Organizational Behavior Today
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Organizational Behavior Today

Stanley C. Ross

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eBook - ePub

Organizational Behavior Today

Stanley C. Ross

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About This Book

This exciting new introductory text offers a new perspective on teaching organizational behavior by framing the organization as the vehicle for implementing strategic management processes, while also breaking down how the different components of an organization are designed to work together. Unlike traditional OB texts, Organizational Behavior Today emphasizes a "big picture" examination of how organizations function in a Darwinian world, in which the primary goal of an organization is survival.

The book introduces readers to the three stages of the strategic management process: strategy formulation, strategy implementation and strategic control, thereby linking the organization to its mission, vision and strategic goals. Essential OB concepts such as work processes, policy, worker behavior, reward system, change management and leadership development are covered, and the book also highlights the impact of technology on organizations.

To support student comprehension and bring the study of OB to life, the book includes vignettes highlighting real organizations who have implemented OB processes, either successfully or unsuccessfully. End-of-chapter questions ensure that students can apply the information learned effectively. Accompanying online resources for this text, available at, include a curated list of relevant video content. The book is suitable for undergraduates and graduate students completing a first course in Organizational Behavior, as well as a practical reference for current managers wishing to optimize organizational performance.

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Part I

Strategic Overview

Chapter 1

Organizational Strategy and Organizational Behavior


The creation of an organization is done to fulfill a purpose. We think of an organization as the means to achieving an endpoint. Once the original purpose is achieved, the organization continues to serve as the means for fulfilling new reasons for existing. To understand an organization’s overall purpose for existing, we need to examine the context to understand the role an organization plays. The Strategic Management Model provides this context, so the reader understands the role an organization plays in supporting the efforts of decision-makers and individuals to achieve the original vision of the decision-makers.
The destiny of any organization is to support the achievement of a vision and to remain in existence if the organization can facilitate the achievement of future visions as determined by an organization’s decision-makers. By continuing to achieve, the organization can survive within a Darwinian World that rewards success but provides the ultimate punishment for failure, extinction. This chapter identifies and describes the strategic management model, the strategic management planning process, strategy, the strategy formation stage in the strategic management model and the strategy formulation process. Furthermore, the chapter introduces the reader to the strategy implementation process, to the formal methods organizations utilize to keep employees focused, goal-oriented and motivated to serve the needs of an organization. Strategy implementation encompasses the methods organization’s use to influence and focus people; these methods include management systems, work processes, policies and related rules.

Chapter 1 Learning Objectives

Readers will achieve the following learning objectives after reading this chapter.
  1. Describe and explain the major features of the strategic management model.
  2. Describe and explain the strategic management planning process.
  3. Identify and explain the meaning of the term “strategy.”
  4. Identify, describe and explain the differences between the three levels of strategy.
  5. Identify and describe the relationship between the strategy formulation process and the strategy implementation process.
  6. Identify and describe the meaning of the term’s formal, formalization and informal.
  7. Discuss the linkage between the size of an organization and the formalization of an organization’s actions.
  8. Identify and briefly describe the purpose and functions of management systems, work processes and organizational policies.

