Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

SOLUTION MANUAL FOR ORGANIZATION THEORY AND DESIGN 13TH EDITION BY RICHARD L DAFT CHAPTER ONE ORGANIZATIONS AND ORGANIZATION DESIGN

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter introduces students to characteristics of organizations and organizations as systems. Definitions and examples are given to provide students an understanding of organization theory and its value in becoming better managers in a rapidly changing world. You may wish to refer throughout the semester to the GE case that opens the chapter, and to update the case regularly from current business analyses. Organization theory is defined and shown to have practical applications for managers, and a brief history of the evolution of organization design theory is provided. A framework for the remainder of the book is also provided, which will be useful as an introductory overview and as a frame of reference throughout the course.

Learning Objectives After reading this chapter you should be able to: • •

Discuss current challenges that organizations face.

Describe the importance of organizations in society.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • •

Describe how the structural dimensions of organizations are shaped by contingencies organizations face.

Outline the evolution of organizational design.

Compare and contrast organic and mechanistic organization designs, including the contingency factors typically associated with each.

Explain the current trend toward bossless organization design.

CHAPTER OUTLINE Managing By Design Before reading this chapter, please check whether you agree or disagree with each of the following statements: • • •

An organization can be understood primarily by understanding the people who make it up.

The primary role of managers in business organizations is to achieve maximum efficiency.

A CEO’s top priority is to make sure the organization is designed correctly.

Answers will be assessed in the chapter.

A LOOK INSIDE General Electric Founded in 1878 by Thomas Edison, General Electric (GE) has a long history of moving in and out of multiple businesses as a key part of its strategy. For decades, the organization was admired for its management, but by the 1970s, the firm had become bogged down in bureaucracy and paperwork. The GE conglomerate was made up of 43 businesses divided into 10 groups, 46 divisions, and 190 departments. When Jack Welch took the helm as CEO in 1981, one of his first moves was to radically change the corporate structure, reducing the layers of management and expanding the span of control of individual managers. He also implemented a new culture that emphasized open, direct, candid communication.

In his two decades as CEO, for which Fortune named him ―Manager of the Century,‖ he made many more strategic changes, took the company global, and launched the organization’s e-business. Welch chose Jeff Immelt to be his successor. Although he pushed for global growth and innovation, GE’s value steadily declined. Many analysts felt that Immelt did not adequately address problems that arose during his tenure. John Flannery then briefly led GE from 2017 to 2019, but he could not reverse GE’s falling stock prices either. By the time Larry Culp assumed the CEO role, GE’s value had fallen to about 10 percent of its former value. Culp immediately began implementing a plan to streamline and trim down the extremely complex Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

conglomerate. Stakeholders are hoping that the current, and any future, CEOs will be able to turn the iconic company around.

Organization Design in Action Topics The chapter-opening GE case illustrates several important organization design topics, such as strategic and structural changes to attain effectiveness, coping with a large and extensive bureaucracy, shaping corporate culture, adapting to new challenges in global and digital business environments, meeting consumer demands for sustainable products and to sustainably run companies, and deciding what type of innovation and change is needed. The text will cover additional topics, such as adapting to or controlling external factors in the environment, ethical challenges, the use of power and politics, and more.

Purpose of This Chapter This chapter explores the nature of organizations and organization design today as it has developed from the systematic study of organizations by scholars.

Current Challenges Today’s managers face a variety of significant challenges that are different from those of the past, which demonstrates how organizations—and organization design— must evolve. These include: •

Globalization

•

Intense Competition

•

Sustainability, the Green Movement, and Ethics

•

Speed and Responsiveness

•

Digital Organizations and Big Data Analytics (technologies, skills, and processes for searching and examining massive sets of data to uncover hidden patterns and correlations)

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK The Vanishing American Corporation: Navigating the Hazards of a New Economy by Gerald F. Davis

Surprising fact: The number of publicly held corporations in the United States declined by half in less than 20 years, from 7,322 in 1996 to 3,659 in 2015. The Vanishing American Corporation’s author Gerald F. Davis explores why U.S.- based companies are shrinking, declining, and generally disappearing altogether. One important factor is that new organization forms have emerged that seem a better fit for today’s business environment: the virtual network form, in which only high value-added tasks are kept in house and other components are outsourced, and the platform-based form, which uses a specific combination of information and communication technologies to connect different groups of people and allow them to engage in mutually beneficial exchanges. Davis presents both positive and negative consequences of this trend.

IN PRACTICE Foot Locker Foot Locker knows that its target audience is young and tech-savvy, which is why the organization has increased its technology staff by at least 30 percent in the last several years. Foot Locker uses artificial intelligence, augmented reality, machine learning, apps and big data not only to keep track of consumer expectations but to market products in an engaging way. CIO Pawan Verna says the biggest challenge to using so much technology is security, and that the organization must be very transparent with customers, vendors, and others about the data it collects nd uses.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

What Is an Organization?

Definition Organizations are (a) social entities that are (b) goal-directed, with (c) deliberately structured and coordinated activity systems, and with (d) a link to the external environment. An organization is an open system that obtains inputs from the external environment, adds value, and discharges products and services back to the environment.

From Multinationals to Nonprofits We will study both large and small organizations. We will also look at manufacturing and service organizations, for-profit and nonprofit organizations, and a newer form of organization called the hybrid, which is designed to earn a profit and serve a social purpose simultaneously. The manager’s role and purpose varies depending on the type of organization. Managers in businesses direct their activities toward earning money for the company and its owners, whereas managers in non-profits direct much of their effort toward generating some kind of social impact.

Importance of Organizations Organizations create value for owners, customers, and employees by their activities.

They bring together resources to accomplish specific goals, whether those goals are putting together an aircraft carrier or planting new trees in the city. Organizations produce goods and services, using innovative techniques and modern manufacturing technology, for competitive pricing. Organizations adapt to and influence the environment and its globalization while accommodating the challenges of diversity, ethics, and the motivation and coordination of employees.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Zara SA Since its inception in Spain in 1975, Zara has been revolutionizing the fashion retailing business by using technology to predict demand and deliver new products in record time.

For example, where other retailers require up to six months to design, produce, and introduce a new product in their stores, Zara is able to accomplish this in four weeks. The process starts with chip technology providing data on inventory. Zara, which is now a global company with locations throughout Europe and the U.S., has also demonstrated a commitment to ―going green‖ by, for example, eliminating the use of hazardous chemicals in all stages of its supply chain.

Dimensions of Organization Design Structural Dimensions Structural dimensions provide labels to describe an organization’s internal characteristics. Formalization pertains to the amount of written documentation in the organization; Specialization is the degree to which organizational tasks are subdivided into separate jobs; Hierarchy of authority describes who reports to whom and the span of control; Complexity refers to the number of distinct departments or activities within the organization. Centralization refers to the hierarchical level that has authority to make a decision.

IN PRACTICE Shizugawa Elementary School Evacuation Center and BP Transocean Deepwater Horizon Oil Rig When the Japanese fishing village of Minamisanriku was ravaged by a tsunami in 2011, the Japanese propensity to establish rules, procedures, and authority structures helped create a sense of normalcy and comfort at the Shizugawa Elementary School Evacuation Center. Contrast that smooth operation to what happened after a transocean oil rig exploded in the Gulf of Mexico. Activities were so loosely organized that no one seemed to know who was in charge or what was their level of authority and responsibility. When the explosion occurred, confusion reigned. As fire spread, several minutes passed before people received directions to evacuate. Structural dimensions serve a similar purpose in an organization.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Contingency Factors Contextual dimensions, known as contingency factors, characterize the whole organization and describe the organizational setting. Size is the organization's magnitude as reflected in the number of people in the organization; Organizational technology refers to the tools, techniques, and actions used to produce the organization’s products or services; Environment includes all elements outside the boundary of the organization; Goals and strategy define the purpose and competitive techniques that set it apart from other organizations; Culture is the underlying set of key values, beliefs, understandings, and norms shared by employees.

ASSESS YOUR ANSWER An organization can be understood primarily by understanding the people who make it up.

ANSWER: Disagree. An organization has distinct characteristics that are independent of the nature of the people who make it up. All the people could be replaced over time while an organization’s structural and contextual dimensions would remain similar.

IN PRACTICE Valve Software Valve Software Corporation is a leader in the video game industry. The company has been ―boss free since 1996,‖ as its website proclaims. ―It’s amazing what creative people can come up with when there’s nobody there telling them what to do.‖ At Valve, everyone makes important decisions. Any employee can make hiring decisions. There are no promotions, only new projects, with someone emerging as the de facto leader. Contrast Valve’s approach to that of Walmart, which achieves its competitive edge through cost efficiency. Stores are controlled from the top, and employees follow standard procedures with little say in decision making. An even greater contrast is seen in government agencies.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Performance and Effectiveness Outcomes The organization must learn to be efficient—using the least amount of resources to achieve its goals, as well as effective—the degree to which an organization actually achieves its goals. In measuring effectiveness, some organizations use the stakeholder approach, meaning the company considers its stakeholders, who consist of any group within or outside the organization that has a stake in the organization’s performance.

Typical stakeholders include employees, customers, creditors, management, government, unions, the community, suppliers, and owners and stockholders. It is difficult for managers to satisfy multiple stakeholders, so they must establish goals that achieve at least minimal satisfaction for them.

ASSESS YOUR ANSWER The primary role of managers in business organizations is to achieve maximum efficiency.

ANSWER: Disagree. Efficiency is important, but organizations must respond to a variety of stakeholders, who may want different things from the organization.

Managers strive for both efficiency and effectiveness in trying to meet the needs and interests of stakeholders. Effectiveness is often considered more important than efficiency.

The Evolution of Organization Theory and Design Historical Perspectives Organization design has varied over time in response to societal changes. The classical perspective remains the basis of management theory today. One classical subfield, pioneered by Frederick Taylor, was the closed system approaches of scientific management. Through scientific procedures in 1898, Taylor identified correct movements and tools for loading four times as much iron or steel for the Bethlehem Steel plant. Administrative principles focused on the total organization based on insights of practitioners such as Fayol. Bureaucracy was an effective approach for the needs of the Industrial Age, calling for clearly defined authority and responsibility, formal recordkeeping, and uniform application of standard rules. It remained the primary approach to organization design through the 1980s. The Hawthorne Studies led to a revolution in worker treatment from findings that positive treatment improved motivation and productivity. Since the 1980s, flexible approaches to organization design have become prevalent because of the Internet, globalization, and the growth of knowledge- and information-based work.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

HOW DO YOU FIT THE DESIGN? Evolution of Style Managers view their world through one or more mental frames of reference. The structural frame of reference sees the organization as a machine. The human resource frame sees the organization as its people. The political frame sees it as a competition for scarce resources. The symbolic frame sees it as theater, with emphasis on symbols, vision, culture, and inspiration. Which frame reflects your way of viewing the world?

It All Depends: Key Contingencies Contingency theory means that one thing depends upon other things, and for organizations to be effective, there must be a fit between the structure and the conditions in the external environment. There is not one best way to manage, and instead, the correct management approach varies for an Internet firm versus a large processing plant.

ASSESS YOUR ANSWER A CEO’s top priority is to make sure the organization is designed correctly.

ANSWER: Agree. Top managers have many responsibilities, but one of the most important is making sure the organization is designed correctly. Organization design organizes and focuses people’s work and shapes their response to customers and other stakeholders. Managers consider both structural and contextual dimensions as well as make sure the various parts of the organization work together to achieve important goals.

The Contrast of Organic and Mechanistic Designs A mechanistic design means that the organization is characterized by machine-like standard rules, procedures, and a clear hierarchy of authority. Organizations are highly formalized and are also centralized, with most decisions made at the top. A mechanistic design is associated with large size, efficiency strategy, a stable environment, a rigid culture, and a manufacturing technology. An organic design means that the organization is much looser, free-flowing, and adaptive. Rules and regulations often are not written down or are flexibly applied. An organic design is associated with smaller size, innovation strategy, a changing environment, an adaptive culture, and a service technology.

Guidelines Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Centralization means that decision authority is located near the top of the organizational hierarchy. With decentralization, decision making authority is pushed down to lower organizational levels. A task is a narrowly defined piece of work assigned to a person. A role is a part in a dynamic social system. Formal systems, mechanistic organizations, emphasize vertical communication. Informal Systems, organic organizations, emphasize horizontal communication. A mechanistic design has a formal chain of command. An organic design emphasizes collaborative teamwork.

The Emerging Bossless Design Trend Current challenges include greater flexibility for most organizations. A few organizations have shifted to an extremely organic, ―bossless‖ design. Advantages include greater employee initiative and commitment, and better, faster decision making. Challenges include an investment in employee training and development. The culture also has to engage employees and support the non-hierarchical environment.

IN PRACTICE Morning Star

The founder of Morning Star, the world’s largest tomato processor for companies such as Heinz and the Campbell Soup Company, believes that people can work without a boss. At the Morning Star Self-Management Institute, every employee goes through training to learn how to work effectively as part of a team, how to handle the responsibilities of ―planning, organizing, leading, and controlling‖, how to balance freedom and accountability, how to understand and effectively communicate with others, and how to manage conflicts. Every colleague writes a personal mission statement and is responsible for accomplishing it.

Framework for the Book Levels of Analysis Organization systems are nested within systems, and one level of analysis has to be chosen as the primary focus. Four levels of analysis normally characterize organizations: individual, group, organization, and finally the external environment.

Organizational behavior is the micro approach to organizations because it focuses on the individuals within organizations. Organizational behavior

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

examines concepts such as motivation, leadership style, and personality and is concerned with cognitive and emotional differences among people within organizations. Organization theory and design is a macro examination of organizations because it analyzes the whole organization as a unit. Organization design is concerned with people aggregated into departments and organizations and with the differences in structure and behavior at the organization level of analysis.

Organization design might be considered the sociology of organizations, while organizational behavior is the psychology of organizations.

Plan of the Book Part 1 introduces the basic idea of organizations as social systems and the essential concepts of organization design. Part 2 is about strategic management, goals and effectiveness, and the fundamentals of organization structure. How do managers help the organization achieve its purpose? Part 3 looks at the various open system elements that influence organization structure and design, including the external environment, interorganizational relationships, and the global environment. Parts 4 and 5 look at processes. Part 4 describes how organization design is related to manufacturing and service technology, organizational size, and life cycle. Part 5 considers the dynamic processes within and between organizational departments and includes topics such as innovation and change, culture and controls, decision-making processes, managing intergroup conflict, and power and politics.

Plan of Each Chapter •

Opening questions: Managing by Design

•

Theoretical concepts in the body of the chapter

•

In Practice segments

•

Questionnaire: How Do You Fit the Design?

•

BookMarks

•

Briefcase items to highlight key points

•

Design Essentials

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Design Essentials •

Organization design provides tools to adapt to a changing environment.

•

Managers face new challenges including globalization and ethical scrutiny.

•

Organizations are open systems that obtain inputs from the external environment, add value, and discharge products and services back to the environment.

•

Organizations are highly important, and managers are responsible for shaping organizations to perform well and meet the needs of society.

•

Many types of organizations exist. One important distinction is between for-profit businesses and nonprofit organizations. Managers strive to design organizations to achieve both efficiency and effectiveness.

•

Organization design perspectives have varied over time. Managers can understand organizations better by gaining a historical perspective and by understanding the contrast between organic and mechanistic designs.

•

Organization designs range from mechanistic to organic. A new trend is the bossless design, an extreme form of an organic design in which most levels of management have been eliminated.

•

Most concepts in organization theory pertain to the top- and middle management levels of the organization.

LECTURE ENHANCEMENT ORGANIZATIONAL TYPOLOGIES To understand and conceptualize the world of organizations, researchers have developed typologies by which organizations can be classified. A typology is a set of categories, with each category including certain characteristics which differentiate the organizations in it from those in other categories. Just as artists portray the same person or scene in different ways, researchers have based their typologies on different underlying dimensions that they see as important in differentiating between organizations. Typologies are methods of organizing information. The characteristics of the organizations in each cell indicate the nature of the organizations.

One typology, for example, which influenced organizational research, was developed by Talcot Parsons in 1960. Parsons maintained that organizationshad different functions in society and that these functions could be the basis for typing organizations. Parsons' four functions and examples of organizations are:

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Type of Organization

Functions

Examples

Adaptation

Acquire resources

Businesses

Goal attainment

Set and implement goals

Government agencies

Integration

Maintain and coordinate system

Courts

Latency or pattern

Transmit culture and values

Educational and religious maintenance organizations

Because organization theory involves the use of models to describe important dimensions of an organization, we will study several typologies in this course. For example, in chapter 3, a typology based on Duncan’s classification of perceived environmental uncertainty has been developed. In chapter 4, Thompson's typology on technological interdependence is discussed in terms of its influence on organizational structure. Typologies lend some insight into understanding organizations and serve as a good basis upon which to analyze cases. Typologies must be relatively simple, yet complete enough to enable distinct categorization and development of understanding and comparison among types of organizations.

Because of a typology’s simplicity, a difficulty to some is in placing organizations in just one category. Look for dominant characteristics as you classify an organization, acknowledging that there are overlapping areas, but not getting hung up on them. When studying conglomerates, each product division may be categorized separately on the typology.

DISCUSSION QUESTIONS 1. What is one contingency factor that might help explain the poor performance of GE when Jeffrey Immelt was CEO? Explain.

ANSWER: Students’ answers to this question will vary, but they should demonstrate their understanding of contingency factors. Some students may say that size is the cause of GE’s poor performance. It’s possible that poor performance in some of the organization’s many business units is damaging GE’s overall performance, and the organization is simply too big to take advantage of any benefits stemming from diversification. This would explain why more recent CEOs have taken steps to sell off important business units under the GE umbrella. An organization as diversified as GE may also struggle to pinpoint goals and strategies that work for the organization as a whole. Some students may also note that in today’s rapidly

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

evolving, global business environment, it is challenging for complex and bureaucratic organizations like GE to quickly respond and adapt.

2. Describe some ways in which the digitalization of business has influenced or affected an organization with which you are familiar, such as your college or university, a local retailer or restaurant, a volunteer organization, a club to which you belong, or even your family. Can you identify both positive and negative aspects of this influence?

ANSWER: Students’ examples used to answer this question will vary, but they should demonstrate an understanding that technology is now used to do far more than streamline operations. The text describes two specific ways organizations are using technology: First, organizations are using digital technology, and particularly social media, to communicate with members and potential members and to attract and inform more desired members. Second, some organizations have access to digital tools that allow them to collect data on customers or consumers in general, which allow the organizations to adapt their products and services, as well as their marketing messages and other communications, to better meet the needs and expectations of their target audience. While these uses of technology help organizations be more efficient and more effective, there is potential for organizations to mismanage or even abuse the data they collect, which can harm consumers and ultimately the organizations as well.

3. A handful of companies on the Fortune 500 list are more than 100 years old, which is rare.

What organizational characteristics do you think might explain 100- year longevity?

ANSWER: Companies that maintain longevity must be flexible. This includes flexibility with organizational structures and ongoing relationships with employees and the external environment. The ability of organizations to offer competitive pricing and bring together resources in an innovative manner and over time contributes to its success. Scientific management played a role in this and the Hawthorne studies contributed the understanding that positive treatment of workers contributed to their longevity with the organization which decreased turnover and maximized expertise among the labor pool.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

4. Can an organization be efficient without being effective? Can an inefficient organization still be an effective one? Explain your answers.

ANSWER: Efficiency refers to the amount of resources used to achieve the organization’s goals. Effectiveness means the degree to which an organization achieves its goals. An organization cannot be efficient without being effective. To be effective, organizations need clear, focused goals and appropriate strategies for achieving them. For example, a physician’s office in Philadelphia increased efficiency by using information technology to reduce paperwork and streamline procedures.

The new system also improved effectiveness because staff can locate information more quickly and make fewer mistakes, leading to a higher quality of care and better customer service.

5. What is the difference between formalization and specialization? Do you think an organization high on one of these dimensions would also be high on the other? Discuss.

ANSWER: Formalization pertains to the amount of written documentation used to direct the organization, including procedures, job descriptions, and policy manuals.

Specialization pertains to the extent to which tasks are subdivided so that each employee performs only a narrow set of activities.

Generally, these characteristics are associated so that an organization would tend to be high or low on both. As an organization becomes large, for example, tasks would become more specialized. Formalization would then be required to provide rules and regulations to specify specialization. A few organizations may deviate from this relationship, but generally an organization high on one characteristic will tend to be high on the other.

6. What does contingency mean? What are the implications of contingency theory for managers?

ANSWER: Contingency means that one thing depends on other things, and therefore for an organization to be effective there must be a good fit between its internal structure and its external environment. There are no universal principles that apply to every organization in every situation. There is not one best way. Contingency means that "it depends." Thus, managers should diagnose their unique situation before deciding on the management approach to take.

7. What are the primary differences between an organic and a mechanistic organization design? Which type of organization do you think would be easier to manage? Discuss.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: A mechanistic design means that the organization is characterized by machine-like standard rules, procedures, and a clear hierarchy of authority.

Organizations are highly formalized and are also centralized. An organic design means that the organization is much looser, free-flowing, and adaptive. Rules and regulations often are not written down or, if written down, are flexibly applied. It would be easier to manage a mechanistic organization because most decisions made at the top whereas in an organic design people may have to find their own way through the system to figure out what to do. The hierarchy of authority is looser and not clear-cut. Decision-making authority is decentralized.

8. What does it mean to say an organization is an open system? How is the stakeholder approach related to the concept of open systems?

ANSWER: An open system must interact with the environment in order to survive. Open systems cannot seal themselves off like closed systems and must continuously adapt to the environment. Managers carefully balance the needs and interests of various stakeholders in the environment in setting goals and striving for effectiveness. This is referred to as the stakeholder approach, which integrates diverse organizational activities by looking at various organizational stakeholders and what they want from the organization. A stakeholder is any group within or outside of the organization that has a stake in the organization’s performance. The satisfaction level of each group can be assessed as an indication of the organization’s performance and effectiveness.

9. What are some differences one might expect among stakeholder expectations for a nonprofit organization versus a for-profit business? Do you think nonprofit managers have to pay more attention to stakeholders than do business managers? Discuss.

ANSWER: Stakeholders in a for-profit business want the company to be successful and to make a profit. While they are concerned with social responsibility, this will most likely be a secondary consideration. Managers in a nonprofit are expected to direct their efforts toward generating some kind of social impact. They are expected to keep costs low and be highly efficient to demonstrate to supporters that they are serving the public. They must pay more attention to stakeholders because they determine funding and direction of the organization.

10. Early management theorists believed that organizations should strive to be logical and rational, with a place for everything and everything in its place. Discuss the pros and cons of this approach for today's organizations.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Early management theorists thought in terms of machine system efficiency.

The external environment may have been more stable and the technology simpler so that an orderly organization system was possible. This approach to management will not work today. Organizations must adapt to the external environment, cope with differences in goals and commitment of employees, survive in a chaotic world, and try to cope with the enormous complexity of social systems. Managers can try to increase the logic, rationality and efficiency of organizations, but they will not achieve a system of perfect order, and should not feel that they are failures when they cannot do so.

WORKBOOK ~ MEASURING DIMENSIONS OF ORGANIZATIONS This activity allows students to begin a preliminary consideration of different organizations’ dimensions. Ask students what clues made them rate one organization as having, for example, many written rules, while they rated another as having few rules. For a meaningful discussion of the interrelationship of dimensions, you may pick out a particular dimension that interests the class, and find out what other dimensions tend to go along with it. For example, to contrast an organization with high specialization (1-3) to an organization with low specialization (7-10), ask the students who rated an organization as low to look at that organization’s other variables. How many rated the low specialization organization as having few rules (7-10)? How many rated it as having a flat hierarchy of authority? Then consider an organization with high specialization. How many rated it (710) as having few rules? How many rated it (7-10) as having a flat hierarchy of authority?

Record results on transparency or PowerPoint slide.

ORGANIZATIONAL DIMENSIONS Formalization Many written rules

1-3

4 -6

7-10

Few rules

Centralization Follows manager

1-3

4 -6

7-10

Makes own decisions

Technology/Work Variety Work varies daily

1-3 4 -6

7-10

Same routine work daily

Caution students not to consider any relationships between dimensions as cause-and- effect or dependent. Relationships between dimensions, at this point, are to be regarded only as a basis for discussion. The textbook will present findings on relationships between dimensions in subsequent chapters. Students can use this scale to measure GE, presented at the beginning of the chapter, in terms of its organizational dimensions.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS: Craft Originalities, Inc. After decades of explosive growth under the direction of founder Bibby Burnett, Craft Originalities is now under the leadership of his son, Bob Burnett. Since the 2008 economic crisis, the organization has been struggling, and Bob is faced with significant challenges. He needs a new vision and a new strategy. He can see that productivity is low, but he has virtually no data regarding production levels or sales. The various supervisors and foremen are unable to provide the insights he needs, and his largely unskilled workforce is content with the status quo.

Bob is well aware that the organization is in crisis mode, but it’s as if he’s the only one who recognizes that things at Craft Originalities must change soon before it loses out to competitors like Saint Crafters.

1. Assuming the survey scores are accurate, what conclusions can you draw about Craft Originalities’ culture? What is your evidence?

ANSWER: The survey results indicate that Craft Originalities’ employees are content with their jobs, their pay levels, and their work environment, and thus they are thankful for their jobs. Positive average scores appeared for statements regarding the work itself, co-workers, and supervisors. It is likely that most of these employees enjoy the easy work, slow pace, low expectations, and casual culture. In general, it would appear that there is no desire or motivation for change, nor do they understand the ramifications if the company fails to adapt.

2. If Craft Originalities adopted a mass production manufacturing process similar to its competitor, Saint Crafters, how do you think that would affect the attitude scores of the workers? Explain.

ANSWER: If Craft Originalities were to adopt a mass production manufacturing process, it would change the work environment dramatically. Employees would be pressured to work harder to accomplish more in less time. They would probably be required to learn new skills. Especially in the early stages of the transition, supervisors would have to push employees to adapt to the new expectations. Additionally, everyone would need to do more to document production and collect data. Given that employees are generally very content with the easygoing culture as it exists now, we can predict that most employees would dislike and resent the changes. Just as they did when the new supervisors were hired, they would probably express their unhappiness through complaints and gossip. Attitude would decline, and morale would suffer.

3. How do you think the rural environment might have influenced the lack of formalization and casual work environment at Craft Originalities? Discuss.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Located in a rural community, Craft Originalities probably does not have a very large pool of workers to choose from. Thus, the company hired family members and friends to fill positions throughout the two plants, which grew rapidly and organically. In such an environment, it’s easy to see how existing employees might simply provide onthe-job training to new employees without ever documenting procedures and policies.

Given that they live in the same community and spend so much time together, the employees probably see themselves as an extended family, rather than formal colleagues or co-workers. Also, in the early days, the organization’s founder and leader was so focused on producing and selling products that he placed a low priority on documentation or data collection. This perspective has been handed down to all members of the organization as it has grown.

CHAPTER TWO Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter explains the types of goals that organizations pursue and the competitive strategies to reach those goals. There is an overview of strategic management, followed by frameworks for determining strategic action. and a look at how strategies affect organization design.

Several approaches are then explored for measuring organizational effectiveness—how effective the organization is in attaining its goals.

Learning Objectives After reading this chapter you should be able to: • • • •

Describe the role of strategy when designing an organization.

Describe the key similarities and differences between Porter’s strategy model and Miles and Snow’s strategy typology.

Identify key distinctions among the goal, resource, internal process, and strategic constituents approaches to measuring effectiveness.

Explain the competing values model and how it relates to effectiveness.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

A company’s strategic intent or direction reflects managers’ systematic analysis of organizational and environmental factors.

The best business strategy is to make products and services as distinctive as possible to gain an edge in the marketplace.

The best measures of business performance are financial.

A LOOK INSIDE Instagram Instagram, which Facebook acquired for around a billion dollars in 2016, is a fastgrowing social media platform designed to achieve a short, lofty mission statement: ―To capture and share the world’s moments.‖ In its early years, the organization operated in an ad hoc fashion with little formalization. However, after Facebook’s acquisition of the firm, Instagram hired Marne Levine as the chief operating officer. One of her first objectives was to bring order to the firm by establishing a budget and by setting goals for employee hiring and product creation.

The Role of Strategic Direction in Organization Design The primary responsibility of top management is to determine an organization’s goals, strategy, and design, therein adapting the organization to a changing environment. (An organizational goal is a desired state of affairs that the organization attempts to reach.) Direction setting may begin with an assessment of opportunities and threats in the environment and an evaluation of internal strengths and weaknesses, which is known as a SWOT analysis.

Another approach to analysis is to use scenario planning to predict possible future events in the internal and external environments and to plan accordingly. Then the company can determine its mission, goals and strategies, known collectively as its strategic intent.

Organizational design reflects the way goals and strategies are implemented. Consider how organization design is affected by the choice of goals and strategy. New goals and strategy are often selected based upon environmental needs, and then the top management attempts to redesign the organization to achieve those ends.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Performance measurements feed back into the internal environment, so that past performance of the organization is assessed by top management in setting new goals and strategies for the future.

IN PRACTICE The Kroger Company This In Practice provides a SWOT analysis for the Kroger Company, the largest supermarket chain in the U.S.: Strengths—a broad array of products and services, including private label brands, provides one-stop convenience; Weaknesses—a high debt load and falling prices for staple products like eggs and milk; Opportunities—carry more desirable organic products and expand into pick-up and delivery services; Threats—aggressive expansion from nontraditional rivals such as Walmart, Target, and Amazon. .

ASSESS YOUR ANSWER A company’s strategic intent or direction reflects managers’ systematic analysis of organizational and environmental factors.

ANSWER: Agree. The best strategies come from systematic analysis of organizational strengths and weaknesses combined with analysis of opportunities and threats in the environment. Careful study combined with experience enable top managers to decide on specific goals and strategies.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Organizational Purpose Purpose may be referred to as the overall goal or mission. Different parts of the organization establish their own goals to help the organization achieve its overall purpose.

Strategic Intent Strategic intent means that all the organization’s energies and resources are directed toward a focused, unifying, and compelling overall goal. Three aspects of strategic intent include: Mission The official overall goal for an organization is its mission. The mission describes the organization's vision, its shared values and aspirations, and its reason for existence.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Competitive Advantage Competitive advantage refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace.

Core Competence Core competence is something the organization does especially well in comparison to its competitors

BOOKMARK Blue Ocean Shift: Beyond Competing: Proven Steps to Inspire Confidence and Seize New Growth by W. Chan Kim and Renée Mauborgne In the follow-up to their best-selling book, Blue Ocean Strategy, Kim and Mauborgne provide a road map for shifting to a ―blue ocean,‖ meaning creating new markets where there is less competition. Their three components for successfully executing a blue ocean strategy are: start with the right perspective, apply the right set of tools, and use a humanistic process to create an involved workforce. Managers are integral to this last component, and they must learn to engage, explain, and reassure. .

Operating Goals •

• •

Operating goals designate the ends sought through operating procedures and describe specific measurable outcomes in the short run. These goals concern overall performance, resource, market, employee development, productivity, and innovation and change.

Overall performance goals may be expressed in terms of profitability, delivery of service, growth, or volume. The Internal Revenue Service has a goal of providing accurate responses to 85 percent of taxpayer questions about new tax laws.

Resource goals pertain to the acquisition of needed material and financial resources. Starbucks formed an alliance with India’s Tata Group to obtain premium coffee beans.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Market goals relate to the market share or market standing. L’Oreal SA, the world’s largest cosmetics company, has a goal of doubling its clientele by 2020.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • •

Employee development goals pertain to the training, promotion, safety, and growth of workers.

Productivity goals concern the amount of output achieved from available resources.

Innovation and change goals pertain to internal flexibility and readiness to adapt to unexpected changes in the environment.

Goal Conflict Organizations pursue many goals simultaneously. They often mix value systems and behaviors that represent two different sectors of society, which leads to tensions and conflict within the organization over goals and priorities.

The Importance of Goals The mission or official goals provide legitimacy to stakeholders. In contrast, operative goals provide employee direction and motivation, decision guidelines, and a standard for performance.

IN PRACTICE Wells Fargo Banking giant Wells Fargo has been rocked by scandal in recent years. An investigation by the U.S. Consumer Financial Protection Bureau found that more than 5,000 lower-level Wells Fargo employees engaged in illegal and unethical activity by opening fake accounts and forcing customers into unneeded products.

The practice continued, even after Wells Fargo’s top management instructed employees to stop. Former employees have come forward and explained that the illegal behavior was the result of overly aggressive sales goals that employees were required to meet.

Two Frameworks for Selecting Strategy and Design A strategy is a plan for interacting with the competitive environment to achieve organizational goals. Goals define where the organization wants to go and strategies define how the organization will get there.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Porter’s Competitive Strategies Michael Porter introduced a framework describing four competitive strategies. To use this model, managers evaluate two factors: competitive advantage and competitive scope. Whether the organization competes on a broad or narrow scope determines the selection of strategies. Low-cost leadership strategy involves techniques for excelling at cost reduction and efficiency, with broad competitive scope.

Differentiation strategy strives to create and market unique products by innovative product characteristics and advertising.

[Use WORKBOOK activity here.]

Competitive Scope Can Be Broad or Narrow With either strategy, the scope of competitive action can be broad or narrow. An organization can choose to compete in many market and customer segments or to focus on a specific market or buyer group.

HOW DO YOU FIT THE DESIGN? Your Strategy/Performance Strength As potential manager, what are your strengths concerning strategy formulation and implementation? To find out, think about how you handle challenges and issues in your schoolwork or job. Managers with implementer strengths tend to work on operative goals and performance to make things more efficient and reliable. Managers with the formulator strength push toward out-of-the-box strategies and like to think about mission, vision, and dramatic breakthroughs.

Both styles are essential to strategic management and organizational effectiveness.

ASSESS YOUR ANSWER The best business strategy is to make products and services as distinctive as possible to gain an edge in the marketplace.

ANSWER: Disagree. Differentiation, making the company’s products or services distinctive from others in the market, is one effective strategic approach. A low-cost leadership approach can be equally or even more effective depending on the organization’s strengths and the nature of competition in the industry.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Allegiant Air Allegiant flies just 85 jets and specializes in flying people from small cities to 14 warm-weather tourist destinations. Allegiant has achieved the lowest costs, fullest planes, and highest margins in the industry. The focused low-cost leadership strategy has allowed Allegiant to be successful where others have failed, and the organization is now expanding into Canadian and Mexican markets.

Miles and Snow’s Strategy Typology Raymond Miles and Charles Snow assume that managers form strategies congruent with the external environment. There must be a fit among internal organization characteristics, strategy, and the external environment. Four strategies can be developed. The prospector strategy involves innovation, taking risks, seeking out new opportunities and growth. The defender strategy may involve retrenchment, beyond just stability, by seeking to keep current customers without innovation or growth. The analyzer strategy lies between the prospector and defender by efficiently maintaining a stable business for current product lines, while at the same time innovating to develop new product lines. Finally, the reactor approach is to respond in an ad hoc manner to environmental threats and opportunities, without a long-range plan.

How Strategies Affect Organization Design Design must support the firm’s competitive approach. For example, if the organization uses the low-cost leadership or defender strategy, the design is for efficiency whereas if the organization uses the differentiation or prospector strategy, the design calls for a flexible organic structure with strong horizontal coordination.

Other Contingency Factors Affecting Organization Design In addition to strategy affecting organization design, other contingency factors environmental stability, workflow technology, size and life cycle, and corporate culture must fit as well.

Assessing Organizational Effectiveness Organizational effectiveness is the degree to which an organization realizes its multiple goals.

Efficiency is the amount of resources used to produce outputs (ratio of inputs to

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

outputs). Effectiveness is often difficult to measure in organizations, especially those that are large, diverse, and fragmented.

Who Decides?

Organizational effectiveness is a social construct, meaning that it is created and defined by an individual or group rather than existing independently in the external world.

Four Effectiveness Approaches Four approaches to measuring effectiveness look at different parts of the organization and measure indicators connected with outputs, inputs, or internal activities.

•

Goal Approach

The goal approach measures effectiveness by evaluating the extent to which output goals are achieved. This is a logical approach because organizations do try to attain certain levels of output, profit, or client satisfaction. It is more productive to measure effectiveness using operative goals than using official goals (mission) which are more abstract and difficult to measure.

•

Resource-Based Approach

The resource-based approach evaluates the ability of the organization to obtain valued resources from the environment. Thus, it looks at the input side of the transformation process. This approach is useful when other indicators of performance are difficult to obtain. Indicators of system resource effectiveness include dimensions such as bargaining position, ability to correctly interpret properties of the environment, maintenance of internal day-to-day activities, and ability to respond to environmental changes.

•

Internal Process Approach

The internal process approach evaluates effectiveness by examining internal organizational health and economic efficiency. An evaluation of human resources and their effectiveness is important. Indicators of effectiveness include a strong, adaptive corporate culture and positive work climate, operational efficiency, undistorted horizontal and vertical communication, and development of employees.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE BNSF Railway When faced with merging two operating systems, management systems, and cultures into one cohesive organization, managers at BNSF chose to build a positive internal environment. Indicators of internal effectiveness at BNSF are that people take pride in their work and have opportunities for personal growth and development. Shared values include listening to customers and meeting their expectations. Managers focus employees on continuous improvement and meeting goals.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Strategic Constituents Approach

The strategic constituents approach measures effectiveness by focusing on the satisfaction of key stakeholders, those who are critical to the organization’s ability to survive and thrive. If an organization fails to meet the needs of several constituent groups, it is probably not meeting its effectiveness goals.

An Integrated Effectiveness Model The competing values model combines several indicators of effectiveness into a single framework. The model is based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness. A combination of external focus and flexible structure leads to an open systems emphasis. The rational goal emphasis represents management values of structural control and external focus. The internal process emphasis reflects the values of internal focus and structural control. The human relations emphasis incorporates the values of an internal focus and a flexible structure.

ASSESS YOUR ANSWER The best measures of business performance are financial.

ANSWER: Disagree. If you can have only one type of measure of business performance, it might have to be financial. But diverse views of performance, such as using the balanced scorecard, have proven to be more effective than financials alone, because managers can understand and control the actions that cause business effectiveness. Financial numbers alone provide narrow and limited information.

IN PRACTICE Samsung Group Samsung once pursued sales of quantity-driven, low-end products with an emphasis on stability, productivity, and efficiency. Then quality and innovation became the guiding principles with emphasis on empowerment and training, creativity, flexibility, and an innovative response to the external environment.

When Samsung flipped its focus from quantity to quality, it needed a new

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

emphasis on people. New digital learning facilities and networking spaces have been created to foster creativity and innovation.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Design Essentials • •

• • • • •

Organizations exist for a purpose. Top managers decide the organization’s strategic intent, including a specific mission to be accomplished. Operative goals designate specific ends sought through actual operating procedures.

Goal conflict is inevitable in organizations and managers sometimes have to negotiate to reach agreement about the important goals to pursue. The hybrid organization means an organization that mixes value systems and behaviors that represent two different sectors of society.

Two other aspects related to strategic intent are competitive advantage and core competence.

Strategies may include any number of techniques to achieve the stated goals. Two models for formulating strategies are Porter’s competitive forces and strategies and the Miles and Snow strategy typology.

Assessing organizational effectiveness reflects the complexity of organizations as a topic of study. Organizations must perform diverse activities well—from obtaining resource inputs to delivering outputs—to be successful.

No easy, simple, guaranteed measure will provide an unequivocal assessment of performance.

No approach is suitable for every organization, but each offers some advantages that the others may lack. The competing values model balances a concern with various parts of the organization rather than focusing on one part.

LECTURE ENHANCEMENT STAKEHOLDER OR CONSTITUENCY APPROACH The stakeholder or constituency approach to determining goals and effectiveness is based on the organization identifying the stakeholders of the organization and their respective measures for determining the organization's effectiveness (See Chapter 1). Each group has different criteria, or goals, which it feels that organization should be addressing. Once the various criteria or goals are defined, the organization must determine how to balance conflicting demands and prioritize which goals to address. One method is to determine the power of each constituent group and the relative importance of the effectiveness criteria of that group. Remember that the stakeholder groups may have power over the organization by virtue of ability to provide or deny critical resources.

