Understanding Business Organizations
Uploaded by
ScribdTranslationsUnderstanding Business Organizations
Uploaded by
ScribdTranslationsBusiness Organization
Chapter 1
Organizations are social entities driven by objectives, designed as systems of activity.
deliberately structured and coordinated that interact with the external environment.
An organization is a means to achieve a purpose and must be designed to reach it.
for this purpose, the central aspect remains the coordination of individuals and resources for the realization
collective of desired goals.
The boundaries between organizational units, as well as those between organizations, are becoming more
flexible and adaptable with the emergence of the need for companies to respond more quickly to
changes in the external environment. The organization is therefore represented as a system
open that receives input from an external environment, adds value through a process of
transformation and returns products and services to the environment.
An important distinction to consider is that between for-profit companies and organizations
non-profit. In fact, while the activities of company managers are directed towards generating
profits for the property, the efforts of the managers of non-profit organizations are mostly aimed at
production of a certain type of social impact. In addition, the financial resources for the
state and non-profit organizations generally come from public funding, grants and
donations rather than from the sale of products and services to customers. In companies, managers
focusing on improving the products and services offered in order to increase the revenues of
sales. In non-profit organizations, services are generally provided to non-paying clients and the
The main problem of many of them consists in ensuring a constant supply of funds to be able to
continue to operate. However, often, even for-profit companies promote fundraising
to be donated to charity thus entering into competition with non-profit organizations in
search for donations. There are still new forms of social assistance organizations called
hybrid or dual-purpose organizations. In Italy, also called benefit companies, are designed to
to make a profit and be self-sufficient rather than relying solely on
fundraising.
Organizations are relatively recent in the history of humanity, in fact, the large company
moderna can be considered the most significant innovation of the last hundred years. The
organizations surround us regulating our lives in many ways and because these latter are so
important? Organizations are important precisely for their ultimate purpose, which is to put
a set of resources to achieve specific objectives while also producing goods and
services that customers want. Organizations then generate a push towards innovation rather
that maintains a dependence on standard products and outdated approaches to management and
organizational design, in fact, they adapt to and influence a rapidly changing environment
thus responding to current challenges in terms of workforce diversity and increasing attention
for ethics and sustainability.
Dimensions of the organization
The first step to understanding organizations is to look at the characteristics that
describe specific aspects of organizational design. The structural dimensions provide
labels to describe the internal characteristics of an organization and create a basis for measurement
and compare organizations. Contingent factors include broader elements that influence
on structural dimensions including the size of the organization, technology, the environment,
culture and the objectives describe the organizational environment that influences and shapes the dimensions
structural.
The main structural dimensions of organizations are formalization, specialization,
hierarchy, complexity, and centralization:
- The formalization refers to the amount of written documentation concerning
the organization that describes behaviors and activities. The larger an organization is, the more
in theory, it is formal.
- Specialization is the degree to which organizational tasks are divided among positions.
separate labor; high specialization = each employee performs only a narrow range
of tasks; low specialization = employees perform a wide range of tasks in
respective jobs.
- The organizational chart describes who reports to whom and the scope of control of each manager. It is described in a
organizational chart with vertical lines and is connected to the concept of scope of control.
- Complexity refers to the number of different units or activities within the organization.
and can be measured along three dimensions: vertical, horizontal, and spatial. The complexity
vertical is the number of levels in the hierarchy; Horizontal complexity corresponds to
number of existing units or horizontal job specializations; The complexity
spatial is the degree of geographic dispersion of units and personnel of an organization.
- Lacentralizzazionesi riferisce al livello gerarchico che ha l'autorità per prendere decisioni.
When decision-making is restricted to higher levels, the organization is centralized;
When decisions are delegated to lower organizational levels, it is decentralized.
The main contingent factors of organizations are size, organizational technology,
the external environment, objectives and strategy and culture:
- The dimension can be measured for the organization as a whole or for specific ones.
it is part of and is typically measured by the number of employees.
- Organizational technology refers to the tools, techniques, and actions used to
transform inputs into outputs and relates to the way the organization produces products and
services provided to clients.
- The environment includes all external elements within the boundaries of the organization, including the sector of
activities, public administration, clients, suppliers and the financial community.
- The objectives and strategies of the organization define the purpose and competitive techniques.
that distinguish it from other organizations and are often put in writing as
statements and long-lasting intent of the company.
- The culture of an organization is the set of fundamental values, beliefs, knowledge and
shared rules by the entire staff. The underlying values may relate to
ethical behavior, the commitment of employees, efficiency provides the glue that holds
Unite the members of the organization.
The 5 structural dimensions and the 5 contingent factors are interdependent. Some contingent factors
they influence the degree of specialization and formalization of organizations.
Performance Results
The underlying purpose of studying structural dimensions and contingent factors is to
design the organization to achieve high levels of performance and effectiveness.
Efficiency refers to the amount of resources used to achieve objectives.
of the organization; Effectiveness is a more general term that indicates the level of achievement of
objectives of an organization. An alternative approach to measuring effectiveness is the approach
of the stakeholders who assesses the various organizational activities observing what the various stakeholders
organizational desires from the organization and the level of satisfaction of each of them.
Mechanical and organic models
Organizations can be classified according to a mechanical model or an organic model.
A mechanical model is characterized by standard rules and procedures as well as a clear line.
hierarchical and such organizations are highly formalized and centralized with much of the
decisions made by the leaders.
An organic model, on the other hand, presents a much greater degree of freedom, flexibility and
adaptability where rules and regulations are not written and if they are, they are applied flexibly; I
Employees enjoy a high degree of autonomy and the hierarchy is less rigid.
The contingent factors typically associated with each of the two models are:
- Centralized structure or decentralized structure. In a mechanical model, the structure is
centralized, meaning that the decision-making authority is at the top of the organizational hierarchy while
in an organic model, the decision-making process is decentralized, meaning that the decision-making authority is
delegated to the lower organizational levels.
- Specialized tasks or expanded roles. In mechanical models, tasks are divided into
specific and separate elements and each employee carries out the activities outlined in a precise
Job description. A task is a work activity defined precisely and
assigned to a single person. In an organic model, employees instead hold roles
within a team or unit, and roles can be constantly redefined or adapted
in fact, a role is part of a dynamic social system and is characterized by
discretion and responsibility.
- Formal systems or informal systems. Mechanical models involve numerous regulations,
standards and standard procedures, with formal systems for the management of information and
communication. On the other hand, organic models provide for rules and systems of formal control in
The lower number and communication, the sharing of information are informal.
- Vertical communication or horizontal communication. Mechanical organizations
they prioritize vertical communication, both upward and downward the hierarchy
hierarchical. Organic organizations, on the other hand, favor horizontal communication with
omnidirectional flows of information within units and between different units as well as between
different hierarchical levels.
- Hierarchical authority or collaborative team work. Mechanical organizations tend to
respect the formal command hierarchy while organic organizations place
the emphasis on teamwork and the structure is built around workflows or
horizontal processes, rather than functional units. The organic model therefore promotes
intrapreneurship whereby those who are part of the organization promote new initiatives
ideas that respond to customer needs.