UNIT I PPT (ODC)

8/4/2019 UNIT I PPT (ODC)

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ORGANIZATIONAL DEVELOPMENT ANDCHANGE


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Organization coming together people andresources to form a unit.


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Organizational Environment:those forcesoutside its boundaries that can impact it. Forces can change over time and are made up

of Opportunities and Threats. Opportunities:openings for managers toenhance revenues or open markets.

New technologies, new markets and ideas. Threats:issues that can harm anorganization.

economic recessions, oil shortages.

Managers must seek opportunities and avoidthreats.


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Distributors

Firm

TaskEnvironment

Suppliers

CompetitorsCustomers

GeneralEnvironment

EconomicForcesGlobalForces

SocioculturalForces

DemographicForces

TechnologicalForces

Political &Legal Forces


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Management

InternalEnvironment

Cmptos

Customers

LbMak

GeneralEnvironment

TaskEnvironment

Technological

Suppliers


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6

General environmentaffects indirectly

Task environment- Affects directly- Influences operations and performances

Internal environmentelements within theorganizations boundaries


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Consists of the wide economic,technological, demographic andsimilar issues. Managers usually cannot impact or control

these. Forces have profound impact on the firm.

Economic forces:affect the nationaleconomy and the organization.

Includes interest rate changes,unemployment rates, economic growth. When there is a strong economy, people

have more money to spend on goods andservices.


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ec no og ca orces:s s equ pmenused in design, production anddistribution. Result in new opportunities or threats to

managers. Often make products obsolete very quickly. Can change how we manage.

Socialcultural forces:result from changesin the social or national culture ofsociety. Social structure refers to the relationships

between people and groups. Different societies have vastly different social

structures.

National culture includes the values thatcharacterize a society. Values and norms differ widely throughout the

world. These forces differ between cultures and over

time.


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Demographic forces:result fromchanges in the nature, composition anddiversity of a population. These include gender, age, ethnic origin, etc.

For example, during the past 20 years, women

have entered the workforce in increasingnumbers.

Currently, most industrial countries are aging.

This will change the opportunities for firms

competing in these areas. New demand for health care, assisting living

can be forecast.


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Political-legal forces:result fromchanges in the political arena. These are often seen in the laws of a society. Today, there is increasing deregulation of

many state-run firms.

Global forces:result from changes ininternational relationships betweencountries. Perhaps the most important is the increase in

economic integration of countries.

Free-trade agreements (GATT, NAFTA, EU)decreases former barriers to trade. Provide new opportunities and threats to

managers.


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Task Environment:forces from suppliers,distributors, customers, and competitors. Suppliers:provide organization with

inputs

Managers need to secure reliable input sources. Suppliers provide raw materials, components, and

even labor. Working with suppliers can be hard due to

shortages, unions, and lack of substitutes.

Suppliers with scarce items can raise the price andare in a good bargaining position.

Managers often prefer to have many, similarsuppliers of each item.


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Distributors:organizations that helpothers to sell goods. Compaq Computer first used special computer

stores to sell their computers but later soldthrough discount stores to reduce costs.

Some distributors like Wal-Mart have strongbargaining power.

They can threaten not to carry your product.

Customers:people who buy the goods. Usually, there are several groups of customers.

For Compaq, there are business, home, &government buyers.


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Competitors:other organizations thatproduce similar goods. Rivalry between competitors is usually the

most serious force facing managers.

High levels of rivalry often means lower prices. Profits become hard to find.

Barriers to entry keep new competitors out andresult from:

Economies of scale: cost advantages due tolarge scale production.

Brand loyalty: customers prefer a givenproduct.


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14

Labor Market Forces Affecting Organizations

today Growing need for computer literate information

technology workers

Necessity for ongoing investment in humanresources recruitment, education, training

Effects of international trading blocks,automation, outsourcing, shifting facilitylocations upon labor dislocations


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Birth Growth Shakeout Maturity Decline


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Reflects the changes that take placein an industry over time. Birth stage:firms seek to develop awinning technology.

VHS vs. Betamax in video, or 8-track vs.cassette in audio.

Growth stage:Product gainscustomer acceptance and growsrapidly. New firms enter industry, production

improves, distributors emerge.


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Shakeout stage:at end of growth,there is a slowing customer demand. Competitor rivalry increases, prices fall. Least efficient firms fail and leave industry.

Maturity stage:most customers havebought the product, growth is slow. Relationships between suppliers, distributors

more stable. Usually, industry dominated by a few, large

firms. Decline stage:falling demand for theproduct.

