Introduction to Organization Chapter 1 Introduction to Organization

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

What is Organization? Organization assists the management of a collective activity by providing: Structure and procedures Ways of managing fundamental processes 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 Basic structure: Hierarchy – levels, layers, designated authority, reporting lines Specialization – roles, groups, and units Procedures: Rules and standards Schedules Systems

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

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

Fundamental Purpose of Organization It enables members of an organization to: undertake wide variety of activities according to a division of labor (specialization) 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? 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 They can motivate behavior - e.g. via defining jobs & goals, reward systems They can facilitate behavior - e.g. via providing for communication They can constrain behavior - e.g. via restrictive rules & procedures

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

The Strategic Contribution of Organization

“Organizational Capabilities Represent the Last Truly Sustainable Source of Competitive Advantage” People are the key strategic resource 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: dealing with changing contingencies (e.g. growth) effectively implementing strategy, so gaining competitive advantage managing diversity (e.g. international expansion) promoting a combination of efficiency and innovation

The Key Drivers of Business Strategy that Organization has to Support 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: Strategy (tasks and priorities) People Environment Technology (physical and informational)