ORGANIZATION STRUCTURE, DESIGN AND

CHANGE
PROF. SHREYASHI CHAKRABORTY
BM 2019-21
COURSE OBJECTIVES
¡ What is an organization?
¡ Why is an organization formed?
¡ What are the organizational goals?
¡ Who takes decisions in an organization?
¡ What does an organization look like?
¡ What are the factors which decide organizational structure?
¡ What are the different structural options?
¡ Who decides the structure?
¡ How to resolve conflicts?
¡ Why does an organization change?
¡ What to change?
¡ How does an organization change?
WHAT IS AN ORGANIZATION?

¡ Social entities that are

¡ Goal-directed
¡ Deliberately structured and coordinated activity systems
¡ Linked to external environment
¡ Organizations create Value
¡ How does it create value!!
¡ Theories
¡ Systems Perspective
WHY IS AN ORGANIZATION FORMED?

¡ To increase specialization and division of labour

¡ Economize on transaction costs
¡ To use large-scale technology
¡ Economies of scale and economies of scope
¡ Exert power and control
¡ Manage the organizational environment
¡ Theories
¡ Transaction Costs
¡ Resource Dependence
WHAT ARE THE ORGANIZATIONAL GOALS?

¡ Effectiveness and the Stakeholders

¡ Efficiency Or Flexibility
¡ Long-term or short-term
¡ Means or Ends
¡ Official or actual goals
WHO TAKES DECISIONS IN AN ORGANIZATION?

¡ Owners and Shareholders

¡ Managers
¡ Employees and Union
¡ Customers and Suppliers
¡ Creditors
¡ Government
¡ Community
¡ Theories
¡ Agency Theory
¡ Resource Dependence
¡ Power control perspective
 WHAT DOES AN ORGANIZATION LOOK LIKE?

¡ Organizational Components
¡ Strategic Apex
¡ Middle Management
¡ Operating Core
¡ Techno-structure
¡ Support
¡ Organizational Structure : Formal system of task and authority relationships that control how people co-ordinate
their actions and use resources to achieve organizational goals
¡ Specialization (Functional or Social)
¡ Hierarchy
¡ Formalization
¡ Centralization
WHAT ARE THE FACTORS WHICH DECIDE ORGANIZATIONAL
STRUCTURE?

¡ Who decides strategy?

¡ Strategy
¡ Determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals
¡ Approaches
¡ Miles and Snow Strategy Types
¡ Porter’s
¡ Theories
¡ Contingency
¡ Strategic Choice
¡ Porter’s 5 forces
¡ Options Theory
WHAT ARE THE FACTORS WHICH DECIDE ORGANIZATIONAL
STRUCTURE?
¡ Technology
¡ Information, equipment, techniques and processes required to transform inputs into outputs
¡ Manufacturing
¡ Unit, Mass and Process
¡ Service
¡ Craft, Routine, Non-routine and Engineering
¡ Task Interdependence
¡ Pooled, Sequential and Reciprocal
¡ Theories
¡ Contingency
WHAT ARE THE FACTORS WHICH DECIDE ORGANIZATIONAL
STRUCTURE?

¡ Environment
¡ Exists outside the boundary and has the potential to affect all or part of the organization
¡ Uncertainty
¡ Unavailability of sufficient information about environmental factors and have difficult time predicting external changes
¡ Stable or Dynamic, Simple or Complex, Abundant or Scarce
¡ Theories
¡ Institutional Theory
¡ Population Ecology
¡ Contingency Theory
¡ Resource Dependence
WHAT ARE THE FACTORS WHICH DECIDE ORGANIZATIONAL
STRUCTURE?

¡ Size
¡ Number of employees, revenues etc.
¡ Big or small size, Owner controlled or Professionally controlled
¡ Theories
¡ Transaction Costs
¡ Contingency Theory
WHAT ARE THE FACTORS WHICH DECIDE ORGANIZATIONAL
STRUCTURE?

¡ Culture
¡ Underlying values, norms, shared assumptions and understandings, guiding beliefs
¡ Invisible and Visible
¡ Internal and External Fit
¡ External adaptation and internal integration
¡ Theories
¡ Contingency
¡ Prospect Theory
¡ ASA framework
WHAT ARE THE DIFFERENT STRUCTURAL OPTIONS?

¡ Linkages : Horizontal and Vertical linkages

¡ Co-ordination and Control
¡ Simple
¡ Bureaucracy
¡ Functional and Professional
¡ Divisional
¡ Matrix
¡ Adhocracy
¡ Network, Intrapreneurship
WHO DECIDES THE STRUCTURE OF AN ORGANIZATION?

¡ Divergent interests and Dominant coalitions

¡ Sources of power
¡ Vertical and horizontal
¡ Conflicts
¡ Political behavior
¡ Theories
¡ Agency Theory
¡ Power control
¡ Resource dependence
HOW TO RESOLVE CONFLICTS?
¡ Superordinate Goals
¡ Organization wide evaluation criteria and reward system
¡ Reduce Interdependence
¡ Expand resources
¡ Mutual problem solving
¡ Increase interaction
¡ Appeals systems
¡ Formal authority
¡ Merge conflicting units
WHEN DOES AN ORGANIZATION CHANGE?
¡ External
¡ Scarcity of labour
¡ Government regulations
¡ Economic condition
¡ Consumer advocate groups
¡ Actions of competitors
¡ Sudden internal or external hostility
¡ Internal
¡ Change in Objectives
¡ Decline in profits
¡ Purchase of new equipment
¡ Implementation of sophisticated information-processing system
¡ Unionization
¡ Mergers or acquisitions
¡ Turnover and decline in employee morale
WHAT TO CHANGE?

¡ Strategy
¡ Technology
¡ Organizational process
¡ People
¡ Product
¡ Theories
¡ Options theory
¡ Configurationalistic perspective
HOW DOES AN ORGANIZATION CHANGE?

¡ Implementation
¡ Edict
¡ Intervention
¡ Persuasion
¡ Participation
¡ Dealing with resistance
¡ Education and communication
¡ Participation
¡ Facilitation and support AMO framework
¡ Negotiation
¡ Manipulation
¡ Coercion
THEORIES AND FRAMEWORKS
¡ Transaction Costs
¡ Agency Theory
¡ Contingency Theory
¡ Strategic Choice
¡ Power Control
¡ Resource Dependence
¡ Institutional Theory
¡ Population Ecology
¡ Porter’s 5 forces
¡ Prospect Theory
¡ Options Theory
¡ ASA model
¡ AMO framework
¡ Systems perspective
¡ Configurational Perspective
CASES

Manufacturing Services
Covington Plaza Inn
Oxford Café Cupcake
Does the Milkshake taste funny? Wildfire Entertainment
BP Oil Spill Royce Consulting
Stone Finch
Orlando Metering Company
 Applications
Determinants of Organizational Organizational
Organizational Structure Effectiveness
Structure
• What does an • What is an • Who takes
• What are the factors organization look organization? decision inside
which decide like?
organizational
• Why is an the organization?
• What are the organization formed?
structure? different structural • What are the • How to resolve
• Who decides the options? organizational conflicts?
structure? goals?
• How to manage
environment?
• How to manage
culture?
• Why does an
organization
change?
• What to change?
• How does an
organization
change?