Prices fall, weaker firms leave the industry.


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Managers must measure thecomplexity of the environment andrate of environmental change. Environmental complexity:deals withthe number and possible impact ofdifferent forces in the environment. Managers must pay more attention to forces

with larger impact. Usually, the larger the organization, the

greater the number of forces managers must

oversee. The more forces, the more complexthe mangers job becomes.


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Managers can counter environmentalthreats by reducing the number offorces. Many firms have sought to reduce the

number of suppliers it deals with whichreduces uncertainty. All levels of managers should workto minimize the potential impact ofenvironmental forces.

Examples include reduction of waste by firstline managers, determining competitorsmoves by middle managers, or the creationof a new strategy by top managers.


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Managers can create new organizationalstructures to deal with change. Many firms use specific departments to respond

to each force. Managers also create mechanistic or

organic structures. Mechanistic structures have centralized

authority. Roles are clearly specified.

Good for slowly changing environments. Organic structures authority is decentralized.

Roles overlap, providing quick response tochange.


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Managers must gain access toinformation needed to forecast futureissues. Rod Canionsforecast of Compaqs future was wrong

due to his incorrect view of the environment.

Boundary spanning is the practice of relatingto people outside the organization. Seek ways to respond and influence stakeholder

perception. By gaining information outside, managers can make

better decisions about change. More management levels involved in spanning,

yields better overall decision making.


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Figure 3.5

Managers in boundaryspanning roles feedbackinformation to other managers


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Environmental scanningis an importantboundary spanning activity. Includes reading trade journals, attending

trade shows, and the like. Gatekeeping:the boundary spannerdecides what information to allow intoorganization and what to keep out.

Must be careful not to let bias decide whatcomes in.

Interorganizational Relations:firmsneed alliances globally to best utilizeresources. Managers can become agents of change and

impact the environment.


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Environment Organization

Change in Environment affects

Managerial actions impact


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To what degree are tasks subdivided into separate jobs?

On what basis will jobs be grouped together?

To whom do individuals and groups report?

How many individuals can a manager efficiently and effectivelydirect?

Where does decision-making authority lie?

To what degree will there be rules and regulations to direct

employees and managers?


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All businesses have to organisewhat they do

A clear structure makes it easier to see whichpart of the business does what

There are many ways

to structure a business


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By function: arranging the business accordingto what each sectionor department does

By product or activity: organising accordingto the different products made

By area: geographical or regional structure


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By customer: where different customergroups have different needs

By process: where products have to gothrough stages as they are made

What are the advantages/disadvantages of

different types of business structure?


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Strategy

Why Do

StructuresDiffer?

OrganizationSize

Technology Environment


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Organizational Chart of a Manufacturing FirmBoard

memberBoard

memberBoard

memberBoard

member

ChiefExecutive

OfficerLegal

counsel

President

IndustrialProductsDirector-Human

Resources

ConsumerProductsDirector-Human

Resources

WesternRegion

IndustrialProducts

SalesManager

EasternRegion

IndustrialProducts

SalesManager

WesternRegion

ConsumerProducts

SalesManager

EasternRegion

ConsumerProducts

SalesManager

etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.

IndustrialProductsDirector-

Production

ConsumerProductsDirector-

Production


R&D


R&D

V.P Researchand Development

V.P Sales/Marketing

V.P HumanResources

V.PProduction


Sales


Sales


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This depends on the business type, size andstructure used

Lets look at a functional structure:

Production Marketing Accounts Personnel IT

Board of Directors

Chief Executive


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Advantages Specialisation each

department focuses

on its own work Accountability

someone isresponsible for the

section Clarity know your

and others roles

Disadvantages Closed

communicationcould lead to lack

of focus Departments can

become resistantto change

Coordination

may take too long Gap between top and

bottom


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A division is a collection of functions workingtogether to produce a product. Divisions create smaller, manageable parts of a firm.

Divisions develop a business-level strategy to compete.

A division has marketing, finance, and other functions.

Functional managers report to divisional managers who thenreport to corporate management.

Product structure:divisions created according to thetype of product or service.

Geographic structure:divisions based on the area of acountry or world served.

Market structure: divisions based on the types ofcustomers served.


