teori organisasi/Organization theory | Strategic Management ...

1. THE ENVIRONMENTAL DOMAIN

A bunch of concepts to describe the environment of organizations (see exhibit for specifics): 

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



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the organizational environment consists of all elements outside the boundary of the organization that can affect it environmental sectors are subdivisions of the external environment that contain similar elements; the 10 principal sectors are shown in the exhibit above an organization's domain is its chosen environmental field of action or niche; it consists of external sectors with which the organization interacts to accomplish its goals the task environment includes sectors with which organization interacts directly and that have a direct impact on the organization; it typically includes industry, raw materials, market, and sometimes human resources and international sectors. (Task environment and organizational domain overlap a great deal.) the general environment includes sectors that influence the organization more indirectly; it may include government, sociocultural, and technology sectors

The international environment has become increasingly important for many organizations. Q - The industry sector includes: potential users of the organization's products (Y/N), competitors (Y/N), employment agencies (Y/N)? Q - During the late 1970s and into the 1980s, power companies were faced with a great deal of uncertainty generated by groups protesting the use of nuclear power. These events contributed to instability in what sector of the organizational environment of power companies? Q - "An organization's domain is the buildings and grounds that are owned or leased by the organization and in which inputs are transformed into outputs." (TRUE/FALSE?) The basic outline for this module is the idea that the environment affects the organization in 2 essential ways, through  

the need for information -> the need to adapt to absence of information, which is uncertainty -> See Sections 2, 3, 4 the need for resources -> the need to minimize resource dependence -> See Sections 5, 6, 7

We review the various strategies that organizations use to achieve these 2 goals. 2. ENVIRONMENTAL UNCERTAINTY Environmental uncertainty is the absence of full information about the environment

There are 2 dimensions of environmental uncertainty:  

environmental complexity (simple environment complex environment) = heterogeneity (or number and dissimilarity) of external elements relevant to the organization's operations environmental stability (stable environment unstable environment) = extent to which the environment is changing rapidly and unpredictably

EX:    

university: complex but stable environment beer distributor: simple and stable environment fashion industry: simple but unstable environment hospital: complex but stable environment (barring a major catastrophe like an earthquake)

The complexity and stability dimensions can be combined into a 2-dimensional framework for environmental uncertainty. 

Exhibit: Framework for assessing environmental uncertainty (Daft E4.2 p. 138)

(Note that the framework assumes that instability is a worse source of uncertainty than complexity.) Q - The two dimensions of environmental uncertainty are ___ and ___ ? Q - "Environmental stability refers to the number and dissimilarity of external elements that have an impact on the organization." (TRUE/FALSE?) 3. ADAPTING TO ENVIRONMENTAL UNCERTAINTY Organizations utilize a number of strategies to adapt to environmental uncertainty. 1. Positions & Departments The organization creates departments that specialize in dealing with a specific sector of the environment. As a result there is a relationship environmental complexity -> internal complexity 2. Buffering & Boundary Spanning  

Buffering = absorbing environmental uncertainty to protect the technical core, the department that performs the primary production activity of the organization; EX: a purchasing department Boundary spanning = linking the organization to key outside elements; EX: market research, competitive intelligence

Minicase: Tommy Hilfiger (Daft p. 142). The company sends researchers into music clubs to keep in touch with fashion trends among the youth, and gives free clothing to MTV stars. Q - "Buffer departments attempt to insure that the technical core operates as an open system." (TRUE/FALSE?) Q - Sophie Lorimer is a researcher in the R&D department of a major chemical company. Part of her job is to read technical and scientific journals, and to attend conferences to find out what new developments are occuring. That part of her job corresponds to a (MAINTENANCE/BUFFERING/BOUNDARY SPANNING?) role.

3. Differentiation & Integration The classical research of Paul Lawrence and Jay Lorsch on differentiation and integration processes is especially important.  

Differentiation = differences in cognitive and emotional orientations, and in formal structure, among different functional departments Integration = quality of collaboration among departments

Lawrence and Lorsch found that organizations in more uncertain environments tend to both  

be more differentiated internally place more emphasis on integrating roles (EX: liaisons, coordinators)

The following exhibits summarize the Lawrence & Lorsch approach   

Exhibit: Departments differentiate to adapt to specific subenvironments (Daft E4.3 p. 143) Exhibit: Resulting differences in goals and orientations among R&D, manufacturing, and sales departments (Daft E4.4 p. 143) Exhibit: L&R's comparison of the plastics, foods, and container industries showing that greater environmental uncertainty entails both greater differentiation and greater integration effort (Daft E4.5 p. 144)

Q - Paul Lawrence and Jay Lorsch argue that an organization is more likely to need a number of specialized departments that have different cognitive and emotional orientations when the environment is highly (Choose one: STABLE/UNCERTAIN/DYNAMIC/MECHANISTIC)? Q - "According to Paul Lawrence and Jay Lorsch, high differentiation in an organization implies that coordination between departments is problematic." (TRUE/FALSE?)

