Man org session 1_intro_28th june 2012
- 1. MANAGING ORGANIZATIONS Session 1: Introduction to Organizations Sourav Mukherji PGP 2012-14 Section C & E Associate Professor of Organization & Strategy Term 1:June-September 2012 Indian Institute of Management Bangalore, India
- 2. WHY DO ORGANIZATIONS EXIST? 2 WHAT PURPOSE DO THEY SERVE? An institutional arrangement that leverages collective resources to achieve a specific objective Commercial profit seeking organizations : maximize shareholders wealth by creating / sourcing and selling / distributing products or services Not-for-profit enterprises maximizing social / environmental / political impact, often depending in grants and donations Hybrids: Financially sustainable social organizations & commercial organizations creating social impact Organizations need to compete for resources to achieve their objectives Both at the input markets and at the output markets Deliver product and services at a price that more than compensates for the cost of production (acceptable return on weighted average cost of capital) Organizations need to create sustainable competitive advantage in order survive and grow “Positions” and “competencies” are two important dimensions for creating sustainable competitive advantage © S Mukherji
- 3. ORGANIZATIONS NEED TO CREATE SUSTAINABLE 3 COMPETITIVE POSITIONS THREAT OF NEW ENTRANTS BARGAINING POWER OF BUYERS • Brand loyalty • Patents, innovations • How much are the buyers dependent on us ? • Experience curve • How much are we dependent on the buyers ? • Economies of scale • Are the buyers consolidated ? BARGAINING POWER THREAT OF OF SUPPLIERS SUBSTITUTES • Can the needs be serviced by alternate • Nature of supplier industry products or services ? -fragmented or consolidated • Are there chances of technological • Switching costs breakthroughs that might make our • Ability of buyer to vertically INDUSTRY product less attractive / obsolete ? integrate RIVALRY • Dependence of buyer on supplier • Industry structure – fragmented or consolidated • Demand conditions – increasing or declining • Ease of expanding or contracting operations Industry analysis needs to be complemented by analysis of the second order environment - the impact of social , economic, political and technological analysis © S Mukherji
- 4. ORGANIZATIONS NEED TO CREATE VALUE 4 SUPERIOR TO THEIR COMPETITORS SUPERIOR • Increase in reliability QUALITY • Creates brand name, reputation • Can lead to greater efficiency • Greater resource leverage • Greater employee productivity SUPERIOR COST LEADER SUPERIOR EFFICIENCY INNOVATION DIFFERENTIATOR • Product , process • Managerial, organizational • Incremental, disruptive • Customize goods and services to unique demands SUPERIOR • Can be achieved through CUSTOMER RESPONSE superior design, service and support Capabilities - the skills of an organization at leveraging its resources - are a product of on organization’s structure and control systems © S Mukherji
- 5. 5 A PROCESS MODEL OF STRATEGY FORMULATION • Guerilla Warfare • Franchisee banditry • Stealth • Rob the rich • Fixed transit tax COMPETITIVE • Alliance INNOVATION ASSUMPTIONS COMPETITIVE • Strength in numbers STRATEGY ORGANIZATION PURPOSE PERFORMANCE • Kill Sheriff ORGANIZATION • Definition • Social Justice DESIGN • Measurement • Short / Long Term ANALYSIS • Centralization • Geographic dispersion BUILDING • Functional Industry Dynamics • Second line of command COMPETENCIES • Sheriff • Intelligence • Barons • Training, recruitment • Prince John Distinctive Competencies • Collection process • Community • Leadership • Commitment • Nimbleness, flexibility © S Mukherji
- 6. ORGANIZATIONS NEED TO BE DESIGNED TO FACILATE 6 ATTAINMENT OF STRATEGIC OBJECTIVES COMPETITIVE ASSUMPTIONS INNOVATION COMPETITIVE STRATEGY ORGANIZATION PURPOSE PERFORMANCE ORGANIZATION DESIGN ANALYSIS BUILDING Industry Dynamics COMPETENCIES Distinctive Competencies © S Mukherji
- 7. ORGANIZATION DESIGN COMPRISES STRUCTURE, PROCESSES 7 AND THEIR INTERDEPENDENCIES WITH ENVIRONMENT Sessions 6,7 The introductory case in Session 2 Session 4 Daft on Xerox Corporation introduces many of the STRATEGY following issues: DEPENDENCY IMPACT OF ON • Organization Culture TECHNOLOGY ENVIRONMENT STRUCTURE & • Organization Politics PROCESSES • Bureaucracy and size • Impact of environment Sessions 1. Centralization • Innovation 8 - 10 2. Formalization 3. Specialization Session 5 • Outsourcing CULTURE 4. Coordination SIZE • Organization restructuring & POWER 5. Control systems AND turnaround POLITICS 6. Learning GROWTH • Acquisitions 7. Decision Making • Sustainable practices 8. Change management Sessions 3,11 - 16 Caveat: This is not a modular course and sessions will have cross references and interdependencies © S Mukherji
- 8. 8 THERE ARE VARIOUS WAYS OF ANALYZING STRUCTURES Configurations Dimensions Groupings Five key parts in organizations Centralization :decision making Functional structure rights and responsibilities Line functions, support functions Divisional structures and managerial functions Formalization: extent of rules and regulations Matrix structure Specialization : structural Hybrid structure differentiation , departments, Geographic spread Team / Project based structures Network structures © S Mukherji
- 9. 9 CONFIGURATIONS: FIVE KEY PARTS IN ORGANIZATIONS STRATEGIC APEX Provide direction envisioning Board of directors TECHNOSTRUCTURE President CEO Helps organizations to Executive Committee adapt to the environment SUPPORT STAFF Vice Legal Maintains smooth operations Presidents of the organization – supports Strategic planning PR / IR the core General Pricing Managers R&D Size and importance of Controller Payroll parts would vary Regional/ depending on environment, Production Plant Mailroom technology and several scheduling Managers other factors Training Cafeteria Foreman Purchasing agents Machine operators Assemblers MIDDLE LINE Sales personnel Maintenance Shippers QA Implementing strategies OPERATING CORE primary transformation from inputs to outputs © S Mukherji