SUMMARY ORGANIZATIONAL THEORY & DESIGN
,WEEK 1 – PART 1 THE ORGANIZATION AND ITS ENVIRONMENT (CH 1 & 3)
CHAPTER 1 ORGANIZATIONS AND ORGANIZATIONAL EFFECTIVENESS
WHAT IS AN ORGANIZATION?
Organization: A tool people use to coordinate their actions to obtain something they desire or value.
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 three stages: input, conversion, and output. Each stage is affected by the
environment in which the organization operates.
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
,WHY DO ORGANIZATIONS EXIST?
1. To increase specialization and the division of labor
People who work in organizations may become more productive and efficient at what they do
than people who work alone. For many kinds of productive work the use of an organization
allows the development of specialization and a division of labor. The collective nature of
organizations allows individuals to focus on a narrow area of expertise, which allows them to
become more skilled or specialized at what they do.
2. To use large scale technology
Organizations are able to take advantage of the economies of scale and scope that result from
the use of modern automated and computerized 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
3. To manage the organizational environment
An organization has the resources to develop specialists to anticipate or attempt to influence
the many pressures from the environment
4. To economize on transaction costs
Transaction costs: the costs associated with negotiating, monitoring, and governing exchanges
between people.(bv wie doet wat, doet iemand het goed, hoeveel krijg je betaald…).
Organizations’ ability to control the exchanges between people reduces the transaction costs
associated with these exchanges (mensen voor lange tijd aannemen, specifieke groepen,
kunnen evalueren hoe iemand het doet, …).
, 5. To exert power and control
To get a job done efficiently, people must come to work in a predictable fashion, behave in the
interests of the organization, and accept the authority of the organization and its managers.
Je kan ze ontslaan of juist promotie geven → power
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 structure: The formal system of task and authority relationships that control how people
coordinate their actions and use resources to achieve organizational goals.
Organizational culture: The set of shared values and norms that controls organizational members’
interactions with each other and with suppliers, customers, and other people outside the organization.
Organizational design: The process by which managers select and manage aspects of structure and
culture so that an organization can control the activities necessary to achieve its goals.
Organizational change: The process by which organizations redesign their structures and cultures to
move from their present state to some desired future state to increase their effectiveness.
The Importance of Organizational Design and Change
1. Dealing with contingencies: An event that might occur and must be planned for
2. Gaining competitive advantage: The ability of one company to outperform another because its
managers are able to create more value from the resources at their disposal.
Core competences: Managers’ skills and abilities in value-creating activities.
,WEEK 1 – PART 1 THE ORGANIZATION AND ITS ENVIRONMENT (CH 1 & 3)
CHAPTER 1 ORGANIZATIONS AND ORGANIZATIONAL EFFECTIVENESS
WHAT IS AN ORGANIZATION?
Organization: A tool people use to coordinate their actions to obtain something they desire or value.
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 three stages: input, conversion, and output. Each stage is affected by the
environment in which the organization operates.
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
,WHY DO ORGANIZATIONS EXIST?
1. To increase specialization and the division of labor
People who work in organizations may become more productive and efficient at what they do
than people who work alone. For many kinds of productive work the use of an organization
allows the development of specialization and a division of labor. The collective nature of
organizations allows individuals to focus on a narrow area of expertise, which allows them to
become more skilled or specialized at what they do.
2. To use large scale technology
Organizations are able to take advantage of the economies of scale and scope that result from
the use of modern automated and computerized 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
3. To manage the organizational environment
An organization has the resources to develop specialists to anticipate or attempt to influence
the many pressures from the environment
4. To economize on transaction costs
Transaction costs: the costs associated with negotiating, monitoring, and governing exchanges
between people.(bv wie doet wat, doet iemand het goed, hoeveel krijg je betaald…).
Organizations’ ability to control the exchanges between people reduces the transaction costs
associated with these exchanges (mensen voor lange tijd aannemen, specifieke groepen,
kunnen evalueren hoe iemand het doet, …).
, 5. To exert power and control
To get a job done efficiently, people must come to work in a predictable fashion, behave in the
interests of the organization, and accept the authority of the organization and its managers.
Je kan ze ontslaan of juist promotie geven → power
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 structure: The formal system of task and authority relationships that control how people
coordinate their actions and use resources to achieve organizational goals.
Organizational culture: The set of shared values and norms that controls organizational members’
interactions with each other and with suppliers, customers, and other people outside the organization.
Organizational design: The process by which managers select and manage aspects of structure and
culture so that an organization can control the activities necessary to achieve its goals.
Organizational change: The process by which organizations redesign their structures and cultures to
move from their present state to some desired future state to increase their effectiveness.
The Importance of Organizational Design and Change
1. Dealing with contingencies: An event that might occur and must be planned for
2. Gaining competitive advantage: The ability of one company to outperform another because its
managers are able to create more value from the resources at their disposal.
Core competences: Managers’ skills and abilities in value-creating activities.
