The need for organisations to expand


An organization would choose a corporate level strategy to expand its value-creation activities beyond its core domain because expanding makes sense if more value creation can not occur in the core domain and resources are available to enter new domains. Corporate level strategy is a continuation of business level strategy because the organization takes its existing core competences and applies them in new domains. If an organization takes marketing skills developed in one domain and applies them in a new domain, it can create value in that new domain. In new domains, a firm needs a complex structure such as the multidivisional structure.

An organization's structure and culture might change as the organization begins to enter new domains. Structure and culture depend on the strategy pursued. Unrelated diversification fosters economic values; related diversification fosters cooperation.Expansion increases bureaucratic costs, resulting in a taller structure that could stifle innovation. Structure & culture must be reevaluated as a firm changes strategies.

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Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 8

Question II: Describe and explain how technology complexity affects organizational structure? What role does technology in the form of knowledge play in the production of the organization's goods and services?

Technology complexity increased the levels in the hierarchy; organizations with small batch technology needs three level; organizations with mass production technology, four level; and organizations with continuous process, six level. As technical complexity increased, organizations become taller, and the span of control of the CEO widens. Span of control is narrow for small batch technology with decision-making decentralized and wide for mass production with decision making centralized. Span of control is narrow for continuous process technology with decision making centralized. Small batch or continuous process technology need organic structure whereas mass production needs a mechanistic structure.

Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 9

Question III: Describe and explain how evolutionary change and revolutionary change differ? What are examples of each?

Evolutionary change makes incremental changes consistently and uses a bottom up strategy. Employees suggest improvements. evolutionary change facilitates learning and response to environmental changes. Evolutionary change is described by George and Jones as "gradual, incremental, and narrowly focused." It is not drastic or sudden, but a constant attempt to improve, adapt and adjust strategy and structure incrementally to accommodate to changes taking place in the environment. examples of evolutionary change are total quality management, sociotechnical systems theory, and the creation of empowered, flexible work groups that are consistently applied and shows improvement over the long term

Revolutionary change takes radical steps with a top down change strategy. Revoluationary change overcomes inertia.

Some organizations need change--fast. When faced with drastic and unexpected change, an organization may have no other choice but to implement revolutionary change. George and Jones describe this as "change that is rapid, dramatic, and broadly focused. This bold shift may be due to a change in the economic climate or a new technological advancement that is integral to the function of the organization."

Reengineering, restructuring, and innovation are three example of revolutionary change

Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 10

Question IV: Why do organizations grow? What types of major crisis is an organization likely to encounter as it grows?

An organization grows by obtaining resources and developing core competences. Growth allows an orgnization to increase its division of labor and specialization and thus develop a competitive advantage. Surplus resources facilitate growth. Over time, organizations thus transform themselves: they become something very different than they were when they started.

An organization passes through five sequential growth stages during the course of its evolution and that at each stage a specific organizational problem causes a crisis that must be solved if it is to be able to advance from one stage to the next.

In the first stage, an organization experiences a leadership crisis because the founder may lack the skills to manage growth. New management teams move the firms to the direction stage. In this stage, the crisis of autonomy occurs, as innovative employees feel frustrated by their lack of decision making. Delegating authority moves the company to the delegation stage, which brings a crisis of control. Top and functional managers conflict over control. A balance between centralization and decentralization move the company to the coordination stage where it faces a crisis of red tape, which stifles innovation. The final stage is collaboration which is the way to solve the crisis of red tape and push the organization up the growth curve.

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Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 11

Question V: How do cognitive biases affect organizational learning and the quality of decision making? What can be accomplished to reduce the negative impact?

Cognitive biases are the factors which may lead managers to develop a cognitive structure that causes them to misperceive and misinterpret information. cognitive biases such as cognitive dissonance, illusion of control and several other cognitive biases may hurt organizational learning and decrease the quality of decision-making. cognitive biases affect manager's information processing abilities and distort managers' and distort managers' interpretation of a problem. Cognitive biases make it difficult to maintain the quality of organizational decision making and promote organizational over time. Organization can use several means to reduce the negative impact and promote learning and change: implement strategies for organizational learning, increase the breadth and diversity of the top-management team, use devil's advocacy and dialectical inquiry, use game theory, and develop a collateral organizational structure.

Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 12

Question VI: What is the relationship between quantum and incremental technological change? Why are these types of change important to organizations?

Quantum technological change is a dramatic/fundamental shift in technology that revolutionezes products or the way they are produced. New products in corporated a quantum technological improvement will result in quantum innovations. Innovations result in environmental changes and require operational changes.

Incremental technological change is the refinements and improvements that are continually made to a particular technology over time. Incremental innovations refers to the products or operating systems that incorporate refinements of some base technology.

Incremental change builds on quantum changes: incremental innovations require quantum innovations. The first Intel microprocessor was a quantum innovation; the successors are incremental innovations. Another quantum innovation occurs and restarts cycle.

These types of change are important to organizations because it brings benefits to organizations. Technological change is both an opportunity and a threat - it is both creative and destructive. It helps create new product innovations that pioneering companies can take advantages of, but at the same time, these innovations reduce or eliminate demand for the products made by established but less innovative organizations. For example, the development of the iPod by Apple has helped create a host of new product opportunities, including of the new smartphone, but at the same time it has destroyed demand for older products such as the Sony Walkman and Motorola Razr - both dominant products just a few years ago. But at any way, these changes are very important for organizations who want to develop and bring new to customers.

Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 13

Question VII: Why is it important to maintain a balance of power between different groups of organizational stakeholders?

It is important to maintain a balance of power between different groups of organizational stakeholders. A balance of power is nessesary to manage organizationl politics and obtain its benefits. This allows for alternative views and solutions can be offered and considered by all parties and dissenting views can be heard. It is also important for the balance of power to shift over time, toward the party that can best manage the uncertainty and contigencies facing the organization. An organization that confers power on those who can promote the changes that will help it the most can take advantage of the political process to improve the quality of organizational decision making. A balance helps allocate resources to those who can create the most value. A group with dominant power can misuse it. When powerful managers can suppress the views of those who oppose their interests, debate becomes restricted,checks and balances disappear, conflict escalates, and organizational inertia increases. When the balance of power between stakeholders and subunits does not force the allocation of resources to where they can best create value,organizational effectiveness declines. A balance of power helps achieve the benefits of power and politics. So, whether power and politics benefit or harm an organization is a function of the balance of power among organizational stakeholders.

Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 14

Question VIII: Define and explain the term authority and discuss the bases of authority. How does authority differ from power? Explain how people or departments within organizations can gain power through control of resources and through solving key organizational problems.

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Reference: Organizational Theory, Design & Change, Gareth Jones, Chapter 14