Organization Theory n Design

Organization Size, Life Cycle n decline

Ch. 9

By Kaleem a. Barlas

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Learning Objectives • Organization Size bigger the better • Organizational Life Cycle• Organizational Bureaucracy n control• Bureaucracy in Changing World • Organizational Control Strategies • Organizational Decline n Downsizing • Summary n Interpretation

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organization size; is bigger better• Every one wants his con become fortune co.• Grow fast n large• Recently there has been change in approach smaller the better to

respond rapid changes• Big joints still continue go bigger. Wal-Mart for example employs

more staff than US army. Sold more than 36 % dog food, 32 % of diapers and 26 % of all toothpastes

• Today is an era of mega corporations• Mergers mania is on the rise leading group of cos.

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Dilemma of Large Size

Large • Huge resources n economies of scales are needed.

• Only large corporation like Air buss can afford to build the A380

• Large co.s are standardized

• Mechanically run

• Complexity offers hundreds of functional specialties

• Large companies stabilize markets

• Managers can join n develop their careers

• The orgs can provide longevity, promotions n raises

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Small • Small is beautiful , responsive, n flexible in ever

fast changing environment • Quick reaction to customers requirements• Globally smaller orgs have become norms-

research • Mergers are not ever lasting – creating problems• Economic vitality is tied to small-medium orgs.

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Continued • smeller co,s have flat organizational structure • Free flowing management styles• That encourages entrepreneurship n innovation

Big-company / small company hybrid • The paradox is smaller co grows n becomes bigger • Most of 100 fortune firms are smaller n but fast n flexible in

responding • Can become victim of their own success by vertical hierarchies • The solution according Jack Welch is big-company/ small

company hybrid • Larger resources n small co simplicity n quick response.

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Organizational life cycle

Orgs. Are born, grow, expand, modernize, cruise, decline n die. This is called OLC. This fllows various stages.

Stages Entrepreneurial Stage Born, create products, services, do marketing, production, non-

bureaucratic, long working hours, owners supervision,

Crisis; need for leadership Growth leads to employee problems, management issues, this

warrants strong leadership

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continued

Collectivity stageStrong leadership resolves the problems, develops clear goals n

directions, depts. Are established along with hierarchy of authority, job assignment, n division of labor.

Crisis; Need for delegation Employees are restricted by top down approach n get discouraged so

need to be delegated authority n responsibility to provide autonomy of work.

This leads to proper coordination and information sharing fo decision making

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Formalization Stage • Development of processes • Procedures • Control systems• Creation HIC • Strategic planning • Decentralization

It may also lead to too much red tape-ism , middle management may resent the innovation n creativity

Elaboration Stage Being large Orgs. Collaboration is required between the departments

Who are you

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• Team work required • Problem solving becomes essential• Formal controls may be relaxed • Social control n self-discipline required • Cross functional teams necessary

Crisis Need for revitalization

continued

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organizational characteristics during the life cycle.

• Structure • Products/services • Rewards n control systems • Innovation • Goal • Top management style

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Organizational bureaucracy n control

What is bureaucracy? Growth follows bureaucratic characteristics • Rules n procedures • Specialization n division of labor• Hierarchy of authority• Technically qualified personnel • Separate positions from position holders• Written communication n records

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Size n structure control • Formalization n centralization • Personnel ratios ( clerical, administrative, support staff )

Bureaucracy in Changing world Richard Cavanaugh once an aid to president Jimmy Carter reports hid

favorite federal title as the; administrative asst to the asst administrator for administration of general services administration.

This bureaucracy leads to ;• Flexibility n innovation • Other approaches to reducing bureaucracy

Organizational control strategies

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Even though many orgs. Are trying to reduce bureaucracy, relax rules and procedures but managers still need to control the organizational operations.

William Ouchi of University of California has suggested three control strategies after a lot of research as under

Bureaucratic Control• Rules• Standards • Hierarchy• Legitimate authority

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Continued Market Control • Prices

• Competition

• Exchange relations

Clan Control • Traditions

• Shared values

• Beliefs n trust

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Organizational Decline n Downsizing

• Organizational life cycle discussed earlier

• Continued growth n expansion may not be possible

• Huge orgs. Like Enron have collapsed because of rapid growth n lack of control

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• Environmental decline • Like demand, taxes,

policies • Organizational atrophy –

means growing old n over bureaucratic

• Vulnerability—orgs. Inability to cope with environment

Definition n causes of decline

Continued

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• Environmental decline or competition- means reduced energy and resources

Model of Decline Stages Blinded stage Internal n external change that

threatens survival

Inaction stage Called denial stage also –

management says all is well

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Continued

Faculty action stage Problems with poor performance

Crisis stage Not able to solve problems feeling panicky

Dissolution stage The decline is inevetable

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Downsizing implementation • communicate more not

less • Provide assistance to

displaced workers • Help the survivors thrive•

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Left blank

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Quiz

Describe model of decline stages