CHAPTER 3 : ORGANIZATION 1 WHAT IS AN ORGANIZATION? Amitai Etzioni • Organization is a social unit or human grouping, structured for the purpose of attaining specific goals Stoner • Organization is a pattern of relationships through which people under direction of managers pursue their common goals 2 WHAT IS AN ORGANIZATION? Group of people Has a structure Strive to achieve goals 3 FORMAL ORGANIZATION AND ITS CHARACTERISTICS 1 2 3 4 5 • Has its own specific function • Has its own norms or rules of social behaviour • Members have different statuses (division of labour) • Creates authority • Based on rationality 4 DEPARTMENTALIZATION Product Types of departmentalization Customer Geographical 5 INFORMAL ORGANIZATION 1 2 3 4 5 6 • Exist within the formal organization • A network or personal and social relationships • People working in a formal organization who meet and interact regularly • Does not have its own rules and regulation • No system of co-ordination and authority • No superior-subordinate relationship 6 System Process An association of interrelated and interdependent parts Sequence of interdependent and linked procedures which convert inputs into outputs Two types of system: Inputs: • Closed system • Open system • Man, money, materials Outputs: • Products or services 7 HIERARCHICAL ORGANIZATION • An organizational structure where every entity is subordinate to a single other entity • Different levels management, power authority of and • Members communicate with their immediate superior and subordinates 8 Network Multinational Virtual New forms of organization 9 TEAM MANAGEMENT • DEFINITION • Refers to techniques, processes and tools for organizing and coordinating a group of individuals working towards a common goal • TEAM DEVELOPMENT MODEL • Forming • Storming • Norming • Performing • Adjourning 10 BASIC ORGANIZATION CONCEPTS Vision Mission Goals Strategies Values Culture Organization chart Organizational levels Job Responsibility Authority Accountability Span of control Centralization Decentralization Delegation Unity of command Staff Line department Specialization 11 BASIC ORGANIZATION CONCEPTS Culture Organization chart Organizational levels • Unique pattern of shared characteristics that distinguish from one another • Shows department’s functions, positions and relationship between departments • Pyramid showing relationships among levels Job • Task that being performed by employees Responsibility • Employee’s duty to perform assigned task Authority Accountability Span of control • The right to make a decision • Manager’s expectation that the employees will accept credit or blame for him work • Number of employees directly reporting to a person 12 BASIC ORGANIZATION CONCEPTS Centralization Decentralization Delegation Unity of command Staff Line department Specialization • Concentration of authority at the top of an organization • Delegation of authority to lower level employees or departments • Process of giving authority to a person to make decisions and act in certain situations • An employee should report to only one manager • Personnel who carry out a specific enterprise • Performs tasks that reflect the organization’s primary goal and mission • Process of identifying particular tasks 13 CHAPTER 4 : PLANNING AND STRATEGY FORMULATION 14 DEFINITION OF PLANNING Process of analysing relevant current or past information Process whereby managers form organizational goals and decide the most suitable action to achieve those goals Process of determining how management system can move the organization towards achieving its goal Process of forming goals and taking suitable action to achieve goals Certo Stoner, Freeman & Gilbert Basic process of selecting and determining suitable action to achieve goals Dessler 15 DEFINITION Vision • Express an organization’s fundamental aspirations and purpose Mission • Organization’s purpose or reason for existing Values Goal Strategies • Basic belief about a condition • Results to be attained • Major courses of action selected to achieve goals 16 DEVELOPING GOALS S • Specific • Measurable M A • Achievable R • Realistic T • Time-based 17 DEVELOPING STRATEGIES Analyzing Your Context and Environment Identifying Strategic Options Evaluating and Selecting Strategic Options 18 PLANNING PROCESS Setting goals Defining the current situation Identifying assistance and resistance Developing a new set of plans and actions Re-evaluating goals 19 TYPES OF PLAN Strategic planning Involves setting long-term goals and objectives Procedures: • Form company’s mission • Establish strategic planning unit • Determine goals of project • Analyse environment • Develop strategic plan • Monitor & measure performance Tactical planning Operational planning Performed by middle-line managers Involves a small or specific scope in an organization Characteristic: Two types: • Concentrates on specific individuals, activities, resources • Conducted a shorter period • Various functions of management • Single-use plan • Standing plan Scenario planning Rediscovering the original entrepreneurial thought Creative managers invent varied scenarios 20 TYPES OF STRATEGIES 21 SWOT EPISTELS Tools for planning PEST STEER 22 TOOLS FOR STRATEGY FORMULATION Bargaining Power of Customers Bargaining Power of Suppliers Threat of New Entrants Competitive Rivalry within an Industry Threat of Substitute Products 23 IMPLEMENTING PLANS Somebody has to be responsible Develop metrics throughout the plan Instruct, educate and coach throughout the plan Understand the root causes and make adjustments Insist on individual compliance with the plan 24 EFFECTIVE STRATEGY IMPLEMENTATION Clarity of purpose 3 1 4 Effective measurement 2 Visible leadership 1. 2. 3. 4. No roadmap No focus No leader Accelerated success 25 For purposeful and orderly objectives Points out need for future change Assist manager in gaining status Increases and balances utilization of facilities ADVANTAGES OF PLANNING Answer ‘what if’ questions Encourages achievement Provides a basis for control 26 Planning is limited by the accuracy of information and future facts Planning is over done by planners DISADVANTAGES OF PLANNING Planning costs too much Planning delays action 27 CHAPTER 5 : DECISION MAKING AND PROBLEM SOLVING 28 IMPORTANCE OF DECISION MAKING Fundamental process in management Includes defining problems, gathering information, generating alternatives and choosing course of action Process of making choices among one or more alternatives 29 WHAT IS A DECISION? Selection made between two or more alternatives 30 CONDITIONS OF DECISION MAKING Certainty Conditions • Managers will be able to predict what will happen in future Risky Conditions • Managers will be able to predict the outcome of implementing alternatives Uncertainty Conditions • Managers are unsure to predict the outcome of an action 31 RATIONAL DECISION MAKING PROCESS Identify the problem Form alternatives Analyse the alternatives Select the best alternatives Implement a decision Evaluate the decision Take follow-up action 32 LIMITS OF RATIONALITY Satisficing Limited search Inadequate information and control 33 Rational Model Decision Making Models Emotional Model Bounded Rational Model 34 RATIONAL MODEL Define and diagnose problem Set goals Search for alternative solutions Implement the solution selected Choose among alternative solutions Compare and evaluate alternative solutions Follow-up and control results 35 BOUNDED RATIONAL MODEL Decision biases Inadequate problem definition Limited search for alternatives Limited information Satisficing 36 Very fast Individuals care about emotional features Provide information EMOTIONAL MODEL Provide a way for coding experience Respect life of other human To enable final selection 37 Deming Cycle Balanced Scorecard Benchmarking Quality Management Decision and Planning Aids 38 Ensuring access to information anywhere Getting right information at right time Sending instant alerts Important areas Information Systems for better Decision Making 39 GROUP DECISION MAKING ADVANTAGES Able to information collect DISADVANTAGES more Takes a longer time Minority domination Able to form many effective alternatives Pressure to follow a decision High acceptance level Unclear responsibilities Increase in the acceptance of rights 40