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, Study unit 1: Features of Contemporary Organisations and New
Management Challenges
Variables influencing contemporary organisations to change
Variables that have emerged during the last decade:
1. Globalization and the global economy operating without constraints of national boundaries and
seeking to compete in any high-potential market on Earth
Countries work together to thereby creating a global village:
International transportation and communication has become cheaper
Businesses apply new processes because they possess a highly educated
workforce, technological and managerial capabilities and advanced telecomms and
transport infrastructure
Markets are becoming more homogeneous
Cost structures vary from country to country – businesses can take advantage of
low-cost places
Cross-border learning increases
Financial markets are trading 24hrs a day
Global standards and regulations for trade & commerce, finance, p/s have emerged
2. Technological advances
The Information Revolution and other technological advances have had a powerful influence on
businesses
3. Radical transformation of the world of work
Moved from TQM to an emphasis on a workplace that is re-organized & redesigned to improve
performance
4. Increased power and demands of the customer
Now choose p/s according to: cost, quality, time, service, innovation & customization
Needs of customers determine how organizations carry out operations?
5. The growing importance of intellectual capital and learning
, The sum and synergy of knowledge, relationships, experience, discoveries, processes,
innovations, market presence and influence of an organization on the community
3 categories
Structural capital: accumulated knowledge and expertise of the business (copyrights-trademarks-
patents)
Customer capital: value of relationships with suppliers and customers
Human capital: skills and knowledge of the employees
New roles and expectations of workers
Changed from the Industrial Era → Knowledge Era
Industrial Era Knowledge Era
Repetitive skills Knowledge to deal with the
unexpected
Depend on memory and Being spontaneous and
facts creative
Risk avoidance Risk taking
Focus on politics and Collaborating with people
procedures
The new organization model
Global business environment is more complex than the domestic environment and managers must
deal with broader sets of environmental forces
The key features of the new organisational model are: flatter and leaner, flexile, networked, global
and diverse
Management challenges
Managers of global organizations should have the ability to:
Develop and use global strategic skills Communicate effectively
Manage change and transitions Work with others and in teams
Manage cultural diversity
, 1. Networked
Boundaries of the networked organization are permeable or semi-permeable which allows frequent
movement of info and people across the boundaries of the organization
Businesses form close relationships with suppliers, shares info with them and develops higher
levels of independence with them
Functional areas that develop p/s are in direct contact with customers
Organizations build coalitions to work together with certain stakeholders
Organizations also build alliances and cooperative networks with other businesses
Management challenges
Managers must develop their skills as team members and leaders (understanding team dynamics,
developing observation skills and learning how to diagnose problems)
2. Flatter and leaner
Organizations will be more flexible to respond quickly
Employees are replaced with IS which can be monitored
Increased global competition and pressure forces businesses to cut costs by retrenchment
Management challenges
Managers cannot rely on authority relationships, they must work with individuals, teams and
groups who report to different managers, have different priorities and motivated by different
incentives
3. Flexibility
Organizations need to respond to changes in the environment, changing customer needs, intense
competition and needs of a diverse workforce
Must be innovative and creative to respond to these changes
Management challenges
Developing skills in multi-tasking is key if they want to work productively at several tasks
Flexible labour practices means employees need to: adapt to change, be innovative, maintain
responsibility, balance work and social life
4. Work force diversity
Organizations are becoming more heterogeneous in terms of race, gender and ethnicity
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