The relative importance of the effectiveness criteria is the degree to which the constituent group feels the goals are important to them. By mapping both the power for the stakeholder group and importance of effectiveness criteria, the Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

organization can analyze its stakeholder environment. Have students determine an organization about which they can collect information from at least a small sampling of several groups of stakeholders.

1.

2.

3.

4.

List all major stakeholders of the organization.

Determine the amount of power each has with respect to the organization, preferably by interviewing the top management team.

Find out from key stakeholders what effectiveness criteria are more important; then determine for a particular effectiveness criterion (e.g., market share, customer service), its importance to each stakeholder group.

Place stakeholder group in appropriate place on model.

ANALYSIS OF STAKEHOLDER POWER & IMPORTANCE High Power of Stakeholder Group Over Organization 1. High Power

2. High Power

Low Importance

High Importance

3. Low Power Low

4. Low Power

Importance

High Importance

DISCUSSION QUESTIONS 1. How might the top management of an organization use SWOT analysis or scenario planning to set goals and strategy? Explain.

ANSWER: All organizations work toward a desired state of affairs, which can also be thought of as a result or end point, toward which organizational efforts are directed. This desired state of affairs is usually articulated in the form of goals, and an organization’s plan for accomplishing those goals is known as the strategy. In order to set reasonable goals and determine the best strategies, top management must first look outside the organization to see what the best options are and what obstacles might stand in the way.

They also need to look inside the organization to determine what resources and capabilities are available that fit the opportunities and where the organization might meet challenges. This is the essence of a SWOT Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

analysis—analyzing internal strengths and weaknesses as they relate to external opportunities and threats. Additionally, scenario planning looks at potential threats and possible weaknesses in order to avoid them or to prepare to meet them if and when they arise. With all of this information, top managers can then confirm that the organization is serving a viable purpose and has mapped out a smart path for achieving it.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. How might a company’s goals for employee development be related to its goals for innovation and change? To goals for productivity? Can you discuss ways these types of goals might conflict in an organization?

ANSWER: Organizations perform activities and pursue many goals simultaneously.

Employee development goals can lead to higher levels of productivity and innovation.

However, pursuing some goals means that others may have to be set aside. Employee development goals could conflict with productivity goals; innovation goals might hurt profitability. For example, Bloomberg News’ goals for accurate reporting conflicts with its business goal of selling financial data terminals. In China, where revenue has grown at 45 percent a year, sales of data terminals dropped when Bloomberg News’s issued a tough report about events in China.

3. What is a goal for the class for which you are reading this text? Who established this goal? Discuss how the goal affects your direction and motivation.

ANSWER: Students may volunteer that a personal goal is to pass the class with a grade of ―C‖ or better in order to fulfill degree requirements. Challenge students to evaluate how such a goal could be reformulated in order to offer motivation that would elevate effort to measurable but realistic objective. Ask students to state the likely goals the instructor has for the class, and how those goals would affect their direction and motivation. There is no ―right‖ answer to this question, but make sure students have the message that goals can, in part, determine behavior.

4. What is the difference between a goal and strategy as defined in the text? Identify both a goal and a strategy for a campus or community organization with which you are involved.

ANSWER: Operative goals include performance goals, resource goals, market goals, employee development goals, productivity goals, and goals for innovation and change.

The official goal is sometimes referred to as the mission or formally stated definition of the business outcome the organization is trying to achieve – its reason for existence. In contrast, a strategy is the organization’s plan for achieving its goals. The goal of Beta Gamma Sigma might be to increase the number of paying members by 15% in two semesters, while a strategy for achieving that goal might be aggressive communication to business students about Beta Gamma Sigma’s purpose.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

5. Discuss the similarities and differences in the strategies described in Porter’s competitive strategies and Miles and Snow’s typology.

ANSWER: Similarities include that Porter’s differentiation strategy and Miles and Snow’s prospector strategy both call for learning orientations with a flexible, decentralized structure. Both have strong capability in research, and values employee creativity, risktaking and innovation. Additional similarities are that Porter’s low-cost leadership strategy and Miles and Snow’s defender strategy have an efficiency orientation with centralized authority and tight cost control. Differences are that Miles and Snow’s analyzer strategy moves in a new direction from Porter’s strategies by balancing the other two main approaches (prospector and defender) into one strategy, while Porter has no ―combination strategy‖ that balances the differentiation and low-cost leadership approaches. Furthermore, Miles and Snow have one category, the reactor, that has no clear approach whatsoever, which is not an option in Porter’s approaches.

6. Do you believe mission statements and official goal statements provide an organization with genuine legitimacy in the external environment? When a company such as CVS (discussed in the chapter) makes a decision to stop selling cigarettes because that action conflicts with its mission statement, what do you see as the impact on public opinion? On future business? Discuss.

ANSWER: One important function of a mission statement is to state the reason for the existence of the organization which provides outsiders with a sense of the organization’s purpose. Official goals identify the purpose and legitimize the organization for employees, clients, government and other important external groups. Official goals typically are abstract and therefore run the risk of being perceived by some outsiders as ―apple pie‖ statements that sound good but do little to shape the actual organization.

Most top leaders want employees, customers, competitors, suppliers, investors, and the local community to look on the organization in a favorable light, and the concept of legitimacy plays a critical role. As part of its mission statement, CVS Caremark redefined its purpose as ―helping people on the path to better health.‖ In 2014, CVS, which provides health clinics as well as pharmacy and retail sales, announced that it would stop selling cigarettes and other tobacco products. It hurts the company’s reputation for promoting health if it sells tobacco products. Although the decision will cost $2 billion in sales, this decision communicates legitimacy because. managers are guided by a mission statement that focuses on a larger social purpose,

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

7. Suppose you have been asked to evaluate the effectiveness of the police department in a medium-sized community. Where would you begin, and how would you proceed?

What effectiveness approach would you prefer?

ANSWER: This question does not have a correct answer. It is designed to force students to think about the different approaches to effectiveness, to encourage them to apply more than one measure, and to try to apply them. Students will realize how difficult it is to use the goal approach or system resource approach alone. One solution to this question is to follow a procedure to identify indicator goals, system resources and internal process indicators. The measures can then be formulated into a combined approach to effectiveness. Students may also argue for the stakeholder approach since the police department is a social organization. The satisfaction of employees, city government, community members, minorities, and other groups, may be a good indicator of police department effectiveness; each of the stakeholders identified should be asked for indicators important to them, and then they should be asked to assess the department on the relevant indicator.

8. What are the advantages and disadvantages of the resource-based approach versus the goal approach for measuring organizational effectiveness?

ANSWER: The advantage of the resource-based approach is that it can be used to evaluate effectiveness when organizations pursue different kinds of goals, if they are using similar resources. Organizations can be compared on the ability to acquire scarce and valued resources needed to provide products and services that will eventually enable them to realize their goals. The resource-based approach considered the organization in relationship to the external environment. The advantage of the goal approach is that it examines what the organization is trying to do, which in some respects is the preferred criterion of effectiveness. The goal approach becomes problematic when the effectiveness has to be measured for multiple goals, or when organizations are compared that pursue different goals, or when the only indicators are subjective. In these cases, an accurate assessment may be difficult. Sometimes a combination of the system resource and goal approach is best. Both inputs and outputs can be evaluated. The two approaches can lead to a reasonably accurate measure of effectiveness.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

9. What are the similarities and differences between assessing effectiveness on the basis of competing values versus the strategic constituents approach? Explain.

ANSWER: The similarity is that both approaches acknowledge that effectiveness has many indicators. The strategic constituents approach argues that effectiveness is a complex, multidimensional concept and has no single measure. The competing values approach combines several indicators of effectiveness into a single framework. One difference is that the strategic constituents approach measures effectiveness by focusing on the satisfaction of key stakeholders whereas the competing values model tries to balance a concern with various parts of the organization rather than focusing on one part. A second difference is that the competing values model is based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness whereas the strategic constituents approach takes a broader view of the environment and examines inputs, internal processes, and outputs. A third difference is that the competing values model examines the value dimensions of structure and focus whereas the strategic constituents approach does not.

10. A noted organization theorist once said, "Organizational effectiveness can be whatever top management defines it to be." Discuss.

ANSWER: This question can facilitate discussion of where goals come from and top management's role in the process. Generally speaking, students will agree with this statement. Managers define the goals of the organization and they define the extent to which the organization is performing well. These factors are not fixed or given from the environment. One of the important roles of management is to define goals and effectiveness, and these factors are then taken by other people at lower levels within the organization. Some students may disagree. Students may argue that society's view is paramount, and the organization should do what is best for the larger culture. This point of view reflects a constituency criterion, and can also be accepted as legitimate. Many managers working within organizations, however, would not accept this approach to effectiveness as superior to their own definition. Some students who disagree with the given statement may feel that managers often have too narrow a view of effectiveness, and that much as the students who had not yet read this chapter, managers may have thought of effectiveness as little more than goal attainment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WORKBOOK ~ IDENTIFY YOUR GOAL PREFERENCES The Workbook activity presents an opportunity to identify goal preferences. Students are to assume that they could design the perfect organization that reflected their values. What goals receive priority in that organization? Students can look at the integrated effectiveness model in Exhibits 2.11 and 2.12. They can allocate each goal to the quadrant they think it fits. They can decide which quadrant reflects their highest goal values and which ranks the lowest.

Students can compare their rankings to those of other students and look for similarities and differences. .

Goals • • • • • • • • • •

Employee Development Organization Stability Market Share Leader Creativity-Innovation Social Contribution High Morale/Satisfaction High Productivity Rapid Growth/Adaptability Profit Maximization Within the Law/Ethical

CASE FOR ANALYSIS ~ THE ADDLINGTON GALLERY OF ART Ask students to assume the role of a candidate invited to interview for the position of museum director. They must now consider how they would answer questions that might arise during the interview process and how they would move the museum forward after taking the job.

They should generate two or three alternatives in answer to each of the first two questions.

You can use the third question as the basis for class discussion.

1. What are the possible purposes of the Addlington Gallery of Art? Which purpose would you choose for the museum?

ANSWER: [a] It could serve the community’s school-aged children with educational programs, [b] it could serve the community’s adults and university students with timely and even controversial exhibits, [c] It could serve as a laboratory for the graduate art history faculty and the doctoral students in the field. Students’ answers to the second question may vary. Some may say that the museum should be more focused on serving the community at large with exhibitions and educational Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

programs, as intended by the original founders. Others may say that, now that the university is providing much-needed funding and support, the museum should be used primarily as an educational opportunity and learning laboratory for students, especially art history undergraduate and graduate students.

2. Who are or should be the museum’s customers?

ANSWER: Depending on the purpose of the museum, it could be adults within the community, school-aged children within the community, or university students, particularly undergraduate, graduate, and PhD art history students.

3. What are the implications of the selected purpose and customers for the museum’s structural design, the qualifications of its director, and its relationship to the university?

ANSWER: The proposed purposes generally fall into two categories: serving the community and serving the university. The structure of the museum might include different positions and different qualifications for the people to fill those positions, depending on the purpose of the museum. The qualifications of the director will also vary depending on the purpose. The director will need to be more academic with a background in higher education if the purpose is to serve as a laboratory for graduate faculty and students, while he or she will need to be more fundraising- and marketing-oriented if the purpose is to serve the metropolitan community. Its relationship to the university will be close if the museum’s program is integrated with the academic program. When their purposes are mutually intertwined, personal relationships between museum and university staff will thrive along with financial interdependence. Its relationship to the university will be more limited to impersonal financial links if the museum abandons the faculty and its students for external groups. With independence between the departments, conceivably the seeds could even be planted for an ―us‖ against ―them‖ mentality between the art history academicians and museum staff.

CASE FOR ANALYSIS ~ COVINGTON CORRUGATED PARTS & SERVICE This case illustrates a company whose stable environment is becoming dynamic and chaotic.

Millier’s market share is slipping fast due to new competitors and industry changes. The organization is at a crossroads, but its managers cannot agree on the best way to achieve growth.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

1. The managers seem to agree on the overall goal of growth. Which of their strategies would you recommend Millier take as the most likely way to achieve growth? Explain.

ANSWER: Students’ answers will vary, but they should be supported by a solid understanding of the material. Some students will say that growth can be achieved by seeking new domestic markets by adapting to serve other industries beyond the box and paperboard industry, and others will agree that seeking new markets by expanding globally is the best option. Yet other students may push for greater efficiencies in the operation of the plant, although they should understand that this will probably result in greater profitability and not necessarily growth.

2. Using Exhibit 2.11, Four Approaches to Effectiveness Values, which emphasis would you say each manager is expressing?

ANSWER: Larisa has a human relations emphasis. She is concerned with the well- being of Millier’s employees, especially their cohesion and morale. The marketing manager and the VP of manufacturing have an open systems emphasis. They are concerned with growth and resource acquisition. The director of finance has a rational goal emphasis.

He is concerned with efficiency and profit.

3. How do you think the managers should go about resolving their differences with regard to their strategies?

ANSWER: The competing values model tries to balance a concern with various parts of the organization rather than focusing on one part. This approach to effectiveness acknowledges that organizations do many things and have many outcomes. It combines several indicators of effectiveness into a single framework. The model is based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness. Under Larisa’s guidance, each manager should be encouraged to further investigate each strategy by conducting a SWOT analysis. As a team, they could then evaluate and compare their options. It could be that one strategy will prove to be more promising than the others, or it could lead to a number of strategy changes and new goals.

CHAPTER THREE FUNDAMENTALS OF ORGANIZATION STRUCTURE

CHAPTER OVERVIEW Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter introduces basic concepts of organization structure and shows how to design structure as it appears on the organization chart. First, we define structure and provide an overview of structural design. Next, an information-sharing perspective explains how to design vertical and horizontal linkages to provide needed information flow and coordination. The chapter then presents basic design options, followed by strategies for grouping organizational activities into functional, divisional, geographic, matrix, virtual network, or holacracy team structures.

The final section examines how the application of basic structures depends on the organization’s situation (various contingencies) and outlines the symptoms of structural misalignment.

Learning Objectives After reading this chapter you should be able to: • • • • •

Define the three key components of organization structure.

Discuss the differences you see between the vertical and horizontal informationsharing aspects of structure.

Describe how relational coordination differs from other horizontal coordination mechanisms.

Identify the strengths and weaknesses of five common departmental group options, including functional, divisional, matrix, virtual, and holacracy.

Describe the symptoms of structural deficiency within an organization.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE

Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

A popular form of organizing is to have employees work on what they want in whatever department they choose so that motivation and enthusiasm stay high.

Committees and task forces whose members are from different departments are often worthless for getting things done.

Top managers are smart to maintain organizational control over the activities of key work units rather than contracting out some work unit tasks to other firms.

A LOOK INSIDE Nissan In the United States Marine Corps, rifle squads were once made up of 13 highly trained individuals. Analysts praised their interdependence and ―brilliant‖ tactical formations. Then Marine Corps Commandant Robert Neller came along and changed the structure of the organization, including the makeup of each squad. He reduced the squad size to 12, and designated two new positions on each team: an assistant squad leader and a technology-focused systems operator. This example illustrates the need for organizational structure to remain aligned in terms of vertical control and horizontal coordination, and to evolve as needed to maintain the right balance.

Organization Structure

Organization structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization. Organization structure includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.

The organization chart is the visual representation of underlying activities and processes. Diagrams outlining church hierarchy can be found as far back as medieval churches in

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Spain. Through most of the 20th century, the hierarchical, functional structure predominated.

But in recent years, organizations have developed other structural designs, often aimed at increasing horizontal communication.

ASSESS YOUR ANSWER A popular form of organizing is to have employees work on what they want in whatever department they choose so that motivation and enthusiasm stay high.

ANSWER: Disagree. A small number of firms have tried this approach with some success, but a typical organization needs to structure its work activities, positions, and departments in a way that ensures work is accomplished and coordinated to meet organizational goals. Many managers try to give some consideration to employee choices as a way to keep enthusiasm high.

Information-Sharing Perspective on Structure The structure must fit information requirements of the organization so people have neither too little information nor too much irrelevant information. Vertical linkages are designed primarily for control, in contrast to horizontal linkages that are designed for coordination and collaboration; all organizations need a mix.

Emphasis of Vertical/Mechanistic and Horizontal/Organic Linkages Vertical linkages emphasis on efficiency and control

Specialized tasks; hierarchy of authority; many rules, vertical communication and reporting systems; few teams, task forces, or integrators; centralized decision making, meaning that decision authority is located near the top of the organization

Horizontal linkages emphasis on learning

Shared tasks/empowerment; relaxed hierarchy; few rules, horizontal/face-to-face communication; many teams and task forces; decentralized decision making, meaning that decision authority is pushed down to lower levels of the organization

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK The Future of Management by Gary Hamel with Bill Breen Many of today’s managers are running twenty-first century organizations using ideas, practices, and structural mechanisms invented a century or more ago.

The author offers glimpses of what is possible when managers build structure around principles of community, creativity, and information sharing rather than strict hierarchy. Hamel notes that few organizations have a well-honed process for management innovation, but such a process can be achieved by following the six steps he describes.

IN PRACTICE Toyota The new version of the Avalon, designed in Michigan and built in Kentucky, is Toyota’s most American vehicle. It is a test of how well Toyota can decentralize decision making and delegate responsibilities, abilities that have become increasingly important in the wake of scandals in recent years.

Toyota was once criticized for its need to coordinate every decision from headquarters, but now regional managers believe they have the freedom to take risks.

Vertical Information Sharing Managers create information linkages to facilitate communication and coordination among organizational elements. Vertical linkages are used to coordinate activities between the top and bottom of an organization and are designed primarily for control of the organization.

Hierarchical Referral This vertical device is illustrated by the vertical lines in Exhibit 3.1. The lines of the organization chart act both up and down the chain as the communication channel.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Rules and Plans For repetitious problems and decisions, a rule or procedure can be established so employees know how to respond without communicating on each separate issue. The budget is a good example.

Vertical Information Systems A vertical information system increases vertical information capacity through such methods as periodic reports, written information, and computer-based communications distributed to managers.

Horizontal Information Sharing and Collaboration Horizontal communication overcomes barriers between departments and provides opportunities for coordination and collaboration among employees to achieve unity of effort and organizational objectives. Collaboration means a joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone.

Horizontal linkage refers to communication and coordination horizontally across organizational departments.

Information systems Cross-functional information systems enable employees to routinely exchange information.

Liaison Roles Higher level horizontal linkage is direct contact between employees affected by a problem. The liaison role can be used to identify a person in one department with the responsibility for communicating and achieving coordination with another department.

Task Forces As a temporary committee composed of representatives from each department affected by a problem, a task force links several departments to solve common problems. The task force is disbanded after tasks are accomplished.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE AT&T WarnerMedia Prior to its acquisition by AT&T and rebranding as WarnerMedia, Time Warner was known for infighting among its three major divisions: HBO, Turner, and Warner Brothers. But AT&T executives decided it was time to create a new culture of collaboration that would capitalize on the three divisions’ resources.

They set up ―workstreams,‖ which were task forces made up of representatives from all divisions, to analyze the media industry and brainstorm the best ideas for moving forward.

ASSESS YOUR ANSWER Committees and task forces whose members are from different departments are often worthless for getting things done.

ANSWER: Disagree. The point of cross-functional committees and task forces is to share information to coordinate their departmental activities. Meeting, talking, and disagreeing is the work of the committee. These groups should not try to ―get things done‖ in the sense of being efficient.

Full-time Integrator Usually with a title such as product manager, project manager, or brand manager, this full-time position outside the affected departments is created to achieve coordination between two or more departments. The integrator does not have formal authority over team members (because that rests with managers of the functional departments), but nevertheless the integrator has responsibility for the entire product (or project or brand).

Cross-Functional Teams Cross-functional teams can be the strongest horizontal linkage mechanism. They are permanent task forces, often used in conjunction with a full-time integrator. Jet Blue formed a special project team of crew schedulers, systems operators, dispatchers, and reservations agents to

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

revise handling operations such as severe weather. A virtual team is made up of organizationally or geographically dispersed members who are linked through advanced information and communications technologies.

HOW DO YOU FIT THE DESIGN? The Pleasure/Pain of Working on a Team Your approach to your job or schoolwork may indicate whether you thrive on a team. Teamwork can be either frustrating or motivating depending on your preference. On a team you will lose some autonomy and have to rely on others who may be less committed than you. You also have to work through other people, and you lose some control over work procedures and outcomes. On the other hand, teams can accomplish tasks far beyond what an individual can do, and working with others can be a major source of satisfaction.

Exhibit 3.6 summarizes the mechanisms available to managers for achieving horizontal linkages.

The higher-level devices provide more horizontal information capacity, which is appropriate to utilize only when the need is present

Relational Coordination Relational coordination refers to frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect.

IN PRACTICE Southwest Airlines

For all airlines, getting a plane prepared for takeoff is a complicated process involving many people performing many tasks. It’s essential for airlines to minimize delays in this ―turnaround‖ process, and Southwest Airlines has one of the best track records for managing turnaround times. Whenever there is a problem, members of the organization refer to it as a ―team delay‖ to remind employees that turnaround is the entire team’s responsibility, and no one individual or group should blame others for delays. Another aspect of the airline’s

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

relational coordination is small spans of control, which enable supervisors to engage in coaching to help correct problems.

Organization Design Alternatives The overall design of organization structure indicates: required work activities, reporting relationships, and departmental groupings.

Required Work Activities Departments are created to perform strategically important tasks.

Reporting Relationships The chain of command, an unbroken line of authority, is represented by vertical lines on an organization flow chart.

Departmental Grouping Options Departments can be grouped in a variety of ways: • • • • • •

Departmental grouping: employees are grouped under a common supervisor with common resources and tend to collaborate to achieve goals.

Functional grouping: employees who perform similar work functions or work processes or who share similar knowledge and skills are grouped together.

Divisional grouping: people are organized according to what the organization produces, for example, along product lines.

Matrix grouping: an organization may embrace two or more grouping alternatives simultaneously Virtual network grouping: people are organized into a loosely connected cluster of separate components.

Holacracy team grouping: the entire organization is made up of self- managing teams.

Functional, Divisional, and Geographic Designs Functional Structure Functional structure, also called a U-form, consolidates human knowledge and skills with respect to specific activities in order to provide depth of expertise. This

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

structure can be effective if there is low need for horizontal coordination between functional departments. Strengths include economies of scale within functional departments and weaknesses include a slow response time to environmental changes.

Functional Structure with Horizontal Linkages Functional structure with horizontal linkages reflects a shift toward flatter and more horizontal structures. Horizontal coordination can be improved with information systems, liaison roles between departments, full-time integrators or project managers task forces, or teams. Horizontal linkages overcome some of the disadvantages of the functional structure.

Divisional Structure Divisional structure, sometimes called M-form, means that departments are grouped into strategic business units based on organizational outputs.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Decision-making is decentralized. Strengths include a design suited to fast change in an unstable environment. Weaknesses include the elimination of economies of scale and problems with cross-unit communication.

IN PRACTICE Google and Alphabet Google began life as an Internet search company, but by 2015 the organization had grown dramatically. Going way beyond online services, it was involved in everything from pharmaceuticals to self-driving cars. To keep pace with the evolution of the organization, founders Larry Page and Sergey Brin restructured the various businesses under a new parent company called Alphabet. Each business unit has its own goals, tasks, and even culture, and senior management hopes the new structure will make the organization more adaptable and innovative.

Geographic Structure Geographic structure often groups the organization’s users or customers together by geographical area. Strengths and weaknesses are similar to divisional structure. The organization can adapt to specific needs of its own region, and employees identify with regional goals. Horizontal coordination within a region is emphasized rather than linkages across regions. The United Way of America uses a geographic structure, with a central headquarters and semi-autonomous local units.

Matrix Structure The matrix structure can be used when both technical expertise and product innovation and change are important. When the structure needs to be multifocused for simultaneous emphasis on both product and function or product and geography, the matrix structure can be considered. The gives dual lines of authority to both the functional and product chains simultaneously.

Conditions for the Matrix Matrix structure combines product and functional designs with its unique purposeful violation of unity of command. Three conditions are necessary for the matrix: pressure exists to share scarce resources across product lines; environmental Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

pressure for two or more critical factors such as in-depth technical knowledge and frequent new products; and, the environment is both complex and uncertain.

Two variations have evolved that may shift emphasis either toward the traditional vertical hierarchy or toward the horizontal teams. The functional matrix gives functional bosses primary authority, while project or product managers simply coordinate product activities. The product matrix gives the project or product managers primary authority, while the functional managers simply offer advisory expertise as needed for projects.

Strengths and Weaknesses The matrix structure is best when environmental change is high and when goals reflect a dual requirement for both product and functional goals. Weaknesses include the fact that dual authority, particularly in the balanced matrix, can be frustrating and confusing to employees.

IN PRACTICE Englander Steel Moving from the functional structure they’d employed for 160 years to a matrix structure was necessary for Englander Steel to respond to the changing market. Implementation of the matrix structure was slow, but after a year of training and consulting with an outside firm, Englander Steel was back on track with a matrix structure. See Exhibit 3.14 for the final design.

Virtual Network Structure and Outsourcing With a virtual network structure, sometimes called a modular structure, the firm subcontracts most of its major functions or processes to separate companies and coordinates their activities from a small headquarters organization. In outsourcing, a firm contracts out certain tasks or functions, such as manufacturing, human resources, or credit processing, to other companies.

How the Structure Works The virtual network organization is central hub surrounded by a network of outside specialists connected electronically. Organizational partners located Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

in different parts of the world use networked computers or the Internet to exchange data and information rapidly.

Strengths and Weaknesses Strengths include the ability to obtain talent and resources worldwide, achieving scale and reach without huge investments, being highly flexible and response to changing needs, and reducing administrative overhead costs. Weaknesses include lack of hands-on control of activities and employees, more time to manage relationships and conflicts with partners, risk of a partner failing, and weak employee loyalty and corporate culture.

ASSESS YOUR ANSWER Top managers are smart to maintain organizational control over the activities of key work units rather than contracting out some work unit tasks to other firms.

ANSWER: Disagree. Virtual networks and outsourcing forms of organization design have become popular because they offer increased flexibility and more rapid response in a fast-changing environment. Outsourced departments can be added or dropped as conditions change. Keeping control over all activities inhouse might be more comfortable for some managers, but it discourages flexibility.

Holacracy Team Structure The most recent approach to organization design, called a holacracy team structure, reflects a fundamental mind-shift in the way human organizations and management are viewed.

Employees work in self-managed teams, taking full responsibility for planning their own work, coordinating their actions with others, developing relationships, acquiring resources, and resolving issues. Best for small to medium-sized organizations, self-managed teams generally start with a written guideline but then team members jointly negotiate the functioning of the team.

IN PRACTICE Zappos

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

In 2015, Zappos CEO Tony Hsieh rolled out a new structure: a holacracy team approach. The organization’s 150 departments were replaced by 500 autonomous, self-managed ―circles.‖ Each circle has three team roles related to people management—lead links, who focus on guiding the circle’s specific work; mentors, who concentrate on employee development; and compensation appraisers, who focus on employee compensation. Anyone can assume any of these roles, and role assignment is negotiated among the team members. Employees are free to move out of and into circles and to form or disband circles in response to changing needs.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Characteristics In a holacracy team environment, teams (or circles) are the building blocks of the organization’s structure. These teams form, evolve, and disband as needed. They govern themselves, and individual roles within the team are defined collectively.

Leadership responsibility shifts as teams evolve.

Strengths and Weaknesses Among this structure’s strengths are a greater focus on teamwork and collaboration, more insightful decision-making, and more rapid and innovative responses to changes in the environment. Employees have a broader perspective on the organization’s purpose, which stimulates employee growth and accountability.

Drawbacks include the time-consuming process of establishing new teams and the need for strong social skills among team members. More traditional managers and others may find it challenging to adapt to a ―bossless‖ work environment. This structure may also limit skill development among employees.

Applications of Structural Design Each type of structure is applied in different situations and meets different needs, and organizations may mix and match elements of the various approaches.

Structural Alignment Finding the right balance between vertical control and horizontal coordination is an important design decision. Vertical control is best associated with goals of efficiency and stability, while horizontal coordination is associated with learning, innovation, and flexibility.

Symptoms of Structural Deficiency One or more of the following symptoms of structural deficiency may appear as an indication of the structure being out of alignment: • • • •

There is an absence of collaboration among units.

Decision making is delayed or lacking in quality.

The organization does not respond innovatively to a changing environment.

Employee performance declines and goals are not being met.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Design Essentials • • • • • • • •

Organization structure must provide a framework of responsibilities, reporting relationships, and groupings, and it must provide mechanisms for linking and coordinating organizational elements.

The purpose of the organization chart is to encourage and direct employees into activities and communications that enable the organization to achieve its goals.

Organization structure can be designed to provide vertical and horizontal information linkages based on the information processing required to meet the organization’s overall goal.

Alternatives for grouping employees and departments into overall structural design include functional grouping, divisional grouping, geographic grouping, matrix, virtual networks, and holacracy teams.

A virtual network structure extends the concept of horizontal coordination and collaboration beyond the boundaries of the organization.

The matrix structure attempts to achieve an equal balance between the vertical and horizontal dimensions of structure.

In a holacracy team structure, the most recent design to emerge, employees group themselves into autonomous, self-managing teams that can form, evolve, and disband as needed to meet organizational needs and goals.

Managers attempt to find the correct balance between vertical control and horizontal coordination.

LECTURE ENHANCEMENT Ford’s New Structure Based on the Article, “Why Ford’s New Structure Might Make Sense‖ in Automotive News (June 19, 2017) https://www.autonews.com/article/20170619/OEM02/170619757/why-fords-new-structure-might-make-sense by Michael Martinez Ford Motor Co.'s C-suite shake-up in June 2017 went much further than simply switching the nameplate outside the CEO's office. The automaker drastically altered its senior management structure by bestowing wider power on three senior executives, combining the critical roles of purchasing and product development and installing Executive Chairman Bill Ford as the company's public voice in a bid Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

to reassert his influence over his family's namesake company.

While the structure may be new to Ford, management consultants say the structure is not unique in the automotive industry and is part of a growing wave of car companies looking to tweak operations and get leaner.

"The whole world is shuffling the deck right now," said Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan. "The industry's being divided into haves and have-nots. Ford is a 'have' company. They have the resources to do whatever it takes to be successful, but they just have to move themselves aggressively in the right direction."

Pressure from new-age tech disruptors in Silicon Valley, as well as questions about future prospects from investors on Wall Street, has automakers approaching their century-old industry in a new way, Cole said. Successful car companies are moving from rigidly controlled bureaucracies to free-flowing, collaborative teams.

During Jim Hackett's introduction as CEO in Dearborn, Mich., in May 2017, Bill Ford acknowledged that Hackett will need to focus on quickening the company's decisionmaking.

"The clock speed at which the world is moving, and our competitors, really requires us to make decisions at a faster pace," he said then. "And we have to trust our people to move fast. It's not command and control."

Hackett now has eight direct reports, down from 18 that reported to his predecessor.

The discrepancy includes the areas of communications and government affairs, two positions assumed by Bill Ford. There are few concerns that Bill Ford's involvement will muddy the waters and create confusion among lower-level reports.

One former executive, who asked not to be identified, said the shake-up was overdue and that operations should improve under the new senior management team.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. To what extent does the true structure of an organization appear on the organization chart? Explain.

ANSWER: The organization chart is the visual representation of a whole set of underlying activities and processes in an organization and can be quite useful in understanding how a company works. It shows the various parts of an organization, how they are interrelated, and how each position and department fits into the whole. However, an organization chart cannot capture the behaviors of the employees, nor can it reflect the nature of the relationships among them. For example, the head of one division could potentially be a ―favorite‖ and thus get a larger share of the resources. An org chart does not reveal the true balance of power within an organization.

2. When is a functional structure preferable to a divisional structure?

ANSWER: It is preferred when environmental uncertainty is low to moderate, and when the dominant competitive issue is for technical specialization and efficiency. The functional structure groups employees together by common activity, so efficiency and economies of scale are realized. But coordination with other functions is more difficult, so adaptation to the external environment is less effective than for the product structure. The functional structure should also be considered when the organization is small to medium sized, when there are only a few products, and when managers wish to provide employees with opportunities for in- depth skill development within functions.

3. Large corporations tend to use different structures in different parts of the organization. Why would that be so?

ANSWER: Given that each structure in its purest form contains both strengths and weaknesses, managers can sometimes take advantage of the strengths and avoid some of the weaknesses by combining or applying different structures to different parts of the organization. For example, using a division structure for various business units gives them greater autonomy and faster decision-making power, while simultaneously using a functional structure for core functions like HR and legal allows the organization to retain any economies of scale associated with those

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

functions. In short, using a combination of structures gives an organization greater flexibility.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

4. What are the primary differences between a traditional, mechanistic organization designed for efficiency and a more contemporary, organic organization designed for learning?

ANSWER:

Comparative Emphasis of Efficiency/Mechanistic vs.

Learning/ Organic Organizations TraditionalVertical linkages emphasis on efficiency and control

Specialized tasks, hierarchy of authority, rules and regulations, formal reporting systems, few teams or task forces, centralized decision making

Contemporary Horizontal linkages emphasis on learning

Shared tasks, relaxed hierarchy and few rules, face-to-face communication, many teams and task forces, informal / decentralized decision making

5. What is the difference between a task force and a team? Between a liaison role and integrating role? Which of these provides the greatest amount of horizontal coordination?

ANSWER: A task force is a temporary committee composed of people from several departments to resolve a problem or to complete a project. Task forces are created for a single purpose and are disbanded when the task force has completed its activity. A team is a permanent committee. A team is used when continuous problems arise between departments and must be coordinated, or when the project is so large that it lasts a period of years. The team resolves problems by mutual adjustment between the departments involved.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

A liaison role exists in one department and is responsible for coordinating with another department. An example would be a manufacturing engineer who is assigned to the engineering department but is responsible for coordinating changes with manufacturing.

The integrating role is not located in either of the coordinated departments, and reports to a neutral manager. The integrating role is used when the coordination of tasks is large and complex, and involves more than two departments. Integrators often have the title of product manager or brand manager when they are personally responsible for achieving coordination for the product line.

The greatest amount of coordination is provided by the integrating role, because it is a full time task. Next is the team which meets regularly. A task force provides substantial coordination, but only during the period it is in existence. A liaison role provides coordination between two departments on a specific issue relevant to them.

6. As a manager, how would you create an organization with a high degree of relational coordination?

ANSWER: As a manager I would make relational coordination part of the very fabric and culture of the organization. I would encourage people to share information freely across departments and interact on a continuous basis to share knowledge and solve problems. I would train people in the skills needed to interact with one another and resolve cross-functional conflicts, build trust and credibility by showing concern for employees. I would foster relationships based on shared goals rather than emphasizing the goals of separate departments.

7. Why do you think the pressure of scarce resources across product lines causes managers to consider a matrix structure?

ANSWER: In a pure divisional structure, each business unit would have to have dedicated employees performing all of the major functions. For example, each business unit would have to have its own HR team, its own legal team, its own marketing team, etc. Not only could this be costly, it could lead to discrepancies in the way these functions are performed across the organization. By moving these functions out into a functional structure, the organization can make better use of these employees’ knowledge and time and can capitalize on economies of scale. More than likely, fewer employees would be required to perform these functions. Overall, the matrix structure offers a more efficient use of the organization’s resources.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

8. The manager of a consumer products firm said, "We use the brand manager position to train future executives." Why do you think the brand manager position is considered a good training ground? Discuss.

ANSWER: This question is designed to facilitate student discussion about integrator roles.

Many organizations use integrator rules, such as brand managers, to train executives.

The reason is that brand managers have responsibility without authority. They are responsible for coordinating all relevant tasks that comprise the business whole for a given product or brand, and they have to do it through good interpersonal relationships and persuasion. Brand managers have to make things happen. They need the same skills required by general managers at upper levels, who don't always rely on the formal hierarchy to get things done. People who can succeed in a brand manager's position often have the characteristics required to succeed in general management.

9. Why do companies using a holacracy team structure have cultures that emphasize openness, employee empowerment, and responsibility? What do you think it would be like to work in a company with such a structure?

ANSWER: In a holacracy team structure, there are no managers guiding the work. Instead, employees work in self-managed teams, taking full responsibility for planning their own work, coordinating their actions with others, developing relationships, acquiring resources, and resolving issues. The success of this type of structure is thus entirely dependent on employees who feel empowered, who can communicate openly and honestly, and who have strong social skills. It also requires employees to be comfortable with taking responsibility and being accountable for their work, and this is probably the difference between students who say they would enjoy working in this environment and those who would not.

10. Describe the virtual network structure. What are the advantages and disadvantages of using this structure compared to performing all activities in- house within an organization?

ANSWER: In the virtual network structure the firm subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization. The advantage of a virtual network is that it allows companies to be truly global, drawing on resources worldwide at the same time allowing the company to develop products and services and get them rapidly to market without huge investments. It also allows the company to be more flexible in a rapidly changing environment while reducing costs. A final strength is reduced administrative overhead.

These advantages are lacking when an organization performs all activities in-house.

However, the disadvantages of the virtual network structure include lack of hands-on control of activities and employees, more time to Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

manage relationships and conflicts with partners, risk of a partner failing, and weak employee loyalty and corporate culture. By contrast, an in-house organization does not have these disadvantages.

WORKBOOK ~ YOU AND ORGANIZATION STRUCTURE Students may get more from the assignment if you use an example when you assign the exercise.

Show an actual chart, and discuss how the structure reflects strengths and weaknesses.

Identify the range of organization charts developed for the range of organizations given in the exercise. Is there a pattern between the type of organization and the proposed organization chart, or between the mission and the proposed organization chart? Next, find the range of organization charts developed for each specific type of organization. If different options were proposed for that organization, would one option likely be more successful than another? In what ways?

CASES FOR ANALYSIS ~ HOLTZCLAW SUPERMARKETS, INC. Founded in the late 1970s, Holtzclaw Supermarkets was once a successful chain in the Southeast. But sales have declined in the last decade due to increased competition from new competitors such as Walmart and Target. The top-level managers recognize that change is needed in order to survive, and the consultants they’ve hired are recommending, among other things, a shift in the organization’s structure.

This is an excellent case to give students an opportunity to apply concepts from the chapter. The next case on Aquarius Advertising Agency requires application of more advanced concepts, so be sure to present the two cases in sequence. Give students a set of discussion questions, such as the following, when you assign this case so that their reading of the case will be productive.

1.

In general, how did Holtzclaw’s first organizational structure contribute to the dissatisfaction of store managers, poor coordination, and Holtzclaw’s slow adaptation to change?

ANSWER: Holtzclaw’s original organizational structure did not give store managers enough autonomy or authority to make smart choices for their particular locations. For example, they could see opportunities to boost sales by catering to the specific needs and preferences of their individual store’s customers, but were not allowed to

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

adapt the store’s products and services to meet those needs. Without this kind of decision-making ability, store managers also felt they could not develop the skills and experience they would need to be promoted to the next management level. Additionally, the reporting structure created a culture of competition, rather than collaboration and cooperation, among departmental managers.

2. How would the proposed reorganization address the problems in Question 1?

ANSWER: The proposed reorganization addresses all of these issues. First, it gives store managers the authority to adapt individual store’s products and services to better meet the unique needs of store customers. Second, the new reporting structure should lead to better coordination and cooperation among the departments within each store. And finally, store managers will receive the mentoring and training they want and need to be more successful in their current roles and to be promoted to higher levels of management.

3. What disadvantages might emerge over time with the proposed reorganization?

ANSWER: Without some degree of higher-level control over the store managers, there is potential for each store to start to function like a business of its own, which could potentially damage the consistency of the brand. Communication across the organization could start to break down, and the organization may not be able to realize economies of scale if the stores become too diversified.

