CH 1 - Organizations and Organizational Effectiveness

7/31/2019 CH 1 - Organizations and Organizational Effectiveness

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Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall 1-1

Organizations AndOrganizationalEffectiveness


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Explain why organizations exist and thepurposes they serve

Describe the relationship between

organizational theory and organizationaldesign and change, and differentiatebetween organizational structure andculture

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Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall


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Understand how managers can utilize theprinciples of organizational theory todesign and change their organizations toincrease organizational effectiveness

Identify the three principal ways in whichmanagers assess and measureorganizational effectiveness

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Appreciate the way in which severalcontingency factors influence the design oforganizations

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: A toolpeople use to coordinate

their actions to obtainsomething they desire or

value

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Value creation takes place at three stages:input, conversion, and output

Each stage is affected by the environment in

which the organization operates Organizational environment: The set of forces

and conditions that operate beyond anorganizations boundaries but affect its ability toacquire and use resources to create value

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To increase specialization and thedivision of laborDivision of labor allows

specializationSpecialization allows individuals tobecome experts at their job

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: Cost savings that result whengoods and services are produced in large volumeon automated production lines

: Cost savings that resultwhen an organization is able to use underutilizedresources more effectively because they can beshared across different products or tasks

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An organizations environment is the

source of valuable input resources and isthe marketplace into which it releasesoutputs

It is the source of economic, social, and

political pressures that affect anorganizations ability to obtain theseresources

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Transaction costs: The costs associated withnegotiating, monitoring, and governingexchanges between people

Organizations can exert great pressure onindividuals to conform to task and productionrequirements in order to increase production

efficiency

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The five factors help explain why morevalue can be created when people worktogether, coordinating their actions in anorganized setting, than when they workalone

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: The study of howorganizations function and how they affectand are affected by the environment inwhich they operate

: The formal systemof task and authority relationships thatcontrol how people coordinate their actions

and use resources to achieve organizationalgoals

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: The set of sharedvalues and norms that controlsorganizational members interactions witheach other and with suppliers, customers,and other people outside the organization

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: The process bywhich managers select and manage aspectsof structure and culture so that anorganization can control the activitiesnecessary to achieve its goals

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: The process bywhich organizations redesign theirstructures and cultures to move from theirpresent state to some desired future stateto increase their effectiveness

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Contingency: An event that might occur and mustbe planned for

The design of an organization determines how

effectively an organization is able to respond tovarious pressures in its environment and soobtain scarce resources

Challenges organizations must be ready to face

Globalization Changing technology

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Competitive advantage: The ability of onecompany to outperform another because itsmanagers are able to create more value from the

resources at their disposal Core competences: Managers skills and abilities

in value-creating activities

Strategy: The specific pattern of decisions and

actions that managers take to use corecompetencies to achieve a competitive advantageand outperform competitors

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Differences in the race, gender, and nationalorigin of organizational members have importantimplications for organizational culture and

effectiveness Learning how to effectively utilize a diverse

workforce can result in better decision makingand more effective workforce

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The better an organization functions, the morevalue it creates

The correct organizational design can lead tofaster innovation and quickly get new products tomarket

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Decline of the organization Talented employees leave to take positions

in growing organizations

Resources become harder to acquire The process of value creation slows down

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- Having control over the externalenvironment and having the ability toattract resources and customers

- Developing an organizationsskills and capabilities so the organizationcan discover new products and processes

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- Means developing modernproduction facilities using new informationtechnologies that can produce anddistribute a companys products in a timelyand cost-effective manner

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: Guiding principles that theorganization formally states in its annualreport and in other public documents

: Goals that explain why theorganization exists and what it should bedoing

: Specific long-term and

short-term goals that guide managers andemployees as they perform the work of theorganization

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Organizations are a tool people use toachieve their goals

Organizational theory is the study of howorganizations function and how they affectand are affected by their environment

Organizational effectiveness must bemonitored by managers


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CH 1 - Organizations and Organizational Effectiveness