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Economics and Management of Organization summary
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Lecture 1What is an organization and what are general characteristics?
• Organizations come in all sorts of shapes and sizes: profit and not for profit organizations and
institutions:
o Industrial companies and service industries
o Private and government controlled firms
o Large, medium-sized and small companies
o National and multinational companies
o Charities and voluntary organizations, and so on…
• Whatever grouping we choose, all organizations have certain features:
o People w ho work together and cooperate in order to reach a specific set of goals.
• Collections of people who work together and coordinate their actions to achieve a wide
variety of goals or desired future outcomes (Jones & George, 2022)
• A social arrangement for achieving controlled performance towards goals that create value
(Boddy, 2009)
• Value is added to resources when they are transformed into goods or services that are worth
more than their original cost plus the cost of transformation (tangible/intangible) (Boddy,
2009)
What is management and what are their tasks?
• Management is the planning, organizing, leading and controlling of human and other
resources to achieve organizational goals efficiently and effectively (Jones & George, 2022).
• Management as a universal human activity occurs whenever people take responsibility for an
activity and consciously try to shape its progress and outcome (Boddy, 2009)
• Management: the activity of getting things done with the aid of people and other resources
(Boddy, 2009)
• Manager: someone who gets things done with the aid of people and other resources (Jansen,
1996)
• According to Jones and George:
o Planning: determining the organization’s mission, vision and goals, formulating the
strategy, identifying internal strengths and weaknesses + external opportunities and
threats (SWOT)
o Organizing: grouping tasks into jobs (job design), allocating authority, incorporating
integrating mechanisms (coordination)
o Leading: motivating, energizing and enabling employees, using power, personality,
influence, persuasion, and communication skills to coordinate people and groups
o Controlling: monitoring the performance of individuals, departments and the
organization as a whole, taking corrective actions
,Mitzberg’s typology
• Mintzberg identified 10 kinds of specific roles or sets of job responsibilities. He grouped
these roles according to whether the responsibility was primarily decisional, interpersonal or
informational
• Decisional roles: roles associated with methods managers use in planning strategy and
utilizing resources:
o Entrepreneur: deciding which new projects or programs to initiate and to invest
resources in.
o Disturbance handler: managing an unexpected event or crisis.
o Resource allocator: assigning resources between functions and divisions, setting the
budgets of lower managers.
o Negotiator: reaching agreements between other managers, unions, customers, or
shareholders.
• Interpersonal roles: roles that managers assume to provide direction and supervision to both
employees and the organization as a whole
o Figurehead: symbolizing the organization’s mission and what it is seeking to achieve
(ceremonial and symbolic duties).
o Leader: training, counseling, and mentoring high employee performance.
o Liaison: linking and coordinating the activities of people and groups both inside and
outside the organization.
• Informational roles: roles associated with the tasks needed to obtain and transmit
information in the process of managing the organization.
o Monitor: analyzing information from internal and external environment.
o Disseminator (in Dutch: ‘verspreider’): transmitting information to influence the
attitudes and behavior of employees (primarily inside the organization).
o Spokesperson: using information to positively influence the way people (in and) out
of the organization respond to it (primarily outside the organization).
,Levels of management
• Levels of management and relative amount of time
Planning
• Jones and George (2022): “In a fast-changing competitive environment a manager must
continually evaluate how well products are meeting customer needs, and they must engage
in thorough, systematic planning to find new strategies to better meet those needs.”
• Effective plans according Henry Fayol:
o Unity: only one central, guiding plan is put into operation to achieve an
organizational goal (unity of direction!)
o Continuity: planning is an ongoing) process in which managers build and refine
previous plans and continually modify plans at all levels
o Accuracy: managers need to make every attempt to collect and use all available
information in the planning process
o Flexible: plans can be altered if the situation changes
• What is planning?
o Making and registering agreements about how, when and by whom certain activities
are carried out
o Planning is a form of coordination
o Strategy is developing adequate plans for the longer term
, o Planning is a PROCESS managers use to identify and select appropriate goals and
courses of action for an organization: Mintzberg’s decisional role!
• Levels and types of planning: In large organizations planning usually takes place at three
levels of management:
o Corporate (corporate-level planning): organization’s vision, mission and goals, overall
corporate strategy, e.g. in which industries and geographical markets to compete,
acquisition, strategic partnerships, corporate strategy
o Business or division (business or division-level planning): long-term divisional goals,
business strategy or competitive strategy
o Department or functional (functional-level planning): goals of each function how to
support their division attain the business-level goals, functional strategy
Stages of business growth:
• New venture
• Early growth
• Rapid growth
• Continuous growth
Greiner’s model of growth
• Two types of crises
• Abrupt crisis:
o We define a sudden crisis as a disruption in the company's business that occurs
without warning and is likely to generate new coverage
o “Abrupt crises operate like a drunk driver exposed to the danger of traffic accidents.”
o Chance of a crisis occurring is time independent
o Examples of such events include business-related accidents, natural disasters,
sudden death or disability of a key person, or workplace violence.
• Cumulative crisis:
o The chance of cumulative crisis increases as time passes
o ‘Fit deterioration between an organization and its environment’
o Examples of a cumulative crises: leaning back because things are going well now
("the law of the inhibiting lead"), increasing bureaucracy, slowly declining market
share, etc.
• Greiner’s model is based on the cumulative crisis:
o Growing organizations go through phases of evolution or gradual development •
Each phase ends with a period of crisis and revolution
o "Every evolution creates its own revolution"
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