CASES FOR ANALYSIS ~ AQUARIUS ADVERTISING AGENCY This case requires the application of more advanced concepts, including concepts from Chapter 1.

1. Analyze Aquarius with respect to the five contextual variables (contingency factors) described in Chapter 1. Which of the five contextual variables would you say is having the greatest impact on Aquarius?

ANSWER: As a refresher, the five factors are: size, organizational technology, environment, goals and strategy, and culture. Of these, the two that students are most likely to answer are environment and culture. The case states that advertising is a volatile industry, and that the agency frequently loses and adds new clients. Thus, the organization is operating in a constantly shifting environment, which is Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

challenging. However, the case seems to focus even more on the agency’s culture. In general, internal communication is poor, and the account executives, who are the organization’s liaisons with clients, are frequently left out of important communications, especially regarding deliverables and deadlines. Additionally, there appears to be conflicting values among different departments. If the quote from an employee is any indication of the general feeling within the organization, there is a great deal of frustration due to a lack of shared organizational priorities and goals.

2. Design a new organization structure that takes into consideration the information flows in Exhibit 3.23 as well as the most significant contextual variable (contingency factor).

ANSWER: A reorganization could potentially address both culture-related issues and a shifting environment. If the employees were grouped together by client, instead of by function, the agency could create dedicated teams for each of its major clients. The new team leaders (perhaps account executives could fill this role) would need to emphasize the team’s shared goals and elicit a feeling of cooperation among team members. Teams would need to adopt new forms of communication so that everyone on the team could feel free to interact with members of the clients’ organizations as they have been doing, while always keeping fellow team members informed about developments and progress. If a client is lost, that client’s team could be reassigned to a new client when the agency’s business development team finds one.

3. Would a matrix structure be feasible for Aquarius? What is your evidence?

ANSWER: To determine whether a matrix structure is feasible now, or will be feasible in the future, students should examine the requirements for a matrix.

Is there a dual domain competitive issue? Perhaps, in this case. Service and creativity require technical competence within each function, and yet at the same time, effective coordination across functions.

Is the environment uncertain? Overall, there is potential for rapid environmental change.

The environment of an advertising agency is not as uncertain, and does not have as great a potential for instability as the environment of computer chip manufacturers, for example, but nevertheless the environment is relatively uncertain. Customers change agencies frequently, and employees drift from agency to agency. New developments and techniques occur in the industry's technology.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Is there a need to share resources across project or product lines? Yes, one of the problems of moving to a matrix structure with account executives serving as the focus of line authority is the tremendous duplication of functional resources. Unless an agency is extremely large, it cannot afford to have separate teams of art, copy, merchandising, media, and research specialists for every account executive. This is an example of the need for shared resources that typifies a matrix structure.

Thus, a matrix structure might be feasible for Aquarius Advertising. But in this situation, matrix is not the best form to recommend for immediate implementation. The matrix will be effective only when the experienced managers are willing to be complete team players and not overstep their authority--functional or product--in the complex violation of unity of command that occurs by design. The individuals involved in Aquarius now appear to lack the organizational savvy necessary for the matrix form to operate smoothly. Currently the account executive that is designated to be the liaison between clients and specialists is often bypassed. If that were to occur in the matrix, Aquarius would have a complex management system in place that still did not provide the coordination between functions that they need. With training, the managers and account executives could "grow into" a matrix form. However, for now, the best recommendation from a consulting point of view would be to strengthen the integrative capability of the account executives while it is in its functional structure.

CHAPTER FOUR THE EXTERNAL ENVIRONMENT

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OVERVIEW The purpose of this chapter is to develop a framework for assessing environments and how organizations can respond to them. First, we identify the organizational domain and the sectors that influence the organization. Then, we explore two major environmental forces on the organization—the need for information and the need for resources. Organizations respond to these forces through structural design, planning systems, and attempts to adapt to and influence elements in the external environment.

Learning Objectives After reading this chapter you should be able to: • • • • • • •

Describe how the influence of the general environment on an organization is different from that of the task environment.

Explain the difference between environmental complexity and environmental dynamism.

Describe how complexity and dynamism together can be used to assess the level of uncertainty in an organization’s environment.

Explain approaches organizations can use to adapt to complexity and dynamism in a changing environment.

Explain how the environment affects organizational differentiation and integration.

Describe how the environment affects organic versus mechanistic management processes.

Describe the techniques organizations can use to control financial resources in the external environment.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

The best way for an organization to cope with a complex environment is to develop a complex structure (rather than keep it simple and uncomplicated).

In a volatile, fast-changing environment, serious planning activities are a waste of time and resources.

Managers of business organizations should not get involved in political activities.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

A LOOK INSIDE Waymo Self-driving vehicles are touted to be the next life-altering development in technology, but employees at Waymo, the division of Alphabet that is currently developing autonomous vehicles, are discovering firsthand that not everyone welcomes this change. The vehicles have been vandalized, and some employees have been threatened. It’s not that consumers object to self-driving vehicles, but rather they don’t want to be subjected to potentially harmful outcomes of the testing and development, just in case something goes wrong. This example illustrates how organizations must respond to various elements in the external environment. In this case, the sociocultural sector suggests that some consumers are not ready to embrace this technology.

The Organization’s Environment Organizational environment includes all the elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization. Environmental domain is the chosen territory of action defining the niche and external sectors with which the organization will interact to accomplish its goals. Sectors are subdivisions of the external environment that contain similar elements.

Task Environment Task environment includes sectors with which the organization interacts directly, including: • Industry sector • Raw materials sector • Market sector • Human resources sector • International sector General Environment General environment includes those sectors that may not have a direct impact on the daily operations of the firm but that influence the industry or economy in general ways that in turn indirectly influence the organization. Often included are: • • • • •

Government sector Natural sector Sociocultural sector Economic conditions Technology sector

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Financial resources sector

International Environment The international sector can directly affect many organizations, and it has become extremely important in the last few years. The distinctions between foreign and domestic operations have become increasingly irrelevant. For example, the auto industry has experienced profound shifts as China recently emerged as the world’s largest auto market. Car makers are moving international headquarters into China and designing features that appeal to the Chinese market.

IN PRACTICE Uber and Didi Chuxing Uber is a well-known name in the U.S. and elsewhere, but China-based Didi Chuxing is actually the largest ride-hailing app in the world. Uber attempted to break into the Chinese market, but found it too difficult to adapt to different financial systems, governmental regulations, and other cultural differences. After losing more than $2 billion in this market, Uber sold its Chinese business to Didi Chuxing.

The Changing Environment Uncertainty means that decision makers have some degree of insufficient information about environmental factors, making prediction of external changes difficult. Characteristics of the environmental domain that influence uncertainty are the extent to which the external domain is complex and the extent to which events are dynamic.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Complexity Environmental complexity refers to heterogeneity, or the number and dissimilarity of external elements (e.g., competitors, suppliers, industry changes, government regulations) that affect an organization’s operations.

Dynamism Dynamism refers to whether the environment in which the organization operates is stable or unstable. An environmental domain is stable if it remains essentially the same over a period of months or years. Under unstable conditions, environmental elements shift rapidly.

IN PRACTICE Gap Inc. Once the dominant player in casual fashion, Gap Inc. is now struggling to adapt to changing customer preferences. In an attempt to update its operations (modeled after Zara, a current fashion powerhouse known for quickly responding to buyers’ needs and interests), Gap is using more data analytics and encouraging information sharing across the brands in the Gap family to try to get a better picture of what consumers want. So far, however, these measures are not working. Gap announced the closing of more than 200 stores from 2019 through 2021, and it plans to spin off Old Navy as a separate company.

Framework The simple-complex and stable-unstable dimensions are combined into a framework for assessing environmental uncertainty. Toy manufacturers, for example, are generally found in simple but unstable environments. In other words, there may be few elements to contend with, but they are difficult to predict and change unexpectedly.

In the simple, stable environment, uncertainty is low. The complex, stable environment represents somewhat greater uncertainty. Even greater uncertainty is felt in the simple, unstable environment. The greatest uncertainty for an organization occurs in the complex, unstable environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK Confronting Reality: Doing What Matters to Get Things Right by Lawrence A. Bossidy and Ram Charan The authors contend that too many managers hide their heads in the sand of financial issues rather than face the confusion and complexity of the organization’s environment. They advise: Understand the environment as it is now and is likely to be in the future, rather than as it was in the past. Seek out and welcome diverse and unorthodox ideas. Avoid the common causes of manager failure to confront reality: Ruthlessly assess your organization.

Adapting to Complexity and Dynamism Organizations need to have the right fit between internal structure and the external environment.

Internal structures can be adapted in many ways to better meet the external environment.

Adding Positions and Departments As the complexity in the external environment increases, so does the number of positions and departments with the organization, which in turn increases internal complexity.

Each sector in the external environment requires an employee or department to deal with it.

Building Relationships Buffering roles or departments can absorb uncertainty from the environment by protecting the technical core from environmental changes and helping it function efficiently. However, a newer approach is to expose the technical core to the environment and make it more fluid and adaptable. Boundary-spanning roles link and coordinate an organization with key elements in the external environment by bringing into the organization information about changes in the environment and sending information into the environment that presents the organization in a favorable light.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Business intelligence is the analysis of data to spot patterns and relationships. An intelligence

team is a cross-functional group, led by a competitive intelligence professional, who work together to understand a specific business issue.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Seton Hall University and Dickinson College In today’s environment, most colleges and universities receive thousands of applications, far more than the number of students they can admit. So, to determine which students are truly interested in attending, these organizations use software from companies like Technolutions Inc. to evaluate prospective candidates. Seton Hall’s enrollment officers, for example, rate candidates on 80 variables to help determine whether they are likely to enroll if accepted.

ASSESS YOUR ANSWER The best way for an organization to cope with a complex environment is to develop a complex structure (rather than keep it simple and uncomplicated).

ANSWER: Agree. As an organization’s environment becomes more complex, the organization has to add jobs, departments, and boundary spanning roles to cope with all the elements in the environment. When environmental sectors are complex, there is no way for an organization to stay simple and uncomplicated.

Differentiation and Integration Environmental uncertainty leads to increased differentiation, which is "the differences in cognitive and emotional orientations among managers in different functional departments, and the difference in formal structure among these departments.‖ With high differentiation, coordination between departments becomes difficult, creating greater needs for integration, which is "the quality of collaboration between departments."

Organic versus Mechanistic Management Processes Organic rather than mechanistic management processes characterizes a looser, free flowing, and adaptive internal organization which fits with rapidly changing Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

environments. A stable environment leads to a more mechanistic organization, which is more rigid, with a strict hierarchy, and more centralized vertical communication.

HOW DO YOU FIT THE DESIGN? Mind and Environment

Does your mind best fit an organization in a certain or an uncertain environment?

In an organization in a highly uncertain environment everything seems to be changing. An important quality for a professional employee or manager is ―mindfulness,‖ which includes being open minded and being an independent thinker. In a stable environment, an organization will be more ―mechanistic,‖ and a manager without mindfulness may perform okay because work can be done in the same old way.

Planning, Forecasting, and Responsiveness The importance of planning and forecasting increase as environmental uncertainty increases because managers need to predict and anticipate external changes.

Planning keeps the organization geared for a coordinated, speedy response.

ASSESS YOUR ANSWER In a volatile, fast-changing environment, serious planning activities are a waste of time and resources.

ANSWER: Disagree. General Colin Powell once said, ―No battle plan survives contact with the enemy.‖50 Yet no wise general would go into battle without one. Serious planning becomes more important in a turbulent environment, even though a plan will not last long. Planning and environmental forecasting help managers anticipate and be prepared to respond to changes.

Lack of planning makes more sense in a stable,

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

easily predictable environment.

Framework for Adapting to Complexity and Dynamism Complexity and dynamism dimensions are combined in a quadrant format to illustrate four levels of uncertainty, ranging from low uncertainty environment which is simple and stable and usually calls for an organization with few departments and a mechanistic structure to a high uncertainty environment which is complex and unstable and usually calls for an organization that has many departments with personnel assigned to coordination and integration, yet is organic. In between the extremes, in a low- moderate uncertainty environment (stable and complex), some departments are needed along with more integrating roles to coordinate the departments, and some planning and imitation may be needed. In a high-moderate uncertainty environment (unstable and simple), structure is usually organic and decentralized, with planning and imitation emphasized.

Dependence on Financial Resources Organizations depend on the environment for resources, yet attempt to be independent of it by acquiring control over resources. Resource dependence means that organizations depend on the environment but strive to acquire control over resources in order to minimize their dependence.

Influencing Financial Resources Establishing Formal Relationships There are many techniques for dealing with resource dependence, such as: • • •

Acquire an ownership stake Form joint ventures and partnerships Lock in key players o Cooptation: when leaders from important sectors are made part of an organization o Interlocking directorate: a formal linkage that occurs when a member of the board of directors of one company sits on the board of directors of another company o Direct Interlock: when one individual is the link between two companies o Indirect interlock: when a director of one organization and a director of another organization both sit on the board of a third

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• •

organization Recruit executives Use advertising and public relations

IN PRACTICE Publicis and Omnicom Modern marketing methods are far more personalized, typically using data analytics to target very narrow market niches and frequently delivering customized messages electronically. Traditional advertising giants like Omnicom and Publicis, which considered merging a few years ago, have had to adapt by integrating digital technology experts with their existing teams of creatives. To date, Omnicom seems to have been more successful at adapting. When Publicis was unable to pull together a broad marketing plan for McDonald’s due to infighting among team members, the organization lost the McDonald’s account to Omnicom.

[Use LECTURE ENHANCEMENT on Publix here. It illustrates one organization’s response to competition within the industry through strategic alliances. It also mentions the advantages of financial independence.]

Influencing Key Sectors Another strategy is to change the environment, which can be done by changing where you do business, engaging in political activity and influencing government regulation, uniting with others, and even engaging in illegitimate activities such as payoffs to foreign governments or promotional gifts.

IN PRACTICE Amazon and Walmart Both Walmart and Amazon believe the future lies in a combination of stores and online retailing. In recent years, Walmart has built up its online business into a thriving retail entity. Meanwhile, Amazon, once an online-only business, has started building convenience stores, pick-up locations, and grocery stores. By Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

expanding domains, both organizations are better able to compete head-to-head.

ASSESS YOUR ANSWER Managers of business organizations should not get involved in political activities.

ANSWER: Disagree. Smart business managers get involved in lobbying and other political activities to try to make sure the consequences of new laws and regulations are mostly positive for their own firms. Companies pay huge fees to associations and lobbyists to make sure government actions work out in their favor.

Organization-Environment Integrative Framework One theme illustrated is that the amount of complexity and dynamism in an organization’s domain influences the need for information and therefore the uncertainty felt within an organization. Greater information uncertainty is resolved through greater structural flexibility and the assignment of additional departments and boundary roles. The second theme is that the more dependent an organization is on other organizations for scarce resources, the more important it is to establish favorable linkages or control entry into the domain.

Design Essentials • • • • •

Dynamism and complexity in the external environment have major implications for organization design and management action.

Organizational uncertainty is the result of the stable–unstable and simple– complex dimensions of the environment. Resource dependence is the result of scarcity needed by the organization.

Organizations try to survive and achieve efficiencies in a world characterized by uncertainty and scarcity.

The concepts in this chapter provide specific frameworks for understanding how the environment influences the structure and functioning of an organization.

When risk is great or resources are scarce, the organization can establish linkages through acquisitions, strategic alliances, interlocking directorates, executive recruitment, or advertising and public relations that will minimize risk and maintain a supply of scarce resources.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Two important themes in this chapter are that organizations can learn and adapt to the environment and that organizations can change and control the environment. Such organizations can adapt when necessary but can also neutralize or change problematic areas in the environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT Adapted from: Going Publix

By Brian Hartz, published in the Business Observer (Florida) on 05/05/2018 https://www.businessobserverfl.com/article/going-publix With $34.1 billion in sales in 2016, Lakeland-based Publix sits at the top of the food chain in the grocery business. But decades of dominance have made it a prime target for competitors.

How will it stay fresh?

Brian West, an oft-quoted and top spokesman for Publix, insists the Lakeland-based (Florida) grocery leader doesn't spent too much time worrying about its competition. It's a long and growing list, which, in addition to a stalwart like Winn-Dixie, includes Sprouts, Aldi, Trader Joe's, Walmart Neighborhood Grocery and Amazon-backed Whole Foods Market.

The new year will bring some major innovations from Publix, in business for nearly 90 years.

Its partnership with area health care firm Baycare will continue to build momentum, with stores in Pinellas, Pasco, Hillsborough and Polk counties getting BayCare HealthHubs — self-serve kiosks that will allow shoppers to obtain free health information and transmit that data to their physician. That move was preceded by Publix retail pharmacies opening in five Tampa Bay area Baycare facilities.

West also says in 2018 Publix will continue its aggressive real estate strategy to buy, rather than lease, some buildings it occupies. In the past four years, Publix has acquired 119 stores, building its portfolio to more than 300.

In 2017, the company spent $68.7 million for shopping centers it occupies in Hillsborough, Pinellas and Polk counties. ―We're fortunate that we have no long-term debt and have cash on hand to invest that way,‖ says West. ―So when those opportunities come about, if it makes sense for us, we're gonna do it.‖

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1.

How would the task environment of a new Internet-based company compare to that of a large government agency? Discuss.

ANSWER: The task environment for a new Internet company would most likely be simple and unstable, while the environment for a large government agency would most likely be complex and stable. The Internet company would most likely be impacted primarily by the market sector and the industry sector, but to some extent by the human resource and possibly the international sector as well. The large government agency is probably most impacted by the market sector, as well as the human resource sector. Depending on the purpose of the agency, it could also be affected by the industry, raw materials, or international sector.

2. Which typically has the greatest impact on uncertainty--environmental complexity or environmental dynamism? Why? ANSWER: Uncertainty is usually composed of two dimensions--complexity and dynamism.

Forces that influence environmental uncertainty include complexity or the number and dissimilarity of external elements relevant to an organization’s operations, and instability or the extent to which environmental elements shift abruptly. Dynamism refers to whether the environment in which the organization operates is stable or unstable. An environmental domain is stable if it remains essentially the same over a period of months or years. Under unstable conditions, environmental elements shift rapidly. Environmental instability (dynamism) has the greatest impact on manager uncertainty. You can actually see this on the framework which shows that unstable environment alone leads to high or high moderate uncertainty, but that complexity alone leads to low or low moderate uncertainty. The reason stability has the greatest effect on uncertainty is because the organization can gradually adapt to and understand a complex environment, but dynamism requires new learning and adaptation.

3. Name some factors causing environmental complexity for an organization of your choice.

How might this environmental complexity lead to organizational complexity? Explain.

ANSWER: Students’ answers will vary, but the factors impacting the organization are likely to include changing consumer preferences and needs, increasing global competition, rapidly advancing technology, economic instability around the globe, and governmental regulations. A complex environment means that many elements

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

affect the organization. To deal with these elements the organization creates positions and departments with the responsibility for exchanging information, resources, and the like with each element. These departments may buffer the technical core of the organization from some environmental complexity, and span the boundary to each external element. As the organization deals with more different and complex external sectors, it may need to have internal specialists with special training or education prepared to deal with those external sectors. Thus, the organization needs a complex structure to cope with a complex environment.

4. Discuss the importance of the international sector for an organization today compared to domestic sectors. What are some ways in which the international sector affects organizations in your city or community?

ANSWER: The international sector can directly affect many organizations, and it has become so important that the distinctions between domestic and foreign companies have become increasingly irrelevant as the effects of distance and time diminish. Therefore, the international sector has possibly changed more rapidly than any other sector in recent years. In most communities, students can point to companies with saturated domestic markets that have experienced growth because of the international marketplace.

5. Describe differentiation and integration. In what type of environmental uncertainty will differentiation and integration be greatest? Least?

ANSWER: Differentiation is the difference in cognitive orientations, goals, structure and interpersonal orientation that occur among managers in different departments.

Integration is the quality of collaboration that is achieved between those departments.

Differentiation is greatest in highly uncertain environments, and integration will follow if the departments are interdependent. Departments become specialized and highly tailored to the needs of their individual external subenvironments. Extensive integration is required to coordinate the changes taking place in various subenvironments. Differentiation and integration are lowest in the low uncertainty environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

6. Do you think planning becomes more important or less important in a world where everything is changing fast and crises are a regular part of organizational life? Why? ANSWER: Organizational planning is emphasized when the environment changes and presents a threat to the organization. Since there is more environmental uncertainty today than twenty-five years ago, planning has become more important. Surveys of multinational corporations have found that as environments become more turbulent, managers increase their planning activities, particularly in terms of planning exercises that encourage learning, continual adaptation, and innovation. Planning, particularly contingency planning, is emphasized most heavily in an unstable environment. In a world where everything is changing fast and crises are a regular part of organizational life, planning can soften the adverse impact of external shifts. Planners scan environmental elements and analyze potential moves and countermoves by other organizations.

7. Compare an organic organization to a mechanistic organization. How does the environment influence organic and mechanistic designs?

ANSWER: An organic structure is a loose, collegial, free flowing organization. Tasks are continually redefined. There is little hierarchy of authority and few rules. Communication is lateral and the organization is decentralized.

A mechanistic organization is more rigid and bureaucratic. Tasks are specialized, separate, and carefully defined. There are many rules and a strict hierarchy of authority.

Communication tends to be vertical with control centralized to the top of the organization.

Environmental change and stability should influence organizational form. A mechanistic structure is suitable for a stable environment while an organic form is suitable for an unstable environment. A mechanistic structure quickly becomes outdated in a rapidly changing environment, but enables an organization to achieve efficiency in a stable environment. An organic form enables the organization to continuously redefine itself to fit and survive in a changing environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

8. Why do organizations become involved in interorganizational relationships? Do these relationships affect an organization's dependency? Explain.

ANSWER: Interorganizational relationships have instrumental value for the organization.

The organization can get things done by selling, buying, or exchanging resources with other organizations. Another reason is that the government mandates coordination between not-for-profit organizations that provide services to citizens.

An organization may avoid resource scarcity when it has interorganizational relationships.

But a large number of these relationships reduces the dependency on any one organization so uncertainty can be kept low. Nevertheless, autonomy is lowered. The performance of organizations can be enhanced by interorganizational relationships because it helps the organization to get things done more efficiently. A synergistic effect can influence both organizations.

9. Assume you have been asked to calculate the ratio of staff employees to production employees in two organizations--one in a simple, stable environment and one in a complex, shifting environment. How would you expect these ratios to differ? Why? ANSWER: The ratio of staff employees would be much smaller in the simple, stable environment. Fewer employees would be needed to deal with external elements. The ratio of staff employees would be very high in a complex, unstable environment because staff employees would be needed to interact with environmental elements and to coordinate diverse activities within the organization.

10. Is changing the organization's domain a feasible strategy for coping with a changing environment? Explain, using either Amazon or Walmart as an example.

ANSWER: Yes, an organization can change its domain. It can gradually develop a new market, use a different technology to produce different products, enter a different industry, find new suppliers, or turn over its human resources. Amazon and Walmart both provide excellent examples illustrating this point. In response to Amazon’s astounding success as an online retailer, Walmart recognized some consumers’ evolving preference for online shopping and aggressively built out its online retail offerings. Meanwhile, in response to Walmart and other organizations’ success with

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

brick-and-mortar retailing, as well as consumers’ objections to online sales (such as long waits for product delivery and lack of access to fresh grocery items), Amazon has built brick-and-mortar pick-up stations and acquired the Whole Foods Market chain.

WORKBOOK ~ ORGANIZATIONS YOU RELY ON This activity will help to involve students who may know organizations only from the perspective of a customer or entry-level worker. Use the discussion to help students bridge their thinking to the top management level for consideration of strategic matters. During class discussion, you may tie this activity to the chapter to help personalize the meaning of environment.

Discuss the types of organizations that tend to be rated high dependency versus low dependency (column 3). Looking at those organizations from their own perspective rather than your perspective, can students see similarities in their respective environments? For example, when you report low dependency, is it likely that the organization’s environment is unstable or highly competitive? Now look at column 4. When students rate the certainty of an organization as high versus low, can they see any similarities in the organizations’ respective environments?

CASE FOR ANALYSIS ~ CPI CORPORATION: WHAT HAPPENED? The CPI Corporation, the store-within-a-store portrait studios. had over 1,500 locations that offered consumers convenient, inexpensive family portrait packages, combined with one-stop shopping for family and household needs.

Then abruptly, in April 2013, CPI announced closure of all of the company’s U.S. locations.

Students can discuss the following questions: 1.

Why do you think CPI board members held onto the company’s success model and did not respond to the environmental changes in photo technology and customers’ desires?

ANSWER: CPI’s board members failed to listen to consumers and observe and respond to changes in the external environment. Perhaps it was due to fear of changing the organization’s model, which had been so successful in the past, or perhaps it was resistance to making the investments required in the new technology needed to keep pace with evolving consumer expectations in the digital age.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2.

What type of organization structure and management process did CPI appear to have, and what type of structure would have been better suited to its changing environment?

Explain.

ANSWER: Based on the background provided in the case, it appears that CPI was a mechanistic organization. Tasks were specialized, there was a strict hierarchy of authority, and control was centralized at the top of the organization. As digital photography and content sharing through social media emerged as major influences in our culture, CPI should have shifted to a more organic structure. If communication had been more free flowing and decision making more decentralized, the organization may have been better prepared to adapt to changing needs.

3.

As business competitors within the industry weigh their future, how might they pay attention and adjust their business strategies to remain viable and avoid the CPI fate?

Discuss.

ANSWER: In an unstable environment such as this, in which technology is constantly changing, portrait-taking organizations will need flexible, adaptable, organic structures. Communication will need to be strong throughout the organizations, and decision making will need to be decentralized. Above all, leadership at the highest level will need to be alert to changes in the external environment, perhaps by creating boundary-spanning roles or by gathering business intelligence.

CASE FOR ANALYSIS ~ FARRINGTON MEDICAL DEVICES This case, which provides an illuminating, side-by-side comparison of mechanistic and organic structures, will be a helpful reference in later chapters when you point out the potentially constructive role of mechanistic systems used properly.

1. How would you describe the management processes within Caresource versus Quest?

Which seemed more effective? Why? ANSWER: Caresource exhibits all the classic traits of a mechanistic structure: centralized decision making, communication and authority flowing from the top down, multiple layers of management, and task-oriented employees. Quest, on the other hand, is a textbook example of an organic structure, with few levels of

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

hierarchy, decentralized decision making, free flowing communication throughout, and a high degree of integration among departments. While some students may feel that a mechanistic structure is efficient, this example clearly demonstrates the benefits of the organic structure. Quest’s employees worked collaboratively to find a timely solution to the problem presented to them, and were actually able to identify an error in the original proposal in the process.

2. Which organizational design (Caresource or Quest) do you think was more appropriate for a competitive and changing technological environment? Why? ANSWER: Based on the information provided, it seems clear that the open, free flow of information and communication within Quest’s organic structure give it a competitive edge in this rapidly changing environment. For example, one employee happened to know of a source for a much-needed component that both organizations thought would be impossible to get, and fortunately, that employee felt comfortable sharing that information. Another employee noticed an error in the original plans that came from the client and felt comfortable bringing it to the team for further exploration. The client had to be impressed with Quest’s thorough, thoughtful approach to the project.

3. In your opinion, which firm should have won the complete contract—Caresource or Quest?

Which do you think eventually will be chosen to produce the ventricular device? Explain.

ANSWER: Although some students may decide in favor of Caresource because of its lower bid, most students will agree that Quest should have and most likely will win the contract in the end. Because the organization functions collaboratively internally, Quest is better suited to function as a collaborative partner with its clients. And with such thorough, careful planning on the front end of the project, Quest may ultimately be able to reduce expenses for the client in the long run.

CHAPTER FIVE INTERORGANIZATIONAL RELATIONSHIPS

CHAPTER OVERVIEW LEARNING OBJECTIVES

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS APPENDIX

CHAPTER OVERVIEW This chapter explores a trend in organizing, which is the increasingly dense web of relationships among organizations. Companies have always been dependent on other organizations for supplies, materials, and information. At one time, it was a matter of a large, powerful company tightening the screws on small suppliers. Today managers handle a whole set of challenging and complex, interorganizational relationships, and a company can choose to develop positive, trusting relationships. Interorganizational research has yielded perspectives such as resource dependence, collaborative networks, population ecology, and institutionalism to explain different approaches.

Learning Objectives After reading this chapter you should be able to: • Describe an organizational ecosystem and the changing role of management in interorganizational relationships.

• Identify types of resource-dependence relationships and their power implications.

• Explain the role of collaborative networks and the interorganizational shift from adversaries to partners.

• Describe key concepts of the population-ecology perspective, including organizational form and niche and the process of change.

• Compare three mechanisms that lead to institutional similarity identified by the institutional view of organizations.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

Organizations should strive to be as independent and self-sufficient as possible so that their managers aren’t put in the position of ―dancing to someone else’s tune.‖ The success or failure of a startup is largely determined by the smarts and management ability of the entrepreneur.

Managers should quickly copy or borrow techniques being used by other successful companies to make their own organization more effective and to keep pace with changing time

A LOOK INSIDE Manufacturing in the U.S. While recent statistics show that manufacturing in the U.S. is actually booming, there have been some issues between manufacturers and their suppliers.

Manufacturers have spent decades streamlining their production lines, and suppliers have adapted by running very lean operations. Now, demand for their products is rising again, but they’re reluctant to add more production capacity due to fears that demand could drop back down again. Without the necessary supplies, manufacturers have found themselves stopping production to wait for parts. It’s an excellent example of one type of interdependence among organizations.

Organizational Ecosystems Interorganizational relationships are defined as the relatively enduring resource transactions, flows, and linkages that occur among two or more organizations. James Moore’s view is that organizations are evolving into business ecosystems. Organizational ecosystems are the systems formed by the interaction of a community of organizations and their environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Is Competition Dead?

In the sense that a single company competing for supremacy with other stand-alone businesses no longer exists, competition is dead. However, a new form of competition is intensifying. Companies find that they must coevolve with others in the ecosystem.

The changing pattern of relationships and interactions in an ecosystem contributes to the health and vitality of the system as a whole. In an organizational ecosystem, conflict and cooperation exist at the same time.

IN PRACTICE Apple and Samsung Samsung is Apple’s biggest rival in the smartphone wars. It is also Apple’s biggest supplier, and Apple is Samsung’s biggest customer. When Apple began collaborating with Samsung, the two companies didn’t compete, but that changed when Samsung got into producing smartphones. Apple managers tried to find alternate suppliers, but it wasn’t easy. Apple needed Samsung’s technology, and Samsung needed the business. The two companies have spent years suing and countersuing over their phone designs but continue to collaborate in other aspects of business.

The Changing Role of Management Managers think about horizontal processes (see chapter 3) rather than vertical structures. The old way of managing relied almost exclusively on operations roles, defending the organization’s boundaries and maintaining direct control over resources. Today, collaborative roles are becoming more important for success.

Collaborative roles involve building horizontal relationships that give the organization access to needed information and resources.

Interorganizational Framework The models and perspectives for understanding interorganizational relationships help managers change their role from top-down management to horizontal management.

Relationships among organizations can be characterized by whether the organizations are similar or dissimilar, and whether the relationships are competitive or cooperative.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

By understanding these perspectives, managers can assess their environment and adopt strategies to suit their needs. The remainder of this chapter is devoted to the perspectives represented within this framework.

[LECTURE ENHANCEMENT on O, The Oprah Magazine may be used here effectively.]

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Resource Dependence This traditional theory of relationships argues that organizations try to minimize their dependence on other organizations for important resources, and try to influence the environment to make resources available. In this view, organizations strive for independence and autonomy. Dependence is based on the importance of the resource and how much discretion those who control the resource have over its allocation. Organizations with this awareness tend to develop strategies to reduce dependence on the environment, and learn how to use their power differences.

Types of Resource-Dependence Relationships Organizations operating under the resource-dependence philosophy avoid excessive dependence on other organizations and maintain control of resources and outcomes. In the hierarchy of resource-dependence relationships, the strategies at the top, Acquisition/ Merger and Joint Venture (where two organizations contribute equal resources to create a new, third entity), offer more direct control than Strategic Alliances (other types of collaborative partnerships), Supply Sourcing, or Trade Associations (a federation of similar organizations in the same industry). Board Interlock offers less direct control.

Power Implications In resource-dependence relationships, large independent companies have power over smaller suppliers or partners. When a large company such as Amazon has power over small publishing companies, for instance, it can ask the companies for shipping deals or lower prices and the publishing companies have no choice but to go along.

IN PRACTICE JPMorgan Chase and Amazon

JPMorgan Chase and Amazon have had a long-standing relationship, but the balance of power between the two has shifted dramatically over the years. In 2002, upstart Amazon struck a credit card deal with banking giant JPMorgan Chase. Twenty years later, however, Amazon was far bigger and more powerful than the bank, thus it was able to renegotiate a much more lucrative deal. The two organizations are connected in many other ways, and today JPMorgan Chase’s CEO Jamie Dimon is wisely working with Amazon’s Jeff Bezos to explore ways that Amazon might get into the financial services business. Dimon recognizes that it would be far better to be a collaborative partner than a competitor as the two organizations move into the future.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Collaborative Networks The collaborative network perspective is an alternative to the resource dependence theory.

Companies join together to become more competitive and to share scarce resources.

HOW DO YOU FIT THE DESIGN? Personal Networking Are you a natural at reaching out to others for personal networking? If you are going to manage relationships with other organizations, networking is an essential part of your job. Networking builds social, work, and career relationships that facilitate mutual benefit. People with large, active networks enjoy and contribute to partnerships and have broader impact on interorganizational relationships.

Why Collaboration?

Companies are joining together to become more competitive and to share scarce resources when entering new markets. Cooperation is necessary for greater innovation, problem solving, and performance. Partnerships are a major avenue for entering global markets.

ASSESS YOUR ANSWER Organizations should strive to be as independent and as self-sufficient as possible so that their managers aren’t put in the position of ―dancing to someone else’s tune.‖

ANSWER: Disagree. Trying to be separate and independent is the old way of thinking. This view says organizations should minimize their dependence on other firms so that they do not become vulnerable. Today, though, successful companies see collaboration as a better approach to maintaining a balance of power and getting things done.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Accelerating Medicines Partnership Companies have spent billions on beating one another to find breakthrough drugs for diseases like Alzheimer’s. Now, 12 big pharmaceutical companies have formed a collaborative agreement with the National Institutes of Health (NIH), the Food and Drug Administration (FDA), and other nonprofits to share scientists, tissue and blood samples, and research data. By collaborating on the Accelerating Medicines Partnership, the scientists hope to interpret Alzheimer’s, Type 2 diabetes, lupus, and rheumatoid arthritis and identify targets for new drugs, something none of the participants have been able to do individually.

From Adversaries to Partners [Use WORKSHOP The Shamatosi activity here.]

With the push from international competitors, managers are shifting to a new partnership paradigm on which to base relationships from the traditional adversarial mindset.

Trust is the base of the new model, for partners to develop equitable solutions to conflicts that inevitably arise. Partners are involved in each other’s product design and production, and invest for the long term.

By breaking down boundaries and becoming involved in partnerships with an attitude of fair dealing and adding value to both sides, today’s companies are changing the concept of what makes an organization.

BOOKMARK Managing Strategic Relationships: The Key to Business Success by Leonard Greenhalgh

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The author says that success in the twenty-first century depends on how successfully organizations support, foster, and protect collaborative relationships both inside and outside the firm. Guidelines for accomplishing this include recognizing that detailed legal contracts can undermine trust and goodwill, treating partners like members of your own organization, and top managers being champions for the alliance.

Population Ecology The population-ecology perspective focuses on organizational diversity and adaptation within a population of organizations. A population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcomes. According to the population-ecology view, the changing environment determines which organizations survive or fail. Organizational form must reflect the needs of a changing external environment.

When rapid change occurs, old organizations are likely to decline or fail, and new organizations emerge that are better suited to the needs of the environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

What Hinders Adaptation?

The ability of organizations to change is limited due to investment in plants, equipment, and specialized personnel; limited information; the viewpoints of decision makers; the organization’s successful history; and the corporate culture.

IN PRACTICE Blockbuster Before Netflix came along, Blockbuster dominated the in-home entertainment business. It had around 9,000 stores and 60,000 employees offering video rental services, but the organization failed to innovative in keeping with changing technology. By 2010, customer expectations had shifted so dramatically that Blockbuster was forced to file for bankruptcy. There is only one Blockbuster store still in operation in Bend, Oregon, where Internet service has not yet been modernized enough to support streaming.

IN PRACTICE LVMH Moët Hennessy Louis Vuitton A Swiss-made mechanical watch was one a coveted luxury item, but in today’s environment, when most people use their smartphones to check the time, Swiss watch manufacturers are quickly becoming obsolete. So, when Apple introduced the first smartwatch, TAG Heuer, part of the LVMH luxury brand family, very quickly introduced a smartwatch of its own. The $1500 ―connected watch‖ has sold fairly well, but it has not achieved one of its primary goals: drawing consumers back to buying ultra-expensive mechanical watches.

Organizational Form and Niche Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The population-ecology model is concerned with organizational forms. Form is an organization’s specific technology, structure, products, goals, and personnel, which can be selected or rejected by the environment. Niche is a domain of unique environmental resources and needs sufficient to support an organization.

ASSESS YOUR ANSWER The success or failure of a start-up is largely determined by the smarts and management ability of the entrepreneur.

ANSWER: Disagree. Luck is often as important as smarts because larger forces in the environment, typically unseen by managers, allow some fi rms to succeed and others to fail. If a start-up happens to be in the right place at the right time, chances for success are much higher, regardless of management ability.

Process of Ecological Change There are three stages in the population ecology model. Variation occurs when new organizational forms appear in the population of organizations. Also, any single organization may try new variations for its own form. Selection occurs when the organizational variation is able to survive and prosper in a small niche. Retention occurs when the organization grows large and becomes institutionalized. It becomes a major part of the environment for other new organizations that appear.

Strategies for Survival Another principle underlying the population ecology model is the struggle for existence, which means that each organizational form is engaged in a competitive struggle to obtain sufficient resources for survival. This competition is especially intense among new organizations, many of which fail to survive, but even institutionalized organizations are not necessarily permanent in the long run. A company that offers a broad range of products or services or that serves a broad market or generalists. A company that provides a narrow range of goods or services or that serves a narrower market is a specialist. Specialists are more competitive than generalists. However, the breadth of the generalist’s domain serves to protect it somewhat from environmental changes.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Institutionalism The institutional perspective describes how organizations survive and succeed through congruence between an organization and the expectations from its environment. The institutional environment is composed of norms and values from stakeholders, and results in a belief that organizations adopt structures and processes to please outsiders. Legitimacy is the perspective that an organization’s actions are desirable, proper, and appropriate within the environment’s system of norms, values, and beliefs. Institutional theory is concerned with the set of intangible norms and values that shape behavior. Once an industry becomes established, there is a push toward similarity.

The Institutional View and Organization Design This view sees organizations as having two essential dimensions—technical and institutional. The technical dimension is the day-to-day work technology and operating requirements which is governed by norms of rationality and efficiency.

Institutional structure is that part of the organization most visible to the outside public which is governed by expectations from the external environment. The adoption of structures might not be linked to actual production needs and might occur regardless of whether specific internal problems are solved. Formal structure is separated from technical action in this view.

Institutional Similarity Institutional similarity, called institutional isomorphism in the academic literature, is the emergence of a common structure and approach among organizations in the same field, causing one unit in a population to resemble other units in the same set of environmental conditions. Following are the reasons organizations change, or three forces behind the change toward institutional similarity, according to the institutional perspective. Exhibit 5.6 illustrates the three types of institutional adaptation.

With unclear goals, technology, and products or services, caused by great uncertainty, mimetic forces occur, which is the copying or modeling of other organizations.

