This comprehensive summary of the course 'Organization and Technology' (R&T) includes the chapters of the book for the midterm, namely chapters 1 to 4.
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Rijksuniversiteit Groningen (RuG)
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Organisatie en Technologie (EBP618B05)
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ORGANISATIE EN
TECHNOLOGIE
Hoofdstuk 1 t/m 4 (Midterm)
,Contents
Chapter 1....................................................................................................................................................... 2
1.1 What is an Organization?...............................................................................................................................2
1.2 Why do Organizations exist?..........................................................................................................................2
1.3 Organizational Theory, Design, and Change..................................................................................................3
1.4 How do managers measure organizational effectiveness?...........................................................................5
Chapter 2....................................................................................................................................................... 7
2.1 Organizational stakeholders..........................................................................................................................7
2.2 Organizational Effectiveness: Satisfying Stakeholder’s Goals and Interests..................................................8
2.3 Top Managers and Organizational Authority..............................................................................................10
2.4 An Agency Theory Perspective.....................................................................................................................13
2.5 Top Managers and Organizational Ethics....................................................................................................14
2.6 Creating an Ethical Organization.................................................................................................................17
Chapter 3..................................................................................................................................................... 19
3.1 What is the Organizational Environment?...................................................................................................19
3.2 Resource Dependence Theory......................................................................................................................20
3.3 Interorganizational Strategies for Managing Resource Dependencies.......................................................21
3.4 Strategies for Managing Symbiotic Resource Interdependencies...............................................................21
3.5 Strategies for Managing Competitive Resource Interdependencies............................................................23
3.6 Transaction Cost Theory...............................................................................................................................24
Chapter 4..................................................................................................................................................... 27
4.1 Differentiation..............................................................................................................................................27
4.2 Balancing Differentiation and Integration...................................................................................................28
4.3 Balancing Centralization and Decentralization............................................................................................29
4.4 Balancing Standardization and Mutual Adjustment....................................................................................30
4.5 Mechanistic and Organic Organizational Structures...................................................................................30
,Chapter 1
1.1 What is an Organization?
Organization= a tool people use to coordinate their actions to obtain something they desire
or value- that is, to achieve their goals. An organization is a response to and a means of
satisfying some human need.
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?
Value creation takes place at three stages: input, conversion and output. Each stage is
affected by the environment in which the organization operates. The organizational
environment is 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.
Inputs. Organization obtains inputs from its environment (raw materials, information
and knowledge, money and capital, human resources, customers).
Conversion Process. Organization transforms inputs and adds value to them
(machinery, computers, human skills and abilities).
Outputs. Organization releases outputs to its environment (finished goods, services,
dividends, salaries, value for stakeholders).
Environment. Sales of outputs allow organization to obtain new supplies of inputs
(customers, shareholders, suppliers, distributors, government, competitors).
The way the organization uses human resources and technology to transform inputs into
outputs determines how much value is created at the conversion stage.
The amount of value the organization creates is a function of the quality of its skills,
including its ability to learn from and respond to the environment.
1.2 Why do Organizations exist?
a. To increase specialization and the division of labor
Labor division results in more efficient production.
b. To use large-scale technology
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.
c. To manage the organizational environment
An organization’s environment is the source of valuable input resources and is the
marketplace into which it releases outputs. It is also the source of economic, social,
and political pressures that affect an organization’s ability to obtain these resources.
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.
, d. To economize on transaction costs
Transaction costs= the costs associated with negotiating, monitoring, and governing
exchanges between people. Organization’s ability to control the exchanges between
people reduces the transaction costs associated with these changes.
e. To exert power and control
Organizations can exert great pressure on individuals (employees) to conform to task
and production requirements in order to increase production efficiency.
1.3 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 and culture are
the means the organization uses to achieve its goals. Organizational design is about how and
why various means are chosen.
Organizational Structure
- The formal system of task and authority relationships that control how people
coordinate their actions and use resources to achieve organizational goals.
- Controls coordination and motivation: shapes behavior of people and the
organization.
- Is a response to contingencies involving environment, technology, and human
resources
- Evolves as organizations grows and differentiates
- Can be managed and changed through the process of organizational design
Organizational culture
- The set of shared values and norms that controls organizational members’
interactions with each other and with people outside the organization
- Controls coordination and motivation; shapes behavior of people and the
organization
- Is shaped by people, ethics, and organizational structure
- Evolves as organization grows and differentiates
- Can be managed and changed through the process of organizational design
Organizational design and change
- The process by which managers select and manage various dimensions and
components of organizational structure and culture so that an organization can
control the activities necessary to achieve its goals.
- Balances the need of the organization to manage external and internal pressure so
that it can survive in the long run.
- Allows the organization to continually redesign and transform its structure and
culture to respond to a changing global environment
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 their
effectiveness. Once again, organizational structure and culture are a principal means that
managers use to change to organization so it can achieve its future desired state. Indeed,
organizational change can be understood as the process of organizational redesign and
transformation.
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