OTD Chapter 11

Question 1

Organizational Life Cycle

Answer 1

A sequence of growth and development stages through which an organization might pass.

Question 2

Organizational Life Cycle stages

Answer 2

1. Organizational Birth
2. Organizational Growth
3. Organizational Decline
4. Organizational Death

Question 3

Organizational Birth

Answer 3

The founding of an organization. A dangerous life cycle stage associated with the greatest chance of failure due to the liability of newness.

Question 4

Population Ecology Theory

Answer 4

A theory that seeks to explain the factors that affect the rate at which new organizations are born (and die) in a population of existing organizations.

Question 5

Population of organizations

Answer 5

The organizations that are competing for the same set of resources in the environment.

Question 6

Population density

Answer 6

The number of organizations that can compete for the same resources in a particular environment.

Question 7

R-Strategy

Answer 7

A strategy of entering a new environment early.

Question 8

K-strategy

Answer 8

A strategy of entering an environment late, after other organizations have already tested the waters.

Question 9

Specialist

Answer 9

Organization that concentrates its skills to pursue a narrow range of resources in a single niche.

Question 10

Generalist

Answer 10

Organization that spreads its skills thinly to compete for a broad change of resources in many niches.

Question 11

R-specialist

Answer 11

Early entry, one niche.

Question 12

R-generalist

Answer 12

Early entry, many niches.

Question 13

K-specialist

Answer 13

Late entry, one niche.

Question 14

K-generalist

Answer 14

Late entry, many niches.

Question 15

Natural selection

Answer 15

The process that ensures the survival of the organizations that have the skills and abilities that best fit with the environment.

Question 16

Organizational Growth (stage 2)

Answer 16

In this stage, organizations develop value creation skills and competences that allow them to acquire additional resources.

Question 17

Institutional theory

Answer 17

A theory that studies how organizations can increase their ability to grow and survive in a competitive environment by satisfying their stakeholders.

Question 18

Institutional environment

Answer 18

The set of values and norms in an environment that govern the behaviour of a population of organizations.

Question 19

Organizational isomorphism

Answer 19

The similarity among organizations in a population.

Question 20

Three processes that explain why organizations become more alike:

Answer 20

Coercive isomorophism
Mimetic isomorphism
Normative isomorphism

Question 21

Coercive isomorphism

Answer 21

Pressured by other organizations or society in general.

E.g., Nike, Walmart, and Apple, how they were pressured by the public to boycot goods made by children in developing countries, and how these companies responded by creating uniform codes of supplier conduct.

Question 22

Mimetic isomorphism

Answer 22

Organizations that intentionally imitate and copy one another to increase their legitimacy.

E.g., Fast-food chains mimicking how McDonalds standardised its global fast food network.

Uncertainty increases imitation.

Question 23

Normative isomorphism

Answer 23

Organizations that come to resemble one another over time because they indirectly adopt the norms and values of other organization in the environment.

That is, because managers and employees are frequently moved from one organization to another, bringing the values and norms they learned at their former employer with them.

Question 24

Disadvantages isomorphism

Answer 24

Out-date, inertia sets in, resulting in low effectiveness.

Reduced the incentive to experiment so the innovation level may decline.

Question 25

Greiner’s Growth Model

Answer 25

Describes the phases that organizations go through as they grow. Each growth phase is made up of a period of relatively stable growth, followed by a “crisis” when major organizational change is needed if the company is to carry on growth.

Question 26

Greiner’s Growth Model - stages

Answer 26

1. Creativity
2. Direction
3. Delegation
4. Coordination
5. Collaboration

Question 27

Greiner’s Growth Model - crises

Answer 27

1. Leadership
2. Autonomy
3. Control
4. Red-tape

Question 28

Organizational decline (stage)

Answer 28

Stage that an organization enters when it fails to anticipate, recognise, avoid, neutralise, or adapt to external and internal pressures that threaten its long-term survival.

Question 29

Organizational inertia

Answer 29

Forces inside organizations that make it resistant to change.

Question 30

Factors that cause inertia are

Answer 30

Risk aversion
Desire to maximize rewards
Overly bureaucratic culture

Question 31

Risk aversion

Answer 31

Unwillingness to bear the uncertainty associated with entrepreneurial activities.

Question 32

Desire to maximize rewards

Answer 32

Managers’ desire for prestige, job security, power, and strong property rights that bring large rewards often lead them to focus on strategies that increase organizational size, even if it reduces future probability and organisational effectiveness.

Question 33

Overly bureaucratic culture

Answer 33

In large organizations, property rights can become so strong that managers spend all their time protecting their specific rights instead of working to advance the organization’s interests.

Question 34

Major sources for uncertainty in the environment are

Answer 34

Complexity
Dynamism
Richness

Question 35

Complexity

Answer 35

The number of different forces that an organization has to manage.

Question 36

Dynamism

Answer 36

The degree to which the environment is changing.

Question 37

Richness

Answer 37

The number of resources available in the environment.

Question 38

Weitzel and Jonsson’s five stage model of organizational decline

Answer 38

1. Blinded stage
2. Inaction stage
3. Faulty action stage
4. Crisis stage
5. Dissolution stage

Question 39

Blinded stage

Answer 39

Decline begins because key managers fail to recognise internal and external changes that harm their organization.

This blindness may be due to lack of awareness about changes or an inability to understand their significance.

Question 40

Inaction stage

Answer 40

As an organization’s problems become more visible, managers may recognise the need to change, but still do not take action.

They may wait for the problem to correct itself. They don’t feel as if the situation is urgent.

Question 41

Faulty action stage

Answer 41

Faced with rising costs and decreasing profits and market share, management will announce belt-tightening plans designed to cut costs, increase efficiency, and restore profits.

Rather than recognising the need for fundamental changes, managers assume that if they run a tighter ship, company performance will return to previous levels.

Question 42

Crisis stage

Answer 42

Bankruptcy or dissolution are likely to occur unless the organization reorganises the way it does business.

At this point, companies typically lack the resources to fully change how they run their business. Cutbacks and layoffs will have reduced the level of talent among employees.

Question 43

Dissolution stage

Answer 43

After failing to make the changes needed to sustain the organization, the company is dissolved.

A new CEO may be brought in to oversee the closing of stores, offices, and manufacturing facilities.