theory . ch 1

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Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

1-11-1

Organizational Theory,

Design, and Change

Sixth Edition

Gareth R. Jones

Chapter 1

Organizations andOrganizational

Effectiveness

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What is an Organization?

Organiations pro!ide goods andser!ices

Organiations e"ploy peopleOrganiations bring together

people and resources to produceproducts and ser!ices

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What is an Organization?(cont.)

Organization: a tool used bypeople to coordinate their actionsto obtain so"ething they desireor !alue

Entrepreneurship: identi$yopportunities to satis$y needs,

and then gather and useresources to "eet those needs

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How Does an Organization

Create Value?&alue creation ta'es place at threestages( input, con!ersion, andoutput

Inputs: include hu"an resources,in$or"ation and 'no)ledge, ra)"aterials, "oney and capital

Conversion: the )ay the organiation

uses hu"an resources and technologyto trans$or" inputs into outputs Output: *nished products and ser!ices

that the organiation releases to its

en!iron"ent

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Figure 1.1: How an OrganizationCreates Value

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Why Do OrganizationsEist? o increase specialiation and the

di!ision o$ labor

i!ision o$ labor allo)s specialiation

/pecialiation allo)s indi!iduals to

beco"e eperts at their ob

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Why Do OrganizationsEist? (cont.)

o use large-scale technology Economies of scale: cost sa!ings

that result )hen goods and ser!ices

are produced in large !olu"e Economies of scope: cost sa!ings

that result )hen an organiation isable to use underutilied resources

"ore e3ecti!ely because they canbe shared across se!eral di3erentproducts or tas's

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o "anage the eternalen!iron"ent Eternal en!iron"ent consists o$ the

political, social, econo"ic, andtechnological $actors that a3ectorganiations

Organiations regularly echange

products and ser!ices $or neededresources Organiations need to "anage their

eternal en!iron"ent

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o eert po)er and control Organiations structure their

"e"bers to e6ciently produce

products and ser!ices

o econo"ie on transaction costs

Transaction costs: the costsassociated )ith negotiating,"onitoring, and go!erning echangesbet)een people )ho "ust cooperate

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Figure 1.!: Why

Organizations Eist

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Organizational "heory# Design#an$ Change: %o&e De'nitions

Organizational theory: the study o$ho) organiations $unction and ho) theya3ect and are a3ected by the

en!iron"ent in )hich they operateOrganizational structure: the $or"al

syste" o$ tas' and authorityrelationships that control ho) people tocoordinate their actions and useresources to achie!e organiationalgoals

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%o&e De'nitions (cont.)

Organizational culture: is the seto$ 'ey !alues, belie$s, and attitudesshared by organiational "e"bers

and helps shape the beha!ior)ithin the organiation

Organizational design: theprocess by )hich "anagers select

and "anage aspects o$ structureand culture so that an organiationcan control the acti!ities necessaryto achie!e its goals

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%o&e De'nitions (cont.)

Organizational change: the process by )hich

organiations "o!e $ro" theirpresent state to so"e desired$uture state to increase theire3ecti!eness

Organiational redesign andtrans$or"ation

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Figure 1.: "he elationshi* +&ongOrganizational "heory# %tructure#Culture# Design# an$ Change

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,&*ortance o-Organizational Design an$Changeealing )ith contingencies Contingencies are e!ents that "ight

occur and "ust be planned $or

Organiations "ust be designed tobe able to respond to changes in theco"ple and increasingly di6culten!iron"ent "any organiations$ace

7lobaliation and changing Itechnologies are ust t)o challengesorganiations "ust be ready to $ace

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,&*ortance o-Organizational Design an$

Change (cont.)7aining co"petiti!e ad!antage he ability to outper$or" other

co"panies because o$ the capacity to

create "ore !alue $ro" resources Core competences: s'ills and

abilities in !alue creation e"bedded inthe organiation8s people or structures

Strategy: pattern o$ decisions andactions in!ol!ing core co"petencesthat produces a co"petiti!ead!antage to outper$or" co"petitors

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,&*ortance o-Organizational Design an$Change (cont.)9anaging di!ersity

i3erences in the race, gender, andnational origin o$ organiational

"e"bers ha!e i"portanti"plications $or organiationalculture and e3ecti!eness

:earning ho) to e3ecti!ely utilie adi!erse )or'$orce can result inbetter decision "a'ing and "oree3ecti!e )or'$orce

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,&*ortance o-Organizational Design an$Change (cont.)Pro"oting e6ciency, speed, and

inno!ation he better organiations $unction,

the "ore !alue they create he correct organiational design

can lead to $aster inno!ation and

;uic'ly get ne) products to "ar'et

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Conseuences o- /oorOrganizational Designecline o$ the organiation8s sales

and pro*ts

:ayo3s occur and talented

e"ployees lea!e to ta'e positions ingro)ing organiations

<esources beco"e harder to ac;uire

<esulting crisis "ay result inorganiational $ailure

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How Do 0anagers 0easureOrganizationalEecti2eness?Control: eternal resource approach

9onitors ho) e3ecti!ely an organiation"anages and controls its eternalen!iron"ent

Innovation: internal syste" approach e!elops an organiation8s s'ills and

capabilities to change, adapt, andi"pro!e the )ay it $unctions

Eciency: technical approach 9easures ho) e6ciently an organiation

con!erts a *ed a"ount o$ resources into

*nished goods and ser!ices

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"a3le 1.1: +**roaches to0easuring Eecti2eness

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0easuring Eecti2eness:Organizational 4oalsOcial goals: guiding principles

that the organiation $or"ally statesin its annual report and in otherpublic docu"ents

Mission: a "ission state"enteplains )hy the organiation eistsand )hat it should be doing

Operative goals: speci*c long- andshort-ter" goals that guide"anagers and e"ployees as theyper$or" the )or' o$ the organiation

theory . ch 1

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