Benchmarking is a clear example of official copying, although when best practice techniques are duplicated, they may be improved.

ASSESS YOUR ANSWER

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Managers should quickly copy or borrow techniques being used by other successful companies to make their own organization more effective and to keep pace with changing times.

ANSWER: Agree. Managers frequently copy techniques used by other, successful organizations as a way to appear legitimate and up to date. Copying other firms is one reason organizations may begin to look and act similar in their structures, processes, and management systems.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Coercive forces are external pressure on organizations to adopt structures, techniques, or behaviors similar to other organizations--sometimes with the force of law. It occurs when organizations are dependent on each other, when there are political factors such as rules, laws, and sanctions involved, or when a contractual or legal basis defines the relationship. Organizations operating under those constraints will adopt changes and relate to one another in a way that increases homogeneity and limits diversity.

Normative forces mean that organizations are expected to change for standards of professionalism and to adopt techniques considered by the professional community to be up-to-date and effective.

Design Essentials • • • • • •

This chapter has been about the important evolution in interorganizational relationships.

Four perspectives have been developed to explain relationships among organizations.

The collaborative-network perspective is an emerging alternative to resource dependence.

The population-ecology perspective explains why organizational diversity continuously increases with the appearance of new organizations filling niches left open by established companies.

The institutional perspective argues that interorganizational relationships are shaped as much by a company’s need for legitimacy as by the need for providing products and services.

Each of the four perspectives represents a different lens through which the world of interorganizational relationships can be viewed.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT INTERTWINED RELATIONSHIPS: COMPETITOR AS PARTNER This article was offered as a case study of the pitfalls of doing business in an era of proliferating alliances. The publisher of Oprah Winfrey’s magazine O, The Oprah Magazine is the Hearst Corp. which also owns half of Lifetime Entertainment Services cable network for women and almost half of the Women.com Web site.

Women.com is a network of sites that utilize content of eleven Hearst magazines including Cosmopolitan and Redbook. Normally, because the success of a magazine depends on its linkages, one would expect that O would be linked closely with Lifetime cable network and Women.com. However, Oprah had a preexisting Internet relationship with Oxygen Media, a competitor with Lifetime, preventing Hearst from developing an Internet component for O. Instead, Hearst developed a partnering relationship with competitor Oxygen so that their Oprah.com site contains some editorial content from O and a link to subscribe to the magazine, along with links to Oxygen Media’s other online properties. Hearst willingly abandoned expected cooperation with its own operations, and abandoned even the revenue stream from a magazine site, because of the desire to publish Oprah’s magazine. To add to the complexity, Oprah refused Hearst’s developing a book section in O because it might be too similar to her popular televised book club.

Source: In Oprah’s Empire, Rivals Are Partners by Matthew Rose. Wall Street Journal April 3, 2000, p. B1, B8.

DISCUSSION QUESTIONS 1.

The concept of business ecosystems implies that organizations are more interdependent than ever before. From personal experience do you agree? Explain.

ANSWER: Students may have business experience that helps them answer this question. If they do not, ask what experiences as a consumer they may have had that give them understanding? Perhaps they have shopped at a Wal-Mart or Price- Costco where they can realize that the organizations are more than simply a

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

retailer--that they have developed relationships with hundreds of organizations, cutting across traditional business boundaries.

2. How do you feel about the prospect of becoming a manager and having to manage a set of relationships with other companies rather than just managing your own company? Discuss.

ANSWER: In discussing this question, students should realize that their careers in management can be more than traditional supervision, and more than getting goals accomplished through other people. Discuss what kinds of activities entry-level managers should do early in their careers in order to be promotable and to demonstrate their ability to handle this new dimension of management. What leadership opportunities exist in extracurricular organizations now for students to begin developing skills in interorganizational communication?

3. Assume you are the manager of a small firm that is dependent on a large manufacturing customer that uses the resource dependence perspective.

Put yourself in the position of the small firm, and describe what actions you would take to survive and succeed. What actions would you take from the perspective of the large firm?

ANSWER: Because the large manufacturing customer uses the traditional view of relationships between organizations, we know that they try to minimize their dependence on us and may at any time assert their control over us to minimize dependence on us.

Therefore, in the small firm, as a protective device, we will develop a wide enough customer base so that we are not subject to their whim. But also, as a proactive strategy, we will attempt to improve communication with the large organization so that we can meet their needs better, and perhaps develop a relationship in which trust and interdependence that replaces a buy from the lowest bidder attitude.

4.

Many managers today were trained under assumptions of adversarial relationships with other companies. Do you think operating as adversaries is easier or more difficult than operating as partners with other companies? Discuss.

ANSWER: What comes most easily is what comes most naturally, and may well be a byproduct of our experience and training. This does not mean that we cannot

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

make a conscious decision and change our patterns, but when a situation is fraught with conflict or is under heavy time restraints, we may lapse back into what comes more naturally. What training have students received so far about individualism versus cooperative relationships (class projects, grades in courses, athletics, etc.)? What training have students received so far about adversarial versus cooperative relationships between organizations (inter-collegiate athletics, student organizations, internships or work experience, etc.)?

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

5. Discuss how the adversarial versus partnership orientations work between you and other students in your course. Is there a sense of competition or collaboration for grades? Is it possible to develop true partnerships if your grade depends upon the work of others?

Explain.

ANSWER: Students may feel that since grades are given in the classroom, and not in the business world, analogies between the two settings are nullified. In response, be sure to help students realize that there are many kinds of organizational rewards that act like grades--who gets the promotion, special recognition, best conference, etc. As long as the rewards/grades are given out, in either setting, based on individual criteria, there will remain an element of adversarial orientation, but for select activities on which rewards/grades can be given for team effort, true partnerships can develop.

6. The population ecology perspective argues that it is healthy for society to have new organizations emerging and old organizations dying as the environment changes. Do you agree? Why would European countries pass laws to sustain traditional organizations and inhibit the emergence of new ones?

ANSWER: If you have European students in the class, be sure that they have an opportunity to speak from their perspective on the importance of maintaining traditional organizations. Most American students can accept the precept of the population ecology perspective that it is appropriate to allow old organizations to die naturally when they have been by-passed because of outdated management, products and services, and to allow the vibrant, new organizations to take their place.

7. Discuss how the process of variation, selection, and retention might explain innovations that take place within an organization? Explain.

ANSWER: Organization populations are continually changing, and therefore within the populations, a single entity is continually changing. When new organization forms appear (variation), they bring innovative ideas to other firms in the industry that are often imitated. When some variations suit the external environment and find a niche (selection), other organizations are prone to imitate, thus bringing change within an organization. If dominant organizational forms do not adapt to external change, they will gradually be replaced, so they typically try to respond to selection and retention of firms in their industry.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

8.

Do you believe that perceived legitimacy really motivates a large, powerful organization such as Wal-Mart? Is acceptance by other people a motivation for individuals as well?

Explain.

ANSWER: When an organization’s actions are seen as desirable, proper, and appropriate within the environment’s system of norms, it is motivating to the organization to maintain that legitimacy because environmental support brings cooperation, partners, and customers. On the negative side, when legitimacy is not in place, organizations are motivated to find environmental acceptance. On the individual level, acceptance by other people is a motivation for them. We see this motivation even in grade school, as children do things and wear clothing that they think will bring peer acceptance.

9. How does the desire for legitimacy result in organizations becoming more similar over time?

ANSWER: Interorganizational relationships are characterized by forces that cause organizations in the same population to become similar over time. As they strive for legitimacy, institutional forces emerge and they adapt structure and behavior in many ways for environmental acceptance. They may copy other organizations, which has the effect of making them more similar over time. And to some extent, there may be outside forces that push organizations for similarity--laws that mandate certain responses such as pollution control or leave for pregnant women.

10. How do mimetic forces differ from normative forces? Give an example of each.

ANSWER: Mimetic forces refer to the emergence of common structures and approaches among organizations in the same field from one organization copying or modeling another. In contrast, normative forces bring about the same result for a different reason-one organization adopting techniques that are considered by the professional community in general to be up-to-date. The motivation for adopting common structures differs in the two cases. In the first case, there is a conscious effort to mimic what another is doing successfully, and in the second case, common professional networks lead to a common understanding of what is right. An example of mimetic forces is when managers benchmark, and purposefully copy the best practices that they find in another company.

An example of normative force is occurring in the field of human resources management; although there is no legal requirement (coercive) for outplacement services when downsizing, consulting companies and professional norms have created a standard of professional practice that companies offer this service for terminated employees.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WORKBOOK ~ THE SHAMATOSI CASE Don’t miss out on this workshop activity! The earlier students discover for themselves that they can really win by cooperating; the better their results will be as a team. (It is rather enjoyable; however, when at least one team does not play with trust and sharing of information, because then from the learning perspective, benefits of cooperation become obvious.) Assign this activity before referring students to the material in the text; most instructors prefer to give out individual roles of Dr. Hobbs or Dr. Dominguez to each student (photocopied from the following pages), instructing them to keep their papers to themselves, and not pointing out until de-briefing that both roles are printed in the textbook for their understanding of the total exercise.

ROLE OF ―DR. HOBBS” As Dr. Bernice Hobbs, you are a biological researcher for Pharmacology, Inc., a major pharmaceutical company, has monitored with mounting concern the reports from Brazil’s Amazon rain forest. Everything from world weather patterns to providing an estimated one in four ingredients in medicine are tied to securing the world’s rain forests. But over the past decade, scientists, pharmaceutical companies, along with environmental groups, and others, have observed with alarm the destruction of the rain forests, and with them the destruction of entire species of plant, animal, and insect life.

As you monitor the situation, you are particularly concerned about conditions with regard to a particular plant found in limited quantities near the Rio Negro. Rain forest trees have shallow roots because the major nutrients for growth are located near the surface level. Biologists discovered a rare tiny plant growth called Shamatosi embedded among the trees near the Rio Negro. For a number of years, researchers have explored potential medical uses for these tiny plants.

You have been working with the leaves of the tiny Shamatosi plant and have discovered the plant’s potential as a cancer suppressing drug after breast cancer surgery. For a number of years the leading drug in this category has been Tamoxifen, a synthetic drug described as ―remarkable’ and credited with saving more lives than any other oncological drug by the lead investigator for a major breast cancer research group. However, research has also shown that Tamoxifen raises the risk of cancer in the lining of the uterus and can lead to blood clots in the lungs. There is also a growing level of concern as Tamoxifen resistance has Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

developed. The medicine you developed may avoid these problems and bring a new treatment into the list of options for doctors and their patients. But more research is needed. You need to have access to as many leaves as possible from the Shamatosi plant.

DBR, the Brazilian timber company, has possession of several thousand Shamatosi plants from this year’s season that have been replanted in portable crates. Your company, Pharmacology, Inc., has authorized $1.5 million for your team to bid to obtain the plants. You cannot go over this budget. Your team will meet with a team from Radiology, Inc., who also wants to purchase the Shamatosi plants from DBR, about a possible agreement for purchasing and using the plants for research

ROLE OF ―DR. DOMINQUEZ” You are Dr. P. W. Dominguez, a biochemist for Radiology, Inc., with expertise in treating radiation exposure. You monitor with mounting concern the reports from Brazil’s Amazon rain forest. Everything from world weather patterns to the providing of an estimated one in four ingredients in medicine are tied to securing the world’s rain forests. But over the past decade, scientists, pharmaceutical companies, along with environmental groups, and others, have observed with alarm the destruction of the rain forests, and with them the destruction of entire species of plant, animal, and insect life.

You are particularly concerned about conditions concerning a particular plant found in limited quantities near the Rio Negro. Rain forest trees have shallow roots because the major nutrients for growth are located near the surface level. Biologists discovered a rare tiny plant growth called Shamatosi embedded among the trees near the Rio Negro. For a number of years, researchers have explored potential medical uses for these tiny plants.

You have been working with the roots of the Shamatosi plant in response to incidents involving radiation exposure. The worldwide expansion of nuclear facilities, the lessons from the 1986 Chernobyl disaster, and the resulting cases of thyroid cancer among thousands of children and adolescents, led you and your colleagues to intensive research to provide the swiftest response with the most powerful medicine. For years, Potassium iodide (KI) was issued in kits provided by organizations such as the Centers for Disease Control.

However, KI was found

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

deficient in protecting many body parts, such as the liver and intestines. You discovered the tiny Shamatosi plant and research indicated the potential for medicines from the root of this plant to provide additional protection, even for incidents of large scale or prolonged exposure. The March 2011 Tohoku earthquake and tsunami, and the resultant radiation exposure caused by the meltdown at the Fukushima Daiichi nuclear power plant, intensified concerns among scientists to find and develop a new medicine. You need as many plants as possible.

DBR, the Brazilian timber company, has possession of several thousand Shamatosi plants from this year’s season that have been replanted in portable crates. Your company, Radiology, Inc., has authorized your team to bid $1.5 million to obtain the plants. You cannot go over this budget. Your team will meet with a team from Pharmacology, Inc., who also wants to purchase the Shamatosi plants from DBR, about a possible agreement for purchasing and using the plants for research.

CASE FOR ANALYSIS ~ TECHNOMAGIA AND AUD This interesting case provides students with a realistic example of the distinctions between the resource dependence and collaborative network perspectives, and the impact they have on organizations.

1. What is the role of the resource dependence and collaborative network perspectives in this case? Explain your reasoning.

ANSWER: The resource dependence view is represented by the two CEOs in this case, Technomagia’s Brassimo and especially AUD’s Right. Right still believes in the traditional view of his company as the big, important customer that has power over the smaller supplier, even though the supplier has grown in strength. Right feels that Technomagia should continue to put AUD’s needs and expectations first, at the expense of Technomagia’s growth and other customers, and this viewpoint is causing strain between the two organizations. Meanwhile, the collaborative network perspective is represented by mid-level managers Handell and Santos. They see opportunities for the two organizations to work together as equal partners, especially through the creation of a VMI system. This would allow Technomagia to manage production and resources more efficiently, and to offer even more support to AUD while cutting costs for both organizations.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. Do you think the relationship between Technomagia and AUD would have worked out satisfactorily for both without VMI? Discuss your expected outcomes with and without VMI. ANSWER: To date, the relationship has been working fairly satisfactorily without VMI. However, VMI appears to offer many benefits to both organizations. Instead of sending purchase orders, VMI will allow AUD to share daily electronic updates about AUD’s sales so inventory is replaced automatically by Technomagia. This will mean that Technomagia can more accurately manage its resources, such as predicting fluctuating supply needs and production capabilities, which will enhance its ability to deliver exactly what AUD needs when it needs it.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. Why do you think Brassimo and Right have different perspectives on the need for a change in the relationship between their businesses?

ANSWER: Both Brassimo and Right still adhere to the traditional resource dependence perspective. In this perspective, the more dependent an organization is on other organizations, the less power it possesses and the greater the risks. Naturally, both CEOs believe that by having the ―upper hand‖ or power in the relationship, they will be more independent and reduce risk. For Right, giving up some power is equivalent to allowing greater risk. For Brassimo, remaining in the weaker position represents increased risk that he could reduce by negotiating new terms.

CASE FOR ANALYSIS ~ BRADFORD CHEMICALS COMPANY This case provides an excellent counterpoint to the Technomagia/AUD case, which focuses on interorganizational relationships between two business organizations. This Bradford case looks at relationships between a business organization and other stakeholder organizations, such as government offices, agencies, and other public interest groups.

1. Do you think it is necessary for Henderson to meet with and try to build support from such a diverse group of people before moving ahead with the color lab and paint shop? Why? ANSWER: Most students will agree that he should. The institutional perspective teaches us that all organizations are subject to mimetic, coercive, and normative forces. In this situation, coercive forces and to a lesser degree normative forces are expected to have a powerful impact on Bradley Chemicals’ expansion plans. Rather than resisting those forces, it would probably be smarter and more efficient for Henderson to welcome those forces and adapt to them accordingly. Given that he is on a tight timeframe, he is likely to arrive at an agreeable solution more quickly by being flexible and adaptive.

2. How does the institutional view in the chapter help explain the events in this case?

Discuss.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: The institutional perspective teaches us that all organizations are subject to mimetic, coercive, and normative forces. In this situation, coercive forces play the strongest role. Coercive forces include local zoning laws as well as the EPA’s regulations. Less formal coercive forces include state and local organizations that encourage economic development and the creation of new jobs, as well as conflicting pressure from public interest organizations that are pushing for conserving the trees and protecting the area’s natural environment. The public’s expectation for Bradley Chemicals to behave in an ethical manner and as a respected, professional member of the community can also be viewed as a normative force. Henderson is keenly attuned to all of these conflicting expectations, and he is trying to find a way to accommodate them in an efficient, respectful way, knowing that resistance to these forces could be detrimental to the organization.

3. Which of normative or coercive forces among stakeholders are most likely to affect the decision to build the color lab and paint shop? Why? ANSWER: It would appear that coercive forces will have the most impact on Bradley Chemicals’ expansion plans. There is tremendous support for the creation of new jobs, but many stakeholders in this scenario are deeply concerned about saving the trees and protecting the natural environment. The organization will need to find a solution that satisfies all of these demands.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

APPENDIX A: NICK CIUBOTARIU’S BLOG As I woke up ready to start the weekend (without the slightest inclination to work, I might add – much more on this later), I glanced at my iPhone to appease my Facebook addiction and see what my friends were up to. Much to my surprise, a New York Times article describing Amazon had polluted my feed.

Amazon is a big company, and gets referenced often. I’ve read many articles that describe us.

Some are more accurate than others. Sadly, this isn't one of them. This particular article, has so many inaccuracies (some clearly deliberate), that, as an Amazonian, and a proud one at that, I feel compelled to respond.

To baseline, no one asked or expected me to do this. As I cracked open my laptop to write this article, people were already discussing its existence on certain email distribution lists, and the expressions were mostly of disbelief at how uninformed the article was. It’s certainly not how I anticipated spending a good part of my Saturday. But I’m not going to stand idly by as a horribly misinformed piece of ―journalism‖ slanders my company in public without merit.

I don't have the data to discuss the past - so I won't. However, so much that is written here is deliberately painted to match current reality, and it does not, even by a stretch of the imagination. That is not responsible journalism - that's a hatchet piece. So let's correct that, starting now.

Getting some bonafides out of the way of what actually qualifies me to rebut this article: •

I actually work here, and can give you a data-driven perspective of what life at Amazon is really like, today. I’m not an anonymous source, and I’m not something a journalist made up to generate clicks. I am putting my name and reputation behind everything I write, and willing to stand by my words 100%.

•

I’ve been at Amazon since March 24, 2014, which means I have 18 months of data to draw from – recent, on-the-ground experience. I have worked in two of our biggest product groups: Marketplace and currently, Search and Discovery, which means my experience covers a good swath of the Amazon populous.

•

I’m an Engineering Leader. I manage other managers, as well as Engineers – which means I run an organization and have visibility into both Executive

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

direction as well as everyday Engineering cadence. I sit on the floor, in a desk, not an office, by choice – because I like to be close to my folks – so I can relate to what it’s like for individual contributors as well as managers.

•

I’m a technical Bar Raiser, which means I’m part of a select group of people at Amazon who not only has visibility into our hiring standards and practices, but has the direct responsibility of ensuring they are always met.

More important, all those who know me know I’m a people-centric manager first and foremost: I live and breathe by the Golden Rule, and I believe in kindness, respect, integrity and transparency, and that being a good human being comes before anything else. Those principles are not for sale, at any price – not to me. And they never will be. I’ve never been afraid to speak my mind, publicly, about companies I’ve worked for where those principles get violated – scan my LinkedIn publisher feed and you’ll find that counter-example quite quickly. And if Amazon was the type of place described in this article, I would publicly denounce Amazon, and leave.

Quoting from the article: ―Data creates a lot of clarity around decision-making,‖ said Sean Boyle, who runs the finance division of Amazon Web Services and was permitted by the company to speak. ―Data is incredibly liberating.‖ Yup, I 100% agree. So, in very Amazonian fashion, I’m going to do what Jodi and David did not. I’m going to use data, and provide you with actual facts, starting now.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The headline itself, and subsequent "experiment" references There is no ―little-known experiment‖. That’s just silly. No one at Amazon has time for this, least of all Jeff Bezos. We’ve got our hands full with reinventing the world.

―On Monday mornings, fresh recruits line up for an orientation intended to catapult them into Amazon’s singular way of working.‖

Yes – this is called ―New Hire Orientation‖, or NHO. At Microsoft (referencing my personal experience), this is called ―New Employee Orientation,‖ or NEO. Every company has one, and they call it something. Here’s what happens at ours, precisely: •

New employees get a good breakfast (fruits, pastries, cereal, that kind of thing)

•

They immediately get a laptop and backpack

•

They get a ―Welcome to Amazon‖ introduction

•

They fill out benefits paperwork

•

They learn a bit about the company, including our leadership principles

•

They hear a story about how important our customers are, as ―Customer

Obsession‖ is widely known to be our first and foremost leadership principle •

They hear from a guest speaker about their experience at Amazon

•

They get their badge picture taken, and receive their badge

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

At the end, the employee’s Manager is waiting for them to welcome them to Amazon, and the new employees get taken out to lunch

This happens from 8 AM – 12:15 PM, or 9 AM – 1:15 PM. Anyone else know of any other company that has a somewhat similar process for new employees?

―They are told to forget the ―poor habits‖ they learned at previous jobs, one employee recalled.‖

This is completely false, and also, well, quite impossible. Amazon shares tons of ―habits‖ with many other companies, and we hire the best people from those companies because we want to learn from their experience. No one in New Hire Orientation says this. New Amazonians are encouraged to ―come up with better ways‖, a recurring theme of how we encourage innovation, and something you hear often at Amazon. ―Unless you know better ways‖ is something we live by. The world doesn’t stand still. If you don’t evolve, you perish. And as things get better, we are not only open about incorporating them, we foster the practice of doing so.

―To be the best Amazonians they can be, they should be guided by the leadership principles, 14 rules inscribed on handy laminated cards.‖

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

In an article, a prominent business magazine called our Leadership Principles ―Amazon’s secret weapon‖. They were absolutely right (no irony here – they help make this company great). They are also so secret that we proudly display them for everyone to see. Most, if not all, are things people readily agree with, and are repeated in one form or another by other companies that call them ―Core Values‖, ―Core Principles‖, and so on. I’m certain that at the time of their writing, they were drawn from past experience not only within Amazon, but other companies. ―When quizzed days later, those with perfect scores earn a virtual award proclaiming, ―I’m Peculiar‖ — the company’s proud phrase for overturning workplace conventions.‖

This is complete and utter reader bait. No one is "quizzed" - the quiz is totally, 100% voluntary – for that matter, no one will mention it again, aside from New Hire Orientation - and you’re told during orientation that it’s an easy way to get your first phone tool icon (some people go as far as collecting these icons). For some, it’s a fun practice. I didn’t take the quiz for 3 weeks, and I admit it’s because I was new and I wanted a phone tool icon. From the quiz itself: To help you understand our Peculiar Ways, we’ve created a quiz. If you answer 100% of the questions correctly, you’ll earn the phone-tool award. If you get an answer wrong because you disagree with the principle itself, then maybe we need to reconsider our way of thinking.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Wait. What?!? But the article is telling me that people get ―catapulted‖ into a ―singular way of working‖. Perhaps if Jodi and David had bothered to actually factcheck most of what they wrote with, you know, current Amazonians, this ―article‖ would have never made it to print. Alas, here we are. But let’s continue.

What are some of these evil quiz questions, you might ask? They mostly explain why we do things like obsess about our customers. Here’s a sample: one asks why we show customers reminders that they’ve already purchased an item if they’re about to accidentally re-purchase it. The correct answer?

Reminding customers that they’ve already bought an item is the right thing to do. It helps them from accidentally ordering the same thing twice, building trust that we’re a helpful partner. That’s awful, right? I mean, what customers would want that?

I’ll give you a big hint about this quiz: all 10 or so questions are about how well we treat our customers, and why we do that. It’s because it’s the right thing to do, and it’s why our customers continue to love us. Our customer obsession is what earned us first place in USA Today’s Customer Service Hall of Fame for the sixth year in a row. As long as Amazon is around, and I’m here, we’ll continue to be customer- obsessed, because that’s a good thing.

―At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

messages asking why they were not answered), and held to standards that the company boasts are ―unreasonably high.‖

No. No one encourages this. In fact, we get immediate growth feedback for this kind of nonsense. We go into meetings and discuss stuff, just like any other company does. If we quickly come to consensus - awesome. We save time and get out early, and that’s a great outcome. If we don’t, we debate – but we debate politely and respectfully, and you are given constructive feedback to course-correct if you are rude or disrespectful. No one, I repeat, no one is encouraged to ―toil long and late.‖ As a matter of fact, I’ll take a bit of time to expand on this: When I interviewed at Amazon, I heard all the horror stories from the past.

They’re actually pretty well known in Seattle. I was told they were true, that the company continues to take steps to make things better, and that work-life balance was taken seriously. I wasn’t convinced, but I took a bet, because I wanted to work on Computational Theory problems and Distributed Systems at scale that can only be found at Amazon. Here’s my experience: During my 18 months at Amazon, I’ve never worked a single weekend when I didn’t want to. No one tells me to work nights. No one makes me answer emails at night. No one texts me to ask me why emails aren’t answered. I don’t have these expectations of the managers that work for me, and if they were to do this to their Engineers, I would rectify that myself, immediately. And if these expectations were in place, and enforced upon me, I would leave.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

If Amazon used to be this way (and it most likely was, as you’ll see in the quote below), from my 18 month experience working in two of its biggest product groups, that Amazon no longer exists. Last year, during all-hands, a very high ranking Executive said, verbatim: Amazon used to burn a lot of people into the ground. This isn’t how we do things anymore, and it isn’t how I run my business. I want this to be a place where people solve problems that cannot be solved, anywhere in the world, but they feel good about working for a great company at the same time. And if you’re burning people into the ground with overwork, you’re not doing it right, and you need to course- correct, or you don’t need to be here.

The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses. Employees say it is frequently used to sabotage others. (The tool offers sample texts, including this: ―I felt concerned about his inflexibility and openly complaining about minor tasks.‖)

We refer to this as ―Anytime Feedback‖, and no one ―instructs‖ you to do anything. It’s simply there to use if you need it. And right at the top, there is a ―Strengths‖ section, and below, an ―Areas for Improvement‖ section. I receive anytime feedback, both positive and constructive, for the folks that work for me. I’m given feedback via the tool, mostly positive, some that addresses my growth areas, that my boss discusses with me. I can always provide it to anyone in the company, at any level. Some

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

people never use it, and just, you know, talk to each other. Some write emails. Certainly, it is not used to sabotage others in the company, and here’s why:

One of the few things the authors got right is that Amazon is a very data-driven company.

If the feedback does not have very specific data, as a manager, you are trained to dig deeper before accepting it (whether it’s positive or negative), and the tool allows you to do just that: reject the feedback by sending it back for clarification. Managers are also coached on diving deep into feedback to ensure that what Jodi and David state to happen – employee sabotage – actually does not.

The sample text bit is just comical: that’s there to help you in case you don’t know what to write. Conveniently, Jodi and David left out the sample text in the Strengths section, which, again, is the first thing you see on the Anytime Feedback page. Don’t worry, I’ll take care of that: ―I immediately felt confident about his abilities to organize the project! He quickly mobilized the team to meet a key project milestone!‖

The next 3 paragraphs

There is no ―culling of the staff‖ annually. That’s just not true. No one would be here if that actually took place and it was a thing.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

―The company, founded and still run by Jeff Bezos, rejects many of the popular management bromides that other corporations at least pay lip service to and has instead designed what many workers call an intricate machine propelling them to achieve Mr. Bezos’ ever-expanding ambitions.‖

I don’t know what the hell this even is, or where to start. What are the popular management bromides that we reject? There is no intricate machine, and I have no idea what Jeff’s ambitions are, other than to continue to grow Amazon. Most of us work here because we want to solve the world’s most challenging technology problems. We come to work, do our best, have fun, and go home. While what the authors write sounds evil- scary-bad, it lacks, you know, facts and substance. ―This is a company that strives to do really big, innovative, groundbreaking things, and those things aren’t easy,‖ said Susan Harker, Amazon’s top recruiter. ―When you’re shooting for the moon, the nature of the work is really challenging.

For some people it doesn’t work.‖

Yes. Amazon is, without question, the most innovative technology company in the world. The hardest problems in technology, bar none, are solved at Amazon. This is why I'm here. My mentor, an Executive at one of the biggest software companies in the world, told me in our monthly 1:1, as recently as 3 days ago: ―There isn’t another company with the size, complexity, and Engineering strength of Amazon. It is the undisputed world leader.‖ And it is true. Our sheer size and complexity dwarfs Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

everyone else, and not everyone is qualified to work here, or will rise to the challenge. But that doesn’t mean we’re Draconian or evil. Not everyone gets into Harvard, either, or graduates from there. Same principles apply.

―Nearly every person I worked with, I saw cry at their desk.‖

I don’t know Ben Olson, and I don’t know when he left the company. If his story is true, his manager, whoever they were, should be ashamed. I’ve been here 18 months, and I’ve never seen anyone cry. And if that was truly the environment in books marketing, Ben should have said something immediately. That’s just wrong, and certainly not something we encourage. In today’s Amazon, management and HR would take care of that in an instant.

I can, however, tell you what happens in my group. We work hard, and have fun.

We have Nerf wars, almost daily, that often get a bit out of hand. We go out after work. We have ―Fun Fridays‖. We banter, argue, play video games and Foosball. And we’re vocal about our employee happiness. And that’s encouraged from the Corporate Vice- President I skip to, and the Director I report to. Aside from our yearly survey, which asks very precise questions hitting at the core of employee happiness, our organization conducts our own polls, which get actioned by my group’s Leadership Team, of which I am a part of. We listen to what our folks are telling us.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Because hiring the very best of the very best is incredibly difficult, especially at Amazon. And it’s just stupid to create and, heaven forbid, foster an environment that encourages people to leave just as you’ve worked so hard to find and hire them in the first place.

Next paragraph deals with growth. Yay – we’re growing!! Then secrecy: we’re required to sign confidentiality agreements. Yes, just like just about every other technology company out there. They're referred to as NDA's, or Non-Disclosure Agreements.

They've been standard in industry for decades. Then there’s this:

―..life inside its corporate offices is largely a mystery‖.

It’s such a mystery that Glassdoor, CareerCup, Quora.. - well, ―the Internets‖ as a whole know all about Amazon, just like this article pretends to. I meet with people every day who ask what life at Amazon is like, and I tell them. I do this formally at least twice a week, for any interview I Bar Raise, because candidates ask. I’m doing it right now, for everyone that's gotten this far into the article and still cares.

The next several paragraphs deal with why people want to work at Amazon, and most is accurate. They come here because innovation in technology happens here more than anywhere else. What I take issue with is below:

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

―Amazon is in the vanguard of where technology wants to take the modern office: more nimble and more productive, but harsher and less forgiving.‖

Why, on Earth, would we want to be harsher and less forgiving? There is a virtual arms- race for the world’s top talent. Hiring in technology is incredibly difficult, more so in giant technology hubs like Seattle, where competition is fierce. If anything, we do our best to foster and grow the talent we hire through continuous improvement, leadership and mentoring, not by being ―harsh and less forgiving‖. That leads to a revolving door of talent, and no one wants that.

On Hire and Develop the Best and Elitism

I cannot speak about Jeff Bezos’s early life – I don’t have that data. I can tell you that our Leadership Principles are taken very seriously, and they play a large part in Amazon’s success. I do take issue with the fact that Jodi and David have no idea how to interpret the Leadership Principles. Hire and Develop the Best isn’t there to ―conjure an empire of elite workers‖. We are a very selective company in who we hire – as are Microsoft, Facebook, Google, and many of the other top companies in technology. Most would say we’re the most selective, and the data would say they are correct. But that doesn’t mean we’re ―elitist‖. Elitist implies snobby, aristocratic, blueblood. Anyone who knows anything about Amazon would tell you that hardly Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

describes us. Being ―most selective‖ is not the same thing by any means. As a matter of fact, here is the ―Hire and Develop the Best‖ leadership principle, verbatim:

Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.

Is any of this bad? Would you not want to work for a company that recognizes talent based on merit, not politics and bureaucracy? Would you not want to work for leaders that help you develop to become your best? Would you not want to be a part of a company where movement is encouraged, rather than restricted?

Other erroneous or unsubstantiated parts of the article. ―Within Amazon, ideal employees are often described as ―athletes‖ with endurance, speed‖. That’s just not true, and I’ve never heard anyone say that. I also think teaching Amazon’s Leadership Principles to one’s children is kind of funny (my opinion only, if there are indeed Amazonians that do this). I’m too busy teaching my child Judo, reading and chess. She’s also busy teaching me about Disney Jr. The authors are right when comparing the food perks. They don’t exist, like they do at Google and Facebook. Some people wish they did, others do not care. Our cafeterias are subsidized, and there are no free drinks at the offices in Seattle, though this policy is not company-wide. And then, there’s this: Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

―...from the bare-bones desks to the cellphones and travel expenses that they often pay themselves.‖

The desks are a tradition from the old Amazon ―door desks‖ and, looking at how nice they are compared to the sterile, hospital white, pressed-wood cubicle desks at other companies, they probably cost a lot more to make. Our cell phone expenses are reimbursed, and the fact that people ―often‖ pay for their own travel expenses is wrong – and, to be frank, just plain stupid – who would work at such a company?!? You’re actually encouraged to get an Amazon corporate card by some of the posters found on the company walls and in the elevators just to make travel reimbursement easier for you. My business travel has averaged twice monthly, and no one has ever told me I had to fund my own travel expenses. I also approve travel expenses for those working for me quite frequently via a, you know, "Travel Tool" – I’ve heard companies have those. In what happens to be a recurring theme throughout this article, simple fact-checking would have really helped.

―Of all of his management notions, perhaps the most distinctive is his belief that harmony is often overvalued in the workplace — that it can stifle honest critique and encourage polite praise for flawed ideas. Instead, Amazonians are instructed to ―disagree and commit‖ (No. 13) — to rip into colleagues’ ideas,

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

with feedback that can be blunt to the point of painful, before lining up behind a decision.‖

Again, no. Absolutely, unequivocally, no. Have Backbone/Disagree and Commit states:

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

I bolded respectfully for a reason. We don’t rip into each other. If this happened at Amazon before, it doesn’t happen now, not where I work and worked. What this does encourage is something that I have not found in any other company, and something that has been reinforced throughout my career at Amazon, including, in writing, in one of my training documents, citing verbatim:

“Executive mandates don’t fly around here”

I have worked in companies where the highest paid person in the room would make a decision, and that was that. Right, wrong or indifferent, you were either the wolf or part of the flock of sheep. At Amazon, people are encouraged and expected to call out bad/suboptimal projects, ideas, patterns, etc., no matter the level. I have

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

done this myself many times, twice to Senior Vice-Presidents that report to Jeff. I did it in a respectful manner, and simply pointed out that ―the data did not justify the project‖ and/or ―the data did not support their assertion.‖ I’m almost positive that at most other companies, this would have been equivalent to career crucifixion.

Instead, I got polite praise in both instances, with no further argument.

Everyone here is empowered to ―push the big red button‖, so to speak, when the train is about to go off rails, no matter their level and role. And that's one of the things that makes this place so great. There is an expectation that you do this in a data-driven and respectful manner, without negative emotion, or you get coached very quickly to do it the right way. That’s the ―Have Backbone‖ part of the leadership principle. The ―Disagree and Commit‖ portion is just as simple: If you’ve exhausted your side of the debate, and the votes go against you, you commit to the direction that your peers have decided to pursue.

A bunch of stuff that's also wrong or inaccurate

I have never been called an ―Amabot‖, nor have I heard anyone utter this term. I’ve never been called an Amhole, and I’m completely certain this is made up, as I’ve never heard anyone say this, and as an insult, it wouldn’t make a very good one, in my opinion. I have never been criticized for not having an Internet connection, not answering emails at night, or otherwise not having a life outside Amazon. If that happened, I would leave. If it is happening in other parts of the company, despite my Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

personal experience and that of thousands of others in the two product groups I’ve worked in, it needs to stop – immediately. I have never seen a 50-60 page document – that is not Frugal in terms of time spent, and certainly would not be encouraged. In a sad and continued pattern of setting the record straight with this article, most Amazonians and especially Executives insist that written material adhere to at ―6 pages or less‖ rule. I have never been ―pop-quizzed‖. I have never been called ―stupid‖, and if anyone called me, or anyone that worked for me, that, the next conversation they would have would be with an HR Business Partner in the room.

My personal favorite

I’m kind of flattered that Jodi and David think of me as a ―star employee‖ by way of being a Bar Raiser – being invited into the Bar Raiser program, and graduating, was one of the toughest and most rewarding things I have ever accomplished. Thanks guys!!

I’ve already covered the Anytime Feedback tool, and completely agree with below:

―Craig Berman, an Amazon spokesman, said the tool was just another way to provide feedback, like sending an email or walking into a manager’s office. Most comments, he said, are positive.‖

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Hey, guess what - Craig was right! And he works for Amazon! But, to just to make sure, I even looked through for the folks that report to me, including Managers and their subordinates.

On average, the ratio of positive feedback to negative feedback was over 5:1. What I find fascinating is how Jodi and David over-index on this tool as if it were the most nefarious devices known to man. It is no different than what is found at tons of other companies – it’s really just another way of providing feedback. I don’t want to be dismissive of the examples provided, but singling out several outliers to vilify an entire company does not represent truth in journalism.

Organizational Level Ranking

I won’t discuss Organizational Level Ranking, or OLR. Some companies, such as Microsoft and Accenture, no longer use it. Others, such as Amazon, Google, Facebook, Apple and others still use it. Yahoo instituted it two years ago. I will dispute – vehemently so – the assertion that ―You learn how to diplomatically throw people under the bus‖. To assert otherwise without a single shred of data is irresponsible and just plain wrong. We don’t have time to do that here, or to teach people that. Also, it's bad. Also, HR participates in OLR, and makes sure that we don't do that, because it's bad.

On the gender gap

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Science is gender-neutral. I have seen Amazon do more to encourage diversity than any other company I’ve worked for. My Bar Raiser mentor is one of the most capable leaders I have ever met – she is a stellar professional and Amazon is lucky to have her. As a Bar Raiser, one of my responsibilities is to ensure that we ―Hire and Develop‖ without a single shred of prejudice. Quite frequently, I interface with Directors and CVPs that are women, who have earned my trust and respect, and I quite frankly have no idea what to make of the following:

―Several former high-level female executives, and other women participating in a recent internal Amazon online discussion that was shared with The New York Times, said they believed that some of the leadership principles worked to their disadvantage. They said they could lose out in promotions because of intangible criteria like ―earn trust‖ (principle No. 10) or the emphasis on disagreeing with colleagues. Being too forceful, they said, can be particularly hazardous for women in the workplace.‖

I honestly don’t understand this. One ―Earns Trust‖ through actions, not through gender.

Here's the Earns Trust of Others leadership principle:

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.

How would adhering to this work against a specific gender? How could being an attentive, respective leader, who is vocally self-critical and candid be a bad thing?? Even if this could logically happen based on gender, of all things (and I can't for the life of me rationalize how) HR is in the room for promotion and review discussions to ensure that what Jodi and David refer to doesn't happen. As a father to a single child (a daughter), who I hope one day will be the best at whatever she chooses to be, this part of the article angers me the most. I want to state that I am not disputing Michelle Williamson’s account of what she was told by her boss – what I am disputing is that it’s a widespread practice, as the article makes it out to be. As an Amazonian, this is not something I’ve ever encountered, and as a Manager and owner, I would flag comments such as the one her former boss made immediately.

