Business politics

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The Organization

What is an organization?

Subjective perspective a social system, which is trying to reach a common goal through coordination of actions and means.

Objective perspective the structure of the organization.




The structure of an organization depends on 4 head points

1. Division of labor

. Coordination of labor

. Authority system

4. Administration

Flow chart (organizations schema) a partial graphic representation of the formal structure. Shows

- The relation ship of authority

- Channels of communication

- Formal working groups

- Departments and divisions

- Formal responsibilities

Elements that forms the organizational structure

- The individual

- The group

- The formal structure

Talking about an organization it is also worth mentioning three topics that represents the structure.

1. Ambito (area)

a) Differentiation; horizontal or vertical

Horizontal division of labor en assignments in the same level organization level.

Vertical division of labor according to the level of authority (hierarchy).

b) Integration, (coordination) se

- Structural medium

- In structural medium

. Stability; an organization should always work in the direction of survival.

. Character;

- Formal; structure of the existent relationship between the members of the organization designed by the head staff(ledning).

- Informal; the informal structure represents all the spontaneous relations and other existent relations (ej bestammda av ledningen) within an organization.

Integration

Structural medium

1. Formation (rules, politics and procedures)

For example Instruction manuals, job descriptions, and other documents that guide the employees. If a job depends on a lot of these things we say it as high level of standardization.

. Centralization

An organization can either be centralized or decentralized. If the bosses are taking all the decisions we say its an centralized organization. It is called empowerment if you let the employers take the decisions.

. Hierarchy/ spans of control

“the number of persons that are controlled efficiently by one supervisor”.

4. Standardization

Establishment of standards which are used in the working process

Input characteristics of input

Process instructions and general principals for the process

Outputs inspections of the final product (Does it fulfill the requirements?)

In structural medium It’s another way of trying to reach high levels of integration in an organization. The mediums that are being used are the following; formation of groups, company culture and information systems.

INTEGRATION WITH OTHER COMPANIES

Should I externalize or internalize certain activities?

If I choose to buy it on the market I will have to pay for the service and I will also have to pay transaction cost and if I do it myself organization costs.

Transaction costs; information, negotiation, guaranties etc

Organization costs; costs for coordination and control, motivation costs

“Criteria of Williamson”

If I choose to make it my self or not, depends of the nature of the service/product.

a) Asset specificity; an asset could be specific for its location, its usability, or for the knowledge that requires the product. ( om det tex krävs speciella maskiner som bara kan anvandas just till framstallningen av denna produkten etc)

b) Transaction Frequency (occasional/ frecuent)

c) Uncertanity; if there is a lot of uncertain aspects it might be better to do it your self.

“Criteria of Coase”

If it is cheaper to buy it on the market, do it! The decision of making or buying only depends on the costs.

MINTZBERG

The simple structure;

The machine bureaucracy;

The professional bureaucracy;



The multidivisional structure

The Adhocracy;

Organization Mecanic or Organic

Caracteristics Mecanic Organic

Complexity high low

Formalization high low

Centralization high low

Span of control reduced wide

Standardization high low

Factors of Contingency

Why does an organization choose to design their structure in a certain way? Which are the reasons?

Woodward (165) introduced the term contingency and according to him the effectiveness of an organization is the correspondences between this organization and its context.

The factors are the following;

- Size;

- technology

- environment

- strategy



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