Article Critique- Using the article selected for the proposal, students will provide a critical summary of the article with the following headings: introduction, article summary, main theories raised, parallels to organizational behaviour concepts, conclusion, references. Your assignment should be no longer than 750-1000 words, double spaced, Times New Roman font, size 12 font and use APA reference format. For references students may use the course text book and scholarly academic journals. For those of you who want to know more about social influence and power, the following audio interview on Zuboff’s new book on surveillance capitalism might interest you:https://www.cbc.ca/radio/thecurrent/businesses-paid-to-have-pokemon-go-players-directed-to-their-locations-says-author-1.5036772
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Chapter 14 – Part 1
Environment, Strategy,
and Structure
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 1
The External Environment of
Organizations
• The external environment refers to events
and conditions surrounding an organization
that influence its activities.
• Examples of the influence of the external
environment on organizations:
– SARS outbreak 2003
– Power outage of 2003
• Wonderland Example
• The external environment profoundly shapes
organizational behaviour.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 2
Organizations as Open Systems
• Open systems are systems that take inputs
from the external environment, transform
some of these inputs, and send them back
into the external environment as outputs.
• The open system concept sensitizes us to the
need for organizations to cope with the
demands of the environment on both the
input side and the output side.
– Some of this coping involves adaptation to
environmental demands and some may be
oriented toward changing the environment.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 3
Components of the External
Environment
• The external environment involves any
person, group, event, or condition outside the
direct domain of the organization.
*Describe JA’s external environment
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 4
Interest Groups
• Interest groups are parties or organizations
other than direct competitors that have some
vested interest in how an organization is
managed.
– They can make competing or conflicting
demands on an organization e.g. SPCA.
• Different interest groups evaluate
organizational effectiveness according to
different criteria.
• Different parts of the organization will often
be concerned with different environmental
components.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 5
Environmental Uncertainty
• The external environment is vague, difficult
to diagnose, and unpredictable.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 6
Environments
• A simple environment involves relatively few
factors, and these factors are fairly similar to
each other.
• A complex environment contains a large
number of dissimilar factors that can affect
the organization.
• The components of a static environment
remain fairly stable over time.
• The components of a highly dynamic
environment are in a constant state of
change; unpredictable and irregular.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 7
Environmental Uncertainty
• Increasing uncertainty has several predictable
effects on organizations and their decision
makers:
– Cause-and-effect relationships become less
clear.
– Makes priorities harder to agree on and
stimulates a fair degree of political
jockeying within the organization.
– More information must be processed by the
organization to make adequate decisions.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 8
Resource Dependence
• Organizations are in a state of resource
dependence with regard to the environment.
• This means that they are dependent on
environmental inputs, such as capital, raw
materials, and human resources as well as
outputs.
• Carefully managing and coping with resource
dependence is key to survival and success.
– Thus, organizations must develop
strategies for managing both resource
dependence and environmental
uncertainty.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 9
Strategic Responses to
Uncertainty and Resource
Dependence
• Organizations devote considerable effort to
developing and implementing strategies to
cope with environmental uncertainty and
resource dependence.
• Strategy is the process of coping with the
constraints and opportunities that an
organization’s environment poses.
– It is the perceived environment that
comprises the basis for strategy
formulation.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 10
What Is Organizational
Structure?
• To achieve its goals, an organization has to do
two basic things:
– Divide labour among its members
– Coordinate what has been divided
• Organizational structure is the manner in
which an organization divides its labour into
specific tasks and achieves coordination
among these tasks.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 11
Division of Labour
• There are two basic dimensions to the division
of labour:
– A vertical dimension
– A horizontal dimension
• Once labour is divided, it must be coordinated
to achieve organizational effectiveness.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 12
Vertical Division of Labour
• The vertical division of labour is concerned
primarily with deligating authority for
planning and decision making
– Who gets to tell whom what to do?
• Key themes that underlie the vertical division
of labour:
– Autonomy and control
– Communication
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 13
The Dimensions of Division of
Labour
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 14
Autonomy and Control
• The domain of decision making and authority
is reduced as the number of levels in the
hierarchy increases.
• Managers have less authority over fewer
matters.
• A flatter hierarchy pushes authority lower and
involves people further down the hierarchy in
more decisions.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 15
Communication
• As labour is progressively divided vertically,
timely communication and coordination can
become harder to achieve.
• As the number of levels in the hierarchy
increases, filtering is more likely to occur.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 16
Vertical Division of Labour
• Labour must be divided vertically enough to
ensure proper control but not so much as to
make vertical communication and
coordination impossible.
• The proper degree of such division will vary
across organizations and across their
functional units.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 17
Horizontal Division of Labour
• The horizontal division of labour groups the
basic tasks that must be performed into jobs
and then into departments.
