Debrief for OB lecture on Friday 25

th
October.
Topics for discussion: Orgnanisatonal Structure & Design
Organisational Theory Basics:
Organizations are social entities that are goal-directed, are designed as deliberately structured and
coordinated activity systems and are linked to the external environment.

Organizations are made up of people and their relationships with one another. Managers deliberately
structure and coordinate organizational resources to achieve the organizations purpose. What contribution
do organizations make:

1) Organizations bring together resources (labour, materials) to achieve desired goals and outcomes.
2) Produce goods and services efficiently (competitive prices, benefits)
3) Facilitate innovation (e-business, computers, redesigning organizational structures etc)
4) Use modern manufacturing and information technologies (e-business, computers)
5) Adapt to and influence a changing environment (globalization)
6) Create value for owners, customers and employees
7) Accommodate ongoing challenges of diversity, ethics and the motivation and coordination of
employees (cope with growing concerns about ethics and social responsibility).
Perspectives on Organizations
1) Open system: must interact with the environment to survive. It consumes resources and exports resources
to the environment. It cannot seal itself off. Every system that must interact with the environment to survive
is an open system.

2) Organizational configuration: Mintzberg said that every organization has five parts: The technical
core/operating core (people who do the basic work), top management (provides direction, strategy, goals and
policies for the entire organization), middle management (responsible for implementation and coordination
on department level), technical support (R&D, Marketing research) and administrative support (responsible
for the smooth operation and upkeep of the organization).

Dimensions of organizational design: Organizational dimensions fall into two types:

1) Structural dimensions: provide labels to describe the internal characteristics of an organization.

They create a basis for measuring and comparing organizations.
a. Formalization: amount of written documentation/rules etc.
b. Specialization: the degree in which organizational tasks are subdivided.
c. Hierarchy of authority: who reports to whom and the span of control for managers?
d. Centralization: refers to the hierarchical level that has authority to make a decision.
e. Professionalism: level of formal education and training of employees.
f. Personnel ratios: deployment of people to various functions and departments. Measured by dividing the
number employees in a classification by the total.

2) Contextual dimensions: They represent both the organization and the environment.

a. Size: Organizations are social systems, thus size is measured by the number of people in the organization.
b. Organizational technology: Tools, techniques and actions used to transform inputs to outputs.
c. Environment: all elements outside the boundary of the organization.
d. Goals and strategy: define the purpose and competitive techniques.
e. Culture: the underlying set of values, beliefs, understandings and norms shared by employees.


Elements of External Environment:

a) Industry: competitors, industry size and competitiveness, related industries
b) Raw materials: Suppliers, manufacturers, real estate, services
c) Human resources: Labor market, employment agencies, universities, training schools, employees in other
companies, unionization
d) Financial resources: stock markets, banks, savings and loans, private investors
e) Market: Customers, clients, potential users of products and services
f) Technology: Techniques of production, science, computers, information technology, e-commerce
g) Economic conditions: recession, unemployment rate, inflation rate, rate of investment, economics, growth
h) Government: city, state, federal laws and regulations, taxes, services, court system, political processes
i) Sociocultural: age, values, beliefs, and education, religion, work ethics, consumer and green movements
j) International: competition from and acquisition by foreign firms, entry into overseas markets, foreign
customs, regulations, exchange rate.

Task Environment: includes sectors with which the organization interacts directly and that have a direct
impact on the organizations ability to achieve its goals. Task environment typically includes a, b, e and
perhaps c and j.

General Environment: includes those sectors that might not have a direct impact on daily operations of a
firm but will indirectly influence them. General environment often includes h, i, g, f and d.

All Students to read this and draft your ideas how organizational design is being changing in last 20
years and what will be the future.