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Chapter 1
Organizations and
Organizational
Effectiveness
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Learning Objectives
1. Explain why organizations exist
and the purposes they serve
2. Describe the relationship
between organizational theory
and organizational design and
change, and differentiate
between organizational structure
and culture
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Learning Objectives
(cont.)
3. Understand how managers can utilize
the principles of organizational theory to
design and change their organizations to
increase organizational effectiveness
4. Identify the three principal ways in which
managers assess and measure
organizational effectiveness
5. Appreciate the way in which several
contingency factors influence the design
of organizations
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What is an Organization?
Organization: a tool used by
people to coordinate their actions
to obtain something they desire or
value
Entrepreneurship: the process
by which people recognize
opportunities to satisfy needs, and
then gather and use resources to
meet those needs
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Figure 1 1: How An
Organization Creates Value
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Why Do Organizations
Exist?
To increase specialization and the
division of labor
To use large-scale technology
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Why Do Organizations
Exist? (cont.)
To manage the external environment
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Importance of
Organizational
Design
and
Dealing with contingencies
Change
Contingencies are events that might
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Importance of
Organizational Design and
Change
Managing (cont.)
diversity
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Consequences of Poor
Organizational Design
Decline of the organization
Talented employees leave to take
positions in growing organizations
Resources become harder to
acquire
Resulting crisis impels managers
to change organizational structure
and culture
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How Do Managers
Measure
Organizational
Control: external resource approach
Effectiveness?
Method evaluates how effectively an
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Measuring Effectiveness:
Organizational Goals
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