Q - The study of differentiation and integration processes in organizations is closely associated with the names of (Choose one: CHEECH & CHONG/SONNY & CHER/LAWRENCE & LORSCH/BONNY & CLYDE/PAUL & VIRGINIE) 4. Organic versus Mechanistic Control Tom Burns and G. M. Stalker have emphasized the distinction between mechanistic and organic forms of organization  

a mechanistic organization has many rules and procedures, well defined tasks, a clear hierarchy of authority an organic organization has a looser structure, fewer written regulations, hierarchy not clear, more horizontal communication

The next exhibit compares the features of mechanistic and organic organizations 

Exhibit: Organic vs. mechanistic organizational forms (Daft E4.6 p. 144)

Organizations tend to adopt a position on the Mechanistic Organic continuum that corresponds to the degree of environmental uncertainty they face, so that greater uncertainty corresponds to a more organic control structure, and vice-versa. 5. Planning & Forecasting Organizations facing greater uncertainty will tend to increase their planning and forecasting effort. (This is pretty obvious if you ask me!) 6. Institutional Imitation (Institutional imitation is discussed more fully in Module 5 as part of the institutional perspective.) The institutional perspective argues that under high uncertainty, organizations tend to imitate others in the same institutional environment. Consequences of institutional imitation  

organizations in the same industry tend to "look alike" organizations are highly susceptible to fads, such as downsizing, setting up a web page on the internet, etc.

4. FRAMEWORK FOR ORGANIZATIONAL RESPONSE TO UNCERTAINTY This framework summarizes organizational responses to uncertainty discussed in Section 3. 

Exhibit: Contingency framework for organizational responses to environmental uncertainty (Daft E4.7 p. 147)

5. RESOURCE DEPENDENCE The resource dependence perspective views organizations as dependent on the environment for scarce resources (material and financial) and as striving to acquire control over the sources of these resources to minimize dependence on the environment.

The 2 general strategies to minimize resource dependence are  

establishing interorganizational linkages; this typically requires a trade-off between resources and organizational autonomy controlling the environmental domain through direct manipulation

Various ways to implement these 2 general strategies are summarized in the next exhibit 

Exhibit: Strategies for controlling the external environment (Daft 4.8 p. 149)

These organizational strategies to minimize resource dependence are examined in detail in the next 2 sections. 6. INTERORGANIZATIONAL LINKAGES 1. Ownership Various degrees of ownership are achieved through part ownership, controlling interest, acquisition, or merger.  

horizontal integration = acquired organization is in the same industry (EX: Maytag bying Magic Chef) vertical integration = acquired organization is a supplier or distributor (EX: soft drink company buys a bottle maker)

2. Contracts & Joint Ventures Includes license agreements, supplier arrangements (EX: McDonald buys a whole crop of potatoes), and joint ventures. 

a joint venture is a new organization independent of the parent organizations

3. Cooptation & Interlocking Directorates  

cooptation = leader from important sector of the environment is made part of the organization (EX: politician sitting on UNC board of directors) interlocking directorates = two organizations are linked when the same person is a member of the boards of both

4. Executive Recruitment 

executive recruitment = interorganizational contact through the transfer or exchange of executives (EX: the "revolving door" in which retired generals are hired by the aerospace industry)

5. Advertising & Public Relations Minicase: Toshiba (Daft p. 151). Toshiba already engaged in high-tech strategic aliance in the early 1900s when it contracted with GE to make light bulb filaments. They are currently involved in more than two dozens major partnerships and joint ventures. Toshiba illustrates the range of strategies that an be used to reduce resource dependence. 

Exhibit: Toshiba's alliances (Daft E4.9 p. 152)

Q - Roderick Cleaver is a militant member of a faculty union at a medium-sized college. When the unions's Negotiating Committee is reporting to a meeting of the faculty, he always find fault with the work of the committee and strongly advocates striking. When a member the the Negotiating Committee resigns because of illness, the union's Executive Committee appoints Roderick to take his place. This is an instance of what organizational linkage strategy? Q - McDonnell-Douglas hired a retired Air Force general for a top management position. This is an instance of what organizaitonal linkage strategy? 7. CONTROLLING THE ENVIRONMENTAL DOMAIN 1. Change of Domain An organization can change its domain through acquisition and/or divestment (EX: Reynolds acquiring Nabisco) 2. Political Activity & Lobbying To influence legislation and obtain favorable regulations. 3. Trade Associations Trade associations of organizations with similar interests (EX: National Association of Manufacturers). 4. Illegitimate Activities If all else fails, let's try using some bribes, kickbacks, payoffs to foreign officials, illegal political contributions, industrial espionage, price fixing, etc. Q - What's the most direct way for an organization to change its domain? 8. SUMMARY OF ORGANIZATIONAL RESPONSES TO THE ENVIRONMENT The next exhibit summarizes most of the discussion on the response of organizations to environmental uncertainty and their effort to minimize resource dependence. This "big picture" illustrates the "top down" approach to understanding the materials in the course.

