,CHAPTER 1
Organization; Social entities that are goal-‐directed, are designed to be as deliberately
structured and coordinated activity systems and are linked to the external environment
Characteristics of an organization;
1. Social entities – indicates that organizations are cultural and political as well as
economic phenomena
2. Goal-‐Directed – Activity in organizations is highly instrumental
3. Designed as deliberate structured and coordinated activity systems
4. Linked to the external environment – Organizations exist within a wider context
or set of conditions
Organizations are made up of people and their relationships with one another
Organizations exist to do the following;
1. Bring together resources to achieve desired goals and outcomes
2. Produce goods and services efficiently
3. Facilitate innovation
4. Use modern manufacturing, service and information technologies
5. Adopt and influence a changing environment
6. Create value for owners, customers and employees
7. Accommodate ongoing challenges
Two important perspectives to look at an organization;
Open system – Organizations are seen as customers of recourses (inputs) and exporters
of recourses (outputs) In order to survive they have to adapt to a changing environment.
Inputs to an organization system include employees, raw materials and other physical
resources, information and financial resources. The transformation process changes
these imputs into something of value that can be exported back to the environment.
Outputs are specific products and services for the costumers.
Closed system -‐ design focuses exclusively upon the organization without consideration
of its dependence upon or capacity to influence elements comprising its context.
Organizational configuration – Each organization consists of five parts. These parts vary
in size and importance depending on an organizations environment.
Technical core; Includes the people who do the basic work within an organization
(Teachers in universities, production department in a manufacturing company)
Technical support; Technical support is responsible for creating innovations in the
technical core. (Departments such as R&D, Technical-‐ and marketing research)
Top management; Provides direction, strategy, goals and policies for the entire
organization
,Middle management; Responsible for communication between top management and
technical core.
Dimension of organization design
Dimensions describe specific organizational design traits. There are two types of
dimensions;
Structural dimensions; Provide labels to distinguish some key characteristics of an
organization. They provide a basis for comparing the composition of organizations.
1. Formalization; refers to the reliance upon written documentation
2. Specialization; The degree to which organizational tasks are divided into
separate jobs (Production lines have high specialization)
3. Hierarchy or authority; Describes the who reports to whom and the span of
control for each manager (When spans of control are narrow, specialization is
high and hierarchy of control is tall)
4. Centralization; refers to the hierarchy level that has top authority to make a
decision. (when decision making is kept at top level, the organization is
centralized)
5. Professionalism; Describes the level of formal education and training of
employees
6. Personnel ratios; The deployment of people to various functions and
departments. A personnel ratio is measured by dividing the number of employees
in a specific department by the total number of employees
Contextual dimensions; Characterize the organization as a whole (including size,
technology ect.) and the broader organizational setting.
1. Size
2. Organizational technology; The tools, techniques and actions used to transform
inputs into outputs
3. The environment; Includes all the elements outside the boundary of the
organization (Industry, government, customers, suppliers)
4. Goals and strategy
5. Culture; is the underlying set of key values, beliefs, understanding and norms
shared by employees.
The dimensions influence each other
Efficiency: Refers to the amount of resources used to achieve the organizational goals
based on the quantity of resources, money ect.
Effectiveness: A broader term, the degree to which an organization achieves its goals
Stakeholder: Any group within or outside an organization that has a stake in the
organizations performance. The satisfaction level of each group can be assessed as an
, indication of the organizations performance and effectiveness (Employees, Suppliers,
Owners and shareholders ect.)
Classical perspective (scientific management) by Frederik Winslow Taylor: Sought to
apply rational calculations to turn organizations into efficient, well-‐oiled machines. This
perspective is associated with the development of hierarchy and bureaucratic
procedures.
Administrative principles: Looked at the design and functioning of the organization as a
whole.
Scientific management and administrative principles lead to the creation of bureaucratic
organizations
Chaos theory: Suggests that relationships in complex, adaptive systems (including
organizations) are nonlinear and made up of numerous interconnections and diverget
choices. It suggests that organizations should be viewed more as natural systems then
well-‐oiled, predictable machines.
CHAPTER 2
Organization design is used to implement goals and strategy and thereby influences
the prospects of success.
Official goals are also referred to as mission.
Mission
1. It describes the organization’s vision, its shared values and beliefs and its reason
for being.
2. It sometimes called the official goals, referring to the formally-‐stated
definition of business scope and outcomes the organization is trying to achieve.
3. A mission statement communicates to current and prospective employees,
customers, investors, suppliers and competitors what the organization stands for
and what it is trying to achieve
Companies where managers are sincerely guided by mission statements that focus on
their social purpose, typically attract better employees, have better relations with the
external environment and perform better in the market over the long term.
Operative goals: Describe specific measureable outcomes and are often concerned with
the short run.
1. Overall performance: profitability expressed in the terms of net income, earnings
per share, or return on investment
2. Resources: resource goals refer to the acquisition of needed material and
financial resources from the environment (obtaining financing for the
construction of new plants, finding less expensive sources for raw materials)
