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intentions of the organization
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direct the activities of the organization's members; mission statement, detailed objectvies
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guide strategic planning to meet the organization's mission
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defines how activities and people are grouped together to most effectively achieve the organizational goals
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number of business units, which each focus on different types of business activity, each producing their own profit
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5 main types of organizational structure start learning
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functional structure, multidivisional structure, holding company, project teams, matrix organization
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functional structure company start learning
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organized by functional specialization in which employees performing related specialised tasks are grouped together under a single management structure
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loser arrangement of the divisional company and consequently may be less focused; may evolve to consisting of independent companies that are controlled by a coordinating group
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units designed to cope with the highly unstable and fast changing environment; units=temporary structures created for a particular task or problem and are not part of a management hierarchy
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combines the project team, the functional orgazniation and the divisional company; creates a structure by combining at least two different elements such as products, markets and customers
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the breaking down of large organizations into smaller units with a smaller number of employees
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the number of levels of management is reduced
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7 types of flexibility of the company start learning
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1. numerical, 2. functional, 3. financial, 4. temporal, 5. geographical, 6. organizational, 7. cognitive
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rapidly changing the number of employees to meet changes in demand
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eployees can perform a range of jobs and switch between them if needed
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flexibility when there are changes in the supply and demand of labour
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change of time patterns of work and the introduction of shift work
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incorporates transnational teams and more mobile workers
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organizational flexibility start learning
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extent to which the structure and systems can change
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changing mindset of the workforce
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sole trader, partnership, limited companies
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owner is the sole proprietor
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unlimited liability (same as sole trader), unless its Limited Liability Partnership (registered accounts and individual members are liable, other members are not)
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limited companies ownership start learning
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all assets belong to the companies instead of the individuals involved; Public Limited Company (PLC) or Private Limited Company (Ltd)
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Public Limited Company (PLC) start learning
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shares are made available to the general public as they are put on the stock market; limited liability; dividends
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Private Limited Company (Ltd) start learning
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shares can only be sold to family members; limited liability; dividends
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managerial revolution (Berle and Means) start learning
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managerial control was the most dominant form during the growth of business
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arising conflicts between owners and managers (a.k.a. principals and agents)
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agent performs a service on behlaf of the principal as a result of the separation of owners and managers
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4 types of public institutions start learning
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1. industries fully owned and controlled by the state, 2. companies whose majority shareholder is the state, 3. services to the population (health, education), 4. other Government Departments at national and local levels
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Why does the number of small businesses increase? start learning
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1. economy is shifting from manufacturing to services, 2. development of technology - lower price for technology
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owners wish to remain small, and only want to have an opportunity for individual to work for themselves; e.g. local hairdresser
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the purpose is creating innovative products and services and achieve rapid growth; e.g. Microsoft
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managed, and established by family members
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collective values, beliefs, and practices of organizational members
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culture intentionally created and implemented by management to serve a specific strategy
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guiding values of top management are clear, consistent and shared by employees; the values are strengthened by rituals, a cultural network, and hero figures
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the degree to which an asset is valuable only in a specific use and with a specific exchange partner
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transaction costs (search costs, bargaining costs, enforcement costs) and production costs
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Search costs; bargaining costs; Enforcement costs
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discovering what relevant prices are
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policing in the way that work is done in the way expected
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cost of organising is lower; manager can avoid making mistakes; production costs are lower for firms with larger size
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activities done outside of the organisation
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activities done inside of the organisation
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Economist view of how do firms set organisational goals start learning
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the context is knowable - actions can be linked with some confidence to consequences; maximise net revenue; rational decision-maker
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challenges for setting organisational goals start learning
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context is chaotic, complex, not knowable; is profit the only objective?; bounded rational decision-maker
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one solution; clear and constant preferences; compute info; maximising outcome; all-encompassing rationality
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many solutions; real world is a confusion; incomplete info; satisfactory outcome; bounded rationality
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ability to be a rational decision-maker is limited cuz we have incomplete information and lack of time
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position in hierarchy; skills of group members; resources they have control over
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organisational politics in interest groups start learning
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different coalitions will pursue different interests and sine coalitions will compete
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hierarchy; integration; coordination and control
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hierarchy as a structural choice start learning
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it tells us how managers divide the work between their workers; flat hierarchy - new managerial layers; span of a hierarchy - how many people are managed by one manager (span of 8 - each manager advocates for 8 subordinates)
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Integration as a structural choice start learning
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activities are more centralised, easier coordination; differentiation; decentralisation; centralisation
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the need for each role to specialise in unique resources and capabilities
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reduce the information overload; increased the motivation of lower level managers
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easier coordination of activities; decisions can better be fit with broader organisational objectives
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Coordination and control as a structural choice start learning
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mutual adjustment; direct supervision; standardisation of work standardisation of output; standardisation of skills; standardisation of norms
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processes that can only be fulfilled when both sides communicate their insights
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using detailed description of the work that has to be done
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standardisation of output start learning
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much more autonomy to the member of an organisation; i.e. salesman gas a goal to reach 15000$ in sales
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standardisation of skills start learning
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the accountant needs the degree to perform a task
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the norm of a company is to work late hours i.e.
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many companies start with it - the owner is also a manager and does many different tasks himself; the company grows and the leadership crisis may happen; that's when it moves to the functional structure
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owner-manager at some point can't do everything by himself
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introducing departments in which manager take care of various functional responsibilities; the owner can refocus attention on strategic issues; each position have their own coordination mechanisms; it may lead to autonomy crisis
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difficult product groups need their own attention, autonomy; diversifying product markets requires more decision-making; when this happens, we go towards divisional structure
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it enables to focus more on each line of business, each division has their own manager; work is done in subunits; each division is given a degree of autonomy but is monitored for good results - standardisation of outcome
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The problem with divisional structure start learning
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Lack of communication between departments; it can lead to duplication; each department can think that it is not heard and then it can lead to matrix structure
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organisational members report to two managers; it is flat and decentralised; facilitates synergy, teams can quickly set up to respond to different requests from the customers
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Flexible organisation (adhocracy) start learning
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people or units bounded together only for a specific temporary purpose; allows decisions to be made on the lowest level possible within an organisation
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form of adhocracy; all parts are connected by formal and informal communications; members of the VO can never meet face 2 face
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Charles Handy's four types of organisational cultures start learning
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power; rule; task; person
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power centres around just a few people, simple quick decision-making; small entrepreneurial organisation
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clear rules define structure; bureaucratic; slow decision-making; i.e. banks, governments
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project-based addressing, specific goals, power mix depends on task
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person superior to organisation; professional service firm; i.e. law firms, universities
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ultimate goal of the company start learning
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achieving a fit - systems theory; contingency theory; there is no one best way, but many good ways and many bad ways to organise stuff; becoming an institution
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becoming an institution as an ultimate goal start learning
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when the organisation becomes an institution, it becomes an important and indispensable part of the environment
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