Learning Objective #1: Major Features of the Strategic Management Model

A model serves as a guide. To understand the role and function of an organization, we need to describe the context that leads to the creation and ongoing evolution of an organization. The context provides the reader a “big picture” perspective in learning about an organization’s role and function. The Strategic Management Model (see Figure 1.1) provides the context for understanding the purpose of an organization. An organization serves as the means used to facilitate the achievement of a goal. After the creation of the organization, the organization serves a dual purpose to identify new goals to accomplish and to support the achievement of the new goals. The achievement of goals serves to accomplish the fundamental goal, the survival of the organization. Organizational members serve to support an organization’s efforts to survive. By understanding an organization’s people dynamics, the reader understands that people are pivotal to the successful performance of an organization as well as the failure of an organization.
The strategic management model begins with the organization’s Mission statement. The mission statement represents a formal description of the organization’s purpose. Mission statements commonly reference the customer group(s) the organization targets; offers a broad overview of the products, services or products and services provided; and describes unique methods for making products or delivering services. As an organization grows in size, products or services are grouped into broader categories. Each category emphasizes the common feature the products in a category refer to. For example, Figure 1.2
shows a product category Dental Hygiene product sub-divided into three separate sub-categories. Each sub-category is divided further, ultimately leading to separate product lines, with each product line encompassing several different products.
FIGURE 1.1 Strategic Management Model
FIGURE 1.2 Example of a Product Category with Sub-Categories of Product Groups
Following the mission statement is the Vision statement. The vision statement articulates the organization’s image of the status of the organization within a three to five-year time frame. The vision statement provides focus and acts like a goal without all the properties of goals. The vision has a longer time horizon than do goals. Organizations that operate within a dynamic environment and industry(ies) often have three-year vision statements because of the constant changes that occur. All technology organizations typically have shorter time horizons because of the constant changes with new technology developing circumstances which can impact an organization. Organizations operating in less dynamic situations commonly have longer vision time horizons.
Strategic Goals represent goals aimed at moving the organization forward toward achieving the organization’s vision. Strategic goals influence the organization’s efforts toward realizing the vision. SMART Goals often are the most common types of strategic goals because a SMART goal is Specific, Measurable, Achievable, Realistic and Time-limited. Measurement enables the organization to track progress and to take corrective action if necessary. Timeliness creates a sense of urgency that keeps the workforce focused.
Strategy represents the plan for achieving the strategic goals. Strategy exemplifies the organization’s decision in selecting the optimal course of action to pursue to achieve the strategic goals which will lead to achieving the vision. External and internal analyses provide information that aids in the identification of strategic options to consider and in guiding the strategy selection process for choosing the preferred strategic option.
There are two primary types of external analyses. One is an Environmental Analysis. An environmental analysis examines the world within which the organization operates and must adapt to. There are five major dimensions of an environmental analysis. Economic factors, socio-cultural factors, political-legal factors, international factors and technological factors. Economic factors can include the growth rate of the economy, changes in disposable income and interest rates as the primary indicators of economic activity. Socio-cultural factors include changes in demographics, preferred consumer tastes and preferences as well as important values that influence buyer behavior of the target market(s). Political-legal factors refer to laws and government policies that can impact an organization’s business. International factors commonly cover potential foreign markets and the potential for outsourcing production or moving production outside of the host country. Technology factors are important because technology can benefit or hurt an organization. There are three forms of technology to possibly consider. Process technology is technology used in manufacturing or in providing a service; there is product features technology or attributes of a product that have a technology focus; and input technology which is new technology that enhances or benefits a product such as gorilla glass for iPhone screens or elastane used in making certain types of clothing.
An Industry Analysis is the second major type of external analysis. An industry analysis examines the industry the organization operates in. The industry analysis becomes more complicated as an organization grows, entering other industries. An industry analysis includes examining the power of suppliers over organizations in the industry (or the reciprocal), the power of customers over organizations in the industry (or the reciprocal), substitute products or services provided by organizations outside of the industry; barriers that make entry into the industry challenging for organizations considering entry into the industry; the growth rate of an industry and the analysis of the strategies and related issues of organizations that operate within the industry to assess opportunities and threats.
The Internal Analysis encompasses the review of several dimensions associated with the organization. The concept of the Balanced Scorecard encompasses three forms of analyses. These include financial analysis of the organization’s performance; operational analysis which focuses on monitoring and evaluating operational performance; and market analysis which examines the customer-organization relationship. A SWOT Analysis provides insights on the organization’s strengths and weaknesses along with a review of the opportunities and threats that an organization must consider. The identification of the organization’s Core Competencies is an essential issue to consider when developing and assessing strategic options that need to emphasize core competencies. A competency represents something an organization excels in; it is difficult for competitors to emulate an organization’s core competencies fully. An example is Wal-Mart’s inventory control system or Apple’s product development process. Resource availability is another internal factor the organization needs to consider when formulating a strategy because resource limitations constrain what an organization is capable of doing. An organization’s Culture is the last major factor to consider when identifying strategic options and selecting an option because culture represents a set of values, and values shape the decisions and actions of an organization. The collective body of employees promotes and supports an organization’s culture. This is one of the important reasons organizational members are important in supporting the longevity of an organization.
Strategy Implementation follows the selection of the corporate strategy. Implementation involves the mobilization of the work force to focus on putting the strategy into effect. The expectation is that successful implementation leads to the achievement of the strategic goals. Implementation represents the organization’s operations. Operations encompass all the people activities of the organization. We can identify three operational categories that define operational actions. These operational categories include management systems, formal and informal work processes and formal and informal organizational policies. Each management system includes work processes and organizational policies, all sharing a common theme. For example, an inventory control system focuses on the management of an organization’s inventory. Work processes represent established methods or tasks in performing an activity. A policy represents the organization’s view on the best way to perform a work process. The workforce’s responsibility is instrumental in identifying problems and recommending changes to the management systems, work processes and organizational policies.
The last stage of the strategic management model is Strategic Control. Strategic control represents the means an organization uses to determine if the organization is moving toward achieving the strategic goals as well as operational objectives linked to the strategic goals. Operational Objectives are SMART type objectives, with a narrow focus and a shorter time horizon than strategic goals. An example of an operational objective is keeping defect rates within acceptable levels. Various types of control systems enable the organization to assess performance-based activities by providing routine performance reports that offer insights about operational performance to decision-makers. The information serves as a catalyst for action depending on the nature of the information.

JDM Flowers on the Go: Part I

John Mulligan, CEO of JDM Flowers on the Go was sitting with Patricia Bennett, the company’s CFO. John and Patricia were discussing the future of the company. Since opening in 2005 as a local distributor of flowers in Massachusetts, the company’s growth rate was meteoric. Access to large distributors in California and Europe along with well-received customer services contributed to the company’s success. Over the years, the company expanded its operations to serve all New England. The business grew largely by leveraging the internet and easy access to the airport in Providence, RI to ship flowers to small, local retailers. However, growth came at a cost. John realized his lack of a business education was limiting his ability to look ahead to the next stage of the business. Patricia began working for the company at the start as a part-time accountant, but she lacked experience as a sav...

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