Ot Lecture Notes
Ot Lecture Notes
Ot Lecture Notes
CHAPTER 1
Theory:
• Theory is basically an explanation!
• It explains relationships between different phenomena (individuals, events,
groups, companies, etc.).
• Why and how something happens?
• What happens? Where and when it happens? Who is responsible?
• Theory provides predictions and creates expectations.
• Theories are helpful to understand our experiences
• Each theory is a framework of ideas and thoughts.
• Theory arranges our approach to certain issues
Importance of theory:
• Theory is everything for a scholarly work!
• Academics challenges existing theories, or improve them, or they create new theories.
• Practitioners use academic theories as a valuable source.
• They also have their own informal theories out of their experiences.
• “There is nothing as practical as a good theory” (Kurt Lewin 1943)
What is organization?
• To organize means to coordinate a group of people and make arrangements
• “forming a whole of interdependent parts”
• Organizations are deliberately designed orders with a purpose.
• An organization is a managed system.
• Management involves planning, coordinating, directing, controlling.
• An organization is different than a market order.
• How?
• Organizations are operated with an environmental structure, possible a market
structure
• For profit vs. non-profit
Importance of organization:
• Success comes with good organization as humans are often individually helpless.
• Military, political, and business leaders rely on excellent organization.
• “Chinggis Khan's organized units were based on the principle of ten. He organized
his people into units of ten, a hundred, a thousand, and ten thousand.”
• “Believing that conventional management had stifled innovation, Jobs laid off the
general managers of all the business units (in a single day), put the entire company
under one P&L, and combined the disparate functional departments of the
business units into one functional organization.”
CHAPTER 2
Images of organization:
• Organization as machines: Control and standardization
• Organization as organism: Adaptation
• Organization as brain: Information processing
• Organization as culture: Values and rituals
• Organization as political: Power, interests and conflicts
• Organization as psychic prisons: Repression
• Organization as flux and transformation: Complexity
• Organization as instruments of domination: Exploitation
- Open system thinking pays attention to the (open) boundary between the
organization and its context.
- Closed system design focuses exclusively upon the organization without
consideration of its dependence upon or capacity to influence elements comprising its context.
Boundary-spanning roles link and coordinate an organization with key elements
in the external environment.
Organization configuration
Weber’s bureaucracy:
• Traditional authority based on customs, kinship and social relationships: The problem
of favoritism
• Formal authority based on rules: Rational meritocracy established by legitimate
authority
• Advantages: Efficiency and discipline
• Problems: Red tape (too much paperwork) and ‘iron cage’ (limited freedom)
Modern perspectives:
Chaos theory suggests that relationships in complex systems are nonlinear and made
up of numerous interconnections and divergent choices.
“This is world full of uncertainty, characterized by surprise, rapid change and
confusion. Managers can’t measure, predict or control in traditional ways the
unfolding drama inside or outside the organization.” P.37
Learning Organization is based on equality, open information, little hierarchy and a
culture that encourages adaptability and participation.
“The learning organization is, in principle, based on equality, open informa-
tion, little hierarchy and a culture that encourages adaptability and
participation, enabling ideas to bubble up from anywhere that can help the
organization seize opportunities and handle crises. In a learning organization,
the essential value is problem solving, as opposed to the traditional
organization designed for predictable outcomes.” P.37
Managers are often reluctant to release their control.
Discussion
• What kind of an organization would you like to work? Why?
• What kind of an organization would you like to manage? Why?
CHAPTER 3: STRATEGY AND ORGANIZATION DESIGN
What is strategy?
• It is a plan for interacting with the competitive environment. Managers must select
specific strategy and design options in order to achieve official and operative goals
within its competitive environment.
Business Strategy
Business strategy aims at competitive advantage: Increased market share, increased
profitability
It aims at business goals and mission of the company
Three competitive strategies
(1) Low cost leadership: this strategy tries to increase market share by emphasizing
low cost compared to competitors (e.g. Ryanair).
(2) Differentiation: organizations attempt to distinguish their products or services
from others in the industry (e.g. Rolex watches).
(3) Focus: focused low cost and focused differentiation. The organization concentrates
on a specific regional market or buyer group (e.g. Puma).
Consider:
• Apple vs Garmin Watches.
