Tutorial 4: Organization Size, Life Cycle, and Decline

Question 1

Is bigger better?

Answer 1

Large companies
= Economies of scale
= Global reach
= Vertical hierarchy, mechanistic
= Complex
= Stable market
= “Organization men”

Small companies
= flexible
= responsive
= Regional reach
= Flat structure -> organic
= Niche finding
= Entrepreneurs

Question 2

What is Bureaucracy?

Answer 2

Max Weber:
= A logical, rational form compared to the other bases of organizations, such as favoritism, status family connections, or feudalism

Question 3

Bureaucracy in a changing world

Answer 3

= Fast changing environment requires flexibility to stay innovative
= Temporary Systems for Flexibility and Innovation

Question 4

Dimensions of Bureaucracy

Answer 4

1. Rules and procedures
2. Specialization and division of labor
3. Hierarchy of authority
4. Technically qualified personnel
5. Separate position from position holder
6. Written communications and records

Question 5

Characteristics of Bureaucracy

Answer 5

1. Formalization
2. Centralization
3. Personnel Ratio

Question 6

What approaches do organizations use as a control mechanism?
-> How does management ensure strategy execution?

Answer 6

= Many businesses need to reduce formalization and bureaucracy to enhance creativity, flexibility, and rapid response in today’s knowledge-based organizations

3 different control mechanisms:

1. Orders and Rules - Bureaucratic Control
   - Top-down
   - Rules, standards, hierarchy, authority, …
   - Establishing rules of conduct (factory standards)
2. Objectives - Market Control
   - Top-down
   - Prices, competition, and exchange relationships
   - Setting a target state to be reached
3. Culture - Clan Control
   - Bottom-up
   - Tradition, shared values, beliefs, and trust
   - Each manager ensures consistency between culture and existing goals, tasks, roles, processes, systems, …

Question 7

Organizational Decline Definition

Answer 7

= is a condition in which a substantial absolute decrease in an organization’s resource base occurs over a period

Question 8

3 reasons for Organizational Decline

Answer 8

• Organizational atrophy
• Vulnerability
• Environmental decline or competition

Question 9

Downsizing Definition

Answer 9

= Downsizing refers to intentionally reducing the size of a company’s workforce

Question 10

Managing Downsizing

Answer 10

1. Communicate carefully
   - forthright, honest, and sincere tell the affected people privately before any general announcement
   - explain the reason for the decision
2. Provide support for departing employees
   - tangible support beyond severance pay
   - Example. offering employees access to career counseling, an employment service
3. Provide support for survivors
   - address worries about the next round of downsizing
4. Rebuild trust and make the survivors feel like they are permanent members of the team
   - be completely truthful about the future
   - provide a vision that specifically includes everyone