Components of an Organization

The environment influences organizational design. When uncertainty exists, the ability to respond
quickly and creatively is important; when the environment is stable, an organization improves
performance by making attitudes and behaviors predictable. Creativity and predictability are fostered
by certain structures and cultures.
Task - an organization’s mission, purpose, or goal for existing
People - the human resources of the organization
Structure - the manner in which an organization’s work is designed at the micro
level; how departments, divisions, & the overall organization are
designed at the macro level
Technology - the intellectual and mechanical processes used by an organization to
transform inputs into products or services that meet
Formal vs. Informal Organization
Formal Organization - the part of the organization that has legitimacy and
official recognition
Informal Organization - the unofficial part of the organization
How does an Organization Create Value?

Why do Organizations Exist?
􀂃 To increase specialization and division of labor
􀂃 Use large-scale technology
􀂃 Manage the external environment
􀂃 Economize on transaction costs
􀂃 Exert power and control
Factors Affecting Organizations
􀂃 Organizational Environment
􀂃 Technological Environment
Organizational Process
The organizational environment is the set of resources surrounding an organization, including inputs (e.g., raw materials and skilled employees); resources to transform inputs (e.g., computers, buildings, and machinery); and resources (e.g., customers) Organizations compete for the scarce, needed
resources. There is much uncertainty about obtaining needed resources. Organizations design their structures and cultures in ways to secure and protect needed resources. Technology is the second design contingency an organization faces. Technology refers to the combination of human resources (skills, knowledge abilities, and techniques) and raw materials and equipment (machines, computers, and tools) that workers use to convert raw materials into goods and services. Each job is part of an organization’s technology. An organization must design its structure and culture to allow for the operation of technology. Organizational processes develop plans of actions for competing successfully by obtaining resources and outperforming competitors. These plans of actions are strategies. To attract customers, for example, organizations can pursue the following strategies.
Organizational change Organizational change is an ongoing process that has important implications for organizational performance and for the well-being of an organization’s members. An organization and its members must be constantly on the alert for changes from within the organization and from the outside environment and they must learn how to adjust to change quickly and effectively. Often, the revolutionary types of change that result from restructuring and reengineering are necessary only because an organization and its managers ignored or were unaware of changes in the environment and did not make incremental changes as needed. The more an organization changes, the easier and more effective the change process becomes. Developing and managing a plan for change are vital to an organization’s success.