Chapter 3
Organization
Group members
Topics
Raheel Zafar
• The world of organizations
Wisal Khan
• Organizational coordination
Salman khan
• Types of organizations
Anser abbas
• Organizational markets
(MBA 3rd B morning)
• Organized markets
Organizations
The world of organization
We live in a world of organization . Think about it for a moment. When you
were, it was perhaps in a hospital – a healthcare organization. Growing up, you
attended school – an educational organization. In your adult life, you will
probably earn your living in a work organization. You may be a member of one
or more recreational organizations. You may belong to a religious organization.
You buy the goods and services you need from a variety of organizations.
Introduction
• An organization (or organization) is a social entity that has a collective goal
and is linked to an external environment. The word is derived from the
Greek word organon, itself derived from the better-known word argon
which means "organ" – a compartment for a particular task.
• Organization is an organized group of people with a particular purpose,
such as a business or government department. Business Organization is an
enterprise that produces goods or services usually in order to make a profit.
Organization is understood as planned, coordinated and purposeful action
of human beings in order to construct or compile a common tangible or
intangible product or service.
According to Keith Davis, "Organization may be defined
as a group of individuals, large of small, that is cooperating
under the direction of executive leadership in accomplishment
of certain common object."
• Organization as a Process: In this first sense, organization is
treated as a dynamic process and a managerial activity which is
essential for planning the utilization of company's resources, plant an
equipment materials, money and people to accomplish the various
objectives.
• Organization as a Framework of Relationship: In the second
sense organization refers to the structure of relationships and among
position jobs which is created to release certain objectives.
• Organization as a Group of persons: In the third sense,
organization is very often viewed as a group of persons contributing
their efforts towards certain goals.
• Organization as a System: In the fourth sense, the organization is
viewed as system. System concepts recognize that organizations are
made up of components each of which has unique properties,
capabilities and mutual relationship.
Organizational coordination
Price mechanism
Price mechanism is a
system by which the
allocation of resource and
distribution of goods and
services are made on the
basis of relative market
price.
Authority
In organization authority
directed the allocation of
resources instead of price
mechanism.
Organization and market as
alternative coordination
devices
Used as primary
coordination mechanism in
small organization.
Organizational
configurations
• Mintzberg defines six mechanisms for coordination
between different tasks.
• six mechanisms help to coordinated work within
organization.
• communicate knowledge and expectations.
• alternatives to the price mechanism
Organizational
configurations
• Mutual Adjustment
simple process of informal communication
• Direct supervision
orders or instructions from one to other. monitoring of the work
processes.
• Standardization of work
specifying the work processes
• Standardization of outputs
specifying the results of different work.
• Standardization of skills
work are coordinated by virtue of the related training the workers have
received.
• Standardization of norms
infusing the work that are controlled, usually for the entire
organization.
Types of organizations
 Entrepreneurial organization
 Machine organization
(Direct supervision)
(Standardization of work process)
 Professional organization
(Standardization skills)
 Diversified organization
(Standardization of output)
 Innovative organization
(Mutual adjustment)
 Missionary organization
(Standardization of norms)
Main parts of
organization
 Strategic Apex (top management)
 Middle Line (middle management)
 Operating Core (operations,
operational processes)
 Technostructure (analysts that
design systems, processes, etc.)
 Support Staff (support outside of
operating workflow)
Organizational markets
•
1.
2.
3.
Consist of organizations or groups of individuals purchasing
products that will be used in an organizational context. In
other words, these products will be used in the operation of
the organization, will be made into other products, or will
be resold to other individuals and or organization.
Internal market for goods
Internal capital market
Internal labor market
Internal market for goods
A system in which goods and services are sold by the provider to a range of
purchasers within the same organization, who compete to establish the price of
the product.
Internal marketing is supposed to build a market oriented and customer focused
culture in an organization that facilitates the following:
1. Enable the organization to build customer focus into the corporate mission
and make every employee (whether in operations, marketing, finance or
personnel)
2. Treat the front-line employees as internal customers and keep their morale
and motivation high.
3. Create an environment where customer contact personnel feel empowered
to deliver high quality service to customers and do not feel threatened to give
feed back to the management on the negative moments-of-truth
experienced by customers,
4. Streamline service delivery systems (including the back-office support systems
and procedures) in order to suit customer needs regardless of internal
conveniences.
• CAPITAL MARKET:
An internal capital market is both a capital allocation method and a
department within a company that disperses money to other sections
of the company.
Types of capital markets
External market
Makes money by charging interest on the borrowed money, while an
internal market makes money through the projects and work done
with the money.
Internal market
The money is being sent to business units the company owns, which
usually increases control over the funds unless there are unscrupulous
employees attempting to steal the money.
INTERNAL LABOR MARKET:
An internal labor market is "an administrative unit, such as a
manufacturing plant, within which the pricing and allocation of labor
is governed by a set of administrative rules and procedures".
Organized markets
• A securities marketplace where purchasers and sellers regularly gather
to trade securities according to the formal rules adopted by the exchange.
Example: Stock market
• A market can be organized as an auction, as a private electronic market, as
a commodity wholesale market, as a shopping center, as a complex
institution.
Collusion
• Explicit collusion (cartel)
• A secret agreement between two or more persons to limit open competition
• Tacit collusion when cartels are illegal or explicit collusion is absent
Why organization used coordination
•
•
•
•
Duplication
Inflexibility
Lost Data
Delay