1. Describe the types of differentiation. Give an example for each.
Horizontal
● Division of work to be done into tasks and subtasks at the same organizational level
● Represented by the number of different individuals or units at the same level of an
organization
Ex: In our department, we have all kinds of instructors: in finance, accounting,
marketing, organization etc. All of them are at the same level. There is no hierarchy
between them. There is further differentiation among the instructors in specific areas for
example Pınar hoca has been specialized in OB, Çağrı hoca in OT.
Vertical
● Division of work by level of authority, hierarchy, or chain of command
● Represented by the number of different levels in an organization
Ex: Government, army
Spatial
● It involves geographical location of different organizational activities
● Typical in multinational companies
● It can be both horizontal and vertical
Ex: METU has also an institute of marine sciences in Erdemli/Mersin.
2. What are the mechanisms of integration? Give an example for each.
Formalization
● Based on rules, policies, and procedures
● Reliance on the written documents
● Employees assumed to be not well-informed, no so knowledgeable, less skilled, and
possess no good judgment therefore formalization is applied.
● Related closely to spatial dispersion due to ensure coordination among dispersed
locations.
● Not the answer to high uncertainty.
Ex: A large university tends to be high on formalization because it has several written
rules such as registration, dropping and adding courses, student associations, dormitory
management and financial support.
Hierarchy of Authority or Span of control
● The number of immediate subordinate positions a superior controls or coordinates
● Related closely to the number of hierarchical levels: flat or tall
● Workable span of control depends on
• the ability and experience of the supervisor
• the ability and experience of subordinates
• the nature of the task being performed
• the spatial differentiation
• the amount and type of interaction
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Ex: Our department head coordinates the teaching activities of the departmental
members. She ensures that there is no schedule conflict, teaching members fairly
allocated. You can say that her span of control is fairly wide, highly broad. Organizations
with broad spans of control tend to have few hierarchical levels and are regarded as flat.
We have only two levels in the department: the head and faculty members.
Organizations with narrow spans of control tend to have more hierarchical levels and are
called tall. Army is a typical example of a tall organization.
Centralization
● Referring to the locus of decision making
● Decision-making authority vested in top management
● Lower-level employees assumed to lack awareness of general organizational goals and
focus on localized concerns
● Lower-level employees not having necessary skills and information to make decisions
● Providing consistency operations and actions but time-consuming
Ex: If the president of METU tells Çağrı hoca which topics should be covered or not
covered in this course, this indicated centralized coordination. Or, army is very
centralized. However, decentralization is common in highly professional fields such as
scientists, accountants, lawyers.
Standardization
● Setting consistent input, process, and output requirements to reduce uncertainty and
unpredictability
● Input standardization: standardizing material and human resources. Ex: Fast food
restaurants might want to deal with only one supplier of raw materials so Big Mac for
example has the same taste every time due to its standard ingredients. Ex: Organizations
may standardize HR by hiring the graduates of certain MBA programs only.
● Process standardization: standardizing the way a task is performed. Ex: Preparation of
fast foods in McDonalds
● Output standardization: standardizing products or services.
3. Explain the contingency factors that affect organizational design. Give an example of how
each might affect the design of an organization.
Size
 Measured by total number of sales, total number of employees, total assets
Ex: Total number of asset could be an indicator for a bank. Large size can lead a complex
structure (i.e. horizontal+vertical+spatial) which necessitates sophisticated
communication
Technology
 Transformation process from inputs to outputs which includes all kinds of machines,
tools, methods and methods and techniques organized actions and interactions.
Ex: Virtual teams are the example for relationship between technology and structure.
Technology facilitates the communication of these teams and emerges spatial
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differentiation. Spatial differentiation may result on accumulation of local market
knowledge and change goals and strategies of the organization towards market broad
and internalization
Goals and Strategies
 Goals is the general purpose of the organization. Strategies are the plan of action that
describes the resource allocation for dealing with the environment and for reaching the
organization’s goals.
