PoM Flashcards
organization
a collective effort to achieve specific objectives
efficiency
using minimal resources to achieve goals
effectiveness
choosing appropriate means to reach goals
basic variables
- fixed costs
- variable costs
- break even point
- marginal revenue
- marginal costs
transaction costs
costs incurred in market transactions
horizontal integration
combining firms in the same industry
vertical integration
combining firms at different production stages
joint stock corporation
business entity allowing share ownership
MNE
- multinational enterprise
- firm operating in multiple countries
power structures
influence dynamics within organizations
critical management studies
examines organizational problems like exploitation
market failures
inefficiencies requiring government intervention
public sphere
political domain distinct from private business
private sphere
domain of individual business activities
management role
coordinating activities in organizations
emergent processes
unplanned development within organizations
organizational structure
framework defining roles and responsibilities
strategic management
focus on long-term competitive success
complex organizations
firms with intricate structures and roles
cognitive reasons
challenges in maximizing due to understanding limits
ethical reasons
moral implications of profit maximization
role of markets
efficient resource allocation mechanism
governance
supervision of managers to align interests
modern technologies
enable large scale production in organizations
specialization
focus on specific tasks to increase efficiency
coordination
efforts required for large organizations to function
weber
- bureaucracy
- 1921
- management based on rational principles and authority
legitimate authority
acceptance of authority based on three types: charismatic, traditional, legal
charismatic authority
leadership based on personal appeal and inspiration
traditional authority
power derived from historical customs and practices
legal authority
authority based on established laws and regulations
bureaucracy characteristics
- rules
- specified competencies
- hierarchy
- technical training
- neutrality
- written recording of rules and decisions
pros of bureaucracy
efficient, reliable, stable, precise management
cons of bureaucracy
- rigidity and lack of creativity
- only takes into consideration impersonal factors
scientific management
- focus on optimizing labor processes for efficiency
- Taylor
time studies
(Taylor)
measure average time for specific tasks
specialization increases efficiency due to:
- learning effects: efficiency increases with repeated task performance
- economies of scale: cost per unit decreases with increased production
- synergies: accomplishing similar tasks reduces overall efforts
fayol’s functions of management
- planning
- organizing
- command
- coordination
- control
critique to taylor
- motivation exclusively through money
- can lead to monotony, increased speed of work, alienation and loss of self-determination
- Hawthorne and Theory X and Y
fayol
- administrative approach
- manage process as a whole
- organizing as engineering
fayol critique
- abstract principles
- no empirical proof
assumptions about the individual
- unreliable
- unable to understand the organization and take responsibility
- need to follow rules
- exclusively motivated materially
assumptions about the organization
- coordination comes from the top
- all that matters is efficiency
- future can be foreseen
- division of labor
- hierarchy
assumptions about theory
- able to produce generally applicable rules
- aim to increase efficiency
u-form
unitary structure focusing on functional differentiation
m-form
multidivisional structure to avoid u-form challenges
u-form challenges
- too many interfaces
- diffusion of responsibilities
- overwhelming load at the top
- low flexibility
matrix organization
- combines functional and project-based leadership
- solution to U and M forms
project organization
organizes tasks under unique and novel conditions
integration
bringing together elements for consistent task processing
differentiation vs integration
balancing specialization with cohesive task processing
burns and stalker study
examined organizational structure in changing environments
environmental influence
organizational structure affected by external conditions
classical organization theories
- early frameworks for understanding large organizations
- focused on structures
critique of classical theories
overemphasis on formal features and authority
environmental turbulence
speed of innovation affecting organizational structure
mechanistic structure
organizational design suited for stable environment. rigidity and hierarchy.
organismic structure
flexible design for adapting to turbulent conditions. requires cultural shift and commitment to shared goals
top-down decision making
hierarchical approach ineffective in turbulent environments
horizontal communication
lateral information flow in organismic systems
contingency theory
- organizational structure depends on environmental conditions
- basic assumptions:
1. each type of environment has an ideal structure
2. organizations can’t change their environments
3. organizations need to deliver specific performance levels
performance levels
organization must meet acceptable, not necessarily maximized, performance
functional equivalents
multiple solutions exist for organizational problems
organizational environment
includes global, technological, political, socio-cultural factors
task environment
- directly influences organization
- competitors
- substitution products
- demanders
- suppliers
- industrial relations
complexity
number of diversity of elements in the environment
dynamics
rate of change within the organizational environment
pressure
threat level from environmental elements to organizations
equivocality
conflicting interpretations complicating decision-making
Ashby’s law
adaptive systems must match environmental variety
organizational complexity
abstract concept evaluated by specialization and differentiation
resource dependence theory
organizations rely on external resources controlled by others
buffering
stockpiling resources to limit dependence
legitimacy
do relevant stakeholders accept the chosen strategy?
isomorphism
increasing similarity among organizations due to external pressures
rationalized myths
structures that appear rational but lack efficiency
stakeholder power
influence based on hierarchy, expertise, or resources
legitimacy demands
pressures for organizations to conform to norms
vertical differentiation
hierarchical layers within an organization increasing complexity
horizontal differentiation
number of functions within an organization increasing complexity
mimetic isomorphism
organizations imitate others to gain legitimacy
coercive isomorphism
organizations are pressured to adopt certain features
normative isomorphism
organizations conform to societal norms and standards
decoupling
pretending to adopt practices while not implementing them
institutional logics
different society spheres have unique legitimate and authority sources
state, market, profession (expertise and professional association)
environmental determinism
environmental conditions dictate organizational responses
value chain
how resources integrate in production processes
core competencies
unique strengths that provide competitive advantage
Porter’s five forces
- threat of new entrants
- bargaining power of customers
- threat of substitutes
- bargaining power of suppliers
- rivalry among competitors
market saturation
degree of competition in a market
exit/entry barriers
costs associated with entering/leaving a market
niche market
targeting specific segment of the market