While some models of organizational effectiveness go in and out of fashion, one that has persisted is the McKinsey 7S framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.

The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you:    

Improve the performance of a company. Examine the likely effects of future changes within a company. Align departments and processes during a merger or acquisition. Determine how best to implement a proposed strategy.

Tip: The McKinsey 7S model can be applied to elements of a team or a project as well. The alignment issues apply, regardless of how you decide to define the scope of the areas you study.

The Seven Elements The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements: Hard Elements

Soft Elements

Strategy

Shared Values

Structure

Skills

Systems

Style Staff

"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems. "Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. The way the model is presented in Figure 1 below depicts the interdependency of the elements and indicates how a change in one affects all the others.

Let's look at each of the elements specifically:    

  

Strategy: the plan devised to maintain and build competitive advantage over the competition. Structure: the way the organization is structured and who reports to whom. Systems: the daily activities and procedures that staff members engage in to get the job done. Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company.

Note: Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The company's structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.

How to Use the Model Now you know what the model covers, how can you use it?

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change. Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration. You can use the 7S model to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It's then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint. Sounds simple? Well, of course not: Changing your organization probably will not be simple at all! Whole books and methodologies are dedicated to analyzing organizational strategy, improving performance and managing change. The 7S model is a good framework to help you ask the right questions – but it won't give you all the answers. For that you'll need to bring together the right knowledge, skills and experience. When it comes to asking the right questions, we've developed a Mind Tools checklist and a matrix to keep track of how the seven elements align with each other. Supplement these with your own questions, based on your organization's specific circumstances and accumulated wisdom.

7S Checklist Questions Here are some of the questions that you'll need to explore to help you understand your situation in terms of the 7S framework. Use them to analyze your current (Point A) situation first, and then repeat the exercise for your proposed situation (Point B). Strategy:     

What is our strategy? How do we intend to achieve our objectives? How do we deal with competitive pressure? How are changes in customer demands dealt with? How is strategy adjusted for environmental issues?

Structure:    

How is the company/team divided? What is the hierarchy? How do the various departments coordinate activities? How do the team members organize and align themselves?

 

Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing? Where are the lines of communication? Explicit and implicit?

Systems:   

What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage. Where are the controls and how are they monitored and evaluated? What internal rules and processes does the team use to keep on track?

Shared Values:    

What are the core values? What is the corporate/team culture? How strong are the values? What are the fundamental values that the company/team was built on?

Style:    

How participative is the management/leadership style? How effective is that leadership? Do employees/team members tend to be competitive or cooperative? Are there real teams functioning within the organization or are they just nominal groups?

Staff:   

What positions or specializations are represented within the team? What positions need to be filled? Are there gaps in required competencies?

Skills:     

What are the strongest skills represented within the company/team? Are there any skills gaps? What is the company/team known for doing well? Do the current employees/team members have the ability to do the job? How are skills monitored and assessed?

Starbucks McKinsey 7S’ Framework Posted on July 25, 2012

The rationalised plan for effective leadership and management for Starbucks Corporation is best presented through McKinsey 7S‟ Framework. It has to be noted that “the essence of McKinsey‟s 7S model is that a firm is the comprehensive sum of its parts, and that the internal dynamics of an organisation clearly determine that organisation‟s ability to compete, the premise being that

both the strategy and the structure of the organisation determine management‟s effectiveness” (Joseph and Mohapatra, 2009, p.59). The 7S‟es of the framework are divided into hard and soft elements. Strategy, structure and systems are considered to be hard elements of the framework, whereas, soft elements consist of shared values, skills, style and staff. Starbucks management have direct influence and control over the hard elements of the framework, whereas the soft elements are usually influenced by corporate culture, and therefore they are more difficult to control.

Hard Elements Strategy. Starbucks has to be concentrating on the quality of its products at the same time offering excellent level of customer services. The main strategy for the company is to increase revenues through effectively positioning Starbucks stores as „third place‟ environment. Structure. Flat management structure needs to be achieved through de-layering. Specifically, the positions of assistant managers need to be eliminated within the stores, after which there will be only three levels of management – store manager, shift manager and customer assistants, thus considerable amount of costs can be saved and organisational efficiency can be increased. Systems. Rather than daily roles among customer assistant being appointed by shift supervisors, the rotation system of duties needs to be introduced that will reduce the potential of conflicts among the workforce, and the work process would be more interesting.

Soft Elements Shared values. Currently effective set of values are being promoted by management at Starbucks, however, more effective initiatives and programs need to be devised that would ensure these values being shared and appreciated by all members of the workforce. Skills. Necessary training and development programs need to be organised in a systematic manner and thus it has to be ensured that all members of the workforce are equipped with skills necessary to achieve a high level of customer satisfaction. Style. Management style within stores should be changed from Laissez Faire to inspirational management. In this way a greater number of the workforce can be effectively motivated for higher performances with less financial resources. Staff. Only capable and promising candidates need to be employed by Starbucks and employees have to be provided growth potential.