• Required workflow is the main basis for this
division.
• Organizations differ in the extent of
horizontal division of labour.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 18
Horizontal Division of Labour
• The horizontal division of labour suggests
some specialization on the part of the
workforce.
• The increased specialization can promote
efficiency.
• Key themes that underlie the horizontal
division of labour:
– Job design
– Differentiation *
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 19
Differentiation
• As organizations engage in increased
horizontal division of labour, they usually
become more and more differentiated.
• Differentiation is the tendency for managers
in separate units, functions, or departments
to differ in terms of goals, time spans, and
interpersonal styles.
• Under high differentiation, various
organizational units tend to operate more
autonomously.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 20
Departmentation
• The assignment of jobs to departments is
called departmentation.
• It represents one of the core aspects of the
horizontal division of labour.
• There are several methods of
departmentation and each has strengths and
weaknesses.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 21
Methods of Departmentation
• Functional departmentation
• Product departmentation
• Matrix departmentation
• Geographic departmentation
• Customer departmentation
• Hybrid departmentation
Your turn to teach: in 6 small groups describe
the form of departmentation and the advantages
and disadvantages. Use the textbook and web.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 22
Chapter 14 – Part 2
Environment, Strategy,
and Structure
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 23
Basic Methods of Coordinating
Divided Labour
• When the tasks that will help the organization
achieve its goals have been divided among
individuals and departments, they must be
coordinated.
• Coordination is a process of facilitating
timing, communication, and feedback among
work tasks.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 24
Basic Methods of Coordinating
Divided Labour
• Direct Supervision (chain of command, very
traditional approach)
• Standardization of Work Processes (routine
jobs standardized by technology or rules)
• Standardization of Outputs (achieving certain
physical or economic standards e.g. budget)
• Standardization of Skills (understand and
employing specialties/skills e.g. technician)
• Mutual Adjustment (communicate and
coordinate tasks, used for simple or complex
divisions of labour)
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 25
Coordination vs. Standardization
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 26
Basic Methods of Coordinating
Divided Labour
• The five coordination methods can be ordered
in terms of the degree of discretion (power)
they permit in terms of task performance.
• Direct supervision permits little discretion.
• Standardization of processes and outputs
permits successively more discretion.
• Standardization of skills and mutual
adjustment puts even more control into the
hands of those doing the work.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 27
Integration
• Integration is the process of attaining
coordination across differentiated
departments.
– Integration specifies who is accountable for
what, enables one department to predict
the activities of another, and creates a
shared understanding of overarching goals.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 28
Integration Methods
• In ascending order of elaboration, three
methods of achieving integration include:
– Liaison roles (a person who coordinates
between departments, at same level)
– Task forces and teams (temporary, set up
to solve coordination issues with reps from
each team, also consider cross functional
or self managed teams)
– Integrators (permanently assigned to
facilitate coordination and addressing
conflict, reporting to executive)
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 29
Traditional Structural
Characteristics
• There are a number of characteristics that
summarize the structure of organizations:
–
–
–
–
–
–
Span of control
Flat versus tall
Formalization
Centralization
Complexity
Size
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 30
Span of Control
• Span of control is the number of subordinates
supervised by a manager.
• The larger the span, the less potential there is
for coordination by direct supervision.
• As the span increases, the attention that a
supervisor can devote to each subordinate
decreases.
• Spans at the upper levels of an organization
tend to be smaller.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 31
Flat versus Tall
• A flat organization has relatively few levels in
its hierarchy of authority.
• A tall organization has relatively many levels
in its hierarchy of authority.
• Flatness versus tallness is an index of the
vertical division of labour.
• Flatter structures tend to push decisionmaking powers downward in the organization.
• Flatter structures generally enhance vertical
communication and coordination.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 32
Formalization
• Formalization is the extent to which work
roles are highly defined by an organization.
• A very formalized organization tolerates little
variability in the way members perform their
tasks.
• Some formalization stems from the nature of
the job itself.
• Formalization also stems from the rules,
regulations, and procedures that an
organization chooses to implement.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 33
Centralization
• Centralization is the extent to which decisionmaking power is localized in a particular part
of an organization (executive management)
• The proper degree of centralization should
put decision-making power where the best
knowledge is located.
• In a more decentralized organization,
decision-making power is dispersed down
through the hierarchy and across
departments.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 34
Complexity
• Complexity is the extent to which an
organization divides labour vertically,
horizontally, and geographically.
• A fairly simple organization will have few
management levels (vertical division) and not
many separate job titles (horizontal division).
• As the organization becomes more complex, it
has more kinds of people performing more
kinds of tasks in more places, whether these
places are departments or geographic
territories.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 35
Size and Structure
• Large organizations are more complex, less
centralized, taller, and more formal than
small organizations.
