MNG2602 STUDY NOTES.

UNIT 1 – CHPT 3: FEATURES OF CONTEMPORARY ORGANISATIONS & NEW MANAGEMENT CHALLENGES REASONS WHY ORGANISATIONS CHANGE:  Organisations are open systems  They influence their environment & vice versa  Previous century ,environment was much more stable and traditional form(bureaucracy) worked well  Contemporary organisations function in environment characterised by major, ongoing change, hence  Emergence of “new” organisation forms FORCES THAT STIMULATE CHANGE: 1. Globalisation & global change – global organisations has several new & sophisticated forces that influence world economy 1.1. Cheaper international transportation & communications Ex. China & Korea manufacture clothes that sell at more competitive price in other markets of the world 1.2. Org. copy & apply new product and technologies – this intensifies international completion & increases available strategic options of individual organisations in areas such a purchasing or finding markets for products & services 1.3. Markets are becoming more homogeneous because consumers are acquiring a taste for foreign products 1.4. Cost structures differ from country to country making it possible for org. to take advantage of lowercost locations for support activities or production 1.5. Cross border learning increases possibility of org. expanding their capabilities Ex. Building networks in to leading markets 1.6. Financial markets are trading 24/7 1.7. Global standards for trade &commerce, finance, products and services have emerged. 2. Technological Advancements Managers need to appreciate & understand the power of technology & must be able to use it in the best interests of the org. where they work ex. E-commerce, internet, mobile computing 3. Radical transformation of world of work Transformation of workplace – structure according to core competencies instead of product or market Autonomous work teams & strategic alliances are becoming more important Creation of integrated organisations, global networks & leaner more flexible structures (becoming more fluid) 4. Increased power & demands of the customer Consumer’s awareness of products & services as wells as greater variety & choices according to the following criteria: Cost – most economical choice Quality – meeting & exceeding customers’ expectations Time – available as soon as possible Service – best possible service Innovation – new, not yet envisioned by customer Customisation – tailored to specific needs of each customer lOMoARcPSD| MNG2602 STUDY NOTES. 5. The growing importance of intellectual capital & learning Intellectual capital 5.1. Structural capital – accumulated knowledge & expertise of organisation, represented by its copyrights, trademarks & patents, systems and proprietary databases 5.2. Customer capital – value of established relationships with suppliers & customers 5.3. Human capital – combined skills & knowledge of employees in organisation Learning organisation Successful org. exhibit a number of distinctive features 5.4. Individual learning is continuous 5.5. Employees share knowledge 5.6. Organisational culture supports learning 5.7. Employees are encouraged to think critically & take risks with new ideas 5.8. All individuals are valued for their contributions to organisation 6. New roles & expectations of workers Society moves from Industrial era to Knowledge era Work force rapidly change to fit job requirements of knowledge era: INDUSTRIAL ERA KNOWLEDGE ERA Repetitive skills Knowledge to deal with unexpected Depending on memory & facts Being spontaneous & creative Risk avoidance Risk taking Focus on politics & procedures Collaborating with people Coping with temporariness  Actual jobs of workers in permanent state of flux – need to continuously stay on top of their game  Work groups include members from different departments and change constantly to meet changing work assignments  Organisations continually reorganise their various divisions, downside, unbundle, outsource & replace permanent employees with temporaries “The world that most manager and workers work in today is one of permanent temporariness” CLASSICAL MODEL OF THE FORMAL ORGANISATION: According to Max Weber’s model organisations should subscribe to the following desirable characteristics: a. Division of labour b. Hierarchy of authority c. Rules & procedures d. Impersonality e. Employee selection & promotion STENGHTS & WEAKNESSES OF BUREAUCRACY STRENGHTS WEAKNESSES predictability rigid rules & red tape resilience protection of authority impartiality slow decision-making expertise through specialisation incompatibility with changing technology lOMoARcPSD| DUE TO RAPID ENVIROMENTAL CHANGE, THE VERY STRENGHTS OF WEBER’S MODEL BECAME ITS WEAKNESSES = WHY BUREAUCRACY FAILS TO PROVIDE THE NEEDS OF THE MODERN ORGANISATION =  Organisations operating in turbulent environments have to respond to increased competition in terms of customer’s service, continuous improvements & greater diversity. These organisations ,the strengths of predictability & stability of bureaucracy turned into weaknesses  TQM developed in 1980’s contrasted with the quest for specialisation (a feature of bureaucracy). Strict division between departments made it difficult to implement quality initiatives, which depend on cooperation between functions & departments  New information technology changed information channels , moving away from chain of command  International competition & expanding global markets demand more effective ways to manage internal operations than those provided by specialised ‘international’ managers THE NEW ORGANISATION MODEL FEATURES OF THE NEW EMERGING ORGANISATION a. Global – global business environment is more complex than domestic and managers operating in international marketplace have to deal with a much broader set of environmental forces b. Networked, internally & externally - the interdependence between individuals, groups and subunits within the contemporary organisation c. Flat & lean – Employing fewer people & improving turnover in sales, organisations improve productivity significantly d. Flexible – response the changes in the environment ,changing customer needs, intense competition, and needs of the diverse workforces e. Diverse – Organisations are becoming more heterogeneous in terms of race, gender & ethnicity Differences between traditional & ‘new ’organisations DIMENSION TRADITIONAL NEW Critical Tasks physical mental (knowledge) Relationships hierarchical lateral Information Flow vertical horizontal & vertical Decision-making top-down where information resides Systems & Processes inflexible flexible Levels many (tall structure) few (flat structure) Boundaries fixed permeable Competitive Style vertical integration networked Management Style autocratic participative Culture compliance commitment & results Mind set ethnocentric global Workforce homogeneous diverse Strategic Focus efficiency innovation Challenges faced by Managers of the new organisation FEATURES MANAGEMENT CHALLENGES GLOBAL  develop & use global strategic skills to manage change & transition