PPT Ch01 Jones6e

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-11-1

Organizational Theory, Design, and Change

Sixth EditionGareth R. Jones

Chapter 1

Organizations and Organizational Effectiveness

1-Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 22

Learning Objectives

1. Explain why organizations exist and the purposes they serve

2. Describe the relationship between organizational theory and organizational design and change, and differentiate between organizational structure and culture


Learning Objectives (cont.)

3. Understand how managers can utilize organizational theory to design and change their organizations to increase organizational effectiveness

4. Identify how managers assess and measure organizational effectiveness

5. Appreciate the way contingency factors influence the design of organizations


What is an Organization?

Organizations provide goods and services

Organizations employ peopleOrganizations bring together

people and resources to produce products and services

4


What is an Organization? (cont.)

Organization: a tool used by people to coordinate their actions to obtain something they desire or value

Entrepreneurship: identify opportunities to satisfy needs, and then gather and use resources to meet those needs


How Does an Organization Create Value?Value creation takes place at three

stages: input, conversion, and output Inputs: include human resources,

information and knowledge, raw materials, money and capital

Conversion: the way the organization uses human resources and technology to transform inputs into outputs

Output: finished products and services that the organization releases to its environment


Figure 1.1: How an Organization Creates Value


Why Do Organizations Exist?To increase specialization and the

division of labor

Division of labor allows specialization

Specialization allows individuals to become experts at their job


Why Do Organizations Exist? (cont.)

To use large-scale technology Economies of scale: cost savings

that result when goods and services are produced in large volume

Economies of scope: cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks

9



To manage the external environment External environment consists of the

political, social, economic, and technological factors that affect organizations

Organizations regularly exchange products and services for needed resources

Organizations need to manage their external environment



To exert power and control Organizations structure their

members to efficiently produce products and services

To economize on transaction costs Transaction costs: the costs

associated with negotiating, monitoring, and governing exchanges between people who must cooperate

11


Figure 1.3: Why Organizations Exist


Organizational Theory, Design, and Change: Some Definitions

Organizational theory: the study of how organizations function and how they affect and are affected by the environment in which they operate

Organizational structure: the formal system of task and authority relationships that control how people to coordinate their actions and use resources to achieve organizational goals


Some Definitions (cont.)Organizational culture: is the set

of key values, beliefs, and attitudes shared by organizational members and helps shape the behavior within the organization

Organizational design: the process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve its goals


Some Definitions (cont.)

Organizational change: the process by which

organizations move from their present state to some desired future state to increase their effectiveness

Organizational redesign and transformation


Figure 1.4: The Relationship Among Organizational Theory, Structure, Culture, Design, and Change


Importance of Organizational Design and ChangeDealing with contingencies

Contingencies are events that might occur and must be planned forOrganizations must be designed to be able to respond to changes in the complex and increasingly difficult environment many organizations faceGlobalization and changing IT technologies are just two challenges organizations must be ready to face


Importance of Organizational Design and Change (cont.)

Gaining competitive advantageThe ability to outperform other companies because of the capacity to create more value from resourcesCore competences: skills and abilities in value creation embedded in the organization’s people or structuresStrategy: pattern of decisions and actions involving core competences that produces a competitive advantage to outperform competitors

18



Managing diversityDifferences in the race, gender, and national origin of organizational members have important implications for organizational culture and effectivenessLearning how to effectively utilize a diverse workforce can result in better decision making and more effective workforce



Promoting efficiency, speed, and innovation The better organizations function,

the more value they create The correct organizational design

can lead to faster innovation and quickly get new products to market

20


Consequences of Poor Organizational DesignDecline of the organization’s sales

and profitsLayoffs occur and talented

employees leave to take positions in growing organizations

Resources become harder to acquire

Resulting crisis may result in organizational failure


How Do Managers Measure Organizational Effectiveness?

Control: external resource approach Monitors how effectively an organization

manages and controls its external environment

Innovation: internal system approach Develops an organization’s skills and

capabilities to change, adapt, and improve the way it functions

Efficiency: technical approach Measures how efficiently an organization

converts a fixed amount of resources into finished goods and services


Table 1.1: Approaches to Measuring Effectiveness


Measuring Effectiveness: Organizational GoalsOfficial goals: guiding principles

that the organization formally states in its annual report and in other public documents

Mission: a mission statement explains why the organization exists and what it should be doing

Operative goals: specific long- and short-term goals that guide managers and employees as they perform the work of the organization


Figure 1.5: Plan of the Book


Figure 1.5: Plan of the Book (cont.)


Figure 1.5: Plan of the Book (cont.)


Summary

Organizations are a tool people use to achieve their goals

Organizational theory is the study of how organizations function and how they affect and are affected by their environment

Organizational effectiveness must be monitored by managers

28

PPT Ch01 Jones6e

Documents