Summary Organizational Theory, Design and Change (seventh edition) – Gareth R. Jones
Chapter 1
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What is an organization?
Organization = A tool people use to coordinate their actions to obtain something they desire
or value to achieve their goals. Organizations are intangible. People who are value security
create an organization called a police force, an army or bank.
Entrepreneurship = The process by which people recognize opportunities to satisfy needs
and then gather and use resources to meet those needs.
How does an organization create value?
Value creation takes place at 3 stages (figure 1.1, page 25)
1. Input = Raw materials, money, HRM, information, knowledge and customers
2. Conversion = Machinery, computers, human skills and abilities
3. Output = Goods, services, salaries, value for stakeholders
Organizational environment = The set of forces and conditions that operate beyond an
organization’s boundaries but affect its ability to acquire and use resources to create
value (customers, shareholders, suppliers, distributors, government and competitors).
The way the organization use HRM and technology to transform inputs into output determines
how much value is created at the conversion stage. The amount of value the organization
creates is a function of the quality of it skills, including its ability to learn from and respont to
the environment.
Why organizations exists?
Increase specialization and the division labour
Use large-scale technology
- Economies of scale = Cost savings that result when goods and services are
produced in large volume on automated production lines.
- Economies of scope = Cost savings that result when an organization is able to
use underutilized resources more effectively because they can be shared across
several different products or tasks.
Manage the extern environment
Economize on transaction costs
- Transaction costs = The costs associated with negotiating, monitoring and
governing exchanges between people to solve these kinds of transaction
difficulties.
Exert power and control (discipline, firing, rewarding)
These 5 factors help explain why often more value can be created when people work
together, coordinating their actions in an organized setting, than when they work alone. This
all increases the value that an organiation can create.
Organizational theory, design and change
Organizational theory = The study of how organizations function and how they affect and are
affected by the environment in which they operate.
Organizational design = The process by which managers select and manage aspects of
structure and culture so an organization can control the activities necessary to achieve its
goals. Determines how effectively an organization is able to respond to various pressures in
its environment and so obtain scarce resources. The order is environment-strategy-design.
Organizational structure = The formal system of task and authority relationships that control
how people coordinate their actions and use resources to achieve organizational goals.
1
Chapter 1
---------------------------------------------------------------------------------------------------------------------------
What is an organization?
Organization = A tool people use to coordinate their actions to obtain something they desire
or value to achieve their goals. Organizations are intangible. People who are value security
create an organization called a police force, an army or bank.
Entrepreneurship = The process by which people recognize opportunities to satisfy needs
and then gather and use resources to meet those needs.
How does an organization create value?
Value creation takes place at 3 stages (figure 1.1, page 25)
1. Input = Raw materials, money, HRM, information, knowledge and customers
2. Conversion = Machinery, computers, human skills and abilities
3. Output = Goods, services, salaries, value for stakeholders
Organizational environment = The set of forces and conditions that operate beyond an
organization’s boundaries but affect its ability to acquire and use resources to create
value (customers, shareholders, suppliers, distributors, government and competitors).
The way the organization use HRM and technology to transform inputs into output determines
how much value is created at the conversion stage. The amount of value the organization
creates is a function of the quality of it skills, including its ability to learn from and respont to
the environment.
Why organizations exists?
Increase specialization and the division labour
Use large-scale technology
- Economies of scale = Cost savings that result when goods and services are
produced in large volume on automated production lines.
- Economies of scope = Cost savings that result when an organization is able to
use underutilized resources more effectively because they can be shared across
several different products or tasks.
Manage the extern environment
Economize on transaction costs
- Transaction costs = The costs associated with negotiating, monitoring and
governing exchanges between people to solve these kinds of transaction
difficulties.
Exert power and control (discipline, firing, rewarding)
These 5 factors help explain why often more value can be created when people work
together, coordinating their actions in an organized setting, than when they work alone. This
all increases the value that an organiation can create.
Organizational theory, design and change
Organizational theory = The study of how organizations function and how they affect and are
affected by the environment in which they operate.
Organizational design = The process by which managers select and manage aspects of
structure and culture so an organization can control the activities necessary to achieve its
goals. Determines how effectively an organization is able to respond to various pressures in
its environment and so obtain scarce resources. The order is environment-strategy-design.
Organizational structure = The formal system of task and authority relationships that control
how people coordinate their actions and use resources to achieve organizational goals.
1