• THY vs Pegagus Airlines
• Migros vs A101
• Nike vs Kinetix
MILES AND SNOW’S STRATEGY TYPOLOGY: HOW TO EXPLOIT EXTERNAL
ENVIRONMENT
• The prospector: Innovate, take risks,
seek out new opportunities and grow
(e.g., Getir, Arçelik)
• Learning, risk-taking, innovation
• The defender: Stability or even
retrenchment. (e.g., Vestel)
• Efficiency and tight cost-control
• The analyzer: Maintain a stable business
while innovating on the periphery. (e.g.,
Sony and IBM)
• Balances efficiency with learning
• The reactor: Responding to
environmental threats and opportunities
in an ad hoc fashion (e.g., McDonalds)
• Reacting to current needs
Purpose
Mission: It describes the organization’s vision, its shared values and beliefs and its
reason for being.
It sometimes called the official goals,
A mission statement communicates to internal and external stakeholders.
OFFICIAL AND OPERATIVE GOALS
The Importance of Goals
Official goals and mission statements describe a value system for the organization.
They legitimize the organization
Operative goals (short-run performance goals) related to key tasks of the
organization. They are more explicit and comparatively well defined. Operative goals
serve several purposes:
• Employee direction and motivation
• Decision guidelines
• Standards of performance
ORGANIZATION DESIGN
Organization design is used to implement goals and strategy and thereby influences
the prospects of success.
Organization design is not always a highly rational process which involves careful
calculation and proceeds smoothly through a serious of stages. In fact, the design of
organization is political process in which established routines and vested interests are
challenged and defended.
Example: Facebook and Meta
ASSESSING ORGANIZATIONAL EFFECTIVENESS
• Effectiveness: Whether the organization realizes its goals
• Efficiency: Ratio of inputs to outputs
• Balanced Scorecard: Balances traditional financial measures with critical operational
measures
• A balanced scorecard contains four major focal areas:
• financial performance,
• customer service,
• internal business processes,
• the organization’s capacity for learning and growth
Team discussion: Mezzaluna vs. McDonalds
• Discussion questions:
1. In terms of Porter’s strategies, how would you define these 2 companies’ strategies
(low cost-differentiation)? Why?
2. How are they different? Their customers and target segments? Their goals? Their
values? Their quality of products and services? Their operations? Preparation of
meals? Prices?
Contingency theory
• Appropriateness of an organizational structure depends on contingencies in their
environment
• Two organizational contingencies: Organizational size and task contingency
• E.g. small organizations and innovative tasks do not require strong
bureaucracy
• Structure should fit with needs, demands, and objectives.
The Organizational Structure of Innovation: How Toyota, Procter & Gamble, etc…
• Decision-making by innovation teams rather than by top management
• Integration of R&D into the Business Units
• Co-location of teams and departments
• Central innovation funds
• External interface for open innovation
• Merger & Acquisition Department
Silos
• Isolation and lack of information flow between department.
• Silos cause inefficiencies
• Poor customer experiences
• Internal unfamiliarity
• Us vs them mentality
• Disenfranchised Employees
• Task duplication
CHAPTER 8:
Manufacturing and Service Technologies
Structuring attends to the core technology:
• Technology: “Technology here refers to the work processes, techniques, machines and
actions used to transform organizational inputs (materials, information, ideas) into
outputs (products and services). “
• Core technology: Directly related to the company vision
• Non-core technology: Indirectly related
Manufacturing company
Organizing manufacturing
Technical complexity refers to the extent of mechanization of the manufacturing
process.
- High technical complexity means most of the work is performed by machines.
- Low technical complexity means workers play a larger role in the production
process.
Wookward’s scale of technical complexity
- Group I: Small-batch and unit production
- Group II: Large-batch and mass production
- Group III: Continuous-process production
Mechanistic: Written rules and procedures, strong hierarchy, centralized decision-making
Organic: Unwritten rules and procedures, weak hierarchy, decentralized decision-making
Lean manufacturing
Lean manufacturing uses highly trained employees at every stage of production
process.
- The heart of lean manufacturing is not machines or software, but people.
Lean manufacturing requires changes in organizational system.
- e.g. decision-making and management process culture
Incorporates technological elements
Paved the way for mass customization
- Using mass-production technology to quickly and
cost-effectively assemble individual goods for
customers
Interdependence among departments dictates the amount of communication and
coordination required in design.
Downsizing implementation
Downsizing has become a common practice in corporations.
