1. 1 MGT8200 Organizing to Compete What is an organization?

2. 2 What Is Organizational Theory? Copyright 2001 Prentice Hall FIGURE 1.4 The Relationship among Organizational Theory and Organizational Structure, Culture, and Design Organizational Structure The formal system of task and authority relationships that controls how people are to cooperate and use resources to achieve the organization's goals. Organizational Design The process by which managers select and manage various dimensions and components of organizational structure and culture so that an organization can control the activities necessary to achieve its goals. Organizational Culture The set of shared values and norms that control organizational members’ interactions with each other and with people outside the organization. Organizational Theory The study of how organizations function and how they affect and are affected by the environment in which they operate. 1-8

3. 3 What Is an Organization? Organizations exist to: Increase specialization and division of labor Use large-scale technology: economies of scale result when goods and services are produced in large volume economies of scope result from using underutilized resources across different products or tasks

4. 4 What Is an Organization? Organizations exist to: Manage the external environment Economize on transaction costs (the costs associated with negotiating, monitoring, and governing exchanges with people) Exert power and control

5. 5 Copyright 2001 Prentice Hall Organization obtains inputs from its environment Raw materials Money and capital Human resources Information and knowledge Customers of service organizations Organization’s Inputs Organization transforms inputs and adds value to them Machinery Computers Human skills and abilities Organization's Conversion Process Sales of outputs allow organization to obtain new supplies of inputs Customers Shareholders Suppliers Distributors Government Competitors Organization’s Environment Organization releases outputs to its environment Finished goods Services Dividends Salaries Value for stakeholders Organization’s Outputs FIGURE 1.1 How an Organization Creates Value 1- 4

6. 6 Discussion Questions How does the macro viewpoint differ from a micro approach to organizations? How does organizational structure differ from organizational process? How might we characterize an organization such as Georgia State University?

7. 7 Hard Candy Structure and strategy must consider: Market niche Coordination Control Economy