Features of Contemporary Organisations- Chapter 3 Summary

MNG2602 Semester 2 2017
Chapter 3 LU1
Features of Contemporary Organisations and New Management Challenges
The Changing Face of Contemporary Organisations

 Key features of emerging ‘new’ organisations= flatter, cleaner, flexible, networked internally and
externally, diverse and global in orientation and operations.
Variables Influencing Contemporary Organisations to Change
Organisations must deal with several variables in their environment:

 Globalisation and the global economy
 Technological advances
 Radical transformation of the world of work
 Increased power and demands of the customer
 Growing importance of intellectual capital and learning
 New roles for and expectations of workers

Globalisation and the global economy

 Being global= operating without the constraints or traditions of national boundaries, and seeking to
compete in any high-potential marketplace.
 Globalisation refers= worldwide integration of markets, cultures, the removal of legal and political
barriers to trade.
 ‘death of distance’= factor limiting material and cultural exchanges.
 Global organisation is a consequence of several new forces influencing the world economy today:
 International transportation and communications have become cheaper. Ex. China and
Korea manufacture clothes that sell at competitive prices in other markets in the world.
 Organisations copy and apply new product or process technologies=possess a highly
educated workforce, technological and managerial capabilities. This intensifies international
competition, but also increases the strategic options of individual organisations in such
areas as purchasing components or finding markets for products or services.
 Markets= more homogeneous= consumers are acquiring a taste for foreign products.
 Cost structures differ from country to country= impossible for organisations to take
advantage of lower-cost locations for support activities or production.
 Cross-border learning= increases the possibility of organisations expanding their
capabilities. Ex. Building networks into leading markets.
 Financial markets= trading 24 hours a day around the world
 Global standards and regulations for trade and commerce, finance, products and services
have emerged.
Definition of “global economy” (According to Manual Castells)

 Capitalist mode of production= characterized by relentless expansion, always trying to overcome
limits of time and space.
 Late-twentieth century= world economy truly became global based on new infrastructure provided
by information and communication technologies
 Informational= productivity and competitiveness of units or agents- depend on their capacity to
generate, process and apply effectively knowledge based information.
 Global= core activities of production and circulation, as well as their components (capital, labour,
raw materials, management, information, technology, markets) = organised on a global scale- either
directly or through a network of linkages between economic agents.
Advances in Technology

 Information Revolution and other technological advances= powerful influence on organisations.

, Radical Transformation of the world of work

 Organisations moved from focusing on reducing defects and streamlining business processes to
focussing on managing continuous and radical change.
 Today emphasis is on creating organisations in which work is re-organised, redesigned or re-
engineered to improve performance.
 Difference between new work and old work= pressure to do it all better, faster and cheaper.
 Organisations focus and organise around what they do best- they structure according to core
competencies, instead of according to product or market.
 Independent work teams and strategic alliances= more NB



Increased Power and Demands of the customer

 New communication, transportation and information technologies= allow customers to compare
prices, quality, availability.
 Global competition increased= because consumers’ awareness products and services increased.
 Consumers= able to choose products and services they want according criteria:
 Cost- most economical choice
 Quality-best quality, meeting and exceeding customer’s expectations
 Time-as soon as possible
 Service-best
 Innovation-something new
 Customisation-tailored to specific needs

Growing Importance of Intellectual Capital and Learning

 Critical factors of production=
 Land
 Labour
 Raw materials
 Intellectual Capital=
 Sum and synergy
 Of knowledge, relationships, experience, discoveries, processes, innovations, market,
presence and influence of an organisation on the community.
 3 Major Categories of Intellectual Capital=
 Structural Capital= accumulated knowledge and expertise of the organisation- represented
by= copyrights, trademarks, patens, systems and proprietary databases.
 Consumer Capital=Value of Established relationships with suppliers and customers
 Human Capital=Combined skills and knowledge of the employees in the organisation.

 Knowledge Management
 Integrated, systematic approach
 Identify, manage and share info assets of an org.
 These include- databases, documents, policies, procedures, expertise and experience of
individual workers.
 Organisational learning
 Process= enables org to adapt to change and move forward by acquiring new knowledge,
skills or behaviours.
 Knowledge Management and Organisational Learning= impact on org. in the future. Enhance the
potential to increase productivity, quality and innovation.


New Roles and Expectations of Workers
Changing job requirements of workers