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Summary notes of chapter 1-11
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Summary notes of chapter 1-11 for introduction to business
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Introduction to BusinessChapter 1: concept of business in context
Business activities:
1. Innovation
2. Operation
3. Marketing
4. HR
5. Finance and Accounting
Business context:
Strategy: compromises a set of objectives and methods of achieving those
objectives.
Organizational level are concerned with:
o Goals
o Structure
o Ownership
o Size
o Organizational or corporate culture
Organization: refers to the way in which people are grouped and the way in which
the y operate to carry out the activities of the business.
Identified 5 factors that operate at environmental level:
o Economy
o State
o Technology
o Labour
o Cultural and institutional differences
interaction-influence, systems and contingency approaches
The systems approach:
Systems approach: assumes that all organizations are made up of independent parts
which can only be understood by reference to the whole.
o Views business in 2 related concepts:
Business is made up of a series of interactions, involving business
activities, the various aspects of an organization and of the
environment.
Views business as a series of inputs from the environment, internal
processes and outputs.
The inputs, processes and outputs must be balanced so the firm can obtain
equilibrium, especially with its environment.
Figure 1.2
,Contingency approach:
Contingency approach: business activities and the way they are organized are
products of the environment in which they operate.
Been criticized for focusing on a limited range of environmental variables, for being
deterministic, and for ignoring both the influence of the organization on its
environment and the values and behavior of management and the workforce.
Chapter 2 Organizational aspects of business:
Goals:
Organizational goals: the stated goals of an organization exists to give direction to
the activities of its members. ( mission statement)
The relationship between goals and performance is uncertain, and even where such
a relationship can be shown, it is unclear how it works.
Employees could have to achieve goals that could conflict with their aspects.
Goals remain the unstated or implicit intentions of the owners
Nature of goals:
Handy (1993) see profit as a by product of other goals like survival, market expansion
and enhancing reputation.
Miller and Dess (1996) place concepts such as goals, objectives and mission as
differenct forms of strategic intention, in which goals are linked to vision, mission
and objectives:
o Vision: relates to the future orientation of the organization and describes the
kind of organization it ought to be
o Mission: statement of the key values, which define the purpose of the
organization and perhaps, its distinctive competitiveness.
o Goals: more specific statements of intent than mission statement but are still
broad and generalized.
o Objectives: are the operationalization of the goals.
How goals are developed:
Bounded rationality: deliberately limit strategic choice by selecting information from
the range available and having decided upon a course of action, often fail to
recognize other strategies.
Interest groups cobine to form coalitions
The ability of groups to pursue their goals depends on the power they wield in the
organization (which depends on a few variables):
o Position in the hierarchy
o Skills of group members
o Resources they combined
o Whether their role is seen as legitimate by the rest of the organization
, Process of influence, negotiation and bargaining may be termed: organizational
politics
Multiple goals:
There are many goals in a organization however this does not inflict conflict all the
time as it seems limited due too:
o Most groups in a organization will agree to those goals formulated by senior
managers as a means of achieving their own goals. Result of a bargaining and
negotiating process between interest groups.
o Most organization members would appear to accept the goals of top
management with little question. Due to employment contract.
o Dominant coalition normally sets up controls to ensure compliance tot heir
goals. These include training, set rules in order to make sure these goals are
persued.
o In many firms senior management acknowledge that different groups may
have their own goals which need to be satisfied.
Structure:
A structure is concerned with the grouping of activities in the most suitable manner
to achieve the goals of the dominant coalition. It is concerned with:
o Organization of work around roles
o Grouping of these roles to form teams or departments
o Allocation of differential amounts of power and authority to the various roles
o Job description, mechanisms for coordination and control, and management
information.
Child (2015) identified a number of choices that lie at the heart of structure:
o Nature of the hierarchy eg, tall or flat
o Degree of specialization. In particular structures this will reflect the combined
influence of hierarchy and specialization
o Type of grouping, deciding which tasks should be placed together
o Rules, schedules and systems and in particular how rigid or flexible working
practices should be.
o Integration in terms of the mechanisms to be used to achieve effective
coordination and operations throughout the organization.
o Nature of control mechanisms. Developments in information and
communications tech. email, facebook and twitter. Reduction in number of
managers (delayering)
o Reward system. Linked to structure in that reward can be based on hierarchy
or more flexible on performance
o Extent of cross-boundary and cross-border activities, especially outsourcing,
alliances and joint ventures.
Organization structure: grouping of activities and people to achieve the goals of the
organization.
, o Type of structure employed influences management strategy, technology,
size, the nature of environment, behavior of interest group, firms history and
cultural factors.
Factors that influence structure:
Strategy and structure and work of Alfred Chandler
o Structure did not automatically follow strategy and that managements often
needed a crisis before they would agree to structural change
o He found that multidivisional structures were not without problems and that
in some cases structures could influence strategy.
Examples of factors influencing structure:
o Growth of mass markets and the development of the techniques of mass
production were accompanied by vertical integration to ensure supply of
materials and secure distribution channels.
Horizontal integration takeovers to maintain growth.
o Expansion cause problems of coordination, control and subsequent
inefficiency.
o Markets become saturated and the benefits accruing from organizational
restructuring slowed down, new markets and products were vigorously
pursued by overseas expansion and R&D.
o A multidivisional structure was created inorder to support for expansion
problems.
Multidivisional company: number of business units which may pursue
markedly different types of business activity.
The business units operate as profit centers and are centrally
coordinated by a corporate headquarters.
Structural change may not be necessary or atleast delayed by the sheer market
power of the firm as in the case of IBM.
Other influences on structure:
o Technology
Concept known as technological determinism
Size and shape of management hierarchy, proportion of management
to other employees, the proportion of direct to indirect labour, and
number of subordinates controlled by any one manager
Increasingly these processes are fully automated
o Size
Firms increase in size, causes problems of coordination and control
requiring structural changes.
Some formalization and delegation is inevitable and a stage is reached
when small business take their first steps towards bureaucratization.
(changes as size increase)
o Changes in the environment
Organization need to adapt to their environment to survive.
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