Ex: Low income family car manufacturer. Goal of this car manufacturer is to produce a
quality car for low income families. Strategy is to produce it in a developing country
where they can find quality labor and equipment for relatively low cost. Its goals and
strategies define the scope of operations and relationship between employees,
customers and competitors. The scope is limited to low cost quality car production for
low income families. Such manufacturer might prefer formalized and standardized
process to ensure the low cost production. This processes in return can create an
inflexible rule-based and homogenous organizational culture in which there is no
tolerance for rule violation.
Culture
 Underlying set of key values, beliefs, understandings, and norms shared by employees.
These underlying values may pertain to ethical behavior, commitment to employees,
efficiency, or customer service, and they provide the glue to hold organization’s member
together. An organization’s culture is unwritten but can be observed in its stories,
slogans, ceremonies, dress, and office layouts.
Ex: Resistance in government intuitions to change, bureaucratic norms of practice,
emphasizing established procedures are the main barriers in any structural change in
governmental organizations.
Environment
 Includes all elements outside the boundary of the organization. Key elements include the
industry, government, customers, suppliers, and financial community. Environmental
elements that affect an organization the most are often other organizations.
Ex: Government regulations necessitates a formalized structure; or customers required
standard services in process. In return, these structural choices of the organization are the
response to the environmental demands.
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4. Compare and contrast mechanistic and organic structures in terms of contingency
characteristics.
Contingency Characteristics
Size
Technology
Goals & Strategy
Culture
Environment
Mechanistic
Large
Manufacturing
Efficiency
Rigid
Stable
Organic
Small
Service
Innovation
Adaptative
Changing
5. How do we manage goals?
There are multiple and conflicting goals within the organizations. Basic techniques to manage
are as follows:
Negotiating and bargaining: Disagreeing parties may apply to this resolve differences. It may
result in some goals abandoned and the others are pursued. Win-lose negotiations and win-win
(sometimes) negotiations are observed.
Satisficing: Members of the organization may be satisfied with something less than perfect or
complete goal achievement. Managers may set higher goals for many aspects of organization.
Since some of the goals may be contradictory, it may be impossible to meet all of them. To the
extent that management was satisfied with less-than-expected profits would be an example of
satisficing.
Ordering:
✓ Setting priorities: Top management determines which of the diverse goals are most
important to the organization.
✓ Sequencing: It assumes all goals will eventually be met however some will be met before
others.
6. Compare and contrast the strategies of differentiation and low-cost.
Both differentiation and Low-Cost strategies are developed by Michael Porter which are
competitive in terms of achieving goals.
Differentiation Strategy:
● Aim of distinguishing products or services from others in the industry to reduce the
threat of substitute goods.
● Use of advertising, exceptional service or new technology.
● Requires production of quality
● Targets customers who do not care much about the price = Leads to profit increase
● “Preserve the uniqueness” = Creation of loyal customers
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Differentiation strategy can either be focused, which includes differentiation in one single
product and target group (like Puma) or have a broad scope in which variety of products are
available (like Apple).
Low-Cost Strategy:
● Aim of increasing market share by keeping costs low compared to the competitors.
● Seeking efficiency and cost reduction- Not innovation! (Perhaps consider innovation only
in terms of process development for efficiency)
● Isn’t equal to low price!! However, eventually leads to have low prices.
● Concerns stability rather than innovation and development (it is the case for
Differentiation Strategy)
● Mechanistic Design
Example: Ryan-Air.
(Kitapta Differentiation ve Low-Cost’a ek olarak Focus Strategy’den bahsetmiş ama ders
notlarında 3. Bir ayrım olarak mevcut değil. Focused’u differentiation ya da low-cost’un alt
başlığı gibi işlemiş hoca, ben de o yüzden bu doğrultuda yaptım.)
Companies that can apply both differentiation and low-cost strategies tend to be successful but
consistent application of the strategies is necessary. However, we cannot decide whether which
one (either differentiation or low-cost strategy) is the best without knowing the organization’s
strengths and market’s competitiveness.
7. Briefly describe environmental sectors.
●
a.
b.
c.
1. Industry:
Competitors, substitute products, the ease or difficulty of entering and leaving the
industry, and relations between buyers and suppliers. Elements of the industry sector
are as follows:
Threats from new entrants or barriers to entry: Economies of scale, capital
requirements, product differentiation, switching cost, distribution channels, government
policies, other cost advantages.
