Summary Foundations of Business Administration Exam Notes
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E_MUB_FBA (E_MUB_FBA)
Instelling
Vrije Universiteit Amsterdam (VU)
Boek
Organization Theory and Design
These are my notes for the course of Foundations of Business Administration. I got an 8.8 (which is an A) on the exam.
It covers aspects like: modernism,symbolism and post modernism of business and their theories, mechanistic vs organic structures, Porter's Five Forces, Bureaucracy and Greiner's...
Week 1:
VIDEO:
Interdependency between organizations and their environment
Closed system perspective:
❖ The old researchers adopted a closed system perspective
❖ They focused on the internal design of the organization in order to improve the performance and
efficiency of the organization
❖ Organizations are bubbles
Open system perspective
❖ Management theories adopted an open system perspective
❖ In the middle is the organization
, ❖ More interested in following designs that efficiency exchange between the environment and the
organization
❖ Focus on the boundaries between organization and environment
❖ input → raw materials, people, financial resources, information etc.
❖ Outputs → products and services, satisfaction of the employees of the level of pollution
❖ The organization will try to give value to the input before putting it out
Open system is more current but is often neglected → environment is often underestimated
A brief history of organization theory
Adam Smith
❖ Defended by adam smith and karl marx
❖ Adam smith is the father of the theory of organization
➢ Concerns how to make ppl happier and nation richer
❖ Adam smith wanted to reconcile the human the human values and needs for business
❖ Emergence of management functions
❖ Should lead to economic success and social progress
Karl Marx
❖ Theory of capital → the human needs to survive and the will to thrive when needs are met
❖ He believes that economic efficiency creates surplus of raw material and time that can be invested
into personal enhancement
❖ Social labor and capitalists
❖ Social conflict between labor and capital - each side claims the excess profits
❖ Labor shouldn’t be defined as a cost of production instead the welfare of workers must be top
priority
❖ Social conflict even stronger with competition with other companies
❖ Risk of alleniatiin = when labor agress to be used by capital
First model of massproduction
❖ Chicago abattoir → great trading place
❖ Animal trade (philip danforth amore invested in a abattoir in chicago and believed to package the
meat and cut it already in chicago
❖ Reduce the price of meat (lower delivery proces
Henry ford model T-assembly line
❖ Enables to reduce price of a car and increase win market
❖ Low skilled assembly line workers, high skilled knowledge system
❖ New management functions
USED TODAY:
Taylor and Fayol (purely closed system perspective)
❖ Classical schools → thinkers, mangers, engineers
❖ At the time mass production was important (efficiency and productivity)
❖ Important: Psychological motivation of the labor → important to understand technical aspects of
the management/work
, ❖ He wanted to reduce the social conflict
❖ Fighting against amateurism and favouritism == put importance on favouritism
❖ Reduces social conflict because it compensates by increasing efficiency labors can relax more?
❖ Importance of having standards and controls
Fayol
❖ Focused on middle management problem!
❖ Proposed span of control - how many low managers
❖ Notion of delegation (routine and standards)
❖ Notion of departemntalization
❖ Organizational culture
Weber and Barnard
❖ Weber is father of bureaucracy
➢ European alignment project → new understanding of humanity
➢ Humans can be free of authority of the irrational power of monarchies and religions
➢ Human beings can use their powers of reason to obtain a true understanding of
themselves and the society
➢ Thorough science and the sensory observation - see, touch, taste, hear and smell, we can
capture the very nature of the world
➢ Through the lens of science, we can understand both nature and social phenomena
❖ No more room for traditional authority or charismatic authority only rational-legal authority from
merit based selection
❖ 3 advantages:
➢ should replace nepotism of traditional authority and the personality cult of charismatic
authority with merit based selection driven by rationally formulated rules and laws
➢ Ensure appropriate behaviour thanks to uniform laws and rules
➢ Should enable bigger and better pool of leaders
Chester Barnard (behaviouralist)
❖ Value and sentiment in the work place
❖ Challenges the classical view of top down
❖ Cooperation deveelops via integration of work efforts through the communication of goals and
attention to work motivation
❖ Closer to symbolic perspective and away from modern
____________________
LECTURE 1: Relationship between the organization and its environment - from
traditional to new approaches
____________________
Organizations were first considered closed systems … now they are considered open systems
Closed system perspective Open system perspective
, Exclusive focus upon the organization Attention paid to the open boundaries
between the organization and its context
Minimal considerations of the organization’s
dependence on and influence on its environment Organizations as consumers of resources
(inputs such as raw materials, people,
Organizations considered as self-contained products, ...) and exporters of resources
(outputs such as services)
Wide context is taken as given
ORGANIZATION AS A BUBBLE ORGANIZATION’s SURVIVAL HINGES UPON ITS
ADAPTION TO AND ATTEMPT TO CONTROL A
CHANGING ENVIRONMENT
PREHISTORY - ORGANIZATIONAL THEORY
❖ Adam Smith - father of theory of organizations
❖ Theory of Specialization → in modern businesses tasks formally done by one person in a single
day could be split up into many tasks and multiple people with whole careers =
➢ Predicted economies would become richer through this
➢ Lack of purpose in lower levels of the chain due to the massive simple tasks
❖ Consumer capitalism - luxury consumerism
➢ Did more good for the poor?
➢ Humans have higher needs outside capital enterprise (true fufillment
❖ How to treat the rich?
➢ They care about honor and respect, they should give give them honor
❖ Educate consumers
➢ Capitalism can be saved by elevating the quality of consumer demand
➢
Karl Marx:
❖ Theory of capital = human need to survive and the will to thrive when needs are met
❖ Economic efficiency - creates surpluses of raw material and time that can be invested in personal
enhancement
❖ Social conflict between labor and capital - each side claims the excess profits
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