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Modern Organizations

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Modern Organizations

Modern Organizations
Technology can be used to dramatically restructure organizations, permanently changing the way they do business.
In particular, note how technology has contributed to flexibility when looking at the organization as a whole, even though users may consider individual applications to be inflexible.
The Information Technology variables discussed in this chapter have the greatest potential for transforming the organization because they provide a way to significantly change the structure of an existing organization or design an entirely new non-traditional one.
Modern Organizations
Information systems exist in the context of an organization; they do not operate in isolation. There are a number of definitions of organizations.
For our purposes, an organization is a rational coordination of activities of a group of people for the purpose of achieving some goal.
The activities of the group of people are coordinated; that is, there is a joint effort.
In most organizations some division of labour and a management layer provide for the rational coordination of activities.
Modern Organizations
The definition also contains the goals of the organization; there are many different types of organizations with different kinds of goals.
Formal Organization
Formal Organization
The formal organization is what appears on the organization chart, usually with well-defined reporting relationships among managers and workers that describe its structure. Versus
Informal Organization
Informal Organizations
Social organizations, also called the informal organization, are patterns of coordination that arise spontaneously from the interaction of a group. Social organizations have no rational coordinated structure and generally lack explicit goals.
The informal organization is the pattern of relations and coordination among members of the formal organization that is not specified on a formal chart. It represents the social interaction and is a more realistic portrayal of the formal organization because it reflects how people actually interact.
For example, a group of workers may form an informal task force using electronic mail or conferencing systems on a computer network; this task force cuts across traditional organizational boundaries and constitutes a temporary, informal organization.
Click on the buttons to read about the different types of organization.
Organizational Structure and Design
There are many factors that influence the structure and design of modern organizations. New Information Technology also offers opportunities to create exciting new forms of organizations.
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1. Uncertainty
One of the major factors influencing organizations is uncertainty. An organization and its managers confront many different types of uncertainty. There are frequently technical uncertainties about whether a new product can be manufactured or whether it will work. Market uncertainties exist when the firm does not know how a product will be received, potential demand, response from competitors, and so on.
The internal management of an organization also creates uncertainty. Key personnel may leave or individuals may not adequately perform their assigned tasks. Thus, the organization and its managers face many different types and degrees of uncertainty. The importance of uncertainty is seen by examining organizations that face differing environments.
1. Specialization
Another major consideration in organizational design is specialization. Are specialized skills or conditions required for some tasks? Consider the activity of running a complicated machine tool versus sweeping the building; certainly, the former requires a specialist.
From our standpoint, the information services department is highly specialized and requires a level of technological proficiency on the part of its staff.
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2. Coordination
When there is specialization, one task of management is to coordinate the diverse specialties to achieve the goals of the organization. Management must balance differing orientations and resolve disputes between specialized subunits.
For example, the marketing department may want to produce a particular item in each style and colour for every warehouse. This plan is best for reducing uncertainty and providing good customer service. On the other hand, manufacturing may want to make products of the same colour and model because this procedure reduces the uncertainties in production; that is, there are fewer setups and smoother production runs.
Management must resolve these differences and coordinate the specialists. Sometimes organizations create special liaison positions or even departments to foster coordination.
Click on the buttons to read about the factors influencing the design of the organization.
Organizational Structure and Design
The last factor we shall consider in organizational structure is interdependence; that is, how do the different departments or subunits within the organization depend on each other.
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Pooled Interdependence
Pooled interdependence occurs when two organizations depend on each other because they are all components of a larger organization; one unit does not depend directly on another. For example, the different divisions of a conglomerate exhibit pooled interdependence.
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate group, usually involving a parent company and many subsidiaries. Often, a conglomerate is a multi-industry company.
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Sequential Interdependence
Sequential interdependence occurs when the output of one unit is the input to another. For example, the painting and finishing department depends on outputs from component assembly. We can view each succeeding station on an assembly line as an example of sequential interdependence.
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Reciprocal Interdependence
Reciprocal interdependence occurs when the output of each unit becomes the input for the other. For example, a student depends on the professor to explain concepts in class so that she can do her assignment and the professor depends on students to prepare for class. Interdependence is an important consideration in organizational design.
The type of interdependence affects the amount of power one unit has in the organization. In designing an organization or modifying the design (for example, through the development of a new information system), various interdependencies must be coordinated. The easiest type of interdependence to handle is pooled, the next hardest is sequential, and the most difficult is reciprocal.
Click on the buttons to read about the different types of organization.