Substitutability threat: The extent to which substitute products or services exists.
Competitiveness increases with the substitute products.
Competitive rivalry: Attempts by industry members to improve their position intensify
rivalry within that industry. Several factors such as large #of competitors, competitors of
nearly equal size, limited growth opportunities, high fixed cost, high costs to exit.
2. Culture
● It contains values, norms, traditions, and artifacts of a society. Local, cultural and social
conditions in the consumer & labor markets in which the firm operates.
● Guide for consumer behaviors: Companies benefits it for conducting operations and
attracting customers in different markets.
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● Especially important with the increasing globalization of business and exposition to
different nations and cultures. American and European cultures are different so
Americans finds it hard to get used to it.
3. Law and politics
● Government, political, and legal processes: The political system, legal and political
institutions, laws, and regulations that affect a firm.
● Taxation and regulation
● Government spending
● Employment laws and minimum wage levels
● Foreign policy – International trade
●
●
●
●
4. Economy
Market, planned, and mixed economic systems: The economic system and the economic
conditions that a firm face. (Private enterprise vs. centrally planned). Government
control over organizations varies.
Allocation of resources and distribution of goods and services
General economic conditions (cost of doing business, economic stability)
The most dynamic sector
5. Technology
● Specific skills, knowledge, tools, and abilities necessary to complete a job at the
individual, group, and organizational level. (Available and emerging technology that a
firm can use to transform inputs into outputs.
● Whether work is done by individuals or groups and how individuals or groups are
organized
● Source of technological innovations
6. Human resources
● Source of human inputs: the labor market, available skills, labor unions or organizations,
and work ethic of available workers.
● Levels of education and training, wage and benefit standards, presence or absence of
unions, and worker attitudes
● Trends
o Part-time, temporary, or contract workers – Leaner, more flexible
o Educated and flexible, workforce – greater stress
o Different cultural backgrounds – outcome of globalization
●
●
●
●
7. Physical resources
Physical resources (weather, terrain, supply of natural resources, and natural
catastrophes) that may affect an organization.
Raw materials
Concentration of resources (few or many suppliers) and suppliers’ bargaining power
Physical conditions like climate, geography, physical disasters and location
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8. Consumers and clients
● The main group for which organizations exist
● Characteristics and changing preferences of consumers and client markets.
● Very large or very few clients or many suppliers and buyers’ bargaining power
8. What are the ways to adapt to organizational environment?
a. Forecasting and strategic planning:
● Forecasting the future conditions and making predictions used to change or modify
strategies
● Trend analysis (historic data) and scenario forecasting (probabilities of alternatives)
● Difficult, inaccurate and time consuming when the environment is complex
● Less valuable when the environment is stable
●
●
●
●
●
●
●
●
b. Withdrawal
Sealing the organization off from part of the environment to keep environment
interfering with the organization’s core operations.
Temporary strategy, focusing on a narrow portion of the market
Buffering: To protect parts of the organization against environ. uncertainty.
Counterproductive in the long-run (delaying the inevitable)
c. Differentiation and integration
Horizontal differentiation or specialization: It achieves complexity to meet the demands
of environment. (more departments to respond to environment)
Vertical differentiation: Pushing decision making to lower levels of hieararchy.
Spatial differentiation: To respond to an environment that is geographically or regionally
fragmented.
Environmentally suitable integration: Selecting mechanisms that are consistent with the
environment.
d. Structuring
● Mechanistic structure for stable environments: Strict centralized hierarchy of decision
authority, heavy reliance on rules, narrowly divided labor and specialized tasks,
emphasis on vertical communication.
● Organic structure for complex environments: decentralization of decision authority, few
rules, broad integrative tasks, emphasis on horizontal communication.
● Shift from mechanistic to organic structure
●
●
●
●
●
e. Imitation
Imitating other successful organizations. It is less costly
Benchmarking: search for and application of the best practice
Institutional pressures motivate managers to imitate.
Risk of imitating the unsuitable and obsolete
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9. What are the ways to control organizational environment?
In today's fast-paced world, there are some challenges to the organizations trying to survive
within the complex and competitive business environment. As known, organisations are linked
to the external environments, and one of these challenges could be mentioned as "responding
rapidly to environmental changes and customer needs". The external environment of an
organisation can be examined at two level:
1) Task environment: Organisation interacts direclty.
