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Summary - Organizational theory design and change
1 Organization and Its Environment
A tool people use to coordinate their actions to obtain something they
desire or value.
The process by which people recognize opportunities to satisfy needs and then gather and use resources to meet those needs
Value creation takes place at three stages:
input(raw materials, money, human resources, information and knowledge), conversion(machinery, computers, human skills and abilities) and output(finished goods, services, dividends value for stakeholders)
Organization’s Environment (customers, shareholders, suppliers, distributors, government and competitors)
The set of forces and conditions that operate beyond an organization’s boundaries but affect its ability to acquire and use resources to create value.
Economies of scale
Cost savings that results when goods and services are produced in large volume on automated production lines.
Economies of scope
Cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across different products or tasks.
The costs associated with negotiating, monitoring, and governing exchanges between people.
The study how organizations function and how they affect and are affected by the environment in which they operate.
The formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organization goals.
The set of shared values and norms that controls organizational members’ interactions with each other and with suppliers, customers, and other people outside the organization.
The process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve it goals. Organizational design is about how and why various means are chosen.
The process by which organizations redesign their structures and cultures to move from their present state to some desired future state to increase their effectiveness.
An event that might occur and must be planned for.
The ability of one company to outperform another because its managers are able to create more value from the resources at their disposal. Increasingly, organizations are discovering that organizational design, change, and redesign are a source of sustained competitive advantage.
Manager’s skills and abilities in value-creating activities.
The specific pattern of decisions and actions that managers take to use
core competences to achieve a competitive advantage and outperform competitors.
External resource approach A method managers use to evaluate how effectively an organization manages and controls its external environment. Secure scarce and valued skills and resources from outside the organization.
- Lower costs of inputs;
- Increase market share or stock price;
- Obtain high-quality inputs of raw materials and employees.
Internal systems approach A method that allows managers to evaluate how effectively an organization functions and resources operate. Coordinate resources with employee skills creatively to innovate products and adapt to changing customer needs. - Cut decision-making time;
- Increase rate of product innovation and increase coordination and motivation of employees;
- Reduce conflict and time to market.
Technical approach A method managers use to evaluate how efficiently an organization can convert some fixed amount of organizational resources into finished goods and services. Convert skills and resources efficiently into finished goods and services.
- Increase product quality;
- Reduce number of defects and production cost; - Reduce delivery time to consumer.
Measuring effectiveness by organizational goals:
1) Official Goals Guiding principles that the organization formally states in its annual report and in other public documents;
* Mission: Goals that explain why the organization exists and what it should be doing
2) Operative Goals Specific long-term and short-tem goals that guide managers and employees as they perform the work of the organization.
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