Massive downsizing has often not achieved the intended benefits and in some cases
has significantly harmed the organization.
Techniques that can help smooth the downsizing process:
1) Communicate more, not less
2) Provide assistance to displaced workers
3) Help the survivors thrive
CHAPTER 1:
1-) An organization can be understood primarily by understanding the people who make it up.
ANSWER: Disagree. An organization has distinct characteristics that are independent of the nature of
the people who make it up. All the people could be replaced over time while an organization’s
structural and contextual dimensions would remain similar.
2-) The primary role of managers in business organizations is to achieve maximum effi ciency.
ANSWER: Disagree. Effi ciency is important, but organizations must respond to a variety of
stakeholders, who may want different things from the organization. Managers strive for both effi
ciency and effectiveness in trying to meet the needs and interests of stakeholders. Effectiveness is
often considered more important than effi ciency.
3-) A CEO’s top priority is to make sure the organization is designed correctly.
ANSWER: Agree. Top managers have many responsibilities, but one of the most important is making
sure the organization is designed correctly. Organization design organizes and focuses people’s work
and shapes their response to customers and other stakeholders. Managers consider both structural and
contextual dimensions as well as make sure the various parts of the organization work together to
achieve important goals.
4-) What is the difference between formalization and specialization? Do you think an organization
high on one dimension would also be high on the other? Discuss.
5-) What does contingency mean? What are the implications of contingency theory for managers?
Contingency means that something depends on other factors. In the context of management,
contingency theory means that there is no one-size-fits-all approach to management. The best way to
manage depends on the specific situation.
The implications of contingency theory for managers are:
Managers need to be flexible and adaptable. They need to be able to change their management style
depending on the situation. Managers need to be able to identify the key contingency factors that are
affecting the situation. These factors may include the organization's environment, the organization's
structure, and the employees themselves.nManagers need to choose the management approach that is
most likely to be effective in the given situation.
Here are some examples of contingency theory in action:
A manager might use a more directive approach to managing a new employee who is still learning the
ropes.
A manager might use a more participative approach to managing a team of experienced employees
who are working on a complex project.
A manager might use a more decentralized approach to managing a global organization with
operations in different countries.
Contingency theory is a valuable framework for managers because it helps them to understand that
there is no one-size-fits-all approach to management. By being flexible and adaptable, managers can
choose the management approach that is most likely to be effective in the given situation.
6-) What are the primary differences between an organization designed for efficient performance and
one designed for learning and change? Which type of organization do you think would be easier to
manage? Discuss.
The primary differences between an organization designed for efficient performance and one designed
for learning and change are as follows:
An organization designed for efficient performance is easier to manage in the short term. This is
because the centralized structure, rigid rules, and specialized tasks make it easy to control and
coordinate the organization's activities. However, this type of organization can be less effective in the
long term, especially in a rapidly changing environment. This is because the rigid structure and rules
can stifle creativity and innovation.
7-) What are some differences one might expect among stakeholder expectations for a nonprofit
organization versus a for-profit business? Do you think nonprofit managers have to pay more attention
to stakeholders than do business managers? Discuss.
There are some key differences one might expect among stakeholder expectations for a nonprofit
organization versus a for-profit business.
Nonprofit organizations are typically expected to:
Fulfill their mission and objectives. This is the primary expectation of all stakeholders, including
donors, volunteers, clients, and the public.
Be transparent and accountable. Nonprofit organizations are often entrusted with public funds, so they
are expected to be transparent about how they use those funds and to be accountable for their results.
Be efficient and effective. Nonprofit organizations are expected to use their resources wisely and to
achieve their goals effectively.
Make a positive impact on society. This is the ultimate goal of all nonprofit organizations.
3-) Discuss the similarities and differences in the strategies described in Porter’s competitive
strategies and Miles and Snow’s typology.
4-) Do you believe mission statements and official goal statements provide an organization with
genuine legitimacy in the external environment? Discuss.
CHAPTER 3:
1-) What is the definition of organization structure? Does organization structure appear on the
organization chart? Explain.
2-) When is a functional structure preferable to a divisional structure?
3-) What is the difference between a task force and a team? Between liaison role and integrating
role? Which of these provides the greatest amount of horizontal coordination?
4-) What conditions usually have to be present before an organization should adopt a matrix
structure?
5-) What types of organizational activities do you think are most likely to be outsourced? What types
are least likely?
CHAPTER 4:
1-)