The next part of the article devotes itself to one-off examples (which sound absolutely horrible). Quoting from the article: ―Mr. Berman, the spokesman, said such responses to employees’ crises were ―not our policy or practice.‖ He added, ―If we were to become aware of anything like that, we would take swift action to correct it.‖

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Craig, you’re now aware. If these examples are indeed accurate, we need to verify what happened and ensure nothing like this ever happens again. On a positive note, I can relate to the lady whose leadership team was supportive when her husband was diagnosed with cancer. When I first went to work for Amazon, I left the Seattle area for the opportunity to help run a very successful and fast-growing Engineering office in Tempe, Arizona. Family health reasons in adjusting to the extreme temperatures of a desert climate forced us to move back. I moved back during review time, and moved to another product group. And my review, as well as my yearly results, didn’t suffer one iota. Amazon was extremely supportive of my move, worked with me when I needed time off to be with my family, and ensured my performance review fairly reflected my contributions to the company. I have done the same, multiple times, for folks that work in my organization with similar circumstances. We are all encouraged to do this because it’s the right thing to do.

A stream of departures

This part of the article deals with attrition. I don’t know what the numbers are. I have some idea of how many people want to work here, and that number is staggering. In every interview I participate, as part of the introduction and as an ice- breaker, I ask a very simple question: ―What brings you to Amazon?‖ The answers vary, but thematically, most candidates provide a version of this:

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

I want to work on the most complex problems in the world, with the best and brightest people in the world.

This is, in effect, what Amazon is all about. And reading the article, it's patently clear that Jodi and David don't comprehend this. It’s not about ―the cause of delivering swim goggles and rolls of Scotch tape to customers just a little quicker.‖ In 1997, Amazon revolutionized the way the world shops. Today, we’re the world’s most innovative technology company that just happens to sell books, among other things. We are a multi-faceted business that spans the breadth of technology innovation, from cloud computing to devices to search to advanced robotics, and countless other spaces. It’s not an easy place to work. We thrive on challenge, innovation, and winning. We believe that every day is still Day One. And alongside that, we're a human company that cares about its employees. Perhaps we weren't before - but even if we didn't want to be, today, we have to be. Because we are not the only ones in the race for talent, and everyone wants the very top people we work so hard to hire.

And the very best of the very best always have choices, and exercise them quickly if they need to.

The Amazon described in this article may have existed, in the past. Certainly, I’ve heard others refer to ―how things used to be‖ but it is definitely not the Amazon of today. And it’s really a shame Jodi and David didn’t take the time to write a fact- based article. I’ve done my best to rectify that, on their behalf, as well as the New York Times. All three of you are quite welcome.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER SIX DESIGNING ORGANIZATIONS FOR THE INTERNATIONAL ENVIORNMENT

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter explores how managers design the organization for the international environment.

Reasons for expanding internationally are provided along with the stages of international development and the use of strategic alliances and acquisitions. The chapter examines global strategic approaches, the application of various structural designs for global advantage, and looks at coordination mechanisms used in global organizations. Finally, the transnational model is explained, a type of global organization that achieves high levels of the varied capabilities needed to succeed in a complex and volatile international environment.

Learning Objectives After reading this chapter you should be able to: • Compare and contrast the three primary motivations for entering the global arena.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • • •

Explain the three major challenges global design faces.

Define globalization, multidomestic, and glocalization strategies.

Describe how different structural design options for international operations relate to differences in global strategy.

Identify mechanisms for global coordination, knowledge transfer, and resolving the tension between global uniformity and local responsiveness.

Describe the transnational model of organizing.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

The only way an organization can reasonably expect to be successful in different countries is to customize its products and services to suit the local interests, preferences, and values in each country.

It is an especially difficult challenge to work on a global team to coordinate one’s own activities and share new ideas and insights with colleagues in different divisions around the world.

The most advanced multinational corporations have developed systems for maintaining tight headquarters control over subsidiaries in dozens of countries.

A LOOK INSIDE Walmart

Walmart’s attempt to enter the German market was an utter failure, largely due to cultural and operational differences. German law prevents the sale of goods below cost, which is one of Walmart’s key differentiators. Additionally, Walmart’s culture of stationing greeters at the doors and asking salespeople to smile are completely opposite of what German shoppers and German employees think is appropriate behavior. After nine years of disappointing performance, Walmart sold its stores to local rival Metro and exited the German market.

Entering the Global Arena The world is rapidly developing into a unified global field, and every company and manager needs to think globally. Emerging economies are growing rapidly as providers of both products and services to developed countries. At the same time, these regions are becoming major markets for the products and services of North American firms. For today’s companies, the whole world is a source of business threats and opportunities.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK The World Is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman The global competitive playing field is being leveled. Friedman asserts that the forces causing accelerated globalization began in the final years of the twentieth century. Friedman outlines ten forces, called flatteners, that flattened the world including: Work Flow Software, Supply-Chaining, and the Steroids. Friedman refers to a variety of new technologies as steroids ―because they are amplifying and turbocharging all the other flatteners.‖ Motivations for Global Expansion By going global companies can realize economies of scale (savings derived from large volumes of purchasing, production, and sales) and exploit economies of scope (the number and variety of products and services it offers, as well as the number of markets it operates in).

IN PRACTICE Amway Amway started in 1959 with a direct sales model of independent entrepreneurs selling to consumers. Sales in China became a $200 million business when the Chinese government issued regulatory changes that required Amway to revise its business model. The company established physical stores, manufactured products in China and changed the compensation system.

Amway took the long-term view, and today, China is the company’s largest market with $4 billion in annual sales. Amway looks at its experience in China as a valuable lesson in the importance of continuously questioning an organization’s business model and adapting to succeed in different markets.

Another reason for moving to global market is to take advantage of low-cost production factors, especially lower-cost labor. Organizations have gone international in search of lower costs of capital, sources of cheap energy, reduced government restrictions, or other factors that lower total production costs.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Managing the Stages of International Development As a company evolves toward full-fledged global operations, they tend to go through four stages: • • • •

Domestic stage means that the company is predominantly domestically oriented, but managers are developing initial international involvement, often to increase market potential.

International (Multidomestic) stage means that exports are taken seriously and that the company deals with the competitive issues of each country separately.

Multinational stage means that it has marketing and production facilities in many countries, worldwide access to capital, and has more than one- third of its sales outside the home country.

Global stage means that the company transcends any single country and does not identify with a single home country.

As a company evolves, managers and employers have an increasing need for cultural intelligence, or the ability to use reasoning and observations skills to interpret unfamiliar gestures and situations and to devise appropriate behavioral responses.

HOW DO YOU FIT THE DESIGN? What Is Your Cultural Intelligence How might you develop greater empathy for people who are different from you?

Cultural intelligence is a manager’s capability to function well in situations characterized by cultural diversity. Cognitive CQ pertains to the head, emotional CQ pertains to the heart, and behavioral CQ pertains to the body.

Hone your observational skills, take courses, look for international travel opportunities, and learn to pick up on clues about how people from a different country respond.

Global Expansion through International Alliances and Acquisitions International strategic alliances offer one way to get involved in international operations. Licensing agreements allow a company to use the technology or name of another. Joint ventures are separate entities created with two or more active firms as sponsors. Many companies prefer acquisitions because they offer greater control than joint ventures.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Walmart and Flipkart With a young population four times that of the U.S., India is an attractive market for both Amazon and Walmart. Amazon has invested heavily in entering this market, but Walmart has decided to enter by acquiring India- based online retailer Flipkart. Already well established, Flipkart offers Walmart a way to enter India with local managers who understand the local environment.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The Challenges of Global Design There are three primary segments of the global organizational challenge: greater complexity and differentiation, the need for integration, and the problem of transferring knowledge across a global firm.

•

•

•

Movement into the international arena means increased complexity and differentiation, demanding the development of a structure to fit the numerous countries in which it operates. Often this means more product differentiation which also means more internal organizational complexity As organizations become more differentiated managers face the increased need for coordination, the quality of collaboration across the organizational units. The question is how to achieve the integration necessary for a global organization to reap the benefits of international expansion.

Organizations need to learn from their international experiences and exploit that learning to create and leverage global organizational knowledge. Knowledge transfer is hindered by language, cultural, and geographic distances; protection of one’s own division rather than cooperation; viewing knowledge as power one unit does not want to give up; the reluctance to use knowledge from elsewhere due to pride; and the fact that much of this knowledge is not written down. One way some organizations cope is to engage in reverse innovation, or trickle-up innovation, which refers to developing lowcost products or services for emerging markets, then adapting them for developed economies.

Designing Structure to Fit Global Strategy An organization’s structure must fit its situation by providing sufficient information processing for coordination and control while focusing employees on specific functions, products, or geographic regions. Organization design for international firms follows a similar logic, with special interest in global versus local strategic opportunities.

Strategies for Global versus Local Opportunities Managers choose between global standardization and local responsiveness. A globalization strategy means that product design, manufacturing, and marketing strategy are standardized, which is less costly than creating different products for different markets. Economic and social changes, including a backlash against huge global corporations, have prompted consumers to favor local products.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ASSESS YOUR ANSWER The only way an organization can reasonably expect to be successful in different countries is to customize its products and services to suit the local interests, preferences, and values in each country.

ANSWER: Disagree. It is the case that people around the world often want products and services that are tailored to their local needs and interests, and many organizations are quite successful by responding to local market demands. However, other international organizations attain competitive advantages by using the same product design and marketing strategies in many countries throughout the world.

A multidomestic strategy means that competition in each country is handled independently of competition in other countries. A multidomestic strategy would encourage product design, assembly, and marketing tailored to the specific needs of each country. Different global organization designs are better suited to either global standardization or national responsiveness.

A glocalization strategy seeks to achieve both global integration and local responsiveness simultaneously.

IN PRACTICE General Electric In today’s economy, countries such as India and Indonesia want foreign companies to invest and build locally, train local workers in new skills, and share technology, rather than just take advantage of lower costs. GE, which has more than 400 factories around the globe, has embraced this new perspective. For example, it built a new locomotive factory in a remote village 600 miles southeast of Delhi. The factory will provide much-needed jobs and skills for local residents.

GE believes that whatever it may lose in terms of efficiency, it will gain in terms of better relationships and more revenues.

International Division When a company is low with respect to developing either a globalization or multidomestic strategy, simply using an international division with the domestic structure is an appropriate way to handle international business. The Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

international division has a status equal to other major departments, and has its own hierarchy to handle international matters such as sales or opening subsidiary plants.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Global Product Division Structure Global product structure means that the product divisions take responsibility for global operations in their specific product area.

Managers in each product division can focus on organizing for international operations and directing employees’ energy toward their own division’s global problems or opportunities. This structure works best for worldwide production and sale of standard products. Often product divisions compete instead of cooperating; and some countries are ignored by managers. Country coordinators can overcome these problems.

Global Geographic Division Structure Global geographic structure means that each region reports directly to the CEO and has full control of functional activities in its geographical area. Although this structure lends itself easily to exploiting opportunities for regional competitive advantages, problems may result from the autonomy of each regional division. It is difficult to plan on a global scale because each division acts to meet only the needs of its region.

It is difficult to introduce products developed offshore into domestic markets, and there is often duplication of line and staff managers across regions.

IN PRACTICE Colgate-Palmolive Company With more than half of its annual sales coming from outside the U.S., ColgatePalmolive has succeeded internationally by using the global geographic structure. It emphasizes individual autonomy, an entrepreneurial spirit, and the ability to act locally. To facilitate coordination the company has created an international development group that has responsibility for long-term company planning and worldwide product coordination and communication. Now the company has added two additional coordinating positions to further coordinate its worldwide activities.

Global Matrix Structure The global matrix structure is similar to the domestic matrix, although distances are greater and coordination is more complex.

This complicated form would work best when there is balanced pressure for the interests of

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

both product standardization and geographical localization and when coordination to share resources is important.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE ABB Group ABB has a global matrix structure to achieve economies of scale combined with local flexibility and responsiveness. At the top are the chief executive officer and an executive committee of 10 top managers, who hold meetings around the world. Along one side of the matrix are product division managers. Along the other side of the matrix is a regional structure with eight regional managers responsible for local balance sheets, income statements, and career ladders.

Managers who are multilingual and culturally sensitive have a better chance of succeeding.

Additional Global Coordination Mechanisms Managers meet the global challenge of coordination and transferring knowledge and innovation across highly differentiated units in a variety of ways.

Global Teams Also called transnational teams, global teams are work groups made up of multinational members whose activities span multiple countries. Teams are intercultural teams, whose members come from different countries and meet face to face or virtual global teams, whose members conduct their work electronically. However, cultural and language differences can create misunderstandings, and resentments and mistrust can quickly sidetrack the team’s efforts.

IN PRACTICE L’Oréal The cosmetics firm L’Oréal exemplifies the global-local tension because personalcare needs are unique to each culture. Yet, L’Oréal is very global and very local.

Product development is the firm’s competitive advantage, so L’Oréal recruits product development teams that report to managers who have mixed cultural backgrounds. Teams share their ideas. L’Oréal places multicultural Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

managers at the center of interactions among brands, regions, and functions.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ASSESS YOUR ANSWER It is an especially difficult challenge to work on a global team to coordinate one’s own activities and share new ideas and insights with colleagues in different divisions around the world.

ANSWER: Agree. The problems of different languages, locations, cultural values, and business practices make membership on an international team especially difficult. Global teams can be effective only if members have the patience and skills to surmount the barriers and openly share information and ideas. Global teams made up of people who are culturally astute and genuinely want to coordinate and communicate with their counterparts in other countries perform better.

Headquarters Planning In this approach, the global headquarters takes an active role in planning, scheduling, and control to keep the global organization working together and moving in the same direction. Without strong leadership, highly autonomous divisions can act like independent companies rather than coordinated parts of a global whole.

Expanded Coordination Roles Creating specific organization roles can help to integrate all the pieces. Often the role of top functional manager is expanded to include responsibility for coordinating across countries. Country managers can coordinate across functions. The network coordinator coordinates information and activities related to key customer accounts. Benefits include: cost savings, better decision making, greater revenues, and increased innovation.

Benefits of Coordination The benefits of inter-unit collaboration, such as information and knowledge sharing, include: • • • •

real, measurable cost savings. better decision making. greater revenues. increased innovation.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Transnational Model of Organization The transnational model exists for large multinational firms with subsidiaries in many countries that try to take advantage of both global and local advantages. It creates an integrated network of individual operations linked together to achieve the multidimensional goals of the overall organization. The transnational model is a managerial state of mind, a set of values, a shared desire to make a worldwide learning system work, and an idealized structure for effectively managing such a system.

Characteristics of a transnational organization include: • • • •

Assets and resources are dispersed worldwide into highly specialized operations that are linked together through interdependent relationships.

Structures are flexible and ever-changing, operating on the principle of flexible centralization─ centralizing some functions in one country and decentralizing them in another.

Subsidiary managers initiate strategy and innovations which become strategy for the corporation as a whole.

Unification and coordination are achieved through corporate culture and shared vision and values, and management style, rather than through formal structures and systems.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ASSESS YOUR ANSWER The most advanced multinational corporations have developed systems for maintaining tight headquarters control over subsidiaries in dozens of countries.

R:

ANSWER: Disagree. To succeed as part of a huge global firm, individual units need flexibility and autonomy. Most of the alignment in a transnational organization is achieved through common culture and values, shared vision and goals, and interdependent relationships among subsidiaries. Managers have to stretch out of their familiar comfort zone to succeed internationally, which sometimes means giving up control in the traditional sense.

Design Essentials • • •

Three primary motivations for global expansion are to realize economies of scale, exploit economies of scope, and achieve scarce or low-cost factors of production such as labor, raw materials, or land.

Organizations evolve through four stages: a domestic orientation, an international orientation, a multinational orientation, and a global orientation.

Global organizational challenges include: addressing environmental complexity through organizational complexity and differentiation, achieving integration and coordination among differentiated units, and implementing mechanisms for the transfer of knowledge and innovations.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • •

Geographic structures are effective for organizations that benefit from a multidomestic strategy. A product structure supports a globalization strategy. Huge global firms might use a matrix structure. Many firms use hybrid structures.

Additional coordination mechanisms include global teams, stronger headquarters planning and control, and specific coordination roles.

Companies are moving toward the transnational model of organization, which is based on a philosophy of interdependence.

LECTURE ENHANCEMENT Chinese Tech Giant Baidu Steps Back from Middle East Based on an article in The Wall Street Journal (October 26, 2017) https://www.wsj.com/articles/chinese-tech-giant-baidu-steps-back-frommiddle-east-1509039191 by Asa Fitch Chinese internet search giant Baidu is retrenching from an Egyptian market from where it had hoped to expand in the Middle East, said people familiar with the matter, following a six-year effort to challenge its American rivals.

In recent months, the company has gradually laid off its more than 30 employees and closed its Cairo office after the business didn’t meet its targets, said these people, who are several former employees and a regional technology executive with knowledge of Baidu’s business.

The Beijing-based company, which has a near monopoly on China’s internet search traffic, had focused in Cairo on developing Arabic-language applications and websites as advertising platforms for the Middle East and North Africa. It tested an Arabic search engine but never launched it widely, these people said. No Baidu representation could be found in Cairo. A company spokesman in Beijing declined to comment on the Cairo office, the search engine nor any plans for Egypt and the Middle East. He said the company still had representation in Egypt, that it was focusing on mobile apps there and that it had tens of millions of monthly active users in the Middle East and North Africa.

Baidu isn’t alone among Chinese tech giants in its struggles overseas. Others, including Alibaba and Tencent have faced difficulties expanding into a global tech landscape dominated by American giants like Google, Amazon and Facebook.

Baidu began expanding abroad in 2007 with mixed success. The company launched its flagship search engine in Japan in 2008 but withdrew in 2015 after failing to make a dent in Google and Yahoo’s market lead. A spokesman said at © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

the time that the company might re-enter the market in the future. The spokesman in Beijing declined to comment on Japan.

Sam Blatteis, who heads the MENA Catalysts Inc., a regional tech policy advisory based in Dubai, said Baidu faltered partly because it chose the wrong Middle Eastern market. Egypt’s rocky politics and strained economic conditions have made it a difficult market despite its large population and role as a leader in the Arab world. The deep foothold of American companies, which have effectively localized regional content, has also been an impediment to new entrants, he said.

The Middle East is among the fastest-growing regions in the world in terms of internet users, with 15% annual growth as of January, according to a report by We Are Social, a London-based digital ad agency. There were almost 150 million internet users in the region at the time of the report’s publication.

Baidu, whose flagship search engine is the fourth-most-popular website globally, entered Egypt about six years ago. In Egypt, it tried to apply a model that worked in China—spending heavily on marketing to secure new users and then hoping organic growth follows.

Some of Baidu’s products were a success, he said, including battery-saving and speed-boosting apps for Android. But Baidu ultimately didn't achieve its targets in Egypt and the Middle East, the employees and the tech executive said.

DISCUSSION QUESTIONS 1. Name some companies that you think could succeed today with a globalization strategy and explain why you selected those companies. How does the globalization strategy differ from a multidomestic strategy?

ANSWER: The companies that the students come up will vary. Multidomestic strategy means that exports are taken seriously and that the company deals with the competitive issues of each country separately. Globalization means that the company transcends any single country and does not identify with a single home country. Products and practices that work in any one country are used in other appropriate countries.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2.

Why do you think the tension between a desire for global uniformity and local responsiveness is greater today than in the past?

ANSWER: Students can discuss this question. In reality, there has been an escalating tension for most companies between the need for global uniformity and the need for local fit and responsiveness. Today, consumers have many choices and very different lifestyles.

Panasonic was losing market share to a local Chinese company until it. learned to meet local consumers’ needs. The company created a research center to develop a deep understanding of different consumer lifestyles

3. Many American companies enter China through joint ventures with local firms, but China is succeeding in the United States primarily with a strategy of buying companies outright.

What are some factors that might account for this difference?

ANSWER: Companies seek joint ventures to achieve production cost savings. However, when they can persuade senior managers of foreign companies to stay on, many companies prefer acquisitions because they offer greater control than joint ventures.

Acquisitions have been China’s preferred way of expanding internationally. Chinese companies have succeeded by buying strong brands overseas and keeping them healthy.

They keep local managers and let them run the companies.

4. Do you think it makes sense for a transnational organization to have more than one headquarters? What might be some advantages associated with two headquarters, each responsible for different things? Can you think of any drawbacks?

ANSWER: Answers will vary, and this question can spark a lively debate. No. The transnational organization does not need to have more than one headquarters because the company’s executives are learning to manage a worldwide organization ―as a network, not a centralized hub with foreign appendages. Since the units of a transnational organization network are far-flung, it would add complexity and confusion to have more than one headquarters. The transnational model creates an integrated network of individual operations that are linked together to achieve the multidimensional goals of the overall organization. Two headquarters might cause a breakdown in communication.

With one headquarters, individual units still have autonomy and the ability to have an impact on other parts of the organization. Drawbacks include added organizational complexity.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

5. What are some of the primary reasons a company decides to expand internationally?

Identify a company in the news that has recently built a new overseas facility. Which of the three motivations for global expansion described in the chapter do you think best explains the company’s decision? Discuss.

ANSWER: By going global companies can realize economies of scale and exploit economies of scope—the number and variety of products and services it offers.

Another reason for moving to global market is to take advantage of low-cost production factors, especially lower-cost labor. The companies that the students come up will vary as will their analysis of the motivations behind that expansion.

6. When would an organization consider using a matrix structure? How does the global matrix differ from the domestic matrix structure described in Chapter 3?

ANSWER: The global matrix structure is most effective when forces for both global integration and for national responsiveness are high. It presents a complexity in the structure, and therefore should not be considered when either or both of those forces are low because it would impose unnecessary complexity on organizational activity.

However, when the needs are present, the design can help the organization effectively match its structure to its strategy.

The international matrix has much in common with the inner workings of the domestic matrix, except for the fact that distances are greater--worldwide--and coordination is more complex. This means that decisions may take longer to make unless new communications technology is used to help overcome distance. It means, further, that factors of local conditions, legalities, and cultures must also be considered when running the organization. Structurally, the domestic matrix highlights managers for both functional areas and product or project areas, whereas the international matrix typically highlights managers for both regional areas and product or project areas.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

7. Name some of the elements that contribute to greater complexity for international organizations. How do organizations address this complexity? Do you think these elements apply to an online company such as Netflix that wants to expand its online video streaming service internationally? Discuss.

ANSWER: The factors that contribute to greater complexity for international organizations include offering modified or different products, the need for integration, the problem of transferring knowledge across a global firm, and cultural differences. Organizations address this complexity by adapting the organizational structure to produce offerings complying with local tastes, culture, and laws. They often must develop new positions as Colgate-Palmolive did.

Online companies such as Netflix must be able to adapt to more complexity. Cultural and legal differences will still play a major role and may require some organizational changes.

8. Traditional values in Mexico support high power distance and a low tolerance for uncertainty. What would you predict about a company that opens a division in Mexico and tries to implement global teams characterized by shared power and authority and the lack of formal guidelines, rules, and structure?

ANSWER: Mexican workers would probably not respond well to this type of approach. They would view management as weak and would want more direction to be provided them.

Another response might be that the teams set up this way would have a strong personality assume the stronger leadership role that their culture prefers.

9. Do you believe it is possible for a global company to simultaneously achieve the goals of global efficiency and integration, national responsiveness and flexibility, and worldwide transfer of knowledge and innovation? Discuss.

ANSWER: While this is certainly possible, it takes a lot of work. The company may have to give up some efficiency and have a little less integration to achieve the responsiveness and flexibility it desires. The company may learn that what makes it efficient in one country does not fit the culture of another country or is not allowed by local laws.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

10. Compare the description of the transnational model in this chapter to the elements of the learning organization described in Chapter 1. Do you think the transnational model seems workable in a huge global firm? Discuss.

ANSWER: A corporate culture that is strong and fosters shared values characterizes both the learning organization and the transnational model; it is described in the text as the learning organization extended to the international arena. The transnational model has multiple centers, subsidiary managers who initiate strategy for the whole company, and coordination and control which is achieved through corporate culture and shared values.

This type of structure may be the only workable structure in huge global firms that truly have subsidiaries in many countries that try to exploit both global and local advantages.

When it is necessary to deal with multiple interrelated competitive issues, the complexities of even the global matrix structure are inadequate to carry beyond balancing simultaneous product and geographic needs. Simply due to the size of the organization, more restrictive types of structures would tend to slow down the organization and make it less competitive.

WORKBOOK ~ MADE IN THE U.S.A? Through discussion, this activity will help students understand that most products we buy and use are international in nature and that we have truly become a global economy. A variation on this exercise would be to challenge the students to find a product made completely in the U.S.A. and then to discuss how difficult this was to do.

CASE FOR ANALYSIS ~ Halogen Analytics In discussing this case your students should answer the following questions: 1. What are the arguments for Halogen Analytics going international?

ANSWER: The arguments can be gleaned from the case itself. One reason for going international is a defensive response to the invasion of FastData, the Norwegian company, and other possible international companies. The other reason is that international markets offer an attractive way to expand both sales and profits.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. What are the arguments for Halogen Analytics staying focused on the U.S. market?

ANSWER: Arguments against going international are that the company still can expand domestically and is really still establishing itself in the U.S. It also does not have any international experience, and any approach it uses will require an investment in both time and money.

3. Which of the three international strategy options—open its own offices, take on foreign partners, license its products—would you recommend. Explain why.

ANSWER: There are pros and cons of each of these approaches. Opening its own offices gives the company maximum control and it does not have to share profits with anyone.

However, this would be expensive and the company would probably make many mistakes as it learns the market conditions and requirements in each country where an office is located.

Taking on foreign partners will reduce the learning curve and facilitate complying with local conditions, culture, and laws. However, this will mean sharing profits and the company may find that it is just training its own future competition.

Licensing foreign distributors also will reduce the learning curve and facilitate complying with local conditions, culture, and laws. The profits will be even lower than with partners and the loyalty of these distributors will depend on how well they can sell the products and how much profit they can earn. If they find a better deal from another company, they could abandon Halogen.

CASE FOR ANALYSIS ~ Rhinebeck Industrial 1. What do you see as the pros and cons of a new headquarters’ international department to coordinate across geographic regions?

ANSWER: The benefits to a new international department at headquarters include greater coordination of activities and greater sharing of information and innovations. These could result in substantial cost reductions and increased sales. However, the three regional Vice Presidents and managers at all of the subsidiaries are accustomed to thinking only in terms of what is best for their regions and/or subsidiaries. They will most likely resist this new way of thinking, at least initially, and may not be willing to implement some changes that benefit the entire organization if they feel the changes hurt their subsidiaries. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. Do you support the proposal to reorganize into a worldwide product structure? What implementation challenges do you foresee? Explain.

ANSWER: The pros and cons of a worldwide product structure are fairly similar to those of the international department. The restructuring should result in greater coordination of activities and greater sharing of information and innovations, which should yield significant cost reductions and increased sales. Here again, the three regional Vice Presidents and managers at all of the subsidiaries will most likely resist the change initially. However, in time, they may come to see themselves as part of a collaborative global effort, as opposed to individuals within a conglomerate.

CHAPTER SEVEN DESIGNS FOR SOCIETAL IMPACT: DUAL-PURPOSE ORGANIZATIONS, CORPORATE SUSTAINABILITY, AND ETHICS

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS APPENDIX

CHAPTER OVERVIEW This chapter explores how managers design an organization to embrace corporate social responsibility, especially hybrid organizations that have the dual purpose of serving

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

society while also generating wealth for owners and shareholders. Contemporary trends, such as the green movement, the triple bottom line, conscious capitalism, and the bottom of the pyramid, are covered. The chapter then looks at organizational design in terms of sustainability and corporate ethics.

Learning Objectives After reading this chapter you should be able to: • • • • •

Describe how a hybrid organization differs from a typical nonprofit or profit- seeking organization, including the two major ―logics‖ that are embraced in hybrid organizations.

Describe how organizations implement corporate social responsibility using the green movement, the triple bottom line, conscious capitalism, and the bottom of the pyramid approaches.

Identify important stakeholders for an organization and discuss how managers balance the interest of various stakeholders.

Discuss how ethical norms can be maintained through organizational structures and systems.

Compare the various sustainability approaches organizations can adopt.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

The best way for an organization to positively address a societal problem while at the same time succeeding as a business is to incorporate as a benefit corporation.

The most important stakeholders for any corporation that wants to succeed are its shareholders.

The single best way to make sure an organization stays on solid ethical ground is to have a strong code of ethics and make sure all employees are familiar with its guidelines.

A LOOK INSIDE Patagonia Patagonia is an excellent example of a benefits corporation, or B Corp, designed to pursue social goals as well as business goals. Founded by mountain climber Yvon Chouinard, Patagonia’s mission has always been saving the environment. The organization donates 10 percent of its profits or 1 percent of sales, whichever is higher, to other organizations that serve the biosphere. Additionally, Patagonia has developed environmentally friendly manufacturing technologies, which is freely shares with other like-minded manufacturers, including competitors.

Designing the Dual-Purpose Organization Unlike traditional for-profit businesses designed to generate wealth or nonprofit businesses designed to serve a social mission, a hybrid organization is designed to pursue both profit and social mission simultaneously.

One of the challenges in operating a hybrid organization is the potential for mission drift, which occurs when employees pay more attention to the organization’s commercial business than they do to its social mission. Because the commercial side of the

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

business is the source of employees’ incomes and job security, they sometimes lean toward the profit-generating aspect of the business.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Facing the Challenge A logic refers to a person’s basic assumptions, values, and beliefs that he or she thinks should guide an organization’s behavior. Most employees tend to embrace one logic at a time. However, employees in a hybrid organization are required to embrace two logics, the commercial logic and the social welfare logic. This can be very challenging for some people.

Designs for Achieving Dual Commercial and Social Welfare Goals Research shows that hybrid organizations can engage in six techniques and structures to create and restore balance in a dual-purpose organization: 1. Choose the right structure. When a hybrid organization has a workflow and clients that readily divide into separate parts, it is best to separate employees into separate departments. However, some hybrid organizations are best served by having all employees coordinated in one department.

2. Hire employees with a balanced mindset. In the hiring process, hybrid organizations must be able to screen and identify those candidates who will be able to hold two logics (the commercial logic and the social welfare logic) simultaneously.

3. Set clear goals and measure effectiveness. Clear goals communicate and continue to remind employees of the dual purpose of the organization, while performance measures reveal what’s working and what’s not.

4. Collaborate with like-minded organizations. As a hybrid organization seeks to gain market share, it may feel pressured to mimic the systems and values of other organizations in the same population, industry, or value chain. By choosing to work with other organizations that share the same values, the organization will be encouraged to stay focused on those values and its social mission.

5. Keep the social mission alive in the minds of employees. Leaders need to keep the organization’s mission ever-present to avoid conflict. One way to achieve this is to offer employees benefits and incentives that are related to the organization’s social mission.

6. Choose the correct legal framework. Organizations that are serious about their social missions may want to consider legalizing it by incorporating as a benefit corporation, a for-profit entity that specifies positive social and environmental impact as well as profit.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Grameen Veolia Water Grameen Veolia Water is a hybrid organization that uses the profits from the sale of water in urban areas to subsidize the sale of water at much lower prices in poor, rural areas in Bangladesh. When the organization started earning significant profits, its employees started to experience mission drift. However, managers used goal setting and measurement in the form of four specific KPIs to successfully restore a more balanced focus among employees.

Corporate Social Responsibility More and more organizations of all types and sizes are paying greater attention to corporate social responsibility, which refers to management’s efforts to make choices and take actions so that the organization contributes to the welfare and interest of all organizational stakeholders, such as employees, customers, shareholders, the community, and the broader society. Many organizations now measure their CSR performance using ESG dimensions, which include the environment (water use, fuel management), social capital (customer privacy, community development), human capital (diversity, compensation, benefits), business innovation (product societal value, quality and safety), and leadership and governance (business ethics, executive compensation).

ASSESS YOUR ANSWER

The best way for an organization to positively address a societal problem while at the same time succeeding as a business is to incorporate as a benefit corporation.

ANSWER: Disagree. Although incorporating as a benefit corporation allows the company to prioritize a social or environmental goal over financial benefit to shareholders without risk of lawsuits, this legal form is not yet available in every state. Organizations can positively contribute to society in many ways, such as by making a commitment to corporate social responsibility and

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

measuring performance along environmental, social, and governance (ESG) dimensions.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The Green Movement Many corporations are embracing the concept of sustainability, which refers to the ability to generate wealth without compromising social stewardship or responsibility for the environment. This means meeting the current and future needs of stakeholders while preserving the environment for society so that future generations can meet their needs as well. In organizations that support this philosophy, environmental and social concerns are woven into every strategic decision.

The Triple Bottom Line In organization that embrace sustainability, managers sometimes use the triple bottom line to measure their success. This refers to an organization’s social performance, environmental performance, and its financial performance.

The triple bottom line is sometimes referred to as the Three Ps, for People, Planet, and Profit. People relates to such factors as fair labor practices, diversity, and supplier relationships. Planet relates to such factors as energy consumption and pollution.

And Profit looks at the traditional financial bottom line.

IN PRACTICE Gravity Payments Some years ago, Gravity Payments, a credit-card processing company in Seattle, raised every one of its 120 employees’ salaries to a minimum $70,000. To cover part of the cost, CEO Dan Price dropped his $1.1 million annual compensation to the same level. He felt that a more comfortable living would lead to happier employees, and the move has worked. The organization, now known as an employer that focuses on values instead of profits, has grown tremendously and now employs about 200 people.

Conscious Capitalism Also known as the shared value approach, conscious capitalism refers to organizational policies and practices that both enhance the economic success of a company and advance the economic and social conditions of the communities

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

in which the company operates. Conscious capitalism means having a higher purpose that focuses on all stakeholders, rather than just shareholders.

BOOKMARK Conscious Capitalism: Liberating the Heroic Spirit of Business

by John Mackey and Raj Sisodia Whole Foods Market founder and co-CEO John Mackey writing with marketing professor Raj Sisodia believe that business can enable people to live more vibrant and fulfilling lives. Thus, they challenge business leaders to open their eyes, minds, and hearts to the perspectives of all stakeholders. Specifically, they offer four tenets of conscious capitalism: have a higher purpose, recognize the importance and interdependence of all stakeholder groups, become a conscious leader, and embrace conscious business values, such as trust, fairness, transparency, and accountability. Believing that conscious organizations will outperform traditional profit-driven organizations in the long run, they predict that conscious business will one day be the norm.

Serving Organizational Stakeholders A stakeholder is any group within or outside of the organization that has a stake in the organization’s performance. When managers carefully balance the needs and interests of various stakeholders in setting goals and striving for effectiveness, they are adopting a stakeholder approach to management.

Stakeholder interests sometimes conflict, however, and organizations can find it difficult to simultaneously satisfy the demands of all groups. Stakeholder mapping is a systematic way to identify the expectations, needs, importance, and relative power of various stakeholders, and thus can be an effective tool in helping to resolve conflicts.

ASSESS YOUR ANSWER The most important stakeholders for any corporation that wants to succeed are its shareholders.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Disagree. Although shareholders are important, organizations must respond to a variety of stakeholders. Investors and shareholders, employees, customers, and suppliers are considered primary stakeholders, without whom the organization cannot survive. However, other stakeholders such as government and the community have also become increasingly significant in recent years.

Serving the Bottom of the Pyramid The people who inhabit the earth have been divided into three categories, represented in the form of a pyramid. The largest category, at the bottom of the pyramid (BOP), are the approximately four billion people who earn less than US$1,500 per year. Some believe that large multinational organizations can help alleviate the poverty at this level while still making significant profits.

IN PRACTICE Godrej & Boyce In 2007, it was estimated that about a third of India’s food supply was lost to spoilage, yet refrigerator market penetration was just 18 percent, mainly because most people couldn’t afford refrigerators and didn’t have enough room or electricity to operate them. Refrigerator manufacturer Godrej & Boyce challenged itself to find a solution. It developed the chotuKool, a mini-fridge that runs on batteries and costs only US$69. Godrej & Boyce then trained rural villagers to sell the units, for which they earned US$3 in commission. The chotuKool has been so successful at serving the BOP while still earning a profit that the organization is now investigating other low-cost products for this market.

The Consequences for Doing Good Numerous studies into the relationship between CSR and an organization’s financial performance have not been conclusive, yet several of these studies suggest a positive © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

correlation between CSR and higher sales, more growth, enhanced brand reputation, higher stock prices, and so forth. Evidence also suggests that employees are attracted to working for organizations that practice CSR, which gives the organization more choice in selecting the best job candidates, who then contribute to the financial success of the organization.

Designing a Structure for Executing a Sustainability Program A Separate Department or Include Everyone?

Organizations that want to succeed with CSR have found that sustainability measures are most effective when they are woven into the culture of the organization. By appealing to employees’ hearts and mind, employees can be encouraged to take ownership of sustainability measures. Those employees who are closest to the operations of the organizations are often the best at identifying opportunities and devising innovative solutions. These organizations have also found it’s best to ask managers to initiate and administer sustainability programs, although a separate sustainability department is useful in administering the details, maintaining performance data, and reporting out on programs.

Involve External Stakeholders Many organizations recognize the need to address monumental problems in the supply chain, such as deforestation, pollution, and scarce resources. These issues are too large, and often too expensive, for any one organization to handle individually. Thus, many organizations are recognizing the need to collaborate with competitors, other organizations in the supply chain, government agencies, NGOs, and others.

Communication must be strong in order to clarify the perspective of all stakeholders, share ideas and innovations, determine the benefits, and deal with hard trade-offs.

Set Goals, Measure, and Reward The successful implementation of any sustainability program must involve setting specific goals or targets, defining metrics to measure performance, and providing rewards and incentives to people who achieve the goals. Key performance indicators (KPIs) must be clear and measurable and achievable within a reasonable timeframe.

Designs to Uphold Ethical Values

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

94

● chapter six

Sources of Individual Ethical Principles Ethics refers to the code of moral principles and values that governs the behaviors of a person or group with respect to what is right and wrong.

Ethical values set standards as to what is good or bad in conduct and decision making. Each individual develops her own ethics, which are shaped by diverse influences including national culture, religious heritage, historical background, family, community, geographic heritage.

Organizational Ethics Organizational ethics are principles that guide the decisions and behaviors of managers with regard to whether they are right or wrong. It is important to remember that ethical decisions from legal acts. The rule of law arises from a set of codified principles and regulations that describe how people are required to act, that are generally accepted in society, and that are enforceable in the courts. Managers encounter many situations that are not covered by law but involve ethics. An ethical dilemma is a situation concerning right or wrong in which values are in conflict.

Formal Structure and Systems An organization’s structure and systems can be used to shape ethical behavior within an organization.

•

Structure: Most organizations now have some kind of formal ethics program. There is often an ethics committee, which is a crossfunctional group of executives who oversee company ethics. Some organizations have even created separate ethics departments, which are typically overseen by a high-level compliance officer. An ethics hotline is an effective tool for assisting employees in making ethical decisions.

•

Disclosure mechanisms: In the past, employees who reported illegal, immoral, or illegitimate behavior—which is known as whistleblowing—often suffered retaliation and other significant repercussions. Today, organizations are encouraged, if not required by law, to establish some means for employees to report

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

unethical behavior without fear of the consequences.

•

Code of ethics: At the very least, every organization should have a code of ethics, which is a formal statement of the organization’s values concerning ethics and social responsibility. It should be easy to understand, include examples, and explain expected behaviors and actions.

ASSESS YOUR ANSWER The single best way to make sure an organization stays on solid ethical ground is to have a strong code of ethics and make sure all employees are familiar with its guidelines.

R:

ANSWER: Disagree. Having a strong code of ethics can be an important part of creating an ethical organization, but managers’ actions are more powerful in determining whether people live up to high ethical standards. If managers and top leaders are dishonest, unprincipled, or ruthless and create a culture that supports or ignore these behaviors in others, employees will put little stock in the formal ethics code.

IN PRACTICE Google Google is famous for, among other things, its Code of Conduct, which starts with the words, ―Don’t be evil.‖ The code is organized around key principles, such as serve our users, respect each other, preserve confidentiality, ensure financial integrity and responsibility, and obey the law. The code also © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password- protected website or school-approved learning management system for classroom use.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

encourages employees to report any suspicious behavior.

