Summary MNG2602 notes.

UNIT 1 Features of contemporary organisations and new management challenges Prescribed textbook chapter 3: pp 46–68 Study guide: pp 1–10 LEARNING OUTCOMES: > Cite reasons why organisations change > Identify “new” variables in the business environment of contemporary organisations > Defend the statement that bureaucracy fails to provide for the needs of modern organisations > Expound on the features of the new, emerging organisation These changes in our lives can be attributed to two factors, namely:  globalisation; and  the Information Technology Revolution Globalisation is the economic and social interaction process whereby different countries work together to create a global economy. Globalisation involves technological, economic, political, and cultural exchanges between different countries, and is the result of advances in communication, transportation, and infrastructure (the Information Technology Revolution). The result of the process of globalisation is globality. Students of business management should understand how globalisation, and major on- going advances in technology, affect organisations and the way they do business. In this study unit, you will find out how organisations had to change fundamentally in order to be able to function in the globalising world. Work through Chapter 3 in the prescribed book. 1.3 KEY CONCEPTS  A bureaucracy is a system of administration marked by rules and regulations, red tape and proliferation.  Customer capital is the value of relationships that an organisation builds with its customers, ± reflected in their loyalty to the organisation and/or its products.  Diversity is the state of being different.  Globalisation is the economic and social interaction process whereby different countries work together to create a global economy.  A global organisation operates in many countries as an integrated unit.  A flat structure is an organisational structure with fewer levels of management.  Human capital is the health, knowledge, motivation, and skills of employees; the attainment of this is an end in itself.  Intellectual capital is the collective knowledge (whether or not documented) of the individuals in an organisation or society. 1 MNG2602 notes.  An international organisation operates in many countries but keeps the operations in each country separated.  The Information Technology Revolution is a term that describes the economic, social and technological trends that occurred because of major technological advances in the world.  An open system is one that interacts with its environment.  Structural capital refers to the competitive intelligence, formulas, information systems, patents, policies, processes, and so on, that result from the products or systems the organisation has created over time.  Synergy occurs when many elements or subsystems work together to create an outcome that is of more value than the total of what the individual input is.  A system is a set of interrelated parts designed to achieve a singular purpose to stay in balance.  A system boundary separates a system from its environment. 1.4 INTRODUCTION Organisations had to change fundamentally in order to be able to function in the global world. This is mainly due to forces in the environment, which change the way in which organisations operate. Systems theory is the basis from which we study organisations, how we manage them, and it refers to changes in the environment of an organisation that cause changes in the organisation itself. Systems theory implies that we view the organisation as a system consisting of value-adding parts that work together to achieve a common goal and purpose. Systems theory focuses on the interaction between the parts of a system. Instead of reducing a system, such as the solar system, into its parts or elements (e.g. sun, earth, Venus), systems theory focuses on the relationships between the parts of the system, how they work together as a whole and the interrelationship between them. The effect of the interrelationship between parts is that a change in one part could cause a change in one of the other parts. 1.5 FORCES THAT CAUSE ORGANISATIONS TO CHANGE Study the six change stimuli discussed in the prescribed textbook. Figure 1.1 contains a mind-map of the textbook content pertaining to the six major forces for change in organisations. Feel free to add and change the mind map according to your own understanding. 1.6 THE CLASSIC MODEL OF THE FORMAL ORGANISATION In management literature, some authors state that major changes in the business environment during the past two decades caused a ``new'' kind of organisation to emerge. In order to study the ``new'' organisation one should understand the ``old'' organisation, its strengths and its weaknesses. The ``old'' organisation features the characteristics of Weber's Bureaucracy. He developed this organisation model at the turn of the nineteenth century. According to Weber's model, organisations should subscribe to several desirable characteristics, such as:  division of labour  hierarchy of authority  rules and procedures  impersonality  employee selection and promotion Table 1.1 lists the strengths and weaknesses of the bureaucracy