• Product departmentation is often preferable
to functional departmentation as the
organization increases in size.
• Organizations with product departmentation
should exhibit more complexity and more
decentralization than those with functional
departmentation.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 36
Mechanistic Structures
• Mechanistic structures are characterized by
tallness, narrow spans of control,
specialization, high centralization, and high
formalization.
• Functional structures tend to be rather
mechanistic.
• We can contrast mechanistic structures with
organic structures.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 37
Organic Structures
• Organic structures are characterized by wider
spans of control, fewer authority levels, less
specialization, less formalization, and
decentralization.
• Flexibility and informal communication are
favoured.
• Organic structures are more in line with the
norms of the human relations movement.
• The matrix form is organic.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 38
Summarizing Structure: Organic
versus Mechanistic
• There is no “one best way” to organize.
• In general, more mechanistic structures are
called for when an organization’s environment
is more stable and its technology is more
routine.
• Organic structures work better when the
environment is uncertain, the technology is
less routine, and innovation is important.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 39
Contemporary Organic
Structures
• The removal of unnecessary bureaucracy and
the decentralization of decision-making result
in a more adaptable organization.
• Some contemporary organic organizational
structures:
–
–
–
–
The Ambidextrous Organization
Network Organizations
Virtual Organizations
The Modular Organization
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 40
The Ambidextrous Organization
• An organization that can simultaneously
exploit current competencies and explore
emerging opportunities.
• Partly organic and partly mechanistic
• The need for it comes from the tension
between exploiting versus exploring.
• Ambidexterity is hard to accomplish, rare and
difficult to imitate, and provides a distinct
source of competitive advantage.
• Synergy between exploitation and
exploration.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 41
Network Organization
• In a network organization, various functions
are coordinated as much by market
mechanisms as by managers and formal lines
of authority.
• Emphasis is placed on who can do what most
effectively and economically.
• The network members cooperate, share
information, and customize their services to
meet the needs of the network.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 42
Virtual Organization
• In a virtual organization, an alliance of
independent companies share skills, costs,
and access to one another’s markets.
• They consist of a network of continually
evolving independent companies.
• A virtual organization is even more flexible
than a matrix.
• Networks allow organizations to specialize in
what they do best (core competencies).
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 43
Modular Organization
• A modular organization is a network
organization that performs a few core
functions and outsources other activities to
specialists and suppliers.
• They are like hubs surrounded by networks of
suppliers that can be added or removed as
needed. Can be separated and recombined.
• Unlike a virtual organization, the modular
organization maintains complete strategic
control.
• Useful in rapidly changing environments.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 44
Self Organizing
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 45
Other Forms of Strategic
Response
• Variations on organizational structure are not
the only strategic response that organizations
can make.
• Structural variations often accompany other
responses that are oriented toward coping
with environmental uncertainty or resource
dependence.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 46
Other Forms of Strategic
Response
• Some more elaborate forms of strategic
response include:
– Vertical integration
– Mergers and acquisitions
– Strategic alliances
– Establishing legitimacy
• Many of these concern relationships between
organizations.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 47
Vertical Integration
• This is a strategy of formally taking control of
sources of organizational supply and
distribution.
• Major oil companies are highly vertically
integrated, handling their own exploration,
drilling, transport, refining, retail sales, and
credit.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 48
Mergers and Acquisitions
• A merger is the joining together of two
organizations.
• An acquisition is the purchase of one
organization by another.
• Some mergers and acquisitions are stimulated
simply by economies of scale.
• Other mergers and acquisitions are pursued
for purposes of vertical integration.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 49
Mergers and Acquisitions
• When they occur in the same industry, they
can reduce the uncertainty prompted by
competition.
• When they occur across different industries,
the goal is often to reduce resource
dependence on a particular segment of the
environment.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 50
Strategic Alliances
• Strategic alliances are actively cooperative
relationships between legally separate
organizations.
• They reduce risk and uncertainty for all
parties, and resource interdependence is
recognized.
• Organizations can engage in strategic
alliances with competitors, suppliers,
customers, and unions.
• In a joint venture, two or more organizations
form an alliance in the creation of a new
organizational entity.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 51
Establishing Legitimacy
• A strategic response is to make the
organization appear legitimate.
• Establishing legitimacy involves taking actions
that conform to prevailing norms and
expectations.
• This will often be strategically correct and it
also has the appearance of being strategically
correct. Perception is important – ethics over
law.
Copyright © 2017 Pearson Canada Inc.
Chapter 14 / Slide 52
Strategies for Achieving
Legitimacy
• Association with higher status individuals or
organizations.
• Be seen as doing good deeds in the community
e.g. CSR.
• To make very visible responses to social
trends and legal le …
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