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A Product Organization

Pro-duction

Acctg.Sales R&DPro-

ductionAcctg.Sales R&D

Pro-duction

AcctgSales R&D

ProductGroup 2

ProductGroup 1

ProductGroup 3

President

ChiefExecutive

Officer


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Washing Machine

Division

Lighting

Division

Television

Division

CorporateManagers

CEO

Corporation


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Advantages Clear focus on

market segment

helps meetcustomers needs

Positive competitionbetween divisions

Better control as eachdivision can act asseparate profit centre

Disadvantages Duplication of

functions (e.g.different sales forcefor each division)

Negative effects ofcompetition

Lack of centralcontrol over eachseparate division


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Northern

Region

Western

Region

Southern

Region

Eastern

Region

CorporateManagers

CEO

Corporation


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Large Business

Customers

Small Business

Customers

Educational

Institutions

Individual

Customers

Corporate

Managers

CEO

Corporation


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Advantages Serve local needs

better

Positive competition More effective

communicationbetween firm and local

customers

Disadvantages Conflict between local

and central

management Duplication of

resources andfunctions


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Matrix structure:managers group people by functionand product teams simultaneously.

Results in a complex network of reporting relationships.

Very flexible and can respond rapidly to change.

Each employee has two bosses which can causeproblems.

Functional manager gives different directionsthan product manager and employee cannotsatisfy both.

Product Team Structure:no 2-way reporting and themembers are permanently assigned to the team andempowered to bring a product to market.


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CEOFunc.Managers

Sales Design ProductionProductteam AProductteam B

Productteam CProduct Team

= two boss employeeTmMangs


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CEOFunc.Managers

Sales Design Production

Manufacturing Manufacturing Manufacturing

= Product Team Manager = Team member


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Chapter 11 44

Organisational design Choosing and implementing structures that best

arrange resources to serve the organisationsmission and objectives

A problem-solving activity that should beapproached from a contingency perspective

Key directions in structural change: Shift fromvertical to horizontal

Shift from authority-driven to task-driven.


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Chapter 11 45

Classical view of bureaucracy The ideal organisational form

Bureaucratic designs feature:

clear-cut division of labour strict hierarchy of authority

formal rules and procedures

promotion based on competency.


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Chapter 11 46

Contingency perspective on bureaucracyasks the questions: When is a bureaucratic form a good choice for an

organisation?

What alternatives exist when it is not a goodchoice?


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Chapter 11 47

The environment determines the answers tothese questions. A mechanistic design works in a stable

environment.

An organic design works in a changing anduncertain environment.


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Chapter 11 48

Adaptive organisations

Operate with a minimum of bureaucratic features

Operate with cultures that encourage worker

empowerment and participation.


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Chapter 11 49

Mechanistic designs: Centralised Many rules and

procedures

Narrow spans of control

Specialised tasks Few teams and task

forces Formal and impersonal

means of coordination.

Organic designs: Decentralised

Fewer rules and

procedures Wider spans of

control

Shared tasks

Many teams and task

forces More informal and

personal means ofcoordination.


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Environment

Strategy

HumanResources

Technologyetermine designor organizationalstructure


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The environment: The quicker the environmentchanges, the more problems face managers.

Structure must be more flexible when environmentalchange is rapid.

Usually need to decentralize authority.Strategy:Different strategies require the use ofdifferent structures.

A differentiation strategy needs a flexible structure,low cost may need a more formal structure.

Increased vertical integration or diversification alsorequires a more flexible structure.


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Technology:The combination of skills, knowledge, tools,equipment, computers and machines used in theorganization. More complex technology makes it harder for managers to

regulate the organization. Technology can be measured by:

Task Variety: new problems a manager encounters. Task Analyzability: programmed solutions available

to a manager to solve problems. High task variety and low analyzability present many unique

problems to managers.

Flexible structure works best in these conditions. Low task variety and high analyzability allow managers to

rely on established procedures.


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Small Batch Technology:produces small quantities ofone-of-a-kind products.

Based on the skills of the workers who need a flexiblestructure.

Mass Production Technology:automated machinesmake high volumes of standard products. Workers perform repetitive tasks so a formal structure

works well.

Continuous Process Technology:totally mechanizedsystems of automatic machines.

Workers must watch for unexpected problems and reactquickly. A flexible structure is needed here.


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Human Resources:the final factor affectingorganizational structure.

Higher skilled workers who need to work in teamsusually need a more flexible structure.

Higher skilled workers often have professionalnorms (CPAs, physicians).

Managers must take into account allfour factors (environment, strategy,technology and human resources)when designing the structure of theorganization.


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Thank youandGood Day

UNIT I PPT (ODC)

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