Presentation on Introduction to Organization

Organisation
1. semester

Litterature:
Gareth Jones (2012); Organizational theory, design and change. Pearson Prentice-Hall.

Litterature:
John Child (2005); Organization: Contemporary Principles and
Practice. Oxford: Blackwell.

What is an Organization?
• Organizations provide goods and services
• Organizations employ people
• Organizations bring together people and resources to produce products and services 4

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What is an Organization? (cont.)
• Organization: a tool used by people to coordinate their actions to obtain something they desire or value
Organization: a tool used by people

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How Does an Organization
Create Value?

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Why Do Organizations Exist?
• To increase specialization and the division of labor
– Division of labor allows specialization
– Specialization allows individuals to become experts at their job

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– Economies of scale
– Economies of scope

http://www.economist.com/node/12446567

Why Do Organizations Exist?
(cont.)
• To use large-scale technology
– Economies of scale: cost savings that result when goods and services are produced in large volume
– Economies of scope: cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks

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Why Do Organizations Exist?
(cont.)
• To manage the external environment
– External environment consists of the political, social, economic, and technological factors that affect organizations
– Organizations regularly exchange products and services for needed resources
– Organizations need to manage their external environment 10

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Why Do Organizations Exist?
(cont.)
• To economize on transaction costs
– What is transaction costs?

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Organizational Theory, Design, and
Change: Some Definitions
• Organizational theory:
The study of how organizations function