Corporate Ethics in a Global Environment Organizations operating in a global environment face even more complex challenges in terms of ethical conduct. Two primary sources of ethical challenges are the complexity of the supply chain, which can include countless contractors and subcontractors, and the cultural differences among employees working for the same organization.

Design Essentials •

•

•

•

More and more organizations are recognizing the need to serve society and care for the environment in addition to earning profits. Some engage in corporate social responsibility, and some even go so far as to designate themselves as hybrid organizations, designed to pursue both profit and social mission simultaneously.

Research shows that hybrid organizations can engage in six techniques and structures to create and restore balance in a dual-purpose organization: choosing the right structure, hiring employees with a balanced mindset, setting clear goals and measure effectiveness, collaborating with like-minded organizations, keeping the social mission alive in the minds of employees, and possibly even incorporating as a benefits corporation.

Many organizations now measure their CSR performance using environmental, social, and governance (ESG) dimensions. Other contemporary CSR approaches include the green movement, the triple bottom line, conscious capitalism, the stakeholder approach, and the bottom of the pyramid.

Studies suggest a positive correlation between CSR and improved performance, including higher sales, more growth, enhanced brand reputation, higher stock prices, and happier, more dedicated employees.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DESIGNING ORGANIZATIONS FOR THE INTERNATIONAL ENVIRONMENT

•

● 95

Organizations that want to succeed with CSR have found that sustainability measures are most effective when they are woven into the culture of the organization, meaning that employees take ownership of sustainability measures.

The successful implementation of any sustainability program must also involve setting specific goals or targets, defining metrics to measure performance, and providing rewards and incentives to people who achieve the goals.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • •

Organizational ethics are principles that guide the decisions and behaviors of managers with regard to whether they are right or wrong. It is important to remember that ethical decisions from legal acts.

Most organizations now have some kind of formal ethics program. There is often an ethics committee or department, a high-level compliance officer, an ethics hotline, and a code of ethics.

Global organizations face even more challenges when monitoring ethical behavior among supply chain contractors and employees of varying cultures.

LECTURE ENHANCEMENT Lessons in Corporate Social Responsibility from TOMS Shoes Based on an article in The Balance: Small Business (May 30, 2019) https://www.thebalancesmb.com/lessons-from-toms-shoes-2502511

by Joanne Fritz For several years, one of the darlings of the corporate philanthropy fan club has been TOMS. And for good reasons.

TOMS is the handiwork of Blake Mycoskie, a young entrepreneur whose business model put a new spin on corporate social responsibility.

Mycoskie has built a company that is winning both sales and hearts by the buy one/give one model.

Initially, it was TOMS Shoes. Mycoskie got the idea for TOMS Shoes when he visited Argentina and saw many children who had no shoes. At the same time, many adults in that country were wearing a very simple yet comfortable shoe that caught Mycoskie's eye.

Mycoskie's company, TOMS Shoes, adopted that shoe style produced it in many styles and colors, and promised customers that for every pair of shoes they bought, another pair would go to people in need.

Mycoskie's idea took off to such an extent that TOMS has dropped the ―shoes‖ 96 learning management system for classroom use.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or schoolapproved

learning management system for classroom use.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

from its name and built a merchandising behemoth; it has now expanded into sunglasses, coffee (the purchase of which provides water where it's needed), and other social entrepreneurial enterprises. The TOMS giving universe keeps on expanding and now includes nutrition, healthcare, and education.

TOMS, from following the emerging trend of social responsibility, has kicked off a wave of businesses that 'do-good' as part of their business plans. And the wave continues as the line blurs between nonprofit and for-profit organizations. Today, there are several ways to set up a business so that it can do good more easily.

Lessons from TOMS for Social Entrepreneurs Ride a Trend: TOMS just happened to intersect with the rise in consumers who have become more conscious about their spending. They are willing to spend on consumer goods that also do some good in the world.

As of writing, the latest Cone Communications CSR study revealed that 63% of Americans (perhaps giving up on government action) hope that businesses will lead to social and environmental change. Furthermore, 78% want companies to get involved in social justice issues.

As for buying power, 87% of consumers say they will purchase a product because a company got involved with an issue they cared about while 76% say they would refuse to buy a company’s products or services if it supported an issue they thought was wrong.

The rising popularity of cause-related marketing has been spectacular, benefiting many causes as well as helping companies polish their reputations as good corporate citizens. TOMS rode that trend to spectacular success.

TOMS also fits with another trend taking place in the nonprofit world. That is the move toward social entrepreneurship within a nonprofit setting. TOMS resembles in many ways the characteristics of organizations described in Crutchfield and Grant's book, "Forces for Good." Those groups are called "high impact" organizations. TOMS could be the commercial equivalent of those social good organizations.

Bake in the Good: TOMS goes beyond what other companies do. It is founded on the premise that sales equal the good done. Mycoskie has said, "...we know every day that we're going to give away one pair of shoes for every one we sell, and that's that. If we can't make the business work that way, then the business just doesn't work."

Build in Sustainability: The model for TOMS is a self-feeding loop. Mycoskie has made the assertion, "If I would've taken half a million dollars and just bought shoes to give to the kids, I would've been able to give the shoes once. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

It never would've been as far-reaching and sustainable as TOMS Shoes is now."

Give Employees a Reason to Be Proud: Mycoskie insists that the employee morale at TOMS is phenomenal. "…how could you be down when you know everything you do makes children happy?" he has said.

Attach a Story to Your Product: Give your customers a story that they can retell again and again. These shoes (and glasses, and all the other TOMS merchandise) are unique enough and stylish enough to appeal to the modern consumer, young and older. Purchasers can boast about the fact that they are from TOMS, and here is what it means. Buyers feel good about their purchase and want to tell their friends. TOMS merchandise is fresh and creates buzz.

[For additional information on TOMS’ CSR: https://www.toms.com/corporateresponsibility/]

DISCUSSION QUESTIONS 1. What is a hybrid organization? How does it differ from a typical nonprofit or profitseeking organization?

ANSWER: Traditional profit-seeking organizations are focused on generating wealth for owners, investors, or shareholders by selling products or services. Typical nonprofit organizations are focused on serving some kind of social mission, and generally seek donations through fundraising to finance their operations. A hybrid organization is a combination of the two, in that it uses revenues from sales to finance its social purpose.

2. Compare and contrast the two major ―logics‖ that organization members might hold in a hybrid organization.

ANSWER: Employees working in a hybrid organization sometimes experience conflict because they must hold two ―logics,‖ the commercial profit logic and the social welfare logic. With the commercial profit logic, products and services are sold for economic gain.

Legitimacy is achieved by technical and managerial expertise, and in an environment in which hierarchical control is valued, shareholders control goals and operations. By contrast, the social welfare logic means that products and services are a means to serving societal needs. Democratic governance is valued, and there is a high participation among local stakeholders. Legitimacy is achieved by contributing to the social mission.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. How might ―mission drift‖ hurt the performance of a social enterprise?

ANSWER: In hybrid organizations, employees are required to hold both the commercial profit logic and the social welfare logic simultaneously. However, because employees depend on success in the commercial pursuit of the organizations for their incomes and job security, many employees ―drift‖ toward placing more importance on the commercial side of the business. If this occurs, it is possible for the organization to lose focus on its social mission and fail to make strategic decisions that support its social goals.

4. Do you personally embrace a commercial logic or a social welfare logic? Why do you think you hold to that perspective?

ANSWER: Answers will vary, but students’ answers should provide a logical reason and an understanding of the basic concepts. Students will probably mention family role models, religious beliefs, or societal influences that have shaped their perspectives.

5. Why would a social enterprise be better able to maintain a strong social welfare purpose by choosing other like-minded organizations with which to collaborate?

ANSWER: When members of a social enterprise spend a lot of time interacting with members of more traditional, profit-oriented enterprises, they may find themselves starting to focus on the commercial aspects of their own organization and losing sight of their social mission. However, if they interact with members of other like- minded organizations, especially when collaborating on projects focused on their social mission, they are more likely to retain the proper balance between commercial and social goals.

6. What do you think would happen if a hybrid organization focused on profit goals to the exclusion of social goals? If vice-versa? Explain.

ANSWER: When members of a hybrid organization begin to focus on either the commercial goals or the social mission to the exclusion of the other, they will most likely make decisions that support their focus and fail to consider whether those decisions might be detrimental to the other purposes of the organization. It is almost guaranteed that the organization will face internal conflict in this situation.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

7.

Is it reasonable to expect that managers can measure their social and environmental performance with the same accuracy as they measure financial outcomes when using a triple bottom line approach?

ANSWER: To some extent, yes. If an organization sets social and environmental objectives that are too broad—for example, by simply stating it wants to ―help people‖ or to ―save the planet‖—it would not be able to measure its impact with much accuracy. However, when organizations set measurable KPIs, or goals, they can clearly articulate how they want to impact the world and determine whether they are successful in achieving their mission. For example, they can set goals to donate a certain amount of financial resources to a particular group of people each year, or they can specify a particular change to be implemented in a set timeframe.

8. A survey found that 69 percent of MBA students view maximizing shareholder value as the primary responsibility of a company. How would that philosophy fit into a hybrid organization?

ANSWER: Employees who work in hybrid organizations must be able to hold the commercial profit logic and the social welfare logic simultaneously, otherwise they will experience conflict on the job. Some of these students may be able to adapt, but if not, they will probably not enjoy working in a hybrid organization and would make poor decisions that do not support the organization’s social mission.

9. There is research evidence to suggest that employees are happier working for a company that provides them with opportunities to contribute to environmental sustainability. Why do you think this would be the case?

ANSWER: Research shows that many people, and particularly younger generations, are well aware of the need for all people to make good choices, treat people fairly, and be good stewards of the planet. Not only do they want to do this in their personal lives through their own behavior, they want to achieve these goals at work, which can be achieved by working for organizations that engage in CSR. Employees who hold that socially responsible attitude and work for an organization that shares the same values often feel that their work is directly contributing to a positive impact in the world. It gives these employees an added sense of purpose and fulfillment through their employment.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

10. Explain the concept of conscious capitalism. Do you think managers and companies that espouse this kind of shared value approach are more likely to behave in socially responsible ways?

ANSWER: Conscious capitalism refers to organizational policies and practices that both enhance the economic success of a company and advance the economic and social conditions in the communities in which the organization serves. So yes, the organization’s commitment to CSR can and should carry over and be reflected in managers’ behavior and decision making.

WORKBOOK ~ What is your level of ethical maturity?

In this exercise, students will be challenged to consider some aspect of ethical maturity.

Ethical maturity means that a person has the moral awareness to recognize the ethical elements of a given situation. In addition, it means the ability not only to judge right from wrong but the autonomy to make the ethical choice under difficult circumstances. Students might want to discuss what influences their ethical behavior and decisions, such as the need for success or approval.

CASE FOR ANALYSIS ~ SOLO: Helping a Million People See Again In discussing this case your students should answer the following questions: 4. Why do you think there are no noticeable conflicts between the social welfare logic and the commercial logic at SOLO? ANSWER: There are two main reasons why there are no conflicts between SOLO’s dual purposes. First, Amareneni is a dedicated evangelist who never misses an opportunity to remind everyone, employees included, about SOLO’s social mission. Second, Amareneni has been able to identify and recruit employees who possess a balanced mindset. In fact, they are so dedicated to SOLO’s social mission that they are willing to volunteer their time, which prevents them from getting caught up in the commercial logic and experiencing mission drift.

5. Which aspect of Amaraneni’s behavior do you think was most important for getting SOLO off the ground? Why?

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Students’ answers may vary, but should offer a sound reason to support them.

Amaraneni’s passion and dedication would have to be one of the most popular answers.

She is described as an evangelist for her cause. Some students may also point to her willingness to do research, her ability to recruit and collaborate with like- minded people, and her strong sense of ethics, which inspire her to operate a transparent organization.

6. Do you think Amaraneni’s start-up company would have succeeded had it not had a triple bottom line mission? Explain.

ANSWER: Given the problems that Amaraneni experienced with the first batch of defective eyewear, combined with her later decision to increase the price threefold, SOLO probably would not have survived if it had been a traditional commercial, for- profit business. Consumers’ dedication to SOLO’s higher purpose and social mission have allowed the organization to overcome early missteps.

CASE FOR ANALYSIS ~ Fiedler, Philips & Wilson Design In discussing this case your students should answer the following questions: 3. What would Janelle be thinking right now? What would you be thinking if in her position?

ANSWER: Janelle is probably shifting back and forth between two main themes in her mind: One is that it’s unethical for her to review the file, and the other is that reviewing the file and using the information it contains to help her employee could potentially land her a full-time job at this prestigious design firm.

4. What do you think she should do? If she makes notes from the file, has she crossed an ethical line? Why? ANSWER: This is definitely an ethical dilemma, but most students will agree that Janelle should not review the file. The information and creative work it contains will give her and her employer an unfair advantage over the competitive firm. It is unethical to copy, take credit for, and benefit from copying another’s work.

5. What is the ethical responsibility of Clark Wilson and the architectural firm in this

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

situation? Explain.

ANSWER: Clark Wilson should agree that this file gives his firm an unfair advantage. He should have asked Janelle would she planned to do with the file, and coached and encouraged her to do the right thing in following her instincts and returning the file unopened. As a manager, it is his responsibility to encourage employees to behave in an ethical manner.

APPENDIX SCG Lampang: Overcoming Community Resistance to a Sustainability Project (B) A follow-up interview with Daniel Anuwat occurred 10 years after SCG Lampang’s efforts to overcome resistance and gain village buy-in to the idea of check dams and green spaces around the Lampang cement plant. Anuwat is now the community relations manager for the Cement-Building Materials Division.

Daniel Anuwat’s description of what happened: “We did finally learn how to engage the villagers in our check dam project for reforestation. Then the project hit a tipping point and buy-in really took off. Some cement plants borrowed our model for gaining community engagement to build check dams. The reforestation around the Lampang cement plant is now complete (see photos in Exhibit 1).

Exhibit 1 Area Around Lampang Cement Plant Before and After Check Dams

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

“First, we decided not to pay money for building check dams. This would make SCG the owner of the project and leave villagers disengaged. It was important that they feel ownership and maintain upkeep of the check dams, so their work must be voluntary. I recall from business school the story of the shopkeeper and the children. The children played noisily outside the

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

window of his room in the rear of his shop. He asked them to play elsewhere, and they refused. He had an idea. He paid the children $0.25 each day to play outside his window.

After a few days, he refused to pay them again, so they refused to play there. By paying them, he gained ownership over their behavior. By contrast, we wanted the villagers to feel ownership for the check dams.

“How did we get the villagers engaged? We realized that we were being logical and trying to persuade with our heads, and villagers connect with their hearts. Therefore, we stopped talking at them and started listening. Gradually, they started to express their concerns and fears. Our heartfelt listening may have created the biggest change in their attitudes toward SCG and the check dam project.

“Another big change was to show them rather than try to tell them everything in words. We took a few key villagers to see the early experimental check dams built by the King. The villagers could actually “see the water”. They could see the green forest. They could see the potential.

Once we stopped talking and started listening and showing, villager buy-in took hold.

“We also addressed specific issues. In the village with fear over the dams restricting spirit flow, we worked with the monk from the local temple. He explained to villagers how spirits would flow with the water into the soil and up through plants and trees. The villagers understood.

"We did not get to the bottom of the gunshot incident concerning the monk headman. It may have been a misunderstanding. Alternatively, perhaps the individual with the gun was embarrassed and withdrew his objection.

"With respect to the NGO letter demanding that we cease reforestation, we made some inquiries and discovered the letter was fake. A teak wood contractor forged the letter to protect his ability to cut down teak trees for sale, which was profitable. One of the most valuable trees in the forest is teak. Once the letter forgery became public, the problem disappeared. It did illustrate, however, that not everyone benefited from check dams.

The wood contractor lost out because village norms turned against the random cutting down of trees for personal profit.

“Another issue raised after we built the cement plant was villagers’ concern about possible toxic dust from the plant. We again used heartfelt listening and showing. We took

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

villagers to the plant and showed them the manufacturing process, including raw material and finished

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

packaging. They could touch the dust and even taste it without harm. We also took them up on the mountain to witness the mining operation. Rather than scrape down the mountain, which is easier and cheaper, we adopted a mining technique called semi open cut mining.

This cuts the very top of the mountain and drills down vertically to minimize deforestation.

This procedure also minimizes dust and leaves a natural view. When we finish mining, we can replace the top as it was. The villagers understood the value of what we were doing once they could actually see it.

“One other thing here in Lampang was to create a dialog center for the villages. People had no mechanism to talk through concerns that arise. An NGO helped us design a dialog process that teaches villagers how to talk through village issues, problems with us (SCG), or with each other. They learned new skills of communication and a place to meet that have been helpful.

“Once we got buy-in locally, the check dam project really took off. Currently there are over 80,000 check dams built across seven Northern provinces. Can you believe it? SCG’s target for the year 2020 is 100,000 check dams.

We were worried early on that a forest fire might damage a cement plant. Forest fires dropped from a high of 225 per year to three. The villagers learned to love the green forests. The number of bird species around the Lampang plant quadrupled (see Exhibit 2). The number of wildlife species nearly doubled. We have reforested about 450 acres around the Lampang plant and thousands of acres nationally.

Exhibit 2 Resurgence of Bird and Animal Species around the Lampang Plant Biodiversity of Bird Species near the Cement Plant

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Biodiversity of Wildlife near the Cement Plant

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

“Perhaps the biggest outcome has been the increase in farmer income. Previously they had two rice crops per year. Now there is enough moisture retained in the soil to allow seven crops per year rotating among various vegetables and fruits along with rice. Many of the farmers’ incomes doubled or tripled. They are so happy to earn their living off the land and to have their children staying in the local area rather than moving to a city for jobs and higher pay.

“Let me emphasize that I think it all started with listening and showing rather than telling and persuading, which developed more of a heart connection to achieve buy- in with villagers. That is not a fancy solution, but it overcame villagers’ resistance to change.”

CHAPTER EIGHT DESIGNS FOR MANUFACTURING AND SERVICE TECHNOLOGIES

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter discusses core manufacturing, including extremely complex technologies that can be dangerous or hazardous unless handled by high reliability organizations. Next, the chapter explores core service and noncore departmental technologies. The technology for the organization influences organizational structure and design for both manufacturing and service technologies. Differences in departmental technologies influence the design and management of organizational subunits. Finally, the chapter looks at how interdependence— the flow of materials and information among departments—affects organization design. .

Learning Objectives After reading this chapter you should be able to: •

Define an organization’s core technology and its influence on organization design.

• Explain Woodward’s model of technical complexity, structure, and performance.

• Apply the distinctive qualities of organization design that enable organizations to operate exceptionally complex technologies with few breakdowns and extremely rare catastrophes.

• Compare service technology and manufacturing technology in terms of their impact on organization design.

• Define departmental technology and its relationship to department design.

• Identify three types of interdependence and their respective structural priority.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: •

One reason that high reliability organizations can operate exceedingly complex technologies, such as an aircraft carrier, without catastrophe is that employees are

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• •

preoccupied with success rather than failure.

The best way for a company to provide good service is to have abundant and clear rules and procedures and make sure everyone follows them to the letter.

The design characteristics and management processes that are effective for a television station’s sales department probably would not work so well for the news department.

A LOOK INSIDE Travel Technology Anyone who has flown on an airplane has experienced a delay due to a technical problem, most likely a problem with the software systems that control many airlines’ functioning. Even a small glitch can cause delays in the overall system that can last for minutes, hours, or even days. But it would be unreasonable to assume that a computer system could operate completely flawlessly all of the time, which is a fact of life that nearly all organizations in all industries must adapt to.

Core Manufacturing Technology Technology refers to the tools, techniques, machines, and actions used to transform inputs (materials, information, ideas) into outputs (products and services). Technology includes such things as machinery, employee education, and work procedures. An organization’s core technology is the work process that is directly related to the mission. A noncore technology is a department work process that is important to the organization but is not directly related to its primary mission. The key question of this chapter is: How should organization structure be designed to facilitate the production process?

Manufacturing Firms Joan Woodward's classic study classified manufacturing firms into small batch (job shop, single orders); large-batch or mass production (assembly line); and continuous process production technologies (automated machines control a continuous process).

Woodward discovered that technology was related to structure and performance, and was based on technical complexity (extent of mechanization and predictability of manufacturing process). Mass production firms were formalized, centralized, mechanistic, had larger span of control and less-educated workers than small batch or continuous process technologies. Successful firms had complimentary structures and technologies. Successful

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

small-batch and continuous process organizations had organic structures. Successful mass production organizations had mechanistic structures.

Strategy, Technology, and Performance Woodward studied the success of the firms along dimensions such as profitability, market share, stock price and reputation. Firms were ranked on a scale of commercial success according to whether they displayed above average, average or below average performance on strong objectives.

Successful firms had complementary structures and technologies.

The Smart Factory The technological and the human systems of an organization are intertwined.

Robots or other machines take over doing the work of people. It is the wave of the future, and the only way manufacturers in developed countries can compete with low-wage countries. New manufacturing technologies include robots, numerically controlled machine tools, RFID, wireless technology, and computerized software for design, engineering analysis, and remote control of machinery.

The ultimate automated factories are referred to as smart or digital factories. The digital factory is typically the result of several subcomponents. Computer- aided design (CAD) uses computers to assist in the drafting, design, and engineering of new parts. Computer-aided manufacturing (CAM) increases the speed of manufacturing and changing production setups by computer- controlled machines.

Robots. can communicate and collaborate with human employees and help with every phase of the manufacturing process. 3-D Printing. Also known as additive manufacturing, builds objects one successive layer of material at a time.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Mass Customization The smart factory has paved the way for mass customization, which refers to using massproduction technology to quickly and cost-effectively assemble goods that are uniquely designed to fit the demands of individual customers Performance and Structural Implications In smart factories, machine utilization is more efficient, labor productivity increases, scrap rates decrease, and product variety and customer satisfaction increase.

Employees need the skills to participate in teams; training is broad (so workers are not overly specialized) and frequent (so workers are up to date).

The smart factory has a narrow span of control, few hierarchical levels, adaptive tasks, low specialization, and decentralization, and the overall environment is organic.

Surviving Extremely Complex Technologies Extremely complex technologies are typically associated with hazardous and dangerous work environments, which has led to the emergence of the high reliability organization. HROs minimize risks by adopting certain characteristics and mindsets: preoccupation with failure, reluctance to simplify their observations, sensitivity to operations, deference to expertise, and commitment to resilience.

IN PRACTICE Carnival Cruise Lines In the fall of 2013, a string of incidents at Carnival Cruise Lines had some customers vowing never to cruise with Carnival again. Part of the danger came from the huge size of the ship and the lack of industry oversight. Carnival managers are reevaluating the strategy of building ever larger ships that are too complex to handle in an emergency.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK Meltdown: Why Our Systems Fail and What We Can Do About It by Chris Clearfield and Andras Tilcsik Modern work environments are complex webs of intricately linked parts that can easily affect one another. Recent disasters indicate that the source is typically not a massive external event but simple human error that spirals out of control in such complex systems. The authors offer suggestions for managing these systems, such as treating mundane details and boring logistical issues as critical safety concerns.

ASSESS YOUR ANSWER One reason that high reliability organizations can operate exceedingly complex technologies, such as an aircraft carrier, without catastrophe is that employees are preoccupied with success rather than failure.

ANSWER: Disagree. The culture norm in a high reliability organization is to be preoccupied with failure. In an HRO, people are constantly thinking about failure and focused on looking at small mistakes that could increase the risk of a catastrophe. A preoccupation with failure helps people in an HRO prevent a disaster rather than reacting to one after it happens.

Core Service Technology Service organizations in the U.S. continue to grow and nearly ninety percent of the U.S. workforce is employed in services. Because service technologies differ from manufacturing technologies, they required a different organizational design.

Service Firms Service technology has eight elements.

•

Intangible output

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • • • • •

Production and consumption take place simultaneously.

Labor and knowledge intensive Customer interaction generally high Human element very important.

Quality is perceived and difficult to measure.

Rapid response time is usually necessary.

Site of facility is extremely important

All organizations can be classified along a continuum that includes both manufacturing and service characteristics. Service firms have always tended toward providing customized output, that is, providing exactly the service each customer wants and needs.

HOW DO YOU FIT THE DESIGN? Manufacturing vs. Service People have two thinking processes—one visual and intuitive in the right half of the brain and the other verbal and analytical in the left half of the brain. The thinking process you prefer predisposes you to certain types of knowledge and information. Manufacturing organizations typically use left-brain processing to handle data based on physical, measurable technology. Service organizations use right-brained processing to interpret less tangible situations and serve people in a direct way.

IN PRACTICE Panera Bread Company

Declining sales and profits at Panera Bread Company motivated managers to study the cause of the problem. They were surprised to find the issue was the long wait times—averaging about eight minutes to place an order—that often resulted in incorrect orders. The solution was to enable online ordering and self-ordering kiosks, but these innovations also led to more customization. Additional changes in workflow procedures and kitchen display systems were required. In short, addressing the problem required dozens of small, interrelated changes. Wait times, however, have been reduced to an average of one minute.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Designing the Service Organization The impact of customer contact on organization structure is reflected in the use of boundary roles and structural disaggregation. Boundary roles are used extensively in manufacturing firms to handle customers and to reduce disruptions for the technical core. They are used less in service firms because a service is intangible and cannot be passed along by boundary spanners, so service customers must interact directly with technical employees, such as doctors or brokers.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Service technology influences internal characteristics that direct and control the organization. The skills of technical core employees must be higher because they need enough knowledge and awareness to handle customer problems. Employees need social and interpersonal skills. As a result, decision making is decentralized in service firms, and formalization is low.

IN PRACTICE Home Depot Inc. To cut costs, Home Depot hired more part-time employees and instituted a salary cap that made jobs less appealing to experienced workers. Customers complained that employees didn’t have the knowledge and experience to be of help. Some customers took their business elsewhere. Now The stores are hiring more full-timers again, instituting new training programs, and looking for other ways to make sure employees are knowledgeable and helpful.

ASSESS YOUR ANSWER The best way for a company to provide good service is to have abundant and clear rules and procedures and make sure everyone follows them to the letter.

ANSWER: Disagree. Service employees need good interpersonal skills and a degree of autonomy to be able to satisfy each customer’s specific needs.

Although many service organizations have some standard procedures for serving customers, service firms are typically low on both centralization and formalization. Abundant rules can take away both personal autonomy and the personal touch.

Noncore Departmental Technology This section shifts to the department level of analysis for departments not within the technical core.

Variety

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Variety refers to the number of exceptions, problems or novel events that occur in the department's work. Variety ranges from repeating a single act as on a traditional assembly line, to working on unrelated problems as in a hospital emergency room.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Analyzability Analyzability refers to the extent to which the work is mechanical, clear cut, and follows an objective, computational procedure. Work that requires intuition and judgment is not analyzable.

Framework The framework includes four quadrants: • • • •

Routine technologies are characterized by little task variety and the use of objective computational procedures.

Craft technologies are characterized by a fairly stable stream of activities, but the conversion process is not analyzable or well understood.

Engineering technologies are high in variety but analyzable.

Nonroutine technologies are not analyzable and high in variety.

Variety and analyzability can be combined into a single dimension of technology.

This dimension is called routine versus nonroutine technology.

Department Design Department technology is associated with a cluster of departmental characteristics, such as the skill level of employees, formalization, and methods of communication.

Patterns exist in the relationship between work unit technology and structural characteristics, which are associated with departmental performance.

The structure of a department is organic or mechanistic. Routine technologies have a mechanistic structure, with formal rules and rigid management processes. Nonroutine technologies have an organic structure, and management is flexible. Formalization, centralization, worker skill level, span of control, and communication and coordination vary according to work unit technology.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Memorial Sloan-Kettering Cancer Center For years, hospital food service units reflected a routine technology. Workers followed a standard menu and standard rules. Some hospitals have shifted to a nonroutine approach. The chef at Memorial Sloan-Kettering Cancer Center, made a lemon-flavored pizza because a teenage patient wanted pizza but could only taste lemon. Hospitals are retraining their kitchen staff, giving them more flexibility in line with a nonroutine service technology.

Internal variables that can be adjusted to the technology include: 1. Formalization 2. Decentralization 3. Employee Skill Level 4. Span of Control 5. Communication and Coordination Departments differ according to their workflow technology. Structural and management processes differ based on departmental technology. Managers should design their departments so that requirements based on technology can be met.

ASSESS YOUR ANSWER The design characteristics and management processes that are effective for a television station’s sales department probably would not work so well for the news department.

ANSWER: Agree. The news department has a nonroutine technology compared to the sales department. No one knows what newsworthy events are going to happen during the day, when they will happen or how they will need to be covered. Sales tasks, particularly telephone sales to repeat customers involving standard rates for advertising, can be performed using standard procedures, but gathering and reporting news events can’t be standardized. A sales department would be characterized as routine because there is little

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

variety and tasks are well understood.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Workflow Interdependence Among Departments Interdependence refers to the extent to which departments depend on each other for resources or materials to accomplish their tasks. Low interdependence means that departments work independently and have little need for interaction, consultation, or exchange of materials.

High interdependence means departments must constantly exchange resources.

Types Thompson defined three types of technology interdependence that influence structure.

•

•

•

Pooled interdependence means that all departments contribute to the organization but do not interact directly with each other. Pooled interdependence is associated with mediating technology, that which mediates or links clients from the external environment (banks, real estate offices).

Sequential interdependence means that the outputs of one department become the inputs to the next department. Sequential interdependence is associated with long-linked technology in which each stage of production is dependent on the previous stage (assembly lines).

Reciprocal interdependence means that departments exchange resources and information simultaneously in both directions. Reciprocal interdependence is found with intensive technology in which the client becomes the object of the conversion process or receives a combination of services (hospitals, universities).

IN PRACTICE Southwest Airlines

Southwest Airlines has the shortest turnaround time in the industry. How do they do it? Southwest promotes relational coordination among interdependent groups to achieve on-time performance and customer satisfaction. Southwest managers created team delay, which helps people pinpoint problems. The emphasis on the team focuses everyone on shared goals. Southwest puts a lot of emphasis on hiring people with a collaborative attitude.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Structural Priority Reciprocal interdependence should receive first priority in organization structure because decision making, communication, and coordination problems are the greatest. If reciprocally interdependent units are not located close together, the organization should design mechanisms for coordination, such as daily meetings between departments or an intranet to facilitate communication. The next priority is given to sequential interdependencies, and finally to pooled interdependencies.

Structural Implications Most organizations experience various levels of interdependence, and structure can be designed to fit these needs. In a manufacturing firm, new product development entails reciprocal interdependence among the design, engineering, purchasing, manufacturing, and sales departments. Once a product is designed, its actual manufacture is sequential interdependence, with a flow of goods from one department to another. The actual ordering and delivery of products is pooled interdependence, with warehouses working independently.

IN PRACTICE Athletic Teams [Be sure to reference the analogy given in the text, because students identify so well with it!] Interdependence among players influences techniques of coordination and the coach's job, as summarized in Exhibit 8.15. Baseball is low in interdependence (pooled), football is medium (sequential), and basketball is highest (reciprocal).

Design Essentials ⚫

⚫ ⚫ ⚫

Woodward’s research into manufacturing technology collected data on technology characteristics, organization structure, and management systems. She found clear relationships between technology and structure in high-performing organizations.

Smart factories are being adopted by organizations and impacting organization design.

Extremely complex technologies create more risk for catastrophes, which is why high reliability organizations develop a ―failure is not an option‖ mindset.

Service technologies differ from manufacturing technologies. Service technologies have intangible outcomes and direct client involvement in the production process.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

⚫ ⚫

Perrow’s framework applies to department technologies. Understanding a technology explains the management style, structure, and process that characterize that department.

As interdependence increases, demands on the organization for coordination increase.

Organization design must allow for the correct amount of communication and coordination to handle interdependence across departments.

LECTURE ENHANCEMENT THIS IS HOW A SMART FACTORY ACTUALLY WORKS

By Nitesh Bansal, June 25, 2019, writing for the World Economic Forum https://www.weforum.org/agenda/2019/06/connectivity-is-driving-a-revolution-inmanufacturing/

Inside a seafood processing facility in Norway, machines, not humans, evaluate the quality of salmon, weigh and grade the fish, and distribute it to the production units. Soon, machines will also calculate the quantity of ice required for transportation of the fish to its destination.

A thousand miles away, at another manufacturing plant in Germany, machines produce millions of Programmable Logic Controls (PLCs) that automate machinery – from ships, automobiles, and farm equipment to entire production centres around the world. The output of customized products manufactured at the plant is 99.99885% defect free.

In the two examples of the ―smart factory‖ ecosystem described above, the physical infrastructure is powered by information and communications technologies, which draw insights from the data in the landscape.

Automation is powered by insights, which enable the executing of business processes and deliver programmed output with minimal human intervention. Such a cyber-physical environment, founded on the Industrial Internet of Things (IIoT), is the very basis of the Fourth Industrial Revolution that is bringing ―intelligence‖ to manufacturing.

Lean production Industry 4.0 transforms how factories operate by creating a conducive environment for Just-InTime (JIT) practices for production, order management, and shipment. It not

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

only interconnects disparate sub-systems of a shop floor, but also establishes digital

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

links between the assembly line or processing unit, and the product design office, logistics services, supply chain, and stakeholders.

A connected plant manufactures high-quality products in shorter production cycles and addresses customer demand for product variety, as well as minimizing waste across operations. The interplay of sensors, data, and analytics is the catalyst for this revolution.

Sensors Connected factories track the location of labour, materials, machines, and moveable assets in real time. IIoT digitizes the production environment by integrating the Manufacturing Execution System and Enterprise Resource Planning system with embedded devices and process instruments for real-time communication.

For instance, smart tags can be embedded to transform a spare parts bin at a production facility into an autonomous bin, which digitally records location and content, and communicates when it needs to be replenished.

Self-driving vehicles, geo-fencing systems for transportation and materials handling, hazard monitoring solutions for industrial safety and security, and remote quality control tools to manage air, water, and product quality depend on sensors and communication technology to function optimally. The network of connected components, sensors, and controllers provide large volumes of useful data in a variety of forms and formats.

Data Seamless data flow between machines and enterprise systems unify the entire manufacturing process. Big data tools consume data residing anywhere – sometimes even in the environment outside the manufacturing facility – and in structured, unstructured, and semi-structured formats, to provide visibility into the production environment.

It facilitates the enhancement of dynamic manufacturing operations. Smart equipment and Industry 4.0 technology empower manufacturers to defy economies of scale and assemble customized products or handle small-sized production runs, profitably.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Flexible operations and real-time data from human, system-to-system and human communication protocols improve quality and reliability through timely interventions before and during manufacturing.

IIoT leverages data to drive self-organizing production lines. In the case of the autonomous bin, when sensors trigger a replenishment request, data in the order management system responds to the requirement. Synchronization of production schedules and supply chain activities based on real-time data from IoT devices enable just-in-time arrival of materials in the bin.

Cloud computing enables smart factories to generate, process, and store large data sets costeffectively. The scalable and secure cloud architecture meets requirements of connected ecosystems. However, raw data offers limited benefits. Sophisticated analytical models are needed to monetize big data and predict requirements.

Analytics The value of IIoT transcends automated measuring, sensing, and control of operations.

Advanced analytical tools and cognitive models intelligently apply big data to create a responsive and self-healing environment for the factory of tomorrow. Predictive analytical tools harness intelligence from the customer, supplier, equipment, and production data, which can then be acted upon.

Predictive analytics minimizes downtime for retooling equipment and asset maintenance.

Simulation prevents failure of new products. Significantly, analytics helps OEMs grow revenue from after-sales services by accurately forecasting the lifespan and maintenance requirements of finished products.

Automated maintenance, ordering, receiving, assembly, shipping, and after-sales services ensure agility, while analytics drives self-optimization. Going back to the example of the autonomous bin, while sensor information and automated order data management enable JIT inventory strategy, analytical frameworks can identify areas for further efficiency and cost reduction – through rearrangement of the sequence in the production line, re-configuring the product that uses the part, or replacement with a more economical component.

Industry 4.0 helps the manufacturing ecosystem to autonomously sense the context, adapt to constraints, and react/organize preemptive action to achieve business goals. The industrial application of the Internet of Things (IoT) and data analytics will lead to fact- based decision-making that will, in turn, be executed as a matter of routine by automatons.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Even with this digital monitoring of physical processes through sensor-based technologies, people will still drive the future of manufacturing. People, freed from routine by technology, will find ways to direct their new-found productivity into tasks that can only be executed with human imagination and intelligence – like the creation of useful new products that must be manufactured to solve the problems of our times.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. Where would your university or college department be located on Perrow's technology framework?

Would a department devoted exclusively to teaching be put in a different quadrant from a department devoted exclusively to research?

ANSWER: The purpose of this question is to generate discussion about how to apply Perrow's framework to a real organization. Students often are not aware of the full range of work activities that take place in an academic department so it is a nice opportunity to discuss the technology of teaching and research. Students generally agree that university departments go into the research quadrant. Most teaching and research are unanalyzable because they require experience, judgment and skill to know how to perform. One cannot do them just by studying a procedure manual. Moreover, there are frequent problems and exceptions that have to be handled. A department devoted to teaching would generally be lower in variety than a department devoted to research. A department devoted to teaching would be in the craft category because after two or three years of teaching, few new problems arise. In schools where teaching is an assembly line, the department might be in the routine quadrant. A department devoted exclusively to research would go into the nonroutine category because research always contains unexpected problems that are not analyzable and require experience and intuition to solve.

2. What is the difference between ―reluctance to simplify‖ and ―sensitivity to operations‖ in a high reliability organization?

ANSWER: In a high reliability organization, the sensitivity to operations and reluctance to simplify go hand-in-hand. A sensitivity to operations means that employees are constantly on the alert to the smallest changes in functions and operations. They are vigilant, not allowing themselves to become complacent. When they do observe slight anomalies, they are trained to resist simplifying or rationalizing with a quick explanation. Instead, they are trained to question, probe, and address these changes before they can multiply or expand into serious problems.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. What is the level of interdependence among departments (finance, marketing) in a business school. What kinds of coordination mechanisms might be used to handle that interdependence?

ANSWER: Pooled interdependence is the lowest form of interdependence. All departments contribute to the overall organization mission, but they do not directly exchange resources with each other. Sequential interdependence means that the outputs of one department are inputs to another department. Reciprocal interdependence means that the outputs of department A go to department B and from department B back to department A. Resources are exchanged in both directions.

The level of interdependence among departments such as finance and marketing in a business school is pooled interdependence. Both contribute to the university but generally they do not exchange resources with one another. Simple rules and standardization can provide for any coordination needed between pooled departments.

4. Why does Woodward suggest that span of control needs to decrease as technological complexity increases? Can you think of any circumstances that might change the relationship between the two?

ANSWER: Woodward proposed that technological complexity increased from small batch to mass production to continuous process technology. Meanwhile, small batch had a span of control of twenty-three, while mass production increased to forty- eight, and continuous process decreased to only fifteen. This is a curvilinear relationship because span of control does not increase steadily with technological complexity. Rather, it increases, then decreases. This relationship can be explained by the fact that continuous process and unit production have more highly skilled employees, requiring fewer direct supervisors, but as problems become more complex, supervisors cannot handle as many people simultaneously.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

5. How do smart factories differ from other manufacturing technologies? How might the transformation to a smart factory change how a manufacturing organization hires and trains employees?

