Samenvatting
Summary Foundations of Business Lecture Notes
- Instelling
- Vrije Universiteit Amsterdam (VU)
Notes of lectures and book
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Lecture 1: Interdependency between Organisations and TheirEnvironment
- organisations first considered closed systems and then open systems
Closed system perspective:
- exclusive focus upon the organisation
- minimal consideration of the organisation’s dependence on and influence on its environment
- organisations considered as self-centred
- wide context is taken as given
“ Organisation is a bubble”
Open system perspective:
- attention paid to the open boundaries between the organisation and its context
- organisations as consumers of resources (inputs such as raw materials, people, products…) and
exporters of resources (outputs such as services)
“ Organisations’ survival hinges upon its adaptation to and attempt to control a changing
environment”
- managers tend to forget that they are now in the open system environment
• little attention is especially paid to the environment
A brief history of organisation theory:
1
,1. Adam Smith - the father of theory of organisation
- division of labour creates economic efficiency and social progress thanks to differentiation of
work tasks and the specialisation of labourer
- importance of the management functions
- industrialisation leads to economic success and social progress
Breaking down of tasks into simple components which can be undertaken on a repetitive basis by
job specialists
2. Karl Marx - the father of theory of capital
- humans have a need to survive and the will to thrive when the needs are met
- economic efficiency creates surpluses of raw material and time that can be invested in personal
enhancement
- social conflict between labour and capital, each side claims the excess profits
- labour should not be defined as a cost of production, instead a welfare of workers must be a
priority
Risk of alienation - when workers, who see the labour as a commodity that they willingly sell,
engage in self-exploitation by accepting the terms of employment that favour the interest of capital
- one of the first examples of mass production is the example of Chicago abattoirs
• Chicago has always been a very important place for trading because of its easy access to other
major American cities
• instead of transporting live animals Philip Danvers Amour came up with the idea to use the
Chicago abattoirs to kill the animals, cut them, clean them, package them and only the
transport their meat
- another example of mass production is the Henry of Ford Model T assembly line
• from craftsmen to low-skilled assembly-line workers
• knowledge-intensive systems (engineering inputs)
• new management functions (coordination, control, specialisation)
3. Winslow Taylor - the father of scientific management
- there are four universal principles
1. replacement of inexact methods for determining each
element of a worker’s job with scientific determination
2. the scientific selection and training of workers
3. the cooperation of management and labour to accomplish
work objectives, in accordance with the scientific method
4. a more equal division of responsibility between managers
and workers, with the former doing the planning and
supervision and latter doing the execution
- favouritism and amateurism are replaced by standardisation, meritocracy and research
Taylorism - implies quantifying workers’ inputs and outputs for the purpose of evaluation and
control —> centralisation and deskilling of workers
4. Henry Fayol - the father of management problems
2
, - among the 14 universal principles developed:
Span of control - corresponds to the optimal number of subordinate to be overseen by managers
Delegation - enabled thanks to routines and standardised operating procedures
- departmentalisation, unity of command and esprit de corps are also addressed
5. Max Weber - the father of bureaucracy
- intellectual and creative movement concerned with a new understanding of humanity
- human beings can be free of authority of the irrational power of monarchies and religions
- human being can use their powers of reason to obtain a true understanding of themselves and
the society
- through science and the use of sensory observation we can capture the very nature of the world
No more room for traditional authority that rest upon inherited status, charismatic authority
that is based on the attractiveness of individuals. What matters is the rational-legal authority
that stems from merit-based selection.
Three advantages:
- rational-legal authority should replace nepotism of traditional
authority and the personality culture of charismatic authority,
with merit-based selection driven by rationally formulated rules
and laws
6. Chester Barnard - behaviourist
- organisations are cooperative social systems including tasks and people
- classical view of top-down authority is challenged
- cooperation develops via integration of work efforts through the communication of goals and
attention to worker motivation
- consideration is given to issues of value and sentiment in the workplace
1. traditional ways of designing and managing organisations are outdated
2. no one-size fits-all answer
3. environmental unpredictability
- economic, social and technological environments are extremely uncertain and unpredictable
3
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