-Industry sector (competitors, etc)
-Raw materials
-HR sector (labor market)
-Market
-International context (foreign firms, exchange rates,etc)
2) General environment: might not have a direct impact on the daily operations of a firm, but
indirectly influences it.
-Financial resources
-Technology
-Economic conditions
-Government sector (taxation, gov spending, etc)
-Nature (environmental impact)
-Culture (guide for consumer behavior)
Changing elements in various environmental sector can create uncertainty.
Environmental Uncertainty:
1) Complexity (simple vs complex): similarity/dissimilarity of environmental elements ADAPTATION
2)Dynamism (stable vs unstable): degree of change in environmental sectors-ADAPTATION
3)Abundance or munificence: amount of material and financial resources- CONTROL
4) Info and resource need
To assess uncertainty in each sector, information and resources are needed; since it
-creates need for information about the environment and
-creates needs for resources from the environment.
So, organizations should choose their way to deal with uncertainty acc. to what reasons causes
uncertainty. None of the way is superior to another.
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Ways to CONTROL:
1)Mergers and Acquisitions:
-Merger: two or more companies joins together to form a new company
-Acquisition: One company purchases another
-Vertical Integration
-Horizontal Integration (to coordinate depts)
-Diversification
2) Agreements, norms, contracts:
-Agreements: informal
-Contracts: legally binding
-expensive and time-consuming to develop and write
-monitoring needed for noncompliance
3) Joint Ventures:
-Creating an inter-organisational link for a specific purpose or project
-Pool resourcing and spreading risk
-Not giving complete control to any one party
4) Board of Directors:
-Inside members as company employees
-Outside members providing industry expertise and connections to the environment
-Cooptation involving group or community leaders
-Interlocking directorates serving on two or more boards
-Agency problem
5) Management Recruiting:
-Recruiting outside expertise, skills and connections
-Attacking a competitor's employees
6) Advertising and Public Relations:
-Dealing directly with the general public
-Differentiating from the competitors
-Advertising to influence the tastes/opinions of consumers
-Public relations to develop positive image
7) Niche or Domain Selection:
-Controlling a niche or selecting a domain ( changing the domain where less uncertainty)
-Exiting the complex or unstable market
-Selecting through internal product development, acquisition, divestiture
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8) Political Activities:
-Lobbying for favorable legislation or regulation
-Demanding protection through trade barriers, lower corporate taxes, etc
-Appointment of people from industry to executive positions in government offices
9)Trade Associations:
-Cooperative organisations formed by the companies in the same industry or market ( to
promote common interest)
for ex; by pooling resources
-Setting industry standards
- Organising public relations activities
-Lobbying government for favorable legislations
-Mobilizing the power of an entire industry
-Competing with industry giants
10) Illegitimate Activities: (questionable practice!)
-Bribing
-Strike breaking
-Price fixing
-Rival misrepresenting
-Wiretapping
10. Explain the three types of core technology at the organizational level.
Small or Unit Batch
 A few units at a time
 Customized production
 Little stockpiling
 Labor intensive
 Custom tailor shop
 Organic structure
 Coordination with
customization
Mass or Large Batch
 Many units of the same or
similar product
 Moderate capital and labor
intensity
 Undifferentiated output
 Stockpiling possible
 Clothing
 Mechanistic/bureaucratic
structure
 Coordination with
standardization
Continuous Process or Flow

Continuous production
 Capital intensive
 Standardized production
and output
 Direct labor involvement is
little labor involvement
 Breweries
 Organic structure
 Coordination with
professionalization
11. Describe the concepts of task variety and task analyzability.
Technology is a concept that can be used not only to characterize an entire organization, but
also to describe work throughout the organization. According to work unit or departmental
view of technology, there are 2 dimensions.
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● Task variety: the degree of task variety present in jobs is associated with the degree of
flexibility that a department has carrying in its operations. Following characteristics
determine high or low variety department/work unit.