ANSWER: Smart factories involve a computer taking over the manufacturing process. On Woodward's technical complexity scale, digital factories would be considered even more complex than continuous process technology because machines run the manufacturing process and batch size can be adjusted for customization or mass production, i.e., smart factories allow for the production of a single unit or of 1,000 or more identical units to be produced in the manufacturing flow. The computers are programmed to construct each part according to bar code data. The equipment does not have to be stopped and retooled as in small batch manufacturing. In effect, a single manufacturing plant can operate as both small batch and mass production at the same time. Several custom orders can be combined into a large volume production run. The tremendous advantage of computer integrated manufacturing is the immediate responsiveness to customers that have a unique order, and the ability to produce these custom orders in large batches for efficiency. In such an environment, fewer unskilled workers are required to work on the production line, but people with technology skills are needed to maintain the operation.

6.

What is a service technology? Are different types of service technologies likely to be associated with different organization designs? Explain.

ANSWER: Service technologies differ from manufacturing technologies because there is no tangible product. Service technologies are typically defined as having two elements: (l) simultaneous production and consumption, which means that the employee and customer interact to provide the service, thereby involving the customer in the production process.

(2) Intangibility, which means a service is abstract and consists of information or knowledge, and the specific service cannot be stored in inventory as a product can.

The structure of service firms usually differs from product firms because the service organization has to be located close to the customer and employees have to have high interpersonal skills. Differences among service technologies were not addressed in the text, and are described in the auxiliary lecture for this chapter. Service technologies that have a high degree of labor intensity and which require customization of services are considered nonroutine and would have a structure characterized by decentralization and informality. Service technologies that have

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

low customization and a low degree of labor intensity (high level of physical facilities) would tend to be structured in a way to increase centralization and formalization.

Perrow's technology framework can also be used to understand service technology.

Those service technologies that are routine would tend to be structured in a more mechanistic structure while services considered nonroutine would tend to be structured in a more organic fashion.

7. Why might administrators at a hospital such as Seattle Children’s Hospital want to foster relational coordination?

ANSWER: At a hospital, the skills of technical core employees need to be high enough to handle patient problems rather than just perform mechanical tasks. Employees at the Seattle Children’s Hospital need social and interpersonal skills and technical skills because decision making is decentralized to teams. Teams make changes any time they think they can improve a process or cut waste. Hospital management fosters relational coordination because managers believe that every employee can make positive changes.

8.

A top executive claimed that top-level management is a craft technology because the work contains intangibles, such as handling personnel issues, interpreting an ambiguous environment, and coping with unusual situations. Do you agree? What type of structure or management process is appropriate for top- level managers?

ANSWER: This question is designed to foster discussion of management work and to puzzle over the role of education in management training. Generally, students agree that management work tends to be craft. Many problems do require experience. Management work is not yet a profession that would go in the engineering category. Formal training and rulebooks will not make people good managers. Management at the highest levels should be organic in design with a focus on outcomes.

9. Do you think the characteristics of a high reliability organization could be applied in nonHRO organizations? Explain.

ANSWER: Yes. Virtually all organizations involve some degree of technology today, which can cause problems that can multiply, just as they do in HROs only perhaps without such devastating results. Thus, workers in all types of organizations can be trained to remain alert to operational anomalies and to be reluctant to simplify the explanations and instead probe for potential problems. Additionally, employees of all types of organizations can and should be trained to guard against any failures, to

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

defer to those with expertise, and to be more resilient and keep working, even under strained conditions.

10. To what extent does the development of new technologies simplify and routinize the job of employees? Can you give an example? Can the new technology also lead to greater variety and complexity? Discuss.

ANSWER: The development of new organizational technologies has the potential to both enrich and simplify employee jobs. Computer integrated manufacturing is the most recent development in manufacturing technology. The shift from mass production to CIM has noticeably enriched jobs in three ways: greater opportunities for intellectual mastery and cognitive skills for workers; more worker responsibility for results; and a greater interdependence among workers, enabling more social interaction and the development of teamwork and coordination skills. The new manufacturing technologies hold great potential for employees because jobs are enriched rather than simplified, engaging higher mental capacities and providing greater job satisfaction. For example, ATMs took most of the routine tasks (deposits and withdrawals) away from bank tellers and left them with the more complex tasks that require higher-level skills.

Advanced manufacturing technology may contribute to greater variety and complexity because fewer workers are needed and each employee has to be able to perform a greater number and variety of tasks. Workers may find that technology actually changes their jobs frequently because of new software programs, increased use of the Internet, and other advances in information technology.

WORKBOOK ~ SMALL BUSINESS WORKFLOW TECHNOLOGY Students can work individually or in groups to complete this assignment at two locations: a cleaners and a family restaurant. Students should not interact with the employees but rather complete the assignment based on their own observations. Following the two onsite visits, students will draw conclusions relating chapter content to their observations.

CASE FOR ANALYSIS ~ Acetate Department

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Change is a factor that often makes or breaks an organization. The ability to change, however, goes hand in hand with the ability to manage change. This case examines the effects of such a dynamic culture on a company’s people, processes, and technology.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

1. How does the technology change from small-batch to continuous process in the Acetate Department reflect the differences in structural characteristics suggested by Woodward in Exhibit 8.4?

ANSWER: Small batch and continuous process actually share many of the same structural characteristics, such as high skill level, high verbal communication, and an organic structure. One major difference is a greater number of management levels, each with a smaller span of control.

2. How do you think task variety and analyzability changed in the Acetate Department?

ANSWER: Task variety is the frequency of unexpected and novel events that occur in the conversion process. Although the tasks themselves have changed dramatically in the acetate department, the degree of task variety has remained the same. Workers are expected to perform the same way every time. Analyzability refers to the degree to which work can be reduced to mechanical steps and participants can follow objective, computational procedures to solve problems. In this regard, the acetate department has changed significantly. The department’s new system involves far more technology, which can behave in unpredictable ways, requiring the employees to more frequently rely on experience, intuition, and judgment.

3. Why do you think production might be lagging with this new technology? What suggestion would you make to improve production?

ANSWER: Prior to the change, the craft technology of this department was paired with a mostly organic design. Now that is being transformed, the department can be described as nonroutine technology, which needs to be paired with an organic design. The change process, although fairly subtle, still needs to be managed with care. Additionally, managers could use several change techniques, such as building a coalition and encouraging employees to participate more fully in the transition process. Team building exercises could also be used to help restore the collegial nature of the previous format.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS ~ Digitalization in the Manufacturing Sector: Skills in Transition In this case, students discover how the introduction of smart manufacturing technologies is affecting all aspects of a manufacturing plant.

1. What is meant in the case by ―jobs being de-skilled‖? Do you think the knowledge and skillsets based on older technologies are worth saving for a company? Explain.

ANSWER: Sandberg is an excellent representation of the ―old guard,‖ hands-on manufacturing world. He describes the way people like him knew how to work with their machines, had in-depth knowledge used to adjust them, and relied on intuition and instinct in determining when a product was well made. The introduction of CAD/CAM and CNC machining has eliminated much of the need for these skills. Some students may say that machines should be allowed to do it all, with the added bonus of making the jobs less stressful, while other students will argue in favor of knowing more about how to use the machines and recognizing quality work.

2. Do you think computer technicians should be hired directly from school or hired from among existing operators and retrained into the new job? Why? ANSWER: This is a dilemma faced by many organizations—hire someone with specialized skills and train him or her in technology, or hire someone with technology skills and train him or her in the area of specialized knowledge. There is no right answer, but students should be able to support their answers.

3. How might a company best work through the transition from an old to a new manufacturing technology with its employees? Discuss.

ANSWER: Many long-time employees fear this type of change. They are concerned they will become obsolete, or they lack confidence in their ability to learn new skills associated with using the new technology. Above all, employees need to be informed and reassured.

Training programs need to be provided, but employees also need outlets in which to express their feelings and concerns. The more employees can be involved in the transition, the more likely they will be to embrace it.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER NINE DESIGNS FOR DIGITAL ORGANIZATIONS AND BIG DATA ANALYTICS

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW The chapter begins by exploring the evolution of digital technologies and the use of big data in business, followed by an explanation of how this evolution has caused an entirely new type of business organization to emerge: the platform organization, which is quite different from traditional ―pipe‖ organizations. Next, the chapter takes a closer look at big data analytics. The section on the many facets of artificial intelligence reveals how organizations are currently using it and will most likely use AI in the future. After discussing two other important digital trends, the chapter closes with a look at digital IT’s impact on organization design.

Learning Objectives After reading this chapter you should be able to: • •

Explain the impact of digital technology on organization as it evolved from mainframe computers to the Internet of Things.

Describe the differences between a traditional ―pipe‖ organization and a new

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • •

―platform‖ organization.

Define how big data analytics is distinct from previous data analysis activities within organizations and specify various approaches to organizing big data scientists within an organization.

Explain how artificial intelligence improves efficiency and decision making in organizations and discuss its potential downsides.

Explain how IT can be used for social network analysis and knowledge management in organizations.

Describe how organizational design is changing because of advances in artificial intelligence.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

Platform-based organizations are a new form of organization, but the fundamental assumptions are the same as for a traditional industrial organization.

Big data analytics gives good results for making decisions by using carefully selected samples of data.

Artificial intelligence is objective and bias-free compared to human decision making in organizations.

A LOOK INSIDE Google In the scientific journal Nature, Google explained how it is able to use data analytics from billions of search queries to predict when and where various types of flu might break out. The importance of this ability is astounding because Google is able to make these predictions in real time, whereas the Center for Disease Control must rely on data compiled from various sources over weeks, meaning they usually can’t determine a flu outbreak when it’s happening. Real-time predictions enable the CDC to assist doctors in addressing the problems much sooner.

The Digital Information Explosion © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Historically, information media involved human beings, but today digital media means that information or data can be both created and consumed by machines. Initially, information technology was used for transaction processing systems, which automated the organization’s routine, day-to-day business transactions. Data warehousing combines all of a company’s data to allow users to access the data directly. Internal business intelligence or data mining refers to the high-tech analysis of a company’s data in order to make better strategic decisions.

Big data analytics refers to technologies, skills, and processes for searching and examining massive, complex sets of data that traditional data processing applications cannot handle to uncover hidden patterns and correlations.

Today’s ―smart‖ devices (things) can communicate directly with each other, which has led to the concept of the Internet of Things, which does not require human interaction.

Pipes versus Platforms: A New Organization Form The traditional form for an organization can be represented as a pipe because an organization works in a linear order, acquiring resources at one end of the pipe, making products within the pipe, and pushing the result out the other end for sale to customers. Due to the emergence of digital technology, there are now platform-based organizations that connect and enable users to both create and consume something of value.

Two Types There are two types of platforms: exchange platforms that facilitate 1:1 interactions among members (such as Uber or Airbnb) and maker platforms that facilitate 1:1000s interactions among members (such as YouTube and Facebook).

Foundational Assumptions Three basic assumptions underlie a traditional ―pipe‖ organization: First, the goal of traditional organizations is to create competitive advantage through increasing the size of capital assets, such as buildings, manufacturing facilities, and support structures. Second, in traditional organizations, information flows toward the center and up to the top levels of the hierarchical organization for decision- making. Third, managers are promoted into positions of increasing responsibility as they gain experience and demonstrate their ability to make bigger decisions that benefit the organization.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The three basic assumptions underlying the more modern platform organization are almost completely the opposite. First, platforms actually minimize the capital assets needed by both the organization and its users, which reduces the need for costly resources. Second, in the digital realm of a platform organization, information travels fast and wide, often even more efficiently than traditional methods of organizational communication. And third, platforms have the ability to make decisions more quickly and accurately because they rely on algorithmic systems embedded in the platform software for some decision-making. An algorithm is a set of systematic rules built into the platform software to accomplish desired outcomes.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Uber Uber is one of the best-known platform organizations. It facilitates ride-hailing through the use of an app. The organization experienced growing pains associated with aggressive growth goals as well as a lack of strong cultural values. Many cities responded negatively to Uber’s disregard for ride-hailing regulations.

ASSESS YOUR ANSWER Platform-based organizations are a new form of organization, but the fundamental assumptions are the same as for a traditional industrial organization.

ANSWER: Disagree. The basic assumptions underlying a traditional company no longer apply in new platform-based companies. Platform-based companies use fewer assets, information travels faster and more widely, and there is less need for hierarchy than in traditional companies.

Platform Design Recommendations To effectively design a platform-based organization, leaders are encouraged to: • • •

Envision a constructive culture that values agility, risk taking, and collaboration as well as data-driven decision making and other technologyrelated values.

Invest in digital talent by hiring outside talent and also developing internal talent.

Promote soft skills and team building that will enable workers from diverse departments to collaborate more effectively.

Big Data Analytics Big data refers to any massive data set that exceeds the boundaries and conventional processing capabilities of IT. Big data requires a nontraditional approach; it requires that you throw out the old way of thinking and take a totally new approach. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Big data analytics refers to the process of examining large data sets to uncover hidden patterns, correlations, and other useful information that lead to making better decisions.

IN PRACTICE Siemens Gamesa A leader in the renewable energy industry, Siemens Gamesa maintains the industry’s largest amount of historical data and continues to collect more. The organization gathers data on factors such as vibration diagnostics, wind directions, weather, service reports and more, all in an effort to improve employees’ monitoring and maintenance of the wind turbines it operates.

Big Data Requirements In addition to organization structure, there are four other elements of big data function: • Volume:. Big data are really big. About 90 percent of the data that exist in the world today were created within the last two years.

• Use All data. People and companies can do things that weren’t possible with smaller amounts.

• Use Messy Data. As the size of data sets increases, so do inaccuracies.

• Adopt a New Mindset. The big data approach requires a new mindset. It requires surrendering to the data.

ASSESS YOUR ANSWER Big data analytics gives good results for making decisions by using carefully selected samples of data.

ANSWER: Disagree. Big data analytics uses all data, not just samples as in traditional data analysis. By using all the data, the findings are considered more accurate for the entire population. This is a major departure from traditional data collection based on small samples.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK Astroball: The New Way to Win It All

By Ben Reiter Sports writer Ben Reiter recounts how the Houston Astros, considered one of the worst baseball teams in 2014, used scouting talent plus data analytics to engineer one of the greatest turnarounds in baseball history: The Astros won the World Series in 2017.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Big Data and Organization Structure Should the big data function be centralized or decentralized? Should data specialists be located in a central pool or attached to business units? Four structural options are used for setting up a big data operation depending on the size and type of organization.

• • •

•

•

Outsourcing. The first option is to outsource analytics activities.

Outsourcing increases flexibility by making fixed costs variable.

Data intermediaries are firms that collect data from multiple organizations and analyze the combined data for them.

Centralized. Companies with an in-house unit for analytics decide whether to centralize or decentralize. Many analysts ensure that the company obtains the necessary data and expertise to use statistical, data-mining, and predictive models.

Balanced Design. Another in-house approacheis to use a balanced or hybrid design, which places a small number of data scientists in a ―center of excellence‖ led by a CDO, while the remainder stay in the various functional departments or business units.

Decentralized. This approach totally decentralizes data analytics, so that data scientists are spread throughout the organizations, with a small group of analysts in each department or business unit.

IN PRACTICE Morgan Stanley Morgan Stanley, like most financial institutions, continues to amass huge quantities of data. To turn this resource into a strategic asset, the organization has created a Data Center of Excellence made up of about 30 experts in data architecture, infrastructure, and governance. The team also works with Morgan Stanley’s AI team to ensure the effective use of algorithms.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Artificial Intelligence Much of the power underlying the smart factory, platform-based organizations, and big data is the software known as artificial intelligence. AI has the ability to make decisions equal to or better than human beings, which is why it is rapidly being adopted by organizations.

Is AI an Objective Decision Maker?

AI is supposed to provide objective decision making, yet researchers have proven that subtle, unconscious biases regarding race and gender have been incorporated into some AI algorithms.

ASSESS YOUR ANSWER Artificial intelligence is objective and bias-free compared to human decision making in organizations.

ANSWER: Disagree. It seems as if AI would overcome a typical supervisor’s prejudices, but AI can have its own biases that are built into the decision-making software. Developers testing their products often rely on data sets that lack adequate representation of minority groups or women. Subtle unconscious biases may be built into some AI algorithms right from the start if developers are not consciously thinking about racial and gender differences.

Is Nudge Management Going to Be Your Coach?

AI coaching programs are using the concept of nudge management, which applies insights from the behavioral sciences to offer gentle reminders, or nudges, toward desired behaviors, such as a reminder to seek a person’s attention or urge an action.

Algorithmic Control May Be Your New Boss Algorithmic control is the use of software algorithms to set targets, measure performance, provide feedback, and decide rewards for employees. Organizations are using AI algorithms because AI pays off financially by reducing employee variability and slack. Yet there have been reports that employees of organizations using these algorithms resent this level of micromanagement.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

AI Implications for Organization Design The addition of AI applications in organizations suggests two adjustments to organization design: 1) create a new senior AI position, and 2) decentralize authority to employees doing nonroutine work.

HOW DO YOU FIT THE DESIGN? How Will You Handle Decentralization and Autonomy?

An important part of digitalized organization life is setting goals, measuring results, and reviewing progress for employees and others. Students’ answers to the questions indicate the extent to which they have already adopted the disciplined use of goals in their lives and work, which could indicate how well they will fit into a decentralized, autonomous work environment.

Other Digital Applications in Organizations Social Network Analysis Social network analysis can help managers learn about informal relationships and network structures within an organization. With SNA they can know who has influence and who doesn’t, who people turn to for answers, who has the knowledge and technical capability to be innovative, and who has leadership potential. Hubs are people who are at the center of an information network. Peripheral players have the fewest number of connections and operate on the boundaries of a network. Brokers connect people across subgroups and boundaries. Social network analysis can uncover hidden workplace relationships.

IN PRACTICE Exploration and Product Division Executives in the deep-sea drilling industry decided to conduct a social network analysis of the top 20 executives in the Exploration and Production Division to see if people were effectively sharing knowledge and best practices. The SNA revealed that in the informal information flow there was

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

almost a complete separation with no communication between the Production and Drilling departments, and only a single manager who linked the Production Department with the Exploration Department. Further investigation provided insights into how these departments could improve the flow of information and knowledge-sharing.

Knowledge Management Knowledge management refers to the efforts to systematically find, organize, and make available a company’s intellectual capital and to foster a culture of continuous learning and knowledge sharing so that organizational activities build on what is already known. The company’s intellectual capital is the sum of its knowledge, experience, understanding, relationships, processes, innovations, and discoveries.

The fastest growing form of corporate networking is intranet, using Internet protocols, but accessible only to employees within the organization.

Codified knowledge is formal, systematic knowledge that can be articulated, written down, and passed on to others in documents or general instructions. Tacit knowledge is based on personal experience, rules of thumb, intuition, and judgment, and some organizations use expert-locator systems to identify and catalog experts in searchable databases so people can quickly find someone who has knowledge they can use.

There are two approaches to knowledge management. The first approach deals with the collection and sharing of codified knowledge. The focus is on collecting and codifying knowledge and storing it in databases where it can easily be accessed for reuse. The second approach deals with leveraging individual expertise and knowhow— tacit knowledge— and connecting people through interactive media; managers concentrate on developing personal networks that link people together for the sharing of tacit knowledge.

IN PRACTICE BAE Systems A long-time manager at BAE demoted himself to become the assistant to the manager who took his place. Sounds strange? It’s part of BAE’s plan to keep the organization from losing the tacit knowledge residing in the minds of retiring employees. While the organization appreciates the modern data and

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

analytical abilities of new and younger employees, it also wants to preserve the knowledge found in older, outgoing employees.

Digital IT Impact on Organization Design Managers and organization theorists have been studying the relationship between technology and organization design and functioning for more than half a century. The advances in IT have had the greatest impact in most organizations. Some specific implications of these advances for organization design include: • Smaller organizations. Some Internet-based businesses exist almost entirely in cyberspace; there is no formal organization in terms of a building with offices, desks, and so forth.

• Decentralized organization structures. Most organizations today use technology to further decentralization.

• Improved horizontal coordination and collaboration. IT can improve coordination, communication, and collaboration across the firm.

• Enhanced network structures. The high level of cross-organization collaboration needed in a virtual network organization structure would not be possible without the use of advanced IT.

Design Essentials • Today’s most successful organizations are those that most effectively apply information technology. Advanced computer-based systems are also used for coordination, and control of the organization.

•

• • • •

The adoption of digital technology has given rise to a new type of organization, called a platform, that connects and enables users to both create and consume something of value. This is different from the traditional ―pipe‖ organization, in which inputs were transformed into outputs, which were then sold.

Big data is a recent advance in IT. Big data analytics uses new technologies to examine large data sets to uncover hidden patterns, correlations, and other useful information and make better decisions.

Artificial intelligence, which uses algorithms embedded in an organization’s software, is another significant trend that allows organizations to make more accurate decisions and more effectively monitor employee behavior.

Two primary ways to increase coordination are with knowledge management and social network analysis.

Digital IT is having a significant impact on organization design, and some experts suggest that it will eventually replace traditional hierarchy as a primary means of coordination and control.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT eBRICKS.COM In Harvard University’s annual business plan competition, a graduating MBA student was runner-up with his idea for an Internet site for contractors to purchase all building supplies. Confident that the traditional old companies in the construction industry could not keep up, he forecast sales of $2 billion through eBricks by 2003.

With venture funding of $3 million, they merged with a construction planning service, BluelineOnline.com, and promptly received new funding of $41.4 million.

They envisioned selling materials for virtually any construction need, and also auctioning leftover supplies. Years later, they have narrowed their focus to the more manageable dimensions of dealing in a limited geographic area (the Northeast) with a limited list of product lines.

With a separation between the New Economy and the Old Economy reflected on Wall Street, a separation was also expected to be reflected in how the new and the old would succeed in the new age. Much to the surprise of eBricks founders, a traditionalist of the building supplies industry, Wickes Lumber, has lumbered into the e-age with a viable strategy. Whereas eBricks could not seem to get their mortar around an industry that was strange to them, the traditionalists of the industry are able to continue pushing the envelope for a comprehensive electronic business form. The Wickes chairman created online links of the inventories of at least five other lumberyard chains, and being a household name, carries credibility to their Internet site. Wickes suffered from the effect of competition from companies like Home Depot in the do-it- yourself market, and was carrying heavy debt following a poor investment in Russian mills. Initially Wickes.com failed to generate significant hits. At the direction of the board to kill the Internet project, Chairman Steve Wilson bought the Internet site and made it part of his holding company for under $1 million. Subsequently he failed with an advertising site containing editorial content for builders. Still believing in the general promise for online ordering, he worked on relationships with other lumber companies, and hired more seasoned executives from other companies. Note that Wicke’s 1998 loss of $1 million was replaced by earnings of $7.6 million in 1999.

Source: In the New Economy, Who Are the Hunters And Who the Hunted? by Douglas A. Blackmon. Wall Street Journal April 12, 2000, pp. A1, A16.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS .

1. How has the Internet of Things caused an explosion in the data available for analysis in organizations?

ANSWER: Today, many ―things,‖ from smartphones to elevators to household appliances, include ―smart,‖ computer-based technology that allows these devices to communicate with each other and with the Internet. Through the Internet, organizations are able to collect massive amounts of data from smart devices, which they can then analyze and use for strategic decision-making.

2. How do the underlying assumptions differ for a traditional ―pipe‖ organization and a new platform-based digital organization?

ANSWER: The assumptions underlying pipe and platform organizations are virtually completely opposite. The three basic assumptions underlie a traditional ―pipe‖ organization: First, the goal of traditional organizations is to create competitive advantage through increasing the size of capital assets, such as buildings, manufacturing facilities, and support structures. Second, in traditional organizations, information flows toward the center and up to the top levels of the hierarchical organization for decisionmaking. Third, managers are promoted into positions of increasing responsibility as they gain experience and demonstrate their ability to make bigger decisions that benefit the organization.

The three basic assumptions underlying the more modern platform organization are almost completely the opposite. First, platforms actually minimize the capital assets needed by both the organization and its users, which reduces the need for costly resources. Second, in the digital realm of a platform organization, information travels fast and wide, often even more efficiently than traditional methods of organizational communication. And third, platforms have the ability to make decisions more quickly and accurately because they rely on algorithmic systems embedded in the platform software for some decision-making.

3. In what ways might artificial intelligence incorporate bias into its decision making? Explain.

ANSWER: In order to create AI algorithmic software, developers must access and utilize huge data sets. However, if the data sets do not accurately reflect the diversity found within a population—for example, if the sample represented in the data sets favors men over women or Caucasians over other races—a subtle, unconscious bias will emerge in the algorithms. The same could happen if the data © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

sets favor one age group more than others or people of a particular religion more than others.

4. Is Amazon an exchange platform or maker platform organization? Explain.

ANSWER: There are two types of platforms: exchange platforms that facilitate 1:1 interactions among members (such as Uber or Airbnb) and maker platforms that facilitate 1:1000s interactions among members (such as YouTube and Facebook).

Amazon is both. In some cases, it facilitates the distribution and sale of an organization’s product to thousands of buyers. However, through its marketplace for handcrafted goods, it is also facilitating the sale of one-of-a-kind items to individual buyers.

5. How might a hospital administrator trying to implement cross-functional teams use social network analysis to improve communication and collaboration among nurses, doctors, technicians, and other staff?

ANSWER: Social network analysis (SNA) would help a hospital administrator learn about informal relationships and network structures in a hospital. With SNA the administrator learns who has influence and who doesn’t, which people to turn to for answers, who has the knowledge and technical capability to be innovative, and who has leadership potential. Social networks include people who turn to one another for help, advice, information, and support, whether or not they are in the same work group. It is within these networks that much of an organization’s work gets done. SNA would be very useful in a hospital to improve efficiency and get things done quickly.

6. Discuss some ways a large insurance company such as Allstate, Progressive, or State Farm might use social media tools such as microblogs or social networking. Do you think these tools are more applicable to a service company than to a manufacturing organization?

Discuss.

ANSWER: A microblog allows an insurance company to post opinions and ideas about anything such as a comparison of insurance rates to tips on how to select an insurance company. Microblogs give organizations a human voice, enable companies to influence opinion, and provide an easy way to share company news directly with outsiders.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Social networking sites allow an insurance company to share photos, information and opinions. The interaction between an insurance company and its customers promotes customer loyalty and strengthens customer relationships.

Answers will vary, but both manufacturing and service organizations can benefit from social media tools such as microblogs and social networking sites because they both need to stay in touch with the customer and get feedback on their products and services.

7. Describe your use of codified knowledge when you research and write a term paper.

Do you also use tacit knowledge regarding this activity? Discuss.

ANSWER: Codified knowledge is systematic knowledge that can be written down and passed on to others in documents. Tacit knowledge is based on personal experience, involving judgment and even intuition. In writing a term paper, codified knowledge would be used for collection of research, but writing the paper involves tacit knowledge to satisfy the assignment and the preferences of the instructor.

8. Why is knowledge management particularly important to a company that wants to learn and change continuously rather than operate at a stable state?

ANSWER: In a company that wants to learn and change continuously, managers strive to create new knowledge and capture both explicit and tacit knowledge and get it to the right place at the right time. Knowledge management is the vehicle for creation of the system that makes this possible. If a company wants to learn and change, it must create a culture that supports creating new knowledge. This process also involves the development and monitoring of relationships.

9. Caesars Entertainment centralized its big data analytics function to be more efficient. Can you think of some competitive issues that might lead a company to go from a centralized big data function to a function that decentralizes to various units?

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Centralizing analytics has given Caesars operations a uniform view of their business and a common language across the organization. However, the assumption in creating a customer experience is that all customers are similar and like the same food, beverages, and atmosphere. This does not take into consideration ethnic and cultural differences, which are best handled locally. In decentralization, data scientists are spread throughout the organizations, with a small group of analysts in each department or business unit. This fully decentralized approach is the easiest way for analysts to collaborate with the respective departments or business units and tailor their models to each unit’s needs 10. Why do you think the application of digital technology typically leads to greater decentralization in an organization? Might it also be used for greater centralization in some organizations? Explain.

ANSWER: Most organizations today use technology to further decentralization. With digital technology, information that may have previously been available only to top managers at headquarters can be quickly and easily shared throughout the organization, even across great geographical distances.

Digital technology can also be used for greater centralization because many organizations are small. A few people maintain the site from their homes and outsource many functions.

New technology enables more work to be done with fewer people. For example, customers can buy almost anything online without a salesperson.

WORKBOOK ~ Manufacturing and Big Data: Organize the Project This exercise gives students firsthand experience with ―analytics paralytics,‖ the inability of members of an organization to determine how to implement big data analytics. By working in teams, students will understand how determining the correct sequence of steps to implement a project can cause conflict. However, it may also reveal how the pooled knowledge of team members can lead to better results.

CASE FOR ANALYSIS ~ Hermitage Escalator Company

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

1. How might Hermitage codify and manage the knowledge of experienced maintenance technicians into the new rules to be written for handling maintenance responses under the upcoming deluge of big data from the Internet of Things? Explain.

ANSWER: Hermitage could use several approaches to collecting and codifying the knowledge possessed by experienced technicians. For example, they could be asked to answer questionnaires, they could be interviewed using the same set of questions, or they could be asked to gather in groups to share and discuss best practices. It would be important to determine what types of problems occur frequently and the best practices for handling them, as well as the more unusual or unlikely situations and the best practices for handling them.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. How might big data analytics actually be more costly rather than less costly with respect to maintaining escalators?

ANSWER: As Anderson explained, the sensors used to detect potential problems are going to register many small issues. If the company sends a technician out to check on every one of these reports as they happen, it will result in far more service calls, many of which turn out to be either very minor issues that could have been handled during a routine maintenance call or false alarms that aren’t really issues at all. Somehow the new predictive analytics must be able to indicate which issues need immediate attention and which issues can wait for a routine call.

3. What specific value might come from analyzing data on past maintenance calls? What specific data do you think would have value? Why? ANSWER: Analyzing data on past maintenance calls will most likely show what types of common, specific problems emerge under certain conditions. For example, the volume of traffic a certain escalator handles may be linked to how often accumulated debris needs to be cleaned out of the operating mechanism. This type of data holds tremendous value in predicting major issues before they occur so that the organization can resolve the issues in advance, thus avoiding frustrating, costly delays and potential accidents and injuries.

Students’ answers on what data has value will vary, but they might include volume of traffic, conditions of the location (such as amount of rain or the presence of debris), operating speed, and the common problems associated with various types of escalators.

CHAPTER TEN ORGANIZATION SIZE, LIFE CYCLE, AND DECLINE

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter explores the question of large versus small organizations and how size relates to structure and control. Organization size is a major contingency that influences organization design and functioning, just as technology, environment, and goals do. The first section looks at the advantages of large versus small size. Then, the organization’s life cycle is considered and the structural characteristics at each stage. Next, the chapter examines the need for bureaucracy to control large organizations and compares bureaucratic control to other control strategies.

Finally, the chapter looks at the causes of organizational decline. It should become clear when bureaucratic control can make an organization effective and when other types of control are more appropriate.

Learning Objectives After reading this chapter you should be able to: • • • • • • •

Explain the advantages and disadvantages of large organization size.

Describe how an organization progresses through four stages of the organizational life cycle.

Define the characteristics of bureaucracy.

Compare large organizations and small organizations along the dimensions of formalization, centralization, and personnel ratios.

Identify approaches to reducing bureaucracy in large organizations.

Contrast market and clan control with bureaucratic control.

Describe the model of decline stages.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: •

It is wise for the entrepreneur who starts a new company to maintain hands-on management control as the company grows.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• •

A manager should emphasize shared values, trust, and commitment to the organization’s mission as the primary means of controlling employee behavior.

If an organization starts into a state of decline, recovery is very unlikely.

A LOOK INSIDE Southwest

Southwest is beginning to show signs of growing old. Southwest’s position in the airline industry has changed and growth has stalled. The low fares aren’t so low anymore. Ultra-discounters undercut Southwest’s fares. Southwest also has out- ofdate phone and computer systems that have caused problems. Workers had to manually reschedule each passenger at Midway Airport in Chicago in 2014.

Southwest lost 7,500 bags. Current Southwest CEO Gary Kelly has publicly acknowledged the organization’s need to adapt in order to survive.

Organization Size: Is Bigger Better?

Pressures for Growth Every entrepreneur wants the company grow fast and large, However, some companies that have resisted the pressure for endless growth and focused on different goals. Industry consolidation, global expansion, and diversification have made firms larger over the past few decades. Despite the proliferation of new, small organizations, giants such as Toyota and Walmart continue to grow. To stop growing is to stagnate. Customers may not have their demands fully met or that competitors will increase market share.

Dilemmas of Large Size Differences between large versus small size are summarized in Exhibit 10.1.

Huge resources and economies of scale are needed for many organizations to compete globally with products such as wind turbines. Large companies are standardized, often mechanistically run, and complex.

HOW DO YOU FIT THE DESIGN What Size Organization for You? How do your work preferences fit organization size? Working in a large © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

organization is a very different experience from working in a small organization. The large organization is well-established, has good benefits, is stable, and has rules, well-defined jobs, and a clear management hierarchy of authority. A small organization may be struggling to survive, has excitement, multitasking, risk, and sharing of responsibility.

The argument for small size stems from the need for responsiveness and flexibility in fast-changing markets. The Internet has made it easier for small companies to compete with larger firms. Small organizations have a flat structure and an organic, free-flowing management style that encourages entrepreneurship and innovation.

Big-Company/Small-Company Hybrid Many small organizations can become victims of their own success as they grow large, shifting to a mechanistic structure and failing to reward an entrepreneurial approach. A big-company/small-company hybrid is the solution. Large companies can retain flexibility and customer-focus by decentralizing authority, cutting out layers of the hierarchy, and using information technology.

IN PRACTICE Dell Inc. Dell was once the top PC maker in the world. Now It faces stiff competition. As it transitions from a PC company to a ―solutions company,‖ it is trying to return to its entrepreneurial roots. Dell is moving into cybersecurity and data center design and management, and letting those units operate more autonomously. Michael Dell says he wants the units to act more creatively and less bureaucratically so he is taking a hands-off approach.

Organizational Life Cycle

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

An organizational life cycle suggests that organizations are born, grow older, and eventually die. Organization structure, leadership style, and administrative systems follow a fairly predictable pattern through stages in the life cycle.

Stages of Life Cycle Development [Use LECTURE ENHANCEMENT on pre-birth stages here.]

Whenever an organization enters a new stage in its life cycle, a new set of rules emerges for how the organization functions internally and how it relates to its environment.

•

• • •

Entrepreneurial stage. Emphasis is on creating a product or service and surviving. The founders devote their energies to production and marketing. Creative and technically-oriented owners are confronted with management issues.

Collectivity stage. Known for development of clear goals and direction, followed by an autonomy crisis as managers want more freedom.

Formalization stage. Known for the addition of internal systems, followed by a crisis of needing to deal with too much red tape.

Elaboration stage. A mature organization, known for development of teamwork through manager teams and task forces, often across divisions of the company, sometimes including periods of temporary decline in which there is a crisis of the need for revitalization.

Eighty-four percent of businesses that make it past the first year fail within five years because they can’t make the transition from the entrepreneurial stage.

ASSESS YOUR ANSWER It is wise for the entrepreneur who starts a new company to maintain hands-on management control as the company grows.

ANSWER: Disagree. Entrepreneurs typically enjoy using their creativity for making and selling a new product or service. Many stay hands-on too long because they have a hard time shifting to the role of managing other people and setting up procedures and systems the company needs as it grows. In most cases, successful entrepreneurs bring in skilled managers to run the business and take the organization to the next level.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Airbnb Originally, Airbnb was run fairly casually with a ―friends crashing on your couch‖ informality. But as the organization grew, many customers began to expect a more consistent, reliable service. That’s when CEO Brian Chesky started applying more control to those who served as ―hosts‖ on the website that matches spare rooms and empty houses with travelers. Hosts are required to function more like traditional hotels with online bookings, cancellation policies, check-in times, and cleanliness and safety standards. Some hosts love the changes, while others think the new controls are a hassle.

Organizational Characteristics During the Life Cycle • • •

•

Entrepreneurial stage. Organization is small, non-bureaucratic, and a one person show. The top manager provides the structure and control system.

Rewards are personal.

Collectivity stage. Growth is rapid, and employees are excited and committed.

The structure is still informal, although some procedures are emerging. Strong charismatic leaders provide direction. Continued growth is a major goal.

Formalization stage. The organization adds staff support groups, formalizes procedures, and a hierarchy and division of labor. Innovation is achieved by a separate (R&D) department. Goals are stability and expansion. Management delegates, but implements formal control systems.

Elaboration stage. The organization is large and bureaucratic, with extensive control systems, rules, and procedures. Managers develop a team orientation to prevent further bureaucratization.

Organizational Size, Bureaucracy, and Control What Is Bureaucracy?

Bureaucracy, as envisioned by Max Weber, is a logical, rational form compared to other bases of organizations, such as favoritism, status, family connections, or feudalism. Six characteristics of bureaucracy include: rules and procedures, specialization and division of labor, hierarchy of authority, technically qualified personnel, separation of position and position holder, and written communication and records.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE United Parcel Service (UPS) UPS became very efficient through adoption of the bureaucratic model of organization. Despite the strict rules, employees are satisfied, and UPS has a high retention rate because employees are treated well and paid well.

Everyone is on a first-name basis and the company promotes from within based on merit. The emphasis on equality, fairness, and a promote-fromwithin mentality inspires loyalty and commitment throughout the ranks.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Size and Structural Control Formalization and Centralization Large organizations have greater formalization, referring to rules, procedures, and written documentation. Large organizations rely on rules to achieve standardization and control across their large numbers of employees and departments. Centralization refers to the level of hierarchy with authority to make decisions. In centralized organizations, decisions tend to be made at the top. However, due to their size and complexity, larger organizations must allow decision-making at lower levels, known as decentralization.

Personnel Ratios Personnel ratios for administrative, clerical, and professional support staff differ in large versus small organizations. As organizations increase in size, the administrative ratio declines and the ratios for other support groups increase.

Keeping costs for administrative, clerical, and professional support staff low represents an ongoing challenge for large organizations.

Bureaucracy in a Changing World As Weber predicted, bureaucracy met the needs of the industrial age very well. But today, with rapid environmental changes, machine-like bureaucracy may not function as well. Many business organizations need to reduce formalization and bureaucracy. Narrowly defined job descriptions and excessive rules limit the creativity, flexibility, and rapid response needed in today’s knowledge-based organizations.

BOOKMARK The Conversational Firm: Rethinking Bureaucracy In the Age of Social Media

By Catherine J. Turco MIT management professor Catherine Turco takes readers inside a social media marketing firm whose founders decided to build ―radical openness‖ into the fabric of the organization. Founders shared everything from financial

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

documents to new project ideas with employees. Two valuable lessons emerged from Turco’s study: One, employees really want to have a voice, to be listened to and consulted, even if their demands are not met or their ideas are not implemented. And two, employees prefer having some degree of bureaucracy.

Organizing Temporary Systems One structural concept is to use temporary systems or structures to respond to a crisis.

This approach is used by organizations such as police departments to maintain the efficiency of a bureaucracy, yet prevent slow response. The approach is being adapted by other organizations to respond quickly to new opportunities, unforeseen competitive threats, or organizational crises.

IN PRACTICE The Salvation Army The Salvation Army realizes that emergencies demand high flexibility. Yet, the organization must have a high level of control to meet its day-to-day responsibilities. In the early emergency moments of a crisis, the Salvation Army deploys a temporary organization that has its own command structure.

The Salvation Army has people simultaneously working in all different types of structures, from traditional vertical command structures, to horizontal teams, to a sort of network form that relies on collaboration with other agencies.

Other Approaches to Busting Bureaucracy Many organizations are cutting layers of hierarchy, keeping headquarters staff small, and giving lower level workers greater freedom to make decisions rather than burdening them with excessive rules and regulations. Another attack on bureaucracy is from the increasing professionalism of employees. Professionalism is defined as the length of formal training and experience of employees. Increased training substitutes for bureaucratic rules.

Bureaucracy and Other Forms of Control Every organization needs systems for guiding and controlling the organization.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Bureaucratic Control Bureaucratic control is the use of rules, regulations, policies, hierarchy, documentation, and other bureaucratic mechanisms to standardize behavior and assess performance.

