1. What Is Organizational Theory?
Organizational theory is the study of how
organizations function and their
relationships with their environment.
It involves components of design, structure,
and culture.
The process of organizational design is used
to diagnose and manage the structure and
culture of organizations. 1-

2. What Is Organizational Theory?
FIGURE 1.4
The Relationship among Organizational Theory and Organizational Structure, Culture, Design, and Change
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 and Change
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.
Copyright 2001 Prentice Hall
1-8

3. What Is Organizational Theory?
Why is organizational design so important?
Affects a company’s ability to deal with
contingencies (events that might occur)
Can influence an organization’s ability
to be efficient and innovative 1-

4. What Is Organizational Theory?
Why is organizational design so important?
Can be a source of competitive advantage,
which is the ability of one company to
outperform another by creating more value.
Competitive advantage springs from core
competencies, managers’ skills and abilities
in manufacturing, R&D, new technology,
and organizational design. 1-

5. Can Tyson Fight ‘Chicken Fatigue’ with Pork, Beef?
Tyson acquired IBP in 2001 (#1 beef, #2 pork processor)
Allowed Tyson to become less dependent on chicken
Consolidation among supermarket chains (top five control 50%+ of sales, cf. 30% in mid-90s), streamlining supply chains, spurring consolidation of food manufacturers
Meatpackers about two decades behind chicken processors in marketing and product development
One of biggest consumer complaints about red meat is lack of consistent quality (in large part due to scores of different cattle breeds)
Most supermarkets employ their own butchers to disassemble carcass parts they buy from meatpackers 1-

6. Can Tyson Fight ‘Chicken Fatigue’ with Pork, Beef?
Ability to capitalize on acquisition will depend on ability to “Tyson-ize” beef, pork
Secret to Tyson’s success is that quality of its meat doesn’t vary much
Co. owns hatcheries, feed mills, contracts with farmers to raise specially developed breed of chicken in climate-controlled sheds according to its specifications
Takes just 11 weeks and 10 lbs. of grain to produce five-pound broiler ready for “processing”
IBP (now Tyson Fresh Meats) thought to be too big to vertically integrate
To achieve better uniformity without trying to control entire process, Tyson planned to accelerate IBP’s strategy of doing more preparation work (marinating, pre-cooking, hand-trimming) (also eliminates labor costs in supermarket)
Source: Wall Street Journal, January 10, 2001. 1-

7. Tyson Robards KY ‘Poultry Complex’
Employs almost 1,200 people
Includes a hatchery, feed mill, processing plant, cold storage facility, and rendering plant (which converts poultry by-products into ingredients for pet food)
Processing plant handles 1.25 million birds per week, producing more than seven million pounds of fresh product
Chickens for the Robards complex are raised at 90 area poultry farms
Source: 1-

8. Organizational Effectiveness
Managers can take one of three approaches
to evaluate how an organization confronts
these three tasks:
External Resource Approach: Control
Internal Systems Approach: Innovation
Technical Approach: Efficiency 1-

9. Organizational Effectiveness
TABLE Approaches to Measuring Organizational Effectiveness
Goals to set to Approach Description measure effectiveness
External resource approach
Evaluates the organization’s ability to secure, manage, and control scarce and valued skills and resources
• Lower costs of inputs
• Obtain high-quality inputs of raw materials and employees
• Increase market share
• Increase stock price
• Gain support of stakeholders such as government or environmentalists 1-

10. Organizational Effectiveness
TABLE Approaches to Measuring Organizational Effectiveness (continued)
Goals to set to Approach Description measure effectiveness
Internal systems approach
Evaluates the organization’s ability to be innovative and function quickly and responsively
• Cut decision-making time
• Increase rate of product innovation
• Increase coordination and motivation of employees
• Reduce conflict
• Reduce time to market 1-

11. Organizational Effectiveness
TABLE Approaches to Measuring Organizational Effectiveness (continued)
Goals to set to Approach Description measure effectiveness
Technical approach
Evaluates the organization’s ability to convert skills and resources into goods and services efficiently
• Increase product quality
• Reduce number of defects
• Reduce production costs
• Improve customer service
• Reduce delivery time to customer 1-