to organize and motivate people in unique ways to achieve strategic objectives

“The Last Truly Sustainable Source of Competitive Advantage” (2) From a strategic perspective, organization is expected to make an important contribution to: Ø dealing with changing contingencies (e. g. growth) Ø effectively implementing strategy, so gaining competitive advantage Ø managing diversity (e. g. international expansion) Ø promoting a combination of efficiency and innovation

The Key Drivers of Business Strategy that Organization has to Support Ø Ø Customer demands for higher quality & service Ability to attract and retain the best people International competition New and rapidly changing technologies

So, the Design of Organization has to “Fit” With: Ø Strategy (tasks and priorities) Ø People Ø Environment Ø Technology (physical and informational)