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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