Chapter 8: Organizational Life Cycle and Decline

Question 1

Pressures for Growth

Answer 1

• Compete on a global scale
• Control resources
• Invest in new technologies
• Control distribution channels
• Gain access to new markets
  Ability to weather downturns

Question 1

Large Size

Answer 1

• Economies of scale, resources, global reach
• Longevity, stability, security for employees

Question 2

dilema of large

Answer 2

But they tend to become more standardized, mechanistic, hierarchical, complex, slow

Question 3

Small

Answer 3

Flexible, responsive to changing needs, fast, flat, organic, niche-finding, entrepreneurial

Question 4

Solving the Dilemma of Size – big company/ small company hybrid

Answer 4

• Cohesive vision, values, style
• Decentralization
• Systems to capture and disseminate innovation
• Cross-functional, cross-disciplinary (global) teams

Question 5

Life cycle

Answer 5

a perspective on organizational growth and change that suggests that organizations are born, grow older, and eventually die

Question 6

Stages of Life-Cycle Development:

Answer 6

1. Entrepreneurial stage
2. Collectivity stage
3. Formalization stage
4. Elaboration stage

Question 7

Entrepreneurial Stage

Answer 7

• Organization is born and its emphasis is on creating a product/service and surviving in the marketplace
• Creativity
• Crisis: need for leadership

Question 8

Collectivity Stage

Answer 8

• Organization has strong leadership and begins to develop clear goals and direction
• Provision of clear leadership
• Crisis: need for delegation with control

Question 9

Formalization Stage

Answer 9

• The installation and use of rules, procedures, and control systems
• Addition of internal systems
• Crisis: need to deal with too much red tape - org is bureaucratized, middle management may resent the intrusion of staff

Question 10

Elaboration Stage

Answer 10

• The red-tape crisis is resolved through the development of a new sense of teamwork and collaboration
• Development of teamwork
• Crisis: need for revitalization

Question 11

Bureaucracy

Answer 11

an organizational framework marked by rules and procedures, specialization and division of labour, hierarchy of authority, technically qualified personnel, separation of position and person, and written communications and records

Question 12

Size and Control

Answer 12

Organization size has been described as an important variable that influences structural design and methods of control

Question 13

Formalization

Answer 13

the degree to which an organization has rules, procedures, and written documentation

Question 14

Centralization

Answer 14

• the level of hierarchy with authority to make decisions

Question 15

Personnel ratios

Answer 15

the proportions of administrative, clerical, and professional support staff

Question 16

Incident command system

Answer 16

• developed to maintain the efficiency and control benefits of bureaucracy yet prevent the problems of slow response to crises

Question 17

Organizational Control Strategies

Answer 17

• Bureaucracy
• market
• clan

Question 18

Bureaucracy

Answer 18

• Rules, standards, hierarchy, legitimate authority
• Standardize behaviour and asses performance

Question 19

Rational-legal Authority:

Answer 19

based on employees’ belief in the legality of rules and the right of those in authority to issue commands

Question 20

Traditional Authority

Answer 20

based in the belief in traditions and the legitimacy of the status of people exercising authority through those traditions

Question 21

Charismatic Authority:

Answer 21

based on devotion to the exemplary character or heroism of an individual and the order defined by them

Question 22

Market

Answer 22

Prices, competition, exchange relationship

Question 23

Clan

Answer 23

• Tradition, shared values and beliefs, and trust
• Self-control: a person’s values are brought into line with the organization’s values to control behaviour

Question 24

Organizational Decline

Answer 24

a condition in which a substantial, absolute decrease in an organization’s resource base occurs over a period of time

Question 25

Organizational Decline - causes

Answer 25

1. Organizational Atrophy
2. Vulnerability
3. Environmental decline or competition:

Question 26

Organizational Atrophy:

Answer 26

when organizations grow older and become inefficient and overly bureaucratized. The organization’s ability to adapt to its environment deteriorates, often followed by long periods of success

Question 27

Vulnerability

Answer 27

reflects an organization’s strategic inability to prosper in its environment, vulnerable to shifts in consumer tastes or in the economic health of the larger community

Question 28

Environmental decline or competition

Answer 28

environmental decline refers to reduced energy and resources available to support an organization. When the environment has less capability to support organizations, the org has to either scale down operations of shift to another domain

Question 29

Model of Decline Stages

Answer 29

1. Blinded stage
2. Inaction stage
3. Faculty Action stage
4. Crisis stage
5. Dissolution stage

Question 30

Blinded Stage:

Answer 30

internal and external change that threatens long-term survival and may require the organization to tighten up, they may have access personnel, cumbersome procedures, or lack of harmony with customers

Question 31

Blinded Stage - solution

Answer 31

develop effective scanning and control systems that indicate when something is wrong, can alert the executives and bring the organization back to top performance

Question 32

Inaction Stage:

Answer 32

denial occurs despite signs of deteriorating performance, leaders persuade employees that all is well

Question 33

Inaction Stage - solution

Answer 33

leaders to acknowledge the decline and take prompt action to realign the organization with the environment

Question 34

Faulty Action Stage

Answer 34

facing serious problems, and indicators of poor performance cannot be ignored, failure to adjust to the declining spiral can lead to org failure

Question 35

Faulty Action Stage - solution

Answer 35

retrenchment - downsizing personnel, leaders should reduce uncertainty by clarifying values and providing information

Question 36

Crisis Stage:

Answer 36

organization experiences chaos, efforts to go back to basics, sharp changes, and anger

Question 37

Crisis Stage: solution

Answer 37

major reorganization

Question 38

Dissolution Stage

Answer 38

stage of decline is irreversible, organization is suffering a loss of markets and reputation, loss if its best personnel and capital depletion

Question 39

Dissolution Stage - solution

Answer 39

close down the organization

Question 40

Downsizing Implementation

Answer 40

• communicate more not less
• provide assitance to displaced workers
• help the survivors cope

Question 41

Downsizing

Answer 41

intentionally reducing the size of a company’s workforce by laying off employees

Question 42

Communicate more, not less

Answer 42

organizational managers should provide advance notice with as much information as possible

Question 43

Provide assistance to displaced workers

Answer 43

help workers cope with the loss of their jobs and get re-established in the job market. Provide training, severance packages, extended benefits, and outplacement assistance

Question 44

Help the survivors cope

Answer 44

feelings of anger, confusion, and sadness after the loss of their coworkers, survivors also may be concerned about their own jobs and have difficulty adapting to changes in job duties and responsibilities