Summary MNG2602 EXAM NOTES.

MNG2602 EXAM NOTES. Organisations had to change fundamentally in order to be able to function in the global world. This is mainly due to forces in the environment, which change the way in which organisations operate. Systems theory is the basis from which we study organisations, how we manage them, and it refers to changes in the environment of an organisation that cause changes in the organisation itself. Systems theory implies that we view the organisation as a system consisting of value-adding parts that work together to achieve a common goal and purpose. Systems theory focuses on the interaction between the parts of a system. Instead of reducing a system, such as the solar system, into its parts or elements (e.g. sun, earth, Venus), systems theory focuses on the relationships between the parts of the system, how they work together as a whole and the interrelationship between them. The effect of the interrelationship between parts is that a change in one part could cause a change in one of the other parts. 1.5 FORCES THAT CAUSE ORGANISATIONS TO CHANGE Study the six change stimuli discussed in the prescribed textbook. Figure 1.1 contains a mind-map of the textbook content pertaining to the six major forces for change in organisations. Feel free to add and change the mind map according to your own understanding. 1.6 THE CLASSIC MODEL OF THE FORMAL ORGANISATION In management literature, some authors state that major changes in the business environment during the past two decades caused a ``new'' kind of organisation to emerge. In order to study the ``new'' organisation one should understand the ``old'' organisation, its strengths and its weaknesses. The ``old'' organisation features the characteristics of Weber's Bureaucracy. He developed this organisation model at the turn of the nineteenth century. According to Weber's model, organisations should subscribe to several desirable characteristics, such as:  division of labour  hierarchy of authority  rules and procedures  impersonality  employee selection and promotion Table 1.1 lists the strengths and weaknesses of the bureaucracy 2 3 4 Figure 1.1: The six change stimuli 5 LEARNING UNIT 1 – FEATURES OF CONTEMPORARY ORGANISATIONS AND NEW MANAGEMENT CHALLENGES  Global: “Using its worldwide presence, Siemens aims to meet the needs of a range of global markets. All its companies report to the German parent company.”  Internally Networked: “Siemens works within a new global strategy, 'Siemens One'. In all its activities, customers can call upon the potential of other Siemens groups Siemens groups use a team approach where the philosophy is that if one does not possess a skill, another will. If a particular part of the business requires something offered by another elsewhere, then that product or service is supplied.”  Externally Networked: “Through buying other businesses and strategic alliances with suppliers has grown to acquire different skill, to become a house hold name in electronics.”  Flat structure and Flexibility: “Siemens is proud of its flat structure and flexibility as this allows the company to better meet local needs”.  Workforce diversity: “Siemens AG is a global electrical and electronics business with a turnover of 53 billion Euro. The – organisation employs over 450,000 people worldwide and is based in Munich, Germany. From there, executives oversee work carried out in the name of Siemens all over the world.” LEARNING UNIT 1 Bureaucracy. This is a system of administration marked by rules and regulations, red tape and proliferation. Customer capital. This is the value of relationships that an organisation builds with its customers - reflected in their loyalty to the organisation and/or its products. Diversity. This is the state of being different. Globalisation. This is the economic and social interaction process whereby different countries work together to create a global economy. Global organisation. This is an organisation that operates in many countries as an integrated unit. Flat structure. This is an organisational structure that has fewer levels of management. Human capital. This is the health, knowledge, motivation, and skills of employees; the attainment of this is an end in itself. Intellectual capital. This is the collective knowledge (whether or not documented) of the individuals in an organisation or society. International organisation. This is a body that operates in many countries but keeps the operations in each country separated.