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Samenvatting organisation theories GEO2-2218
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Samenvatting organisation theories GEO2-2218
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(HER)TENTAMEN/ EXAM: Organizational Theory & Design (OTD) for Pre-MSc
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Summary Organizational Theory, Design, and Change - Organizational Structure
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Samenvatting Organizational Theory, Design, and Change - Organizational Structure (EBP670C05)
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Organisation theoryChapter 1:
What is an organisation?
Organization: A tool people use to coordinate their actions to obtain something they desire or value
=> to achieve their goals.
Entrepreneurship: The process by which people recognize opportunities to satisfy needs and then
gather and use resources to meet those needs.
How does an organization create value?
Organizational environment: The set of forces and conditions that operate beyond an organizations
boundaries but affect its ability to acquire and use resources to create value.
Why do organizations exist?
Five reasons for the existence of organizations:
To increase specialization and the division of labor
People who work in organizations may become more productive and efficient at what they do than
people who work alone.
To use large-scale technology
Organizations are able to take advantage of the economies of scale and scope.
Economies of scale: Cost savings that result 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.
To manage the organizational environment
,Managing complex environments is a task beyond the abilities of most individuals, but an
organization has the resources to develop specialists to anticipate or attempt to influence the many
pressures from the environment. This specialization allows the organization to create more value for
the organization, its members, and its customers.
To economize on transaction costs
Transaction costs: The costs associated with negotiating, monitoring, and governing exchanges
between people.
Organizations’ ability to control the exchanges between people reduces the transaction costs
associated with these exchanges.
To exert power and control
Organizations can exert great pressure on individuals to conform to task and production
requirements in order to increase production efficiency.
Organizational theory, design and change
Organizational theory: The study of how organizations function and how they affect and are affected
by the environment in which they operate.
Organizational structure
Organizational structure: The formal system of task and authority relationships that control how
people coordinate their actions and use resources to achieve organizational goals.
Organizational culture
Organizational culture: 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.
An organization’s culture is shaped by the people inside the organization, by the ethics of the
organization, by the employment rights given to employees, and by the type of structure used by the
organization.
Organizational design and change
Organizational design: The process by which managers select and manage aspects of structure and
culture so that an organization can control the activities necessary to achieve its goals.
Organizational change: The process by which organizations redesign their structures and cultures to
move from their present state to some desired future state to increase effectiveness.
They are al interrelated.
The importance of organizational design and change
Because of increased global competitive pressures and the increasing use of advanced IT,
organizational design has become one of management’s top priorities.
Dealing with contingencies
Contingency: An event that might occur and must be planned for.
,Gaining competitive advantage
Competitive advantage: The ability of one company to outperform another because its managers are
able to create more value from the resources at their disposal.
Competitive advantage springs from core competences: Managers skills and abilities in value-
creating activities.
Core competences allow a company to develop a strategy. Strategy: The specific pattern of decisions
and actions that managers take to use core competences to achieve a competitive advantage and
outperform competitors.
An organizations strategy is always changing in response to changes in the environment.
Managing diversity
An organization needs to design a structure and control system to make optimal use of the talents of
a diverse workforce and to develop an organizational culture that encourages employees to work
together.
The consequences of poor organizational design
The consequence of poor organizational design or lack of attention to organizational design is the
decline of the organization. Talented employees leave to take positions in strong growing companies.
Resources become harder and harder to acquire, and the whole process of value creation slows
down.
New COO > create and oversee teams of experienced senior managers who are responsible for
organizational design.
How do managers measure organizational effectiveness?
To evaluate the effectiveness with which an organization confronts each of these three challenges,
managers can take one of three approaches.
The external resource approach: Control
External resource approach: A method managers use to evaluate how effectively an organization
manages and controls its external environment.
, To measure the effectiveness of their control over the environment, managers use indicators such as
stock price, profitability, and return on investment, which compare the performance of their
organization with the performance of other organizations.
The internal systems approach: Innovation
Internal systems approach: A method that allows managers to evaluate how effectively an
organization functions and resources operate.
To be effective, an organization needs a structure and a culture that foster adaptability and quick
responses to changing conditions in the environment. The organization also needs to be flexible so it
can speed up decision making and create products and services rapidly.
The technical approach: Efficiency
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.
Look at scheme.
Measuring effectiveness: organizational goals
Two types of goals.
Official goals: Guiding principles that the organization formally states in its annual report and in
other public documents. Usually these goals lay out the Mission of the organization: Goals that
explain why the organization exists and what it should be doing.
Operative goals: Specific long-term and short-term goals that guide managers and employees as they
perform the work of the organization.
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