• Many or few exceptions to standard procedures
• A large or small number of unrelated tasks and unexpected events
• Various or limited raw materials
• Flexibility or inflexibility
● Task analyzability: ease or difficulty encountered in searching for information to solve
the problems or complete tasks. Following characteristics determine high or low task
variety.
• Readily available or unavailable information – High analyzability tasks
• Standardized and programmed or ambiguous and complex – Low analyzability
12. Describe the three types of technology used to integrate and coordinate departments.
It focuses on the nature of Interdependence and coordination among departments or work
units that result from the technology. Essential questions are: How much does one unit or
department depend on another to complete work? What is the nature of that
interdependence? How can we achieve the necessary coordination?
a. Mediating technology (e.g. bank)
• Brings together individuals, departments, or organizations with complementary needs
• Standard operating procedures and manuals create consistency across units of organ.
• Low need for communication and coordination
• Low horizontal communication
• No need to locate different units closely
• Pooled interdependence (perfo. of the org. depends on individual perfo. of units)
• Relatively independent units
b. Long-linked technology (e.g. automobile assembly line)
• Proceeding in a serial or step-wise fashion
• Steps in sequential order
• Interdependent units close or adjacent to one another
• Communication channels between units
• Scheduled tasks
• Sequential interdependence (required sequencing of tasks)
• Relatively dependent units
c. Intensive technology (e.g. intensive care unit of a hospital)
• Involving situations in which the outputs of one individual, unit, or department become
the inputs of another individual, unit, or department
• Different skills, techniques, and methods brought together to accomplish a specific
purpose
• Units located together to facilitate communication and mutual adjustment
• Reciprocal interdependence
• Interdependent units
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13. What are the stages of organizational life cycle? Explain them.
BIRTH
Entrepreneural Stage
Initially, the organization is small, non-bureaucratic, and a one-person show. The top manager
provides the structure and control system. Organizational energy is devoted to survival and the
production of a single product or service.
- Rapid Growth
- Liability of Newness
Challenge
- Survival
EMERGENT STRUCTURE
Collectivity Stage
This is the organization’s youth. Growth is rapid, and employees are excited and committed to
the organization’s mission. The structure is still mostly informal, although some procedures are
emerging. Strong charismatic leaders like Jeff Bezos at Amazon.com provide direction and goals
for the organization. Continued growth is a major goal.
- Continued growth
- Balance
- Stability
- Flexibility
Challenges
- Delegation of responsibility
- Professional management
FORMAL ORGANIZATION
Formalization Stage
At this point, the organization is entering midlife. Bureaucratic characteristics emerge. The
organization adds staff support groups, formalizes procedures, and establishes a clear hierarchy
and division of labor. At the formalization stage, organizations may also develop complementary
products to offer a complete product line. Innovation may be achieved by establishing a
separate research and development (R&D) department. Major goals are internal stability and
market expansion. Top management delegates, but it also implements formal control systems.
This is the stage where Jeff Bezos of Amazon is having trouble managing the transition because
he doesn’t want to give up personal control.
- Slow growth
- Formal organization
- Beginning of bureaucracy
Challenges
- Balancing needs for coordination and control with needs for flexibility and
responsiveness
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DINOSAURS & TURNAROUNDS
Elaboration Stage
The mature organization is large and bureaucratic, with extensive control systems, rules, and
procedures. Organization managers attempt to develop a team orientation within the
bureaucracy to prevent further bureaucratization. Top managers are concerned with
establishing a complete organization. Organizational stature and reputation are important.
Innovation is institutionalized through an R&D department. Management may attack the
bureaucracy and streamline it.
- Slow growth or stagnation
- Large and complex
- Highly bureaucratic
Challenges
- Restructuring
- Reengineering
- Rethinking
14. What is functional design? What are its strengths and weaknesses?
● Grouping employees on the basis of functions or equipment
● Based on specialized knowledge, skills, information, and equipment
● Assigning partial responsibility
● Best suited for organizations of small- or medium-size, single-product or few-closely
related-product, low-interdependence and routine technology, and fairly stable
environment
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Strengths:
● Workers can develop refined expertise and skills
● Communication and thus coordination is facilitated within functions
● Newly hired employees can be easily socialized to acquire functional and interactional
skills
● Economies of scale is more likely to emerge
Weaknesses:
● It is difficult to coordinate the activities of different functions
● A narrow functional view of the organization may emerge
● Coordination may be pushed up the hierarchy, wasting top managerial resources
● It is likely that innovation will be inhibited
15. What is output design? What are its strengths and weaknesses?
● Grouping based on outputs. Three types of output groupings: products or services
(gasoline, chemicals, oils and lubricants), markets (consumer goods market, industrial
goods market, aerospace market), and geographical regions (east, west)
● Involving semi-autonomous departments or division
● Suitable for uncertain environments and non-routine interdependent technologies
Strengths:
● Adaptation to environmental demands in general is easier
● Output rather than department orientation makes coordination easier
● The need for centralized coordination is less
● It is easier to identify and track responsibility for efficiency and profitability
Weaknesses:
● Product, market, or geographical biases are likely to occur
● The potential for economies of scale is considerably reduced
● The ability to share information and resources across divisions is low
16. Describe the indicators of organizational culture.
Rites, rituals, and ceremonies: They mark the passage of some event or milestone such as
celebration of entry into organization, promotions, renewal and enhancements (annual
meetings), degradation(firing and layoffs) and parting (retirement, farewell parties). They may
be planned or spontaneous.
Symbols and slogans: They are used for developing means of ready recognition of the
organization and its products. E.g. slogans, logos and trademarks, symbols.
Language: language or jargon of its own serves as a shorthand to members and as a barrier to
nonmembers. Members develop and use an organizational vocabulary.
Myths and stories: History of operations and events over time in the form of myths and stories
that is handed down from one generation to other. Although myths and stories typically involve
elements of truth, they often get distorted or exaggerated over time.
Physical environment: The specific architecture of physical environment often affects the
process of work and may give evidence of the culture or contribute to the development of
culture.
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● Physical structure: Physical layout or design of a building provides important evidence
about culture. They are designed to meet certain functional needs.
● Physical stimuli: they gradually come into members’ activities. Such as mail deliveries,
tie clocks and telephone calls. E.g. employees may become aware of patterns of mail
delivery and structure their work around them.
● Symbolic artifacts: Aspects of physical setting that individually and collectively guide our
interpretation of the social setting.
17. Explain the rational decision-making model.
18. Explain the garbage can decision making model.
19. What is authority? Explain the types of authority.
● Rationally based formal right to make decisions and influence behavior through instructions
or directions to implement decisions based on formal organizational relationships.
● The right of a manager to make decisions and to issue orders, instructions, and so on comes
from ownership and property rights.
● Associated with the responsibility to protect the interest of the organization and the owner
20. Explain individual bases of power.
Rational or legal or traditional power-e.g. obeying commands of police officer
● Acceptance that its exercise, by another person, agrees with some set of rules or laws or
traditions considered legitimate by both parties.
● Called legitimate power
● Function of culture in tradition-based societies. (far east)
● Identical with authority when rule- or law-based
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Reward power-e.g. working hard for promotion
● Ability to control and dispense benefits to others
● Ability to shape the behavior of others by the act of dispensing or withholding benefits
● Based on the size of the reward and the belief that it will be dispensed
● Depending on the measurement of the behavior to be rewarded
● Indicating a dependency relationship
Coercive power- e.g. disciplinary action of a three-day suspension
● Ability to coerce into something or punish another person
● Effective to the extent that punishments are considered as punishing actually, strong
enough, and likely
● Depending on the measurement of desired behaviors or task accomplishments
● It changes behaviors.
● Potentially leading to avoidance and estrangement(uzaklaşma, soğuma)
Referent power-e.g. hero worship
● Identification with a person in a power position
● Not depending on explicit recognition
● Indicating role modeling
● Observed in hero worship or master/apprentice relationship
● Creating strong commitment
Charismatic power- e.g. religious leaders
● Influence or power based on one’s personality
● Involving no special effort
● Helping followers attain personal goals
● Possible to involve referent power
● Indicating leadership qualities
● Easily attracting others
● Retained long after loss of official power positions or life
Expert power-e.g. computer programmer
● Based on knowledge or special skills or academic and professional credentials
● Irrespective of hierarchical positions
● Involving a dependency relationship
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