Some bureaucratic control is used in almost every organization. Bases of control include rational-legal authority--based on employees’ belief in the legality of rules and the right of those elevated to positions of authority to issue commands; traditional authority belief in traditions and in the legitimacy of the status of people exercising authority through tradition; charismatic authority based on devotion to the exemplary character or heroism of an individual person and the order he or she defines. Management control systems are the formalized routines, reports, and procedures that use information to maintain or alter patterns in organizational activity.

IN PRACTICE East Resources Inc. and Royal Dutch Shell PLC East Resources Inc. drilled into the Marcellus Shale, and regulators cited the company for spills Royal Dutch Shell bought East Resources and brought its bureaucratic control to the operation. Shell shut down the rigs and retrained the workers. Since taking over in 2010, Shell has averaged less than one violation for every four wells. As larger companies with standardized procedures buy out smaller firms, environmental and safety records are improving.

Market Control Market control uses price-cost comparisons to evaluate performance. Market control requires price competition so that the price reflects the true value of outputs and is a measure of internal efficiency. It is used primarily at the level of the entire organization, but can also be used in product divisions or profit centers. The network organization illustrates market control.

Clan Control Clan control is the use of corporate culture, shared values, commitment, traditions, trust, and beliefs to control behavior. People behave the way the culture expects because they are part of the group and want to belong. It is used in organizations with a strong culture, because of personal involvement in and commitment to the organization's purpose. Clan control is important

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

when ambiguity and uncertainty are high. Managers act as mentors, role models, and agents for transmitting values.

ASSESS YOUR ANSWER A manager should emphasize shared values, trust, and commitment to the organization’s mission as the primary means of controlling employee behavior.

ANSWER: Agree or disagree. Clan control, which relies on culture, trust, commitment, and shared values and traditions, can be highly effective and is particularly useful in departments or organizations experiencing high uncertainty or environmental turbulence. However, other forms of control, such as bureaucratic or market control, are also effective and appropriate under the right circumstances.

IN PRACTICE Valve Corporation and FAVI Valve Corporation is a great example of a bossless organization where selfcontrol and clan control work well. The video game developer is organized by self-appointed teams that make all their own decisions, and employees’ performance is evaluated by peers. Another company that shifted from bureaucratic control to bosslessness is FAVI, a French company that designs and manufactures automotive components. There is no personnel department, no middle management, no time clocks, no employee handbooks. Employees are told they ―work for the customers,‖ and as a result, FAVI hasn’t been late with a customer order in 10 years.

Organizational Decline Some organizations have stopped growing, and many are declining.

Definition and Causes

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Organizational decline is a condition in which a substantial, absolute decrease in an organization’s resource base occurs over a period of time.

Causes of organizational decline: • • •

Organizational atrophy occurs when organizations become inefficient and overly bureaucratized. Their ability to adapt to the environment deteriorates.

Vulnerability reflects an organization’s strategic inability to prosper in its environment.

Environmental decline or competition refers to reduced energy and resources available to support an organization.

IN PRACTICE Eastman Kodak Founded in 1880, Eastman Kodak helped create the camera industry but a combination of factors led Kodak to bankruptcy. The primary causes of decline were competition and industry changes, but atrophy and vulnerability were also involved. Kodak actually invented one of the first digital cameras, but managers couldn’t move forward out of fear of cannibalizing their film business. Kodak will continue operating, and managers hope they can turn things around.

A Model of Decline Stages The five stages of organizational decline are presented in this model.

• • • • •

Blinded stage. This is the internal and external change that threatens long-term survival and might require the organization to tighten up.

Inaction stage. Denial occurs despite signs of deteriorating performance.

Faulty action stage. During this stage, the company tries to take action, but it is not the correct action.

Crisis stage. The organization experiences chaos, may go back to basics, and experiences panic and anger.

Dissolution stage. The organization is forced to close down in an orderly fashion.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ASSESS YOUR ANSWER If an organization starts into a state of decline, recovery is very unlikely.

ANSWER: Disagree. Any organization can experience a period of decline because of factors such as decreasing resources or other shifts in the environment.

Managers are responsible for recognizing and effectively addressing decline before it is too late. In the early stages of decline, managers have time to correct problems and turn the organization around.

Design Essentials • • • • •

Organizations experience many pressures to grow, and large size is crucial to economic health in some industries. However, large organizations have a hard time adapting to rapid changes in the environment.

Organizations evolve through distinct life-cycle stages as they grow and mature.

Organization structure, internal systems, and management issues are different for each stage of development.

As organizations progress through the life cycle and grow larger and more complex, they take on bureaucratic characteristics. While bureaucracy uses resources efficiently, many firms choose to decentralize authority.

All organizations need systems for control. Managers can choose among three overall control strategies: market, bureaucratic, and clan.

Many organizations have stopped growing, and some are declining. Organizations go through stages of decline, and managers must detect the signs of decline, implement necessary action, and reverse course.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT PRE-BIRTH ORGANIZATION STAGES Bartunek and Betters-Reed (American Journal of Community Psychology, 15, 287303, 1987) developed a model describing the process of organizational creation from the original idea to its implementation, based on case studies of several organizations, each of which had the goal of meeting some social need in an innovative way. The model involves three stages: first idea, commitment and early planning, and implementation. The authors contend that the ways in which the idea is developed and ultimately implemented affect the future of the organization by providing the foundation for how the organization will pass through life-cycle stages. For example, organizations which allowed all new members the freedom to develop and adapt the plan were more likely to be an innovative organization.

Those which did not resolve problems and conflicts during the pre-birth stages continued to have such problems in their later organizational life.

The first idea stage involves the perception of a problem and the suggestion of a way the problem might be addressed through an organization. Experiences and feelings vary from discomfort about the problem to excitement about the first ideas and their superiority to other ideas. Critical issues include the creativity and thoroughness involved in the development of the idea and whether the originator of the idea cares about the problem itself.

The second stage, commitment and early planning, begins with the commitment of the idea originator to create a new organization and continues through initial planning. Important relationships are established at this stage--with others who now join in planning for the organization, and with others in the environment, such as sponsors, resource suppliers, and regulatory agencies. Common experiences and feelings may involve ambiguity and conflict among planners, negotiation over the development of the idea which may be transformed by the addition of other planners, and problems with the environmental sectors. The critical issues are similar to those of the first stage, but take on new dimensions. Issues now include the relationships among the planners and between planners and environmental groups.

At the implementation stage planners begin to feel that an organization really exists, as formalization begins to take place. Crucial tasks include choosing the leader and hiring new organizational members. There is excitement that the organization is finally getting underway. However, there are also discoveries that resources are not adequate for the plans. There may be difficulties between planners and new members. Critical issues include: the ways in which resources are used, particularly if the level of resources does not match the intended plan; the way in © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. which new members are treated as integral to the organization; and the relationship between the first leader and members.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. Why do large organizations tend to have larger ratios of clerical and administrative support staff? Why are they typically more formalized than small organizations?

ANSWER: Personnel ratios for administrative, clerical, and professional support staff increase in proportion to organization size. The clerical ratio increases because of the greater communication and reporting requirements needed as organizations grow larger.

The professional staff ratio increases because of the greater need for specialized skills in larger, complex organizations.

Large organizations experience greater variation among employees and hence the need for standardization and control is present. Large organizations rely on rules, procedures, and other paperwork to achieve standardization and control across the large number of employees and departments. Personal supervision is not a feasible form of control by upper management in a large organization. Formalization is an impersonal means of control which substitutes for surveillance as organizations increase in size.

2. Apply the concept of life cycle to an organization with which you are familiar, such as a local business. What stage is the organization in now? How did the organization handle or pass through its life cycle crises?

ANSWER: This question is designed to have students trace the development of an organization through the four stages of the life cycle. Students will match the characteristics described in Exhibit 10.3 with the actual characteristics of the organization chosen for description. Although the model and reality of any one given organization may not correspond exactly, use the questioning process to help students identify the factor satisfied during each stage, and then the crisis experienced before pushing the organization to the next stage.

3. Why do you think organizations feel pressure to grow?

ANSWER: Companies grow to acquire the size and resources needed to compete on a global scale, to invest in new technology, and to control distribution

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

channels and guarantee access to markets. There are other pressures to grow. Many firms must grow to stay economically healthy because to stop growing is to stagnate. To be stable means that customers may not have their demands fully met or that competitors will increase market share.

4. Describe the three bases of authority identified by Weber. Is it possible for each of these types of authority to function at the same time within an organization? Discuss.

ANSWER: Rational-legal authority is based on employees' beliefs in the legitimacy of rules and the hierarchy of authority, and the right of those elevated to authority to issue commands. Traditional authority is based on people's belief in the sanctity of tradition and in the status of people exercising authority through those traditions. Charismatic authority is based upon devotion to the exemplary character or heroism of an individual person.

Yes, each of these types of authority may function at the same time within an organization.

Rational-legal authority is a common base in today's organization. Traditional authority may appear in norms and values within an organization. Things may be done a certain way because of norms and tradition. Certain individuals may have special status due to these traditions or norms, and the rest of the employees defer to that tradition.

Charismatic authority would appear when a very strong or attractive person is able to influence the direction and outcomes of the organization because other people defer to him.

5. Look through several recent issues of a business magazine such as Fortune, BusinessWeek, or Fast Company and find examples of two companies that are using approaches to busting bureaucracy. Discuss the techniques these companies are applying.

ANSWER: Students can research this question and share their answers with the class. By reorganizing into groups of small companies, a huge corporation such as Johnson & Johnson can capture the mindset and advantages of smallness. Johnson & Johnson is actually a group of 250 separate companies operating in fifty- seven countries.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

6. In writing about types of control, William Ouchi said, "The Market is like the trout, and the Clan is like the salmon, each a beautiful highly specialized species which requires uncommon conditions for its survival. In comparison, the bureaucratic method of control is the catfish--clumsy, ugly, but able to live in the widest range of environments and, ultimately, the dominant species." Discuss what Ouchi meant with that analogy.

ANSWER: Ouchi's point is that the market and clan mechanisms of control are highly specialized and suited to specific circumstances. The market works only when price competition is present and output can be accurately priced (highly specialized species).

Clan control works only when employees have shared values, traditions and trust (requires uncommon conditions for its survival). The bureaucratic control, on the other hand, will fit almost any situation. Rules and regulations, the hierarchy, and other bureaucratic aspects of control can be used in almost any organization (widest range of environments). Thus bureaucracy occurs in almost all organizations and is the most widely used form of control (dominant species).

7.

Government organizations often seem more bureaucratic than for-profit organizations.

Could this partly be the result of the type of control used in government organizations?

Explain.

ANSWER: Yes, government organizations have to rely on bureaucratic forms of control; hence they have more paperwork, procedures, and red tape. Government organizations usually cannot use market control because they typically provide services that are unique and difficult to price. Moreover, government organizations are not in competition, so there is not a market to ensure that a price reflects fair value. There is an element of clan control in some agencies, to the extent that employees share common values. However, heavy clan control is not realized for lack of a thick, constant culture. Since many government organizations also are large and perform routine tasks, they are unable to make extensive use of clan control. Government organizations thus seem much more bureaucratized than similar organizations in the private sector. By default, bureaucratic control dominates.

8. How does the Salvation Army manage to be ―several different kinds of organization at the same time‖? Does the Salvation Army’s approach seem workable for a large media company like Time Warner or Disney that wants to reduce bureaucracy?

ANSWER: The Salvation Army provides day-to-day assistance which demands a high level of control and accountability, and disaster relief which demands flexibility. In a

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

crisis, the Salvation Army deploys a temporary organization with its own command structure: manuals specify who talks to the media, who is in charge of supplies, and who is the liaison to other agencies. In the later recovery phase, supervisors give general guidelines and allow people to improvise solutions. The Salvation Army has people simultaneously working in different structures, from traditional vertical command structures, to horizontal teams, to a sort of network form that relies on collaboration.

Yes, this approach can help any organization respond to new opportunities, unforeseen competitive threats, as well as organizational crises. A media company like Time Warner or Disney that chooses to reduce bureaucracy could loosen its lines of command while maintaining its mission. The idea is to maintain order in a dynamic environment. With technological happening so rapidly, this approach could be very helpful.

9. Numerous large financial institutions, including Lehman Brothers and Merrill Lynch, experienced significant decline or dissolution in recent years. Which of the three causes of organizational decline described in the chapter seems to apply most clearly to these firms?

ANSWER: Lehman Brothers and Merrill Lynch suffered from organization atrophy which occurs when organizations grow older and become inefficient and overly bureaucratized.

These firms suffered partly as a result of unfettered growth and ineffective control. Their ability to adapt to the crisis facing the financial services sector of the U. S. economy deteriorated.

10. Do you think a ―no growth‖ philosophy of management should be taught in business schools? Discuss.

ANSWER: A case can be made to teach a ―no growth‖ philosophy in management. It has become evident in the economy the last few years that always expecting a growth is not always realistic. Managers need to know how to mange in such a situation.

WORKBOOK ~ CLASSROOM CONTROL

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

This Workbook activity encourages students to evaluate control they have experienced in the work and school settings. You will have an opportunity to reinforce the importance of achieving balance in organizational control systems. Some students may have a tendency to label all control as bad, so be certain that a balanced picture emerges in the final analysis, and that students understand the importance of appropriate control.

CASE FOR ANALYSIS: YAHOO: “GET TO WORK!” 1. Why do you think Marissa Mayer adopted a more centralized and bureaucratic approach by bringing all employees on-site to work at Yahoo?

ANSWER: When Mayer came on board in 2013, Yahoo had lost focus, employee morale was low, and the company was quickly losing ground to competitors. Mayer felt that the work-from-home mentality, although enjoyable for many employees, was not productive for the Yahoo organization at that time. And, in fact, some employees were even abusing the privilege of working in such a flexible environment. Mayer believed that by forcing employees to return to the workplace, they would once again begin to collaborative, innovative, and be more focused and productive.

2. Why do you think many employees resisted this change?

ANSWER: In addition to being accustomed to the flexibility and convenience of working from home, many employees felt that they were being treated like children who needed close supervision. They felt that the CEO did not trust them to do their work efficiently. In a bureaucracy, narrowly defined job descriptions and excessive rules limit the creativity, flexibility, and rapid response needed in today’s knowledge- based organizations such as Yahoo.

3. What do you think will be the full impact of having employees work on-site rather than at home?

ANSWER: With bodies now working on-site, there is an effort to create a more efficient atmosphere of meeting and collaboration. The CEO insisted on day-long Friday question/answer/planning meetings between senior executives and all employees because Yahoo must make up time and get up to speed within the industry quickly

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS ~ BACHMEYER FOODS, INC. 1. What types of control did Clemmons appear to be using at Bachmeyer? What are her assumptions about her control over people in the plants?

ANSWER: Prior to Clemmons’s arrival, the home office was using a market form of control.

It was evaluating profit performance, which is a function of price and cost. Market control was appropriate because profit is an accurate indicator of performance, and the regions are setting prices under conditions of competition. Clemmons tried to impose bureaucratic control. She was relying on the hierarchy of authority and rules and procedures to bring about a change in behavior. The executives, on the other hand, previously used market control and perhaps some clan control. They expected the freedom to do as they pleased as long as profit results were satisfactory. They identified with their own region and may have developed a clan atmosphere within each region.

Clemmons is having a difficult time because her attempts to control the region are running counter to the other types of control in use. She assumed they would readily make this tremendous switch in response to a simple email.

2. Why do you think her communication attempt to change procedures received little response?

ANSWER: This question asks students to think about the relationship between information media and the information topic. Generally, as the topic becomes more complicated, intangible, and personal, then richer information is needed. A richer medium is also more effective for changing the receiver's mental map of the organization. Since the pricing and purchasing procedures were complicated, affected the personal power and authority of local managers, and were the result of changing conditions within each region, the procedures should have been discussed and resolved through face-to-face communications. The same would be true for announcing the new position. The position was not well understood, so face-to-face discussion from her superior would provide greater insight and understanding on the part of regional managers. The use of a formal written announcement would be appropriate for a more routine change, such as when a new person takes over an established position.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. What advice would you give Clemmons about communicating future changes in purchasing procedures?

ANSWER: Major announcements need to be handled personally. For example, Clemmons should follow Washington’s suggestions to visit the regions personally or to wait until the annual company meeting to roll out major policy changes. For smaller announcements, Clemmons could link regional purchasing managers, sales, and other front-line personnel to her information system. This would allow her to share information with them, and it would provide her with immediate, relevant information from which she could assume a support role from her centralized position. If possible, she should consider supporting the regions technologically with direct communication links to customers through electronic data interchange. By using her role in these creative ways, she would discover how to support the regions in a way that they themselves could not perform as effectively without duplication of effort and interference with their day-to-day responsibilities.

Clemmons and her supervisor need to realize that in implementing change she will need the cooperation and commitment of those affected by the change. The regions must recognize her responsibility and authority. She needs to use more participation in determining the change or at least the method and timing of changes. This will elicit the needed commitment to implement the desired changes.

CHAPTER ELEVEN ORGANIZATIONAL CULTURE AND CONTROL

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OVERVIEW This chapter explores corporate culture and its relationship to organizational control. The first section describes corporate culture, its origins and purpose, and how to identify and interpret culture by looking at rites and ceremonies, stories and sayings, symbols, organization structures, and power relationships. Culture reinforces the strategy and structural design needed for effectiveness. Next, the chapter turns to the correlations between culture and performance, specifically how a strong culture is needed to ensure long-term high performance. And finally, the chapter explores various control mechanisms, such as the feedback control model, the balanced scorecard, and behavior and outcome control, all viewed through the lens of culture.

Learning Objectives After reading this chapter you should be able to: •

Define organizational culture and identify symbols, rituals, stories, or other observable elements that signal cultural values in a company you are familiar with.

• Describe the four types of organizational culture.

• Explain the relationship between culture, corporate values, and performance.

• Explain how managers create a high-performance culture.

• Contrast a decentralized culture of control with a hierarchical culture of control.

• Explain the feedback control model.

• Describe the balanced scorecard’s value for organizational control.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

Top managers typically should focus their energy more on strategy and structure than on corporate culture.

For a high-level manager, emphasizing cultural values is more important than emphasizing performance metrics to achieve high performance.

For a department manager, it should not matter much exactly how or when people get their work done, just as long as they produce good results.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

A LOOK INSIDE Amazon Some former employees refer to Amazon’s environment as a ―gladiator culture,‖ where a fierce competitiveness seems embedded in everything. Some wouldn’t think of returning to work there. Others love the challenge of such a confrontational culture and can’t work effectively anywhere else. Amazon has employees and managers who enjoy their jobs and employees who think the cultural values are detrimental to employee happiness and long-term company success.

Organizational Culture Strong cultures have a profound impact on a company. A related concept concerning the influence of norms and values on working together is social capital. Social capital refers to the quality of interactions among people and whether they share a common perspective.

What Is Culture?

[Assign WORKBOOK activity here.]

Culture is the set of values, beliefs, and understandings, and ways of thinking that are shared by members of an organization and is taught to new members as correct.

Culture exists at two levels: the surface level of culture includes observable symbols, ceremonies, stories, slogans, behaviors, dress, and the physical settings; and the underlying level which is more of the "true culture" includes values, assumptions, beliefs, and thought processes.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Emergence and Purpose of Culture Emergence of culture is generally from a founder or early leader who articulates and implements certain values as a vision or business philosophy. Culture serves two critical functions: internal integration to integrate members so they develop a collective identity, and external adaptation to help the organization meet goals and deals with outsiders by responding rapidly to customer needs, for example.

IN PRACTICE Google

Google is consistently named one of the best places to work, and it is known for its fun perks, like nap pods and ping pong tables. But beneath the fun is a strong culture that leads to high performance. Google’s culture is founded on flexibility, collaboration, and trust. Additionally, Google perpetuates and learning and growth culture by encouraging employees to try, fail, and learn from mistakes.

Interpreting/Shaping Culture Interpreting culture requires one to make inferences based on observable symbols.

•

Rites and ceremonies are the elaborate, planned activities that make up a special event and are often conducted for the benefit of an audience. Rites of passage facilitate the transition of employees into new social roles. Rites of integration create common bonds and good feelings among employees and increase commitment to the organization.

•

Stories and sayings. Stories are narratives based on true events that are frequently shared among organizational employees and told to new employees. Heroes of stories serve as role models. Legends are historical events embellished with fictional details. Sayings are mottoes or mantras that encapsulate key cultural values.

[Use LECTURE ENHANCEMENT on organizational culture stories here.]

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Symbols. A symbol is something that represents another thing. It represents the deeper values of an organization. Another symbol is a physical artifact of the organization.

•

Organization Structures. A strong reflection of the culture is how the organization is designed. Does it have a rigid mechanistic structure or a flexible organic structure?

•

Power Relationships. Looking at power relationships means deciphering who influences or manipulates or has the ability to do so. Which people and departments are the key power holders in the organization?

•

Control Systems relates to control systems, or the inner workings of how the organization controls people and operations. This includes looking at such things as how information is managed.

Culture and Organization Design Corporate culture should reinforce the strategy and structural design that the organization needs to be effective within its environment. The correct relationship among cultural values, organizational strategy and structure, and the environment can enhance organizational performance. Exhibit 11.4 illustrates the fit and is associated with four categories of culture. .

ASSESS YOUR ANSWER Top managers typically should focus their energy more on strategy and structure than on corporate culture.

ANSWER: Disagree. Smart top managers know that for the organization to be successful, the right culture has to support and reinforce the strategy and structure to be effective in its environment. Someone once said, ―Culture eats strategy for lunch.‖ Managers can invest all the time and resources they have in defining a killer strategy, but if the cultural values are out of line, implementing it will be impossible.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The Adaptability Culture The adaptability culture is characterized by strategic focus on the external environment through flexibility and change to meet customer needs; the company actively creates change. Innovation and risk-taking are rewarded.

IN PRACTICE Huawei Chinese telecom and consumer electronics giant Huawei is known for its aggressive, hard-charging culture, dubbed internally as ―wolf culture.‖ Once indoctrinated into the company’s culture, employees are encouraged to work grueling hours, persevere under dangerous conditions, and even bend company rules if it benefits Huawei. This culture has motivated some employees to engage in illegal conduct, such as bribing government officials, stealing competitive secrets, and committing bank fraud. Huawei’s CEO issued a statement condemning such behavior and promising stricter internal controls, but his words indicate that the win-at-all-costs culture will not change.

The Achievement Culture The achievement culture places major importance on a clear vision of organizational purpose and on the achievement of goals such as sales or market share. Because the environment is stable, managers can translate the vision into measurable goals and evaluate employee performance for meeting them.

The Clan Culture The clan culture has a primary focus on the involvement and participation of the organization's members and on rapidly changing expectations from the external environment. Important values include taking care of employees and making sure they are satisfied and productive.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The Bureaucratic Culture This bureaucratic culture has an internal focus and a consistency orientation for a stable environment. There is a high level of consistency, conformity, and collaboration among members. Managers are shifting away from bureaucratic cultures to gain flexibility.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

HOW DO YOU FIT THE DESIGN? Corporate Culture Preference The fit between a manager or employee and corporate culture can determine both personal success and satisfaction. A lower score on the rating scale means a stronger preference for that specific culture. You will likely be more comfortable and more effective as a manager in a corporate culture that is compatible with your personal preferences. A higher score means the culture would not fit your expectations, and you would have to change your style to be effective.

Culture Strength and Organizational Subcultures Culture strength refers to the degree of agreement among employees about the importance of specific values. Strong culture can have a powerful impact on company performance, and is typically characterized by frequent use of ceremonies, symbols, stories, heroes, and slogans.

Subcultures may develop within the larger organization, reflecting common problems, goals, and experiences.

IN PRACTICE Pitney Bowes Credit Corporation Although headquarters of this postage meter and office equipment maker is traditional and orderly, the third floor dedicated to PBCC looks more like an indoor theme park. Branching from its original purpose of helping customers finance their business, PBCC has redefined its division as a creator of services rather than a provider of services. PBCC creates new services for customers to buy, such as a revolving line of credit. Simultaneously, PBCC began redefining its subculture, emphasizing values of teamwork, risk-taking, and creativity.

BOOKMARK Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World By Michele Gelfand

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

After compiling data on more than 7,000 people, psychologist Michele Gelfand developed a tight-loose continuum. The tight end has strong social norms and little tolerance for deviance, while the loose end has weak social norms and are highly permissive. Corporate cultures can also be slotted onto this continuum, and Gelfand’s research reveals that mergers between a tight culture and a loose culture ultimately lose shareholder value. Ideally, organizations will strive for a culture that is balanced, lying somewhere in the middle of the spectrum.

Culture and Performance Research has shown a strong correlation between culture strength and high performance. In a high-performance culture, managers uphold the desired cultural values and lead their organizations to meet high performance goals. An organization may be able to achieve high performance in the short run but cannot sustain it without strong cultural values.

ASSESS YOUR ANSWER

For a high-level manager, emphasizing cultural values is more important than emphasizing performance metrics to achieve high performance.

ANSWER: Disagree. An emphasis on positive cultural values is important, but managers must also pay strong attention to performance metrics for the organization to be successful Achieve high performance requires attention to both values and solid business performance.

The Cultural Focus of Control Systems The Changing Philosophy of Control In many of today’s organization, managers are shifting away from traditional hierarchical control to decentralized control. Hierarchical control involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms. Hierarchical control stems from a rigid or ―tight‖ culture. In contrast, decentralized control relies on cultural values, traditions,

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

shared beliefs, and trust to foster compliance with organizational goals.

Decentralized control is a reflection of a flexible and adaptive culture.

Feedback Control Model All effective control systems involve the use of feedback to determine whether organizational performance meets established standards to help the organization attain its goals. A classic feedback control model can be illustrated in four steps that form a continuous loop: set strategic goals, establish metrics and standards of performance, compare metrics of actual performance to standards, take corrective action as needed.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Organization Level: The Balanced Scorecard A popular control system used to assess an organization’s performance is the balanced scorecard. Managers identify key performance indicators (KPIs) in four key areas: the financial perspective, customer service indicators, business process indicators, and potential for learning and growth. Also useful is a strategy map, which is a visual representation of the key drivers of an organization’s success that reveals how specific outcomes in these four areas are linked. A strategy map can reveal causeeffect relationships. For example, it might show that a learning and growth culture is needed to achieve excellent internal business processes.

Department Level: Behavior Versus Outcome Control While a balanced scorecard assesses the organization as a whole, managers are also charged with assessing individual employees’ performance. Behavior control is based on managers’ direct observations of employees to monitor how they are doing their work. Outcome control, on the other hand, is based on monitoring and rewarding results. Employees are given some leeway in how they do their work as long as they produce the desired outcomes.

ASSESS YOUR ANSWER For a department manager, it should not matter much exactly how or when people get their work done, just as long as they produce good results.

ANSWER: Agree. Focusing on results, or outcomes, can be a highly effective approach to department level control in many organizations. Employees resent being micromanaged and don’t like being treated like children. Most managers find it necessary to set some reasonable boundaries for correct behavior, but greater control emphasis is placed on outcome control to achieve highest performance.

Design Essentials •

This chapter covered corporate culture, the importance of cultural and ethical values, and techniques managers can use to influence these values.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • •

Culture is the set of key values, beliefs, and norms shared by members of an organization. Organizational cultures integrate members so they know how to relate to one another.

Organizational culture should reinforce the strategy and structure that the organization needs to be successful in its environment.

An organization’s culture is directly linked to its performance. Organizations that want to perform well in the long-term must have a strong culture.

An organization’s culture is reflected in its control mechanisms. A rigid culture will most likely employ hierarchical control methods (such as behavior control), while a flexible, adaptive culture will employ decentralized control methods (such as outcome control).

LECTURE ENHANCEMENT

ORGANIZATIONAL CULTURE STORIES Stories are frequently used in organizations as an example of, or to enhance, the organization's culture. In a classic article from Administrative Science Quarterly, Martin, Feldman, Hatch, and Sitkin document that there are at least seven similar types of stories that occur in organizations and distinguish that organization's culture from others. These stories share common elements and express common concerns.

Following are shortened versions of some of these stories: RULE-BREAKING Thomas Watson, Jr., IBM Board Chair, was not permitted to enter a secure area of IBM without correct clearance identification. A 90 pound young woman stopped him! The man accompanying Watson was stricken, and someone hissed, "Don't you know who he is?" Watson instead instructed someone to go get his badge.

IS THE BIG BOSS HUMAN? A bad strike had crippled Illinois Bell during the late 1960s; craftspeople refused to work for months. "Charlie" Brown, CEO, would grab some tools and repair telephones on weekends. One weekend, the country club to which he belonged called about a broken telephone. Without even changing his clothes, Charlie went out and fixed the phone.

CAN THE LITTLE PERSON RISE TO THE TOP? At the age of 12, Deupree left school to work as an office boy at an insurance agency at $1 a week. He was hired in 1905 as an office boy in Proctor & Gamble's Treasury Department at $4.50 per week, and was soon promoted to a cashier's cage. There he caught the attention of Thomas Beck, head of the newly-organized Bulk Soap Sales Division. Beck was struck by Deupree's pleasant nature, telling him, "You're the first cashier I've known who ever smiled when paying out money." Beck remembered him in 1909 when his division needed another salesman. Deupree rose rapidly and by 1917, at the age of 32, he was appointed General Sales Manager. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WILL I GET FIRED? Within 3 minutes of arriving on the Friday that Walter Ronner began his job, the comptroller called him and told him to lay off 40 people "today." He said, "I've got orders from management to lay off 40 people. I don't care how you do it, but get rid of them. By the way, we quit here at 5:15, so don't notify anybody until 5:00. We want a full day's work out of them." Ronner refused to do it; it was his first day and he and the comptroller were on the same level of authority. The comptroller then said he'd do it himself.

He picked 40 people at random, and at 5:00 lined them up on the stairs between the 5th and 6th floors, lectured them about lack of work, and handed them severance checks.

WILL THE ORGANIZATION HELP ME WHEN I HAVE TO MOVE? Glenn James started out in one building, but was soon moved across the street to another building.

His next move was to an office down the hall; then four blocks down. Finally, he was relocated in the exact same office he first had, and recycled back to the same boss as at the beginning.

The final irony was that he had continued to perform the same function in the organization throughout the entire time.

HOW WILL THE BOSS REACT TO MISTAKES? A young manager said, "I pulled a real boner and figured I'd better get to the group vice president's office and take my lumps.

When I told him that I had made a mistake, he just looked at me for a minute and then said, 'Just a minute...I approved your project and if there was a mistake, we made it together."'

HOW WILL THE ORGANIZATION DEAL WITH OBSTACLES? In a government agency that adopted an energy conservation policy, employees had reluctantly become used to walking down dimly lit corridors, washing their hands in cold water, and sweltering in the Washington heat without adequate air conditioning. Then a new president was elected and energy conservation was no longer top priority. The lights came on, the water became hot, and the air conditioning actually did its job. Old timers were not surprised by the change; they called it the "New Administration Effect."

DISCUSSION QUESTIONS 1. How much do you think it is possible for an outsider to discern about the underlying cultural values of an organization by analyzing symbols, ceremonies, dress, or other observable aspects of culture, compared to an insider with several years of work experience? Specify a percentage (e.g., 10%, 70%) and discuss your reasoning.

ANSWER: The answer to this question will vary. This question is designed to get the student to think about these observable aspects of culture. Since all students have been associated with a college, a discussion of the culture of that college could be used for this question if the class does not come up with meaningful discussion on

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

their own about places they have worked. The graduation ceremony with the robes worn by faculty and graduates helps maintain the culture. All give diplomas as symbols. Other elements of culture among students include the prevailing dress, book bags rather than brief cases, and expected study habits or behavior of students.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. Many of the companies on Fortune magazine’s list of most admired companies are also on its list of most profitable ones. Some people say this proves that high social capital translates into profits. Other people suggest that high profitability is the primary reason the companies have a good culture and are admired in the first place. Discuss your thinking about these two differing interpretations.

ANSWER: Social capital refers to the quality of interactions among people and whether they share a common perspective. When social capital is high, a company experiences goodwill and frictionless social interactions that facilitate smooth organizational functioning and translate into profits. Social capital relates to both corporate culture and ethics. Relationships based on cutthroat competition, self- interest, and subterfuge can be devastating to a company. For example, Enron is a company that was profitable but had low social capital. Ultimately the Enron scandals devastated the company.

3. Describe the four elements of the feedback control model. Which of these elements is more similar to behavior control? Outcome control? .

ANSWER: All effective control systems involve the use of feedback to determine whether organizational performance meets established standards to help the organization meet its goals. The four elements of every feedback control mechanism are: set strategic goals, establish metrics and standards of performance, compare metrics of actual performance to standards, and take corrective action as needed. These four elements can be used with either behavior control or outcome control. With behavior control, managers would closely monitor employees’ behavior, comparing their actions to performance standards and correcting as needed. The same would be true of managers using outcome control, only managers would simply look at the results of employees’ actions, compare the results to performance standards, and correct as needed.

4. In which of the four cultures described in Exhibit 11.4 would you prefer to work? Why? ANSWER: Students’ answers will vary but should demonstrate their understanding of each of the four cultures: adaptability, achievement, clan, and bureaucratic. Students who see themselves as creative or innovative will probably be attracted to the adaptability culture.

Students who are somewhat competitive and goal-oriented may prefer the achievement culture. Those who enjoy working in a collaborative team environment will probably choose the clan culture. Although most students will probably not choose the bureaucratic culture, there may be some who feel more comfortable with strict rules and clear guidelines in a hierarchical structure.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

5. How might the symbols apparent in a business college differ from symbols in a school of social work? If you have access to both types of schools, walk through them and record any differences you see.

ANSWER: Students’ answers will vary but should demonstrate their understanding of the concept of symbols. In a more traditional business college setting, symbols might emphasize competition, people management, and close ties with finances. Symbols in a school of social work will probably relate to social issues, such as women’s rights, families and children, unemployment, hunger, homelessness, etc.

6. Do you think strong subcultures would be a good thing for an organization? Why? ANSWER: Although it is not unusual for subcultures to develop within an organization, they are probably counterproductive and possibly even detrimental to the organization. The purpose and benefit of culture is to unite and integrate employees. A strong subculture that differs from the organization’s overarching culture will most likely cause confusion and possibly even conflict.

7. What importance would you attribute to leadership statements and actions for influencing cultural values in an organization? Explain.

ANSWER: Leadership statements and actions are extremely important in influencing cultural values, and in fact, an organization’s culture is often a direct reflection of the top leader’s values. Senior leadership’s actions and statements set the tone for how an organization is expected to achieve its purpose, specifies priorities, and suggests who has the power within the organization. Directly or indirectly, the messages communicated through statements and actions will coalesce into the organization’s culture.

8. Would you prefer to work in an organization with a tight or a loose culture (BookMark)?

Explain why.

ANSWER: Students’ answers will vary but should demonstrate their understanding of a tight (bureaucratic, rigid, centralized) culture and a loose (adaptive, flexible, decentralized) culture. Most students will prefer a looser culture in which they expect to have more autonomy and personal discretion in how they do their work. Some students, however, may prefer a tighter culture in which strict rules and guidelines provide clear expectations.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

9. Why do you think Learning and Growth Culture Goals are at the bottom of the Strategy Map in Exhibit 11.9? Discuss.

ANSWER: A learning and growth culture is the foundation for an organization’s success, which is why these goals are positioned at the bottom of the strategy map. Specifically, a strong learning and growth culture helps an organization achieve excellence in internal business processes. These, in turn, enable the organization to achieve high customer service and satisfaction, which then enables the organization to reach its financial goals and optimize its value to all stakeholders. .

10. How would you describe the major differences between a hierarchical philosophy of control and a decentralized philosophy of control? Which philosophy of control would be easier for a manager to implement? Discuss.

ANSWER: Hierarchical control involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms. Hierarchical control stems from a rigid or ―tight‖ culture, and is founded in the belief that people are incapable of selfdiscipline, cannot be trusted, and need to be closely monitored and controlled. In contrast, decentralized control relies on cultural values, traditions, shared beliefs, and trust to foster compliance with organizational goals. Decentralized control is a reflection of a flexible and adaptive culture. This philosophy is based on the assumption that people work best when they are fully committed to the organization. Of the two, decentralized control is probably the more challenging to implement because it requires the manager to fully indoctrinate employees into the organization’s culture and goals, and it also requires extensive training so that employees are prepared to make decisions and behave in ways that align with the organization’s goals and purpose. Decentralized control also requires trust and the ability to relinquish control, which might be difficult for some managers.

WORKBOOK ~ BALANCED SCORECARD EXERCISE This activity gives students hands-on experience with a balanced scorecard, offering insights into the specific metrics that might be used to determine performance within each of the four main categories. By having students work in groups to discuss the relevance of each metric, they will start to see the interconnectedness of the metrics and the cause-effect relationships that can emerge from this process.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS ~ MIDWEST CONTROLS, INC. 1. Which of the four types of culture in Exhibit 11.4 would you say best describes Midwest’s corporate culture under the leadership of Carpenter? Under that of Lawrence? Which culture is more appropriate for Midwest?

ANSWER: Under Carpenter’s leadership, Midwest developed a clan culture with an internal focus. The organization enjoyed a collegial, friendly atmosphere that encouraged social interaction and supported managers with training, but did not set demanding performance goals for managers and workers. Lawrence has made a dramatic shift to a highly bureaucratic culture driven by rules and metrics, with a low tolerance for failure.

Both approaches have flaws, so a mixture of the two—a friendly atmosphere mixed with clear performance objectives and management support—would be more appropriate.

2. Within the culture established by Tom Lawrence, is it possible to return to high morale and lower turnover? How might Lawrence do that?

ANSWER: In one year, Lawrence has alienated many of his best managers and destroyed the loyalty and trust the company’s workers once felt. To undo the damage he has caused will be a significant, but not entirely impossible, challenge. First, Lawrence needs to restore some of the cultural customs, such as the birthday parties, picnics, and holiday party, that employees cherish. More significantly, he needs to communicate the need for change with managers and employees, and he needs to involve them in the process of devising a new corporate strategy and setting performance metrics and goals.

3. In which quadrant of Exhibit 11.5 would you place Lawrence? If you were Curtis Simpson, what would you say to Tom Lawrence in your upcoming meeting with him?

ANSWER: Lawrence falls into Quadrant A of Exhibit 11.5, high performance with low cultural values. His changes to the organization have boosted productivity and profits to expected norms. His methods for achieving that, however, have been detrimental to the company. Simpson needs to coach Lawrence through the process of creating a new high-performance culture that will build a foundation for continued success into the future.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS ~ NASCAR 1. How would you describe the culture of NASCAR racing teams? How are these cultural values manifested?

ANSWER: Race-car drivers and teams belong to a culture of ―outlaws‖ who take the law into its own hands. NASCAR fans expect their drivers to be smart, crafty, and calculating and, if need be, playing just this side of the rule book—in the garage and on the track.

Loyal fans ―know‖ their drivers and can easily picture themselves drinking a beer or spending an afternoon tinkering under the hood with a favorite driver.

Drivers remain faithful to traditional stock car racing and to the traditional tracks, devoted to the notion of ―let the boys drive,‖ including rule-breaking to gain an advantage. The outlaw image is cherished by NASCAR’s fan base, as one sports columnist warned: ―If the outlaw blood ever is completely drained, then NASCAR will be as colorless as the white flag that signals one lap to go. And its popularity could be just as fleeting.‖ 2. Describe the culture war at NASCAR. What is your evidence?

ANSWER: In contrast to the no-holds-barred, outlaw culture enjoyed by drivers, teams, and fans, NASCAR’s corporate office, the media, and sponsors embrace a bureaucratic culture full of rules, fines, and penalties. NASCAR’s focus ranges from assigning and revoking car numbers at will and the strict enforcement of a no- communications ban between crews/drivers and their rivals, to points penalties for drivers who refuse to talk to the media. Even the area of driver safety is a cultural tug-of-war, and drivers claim that NASCAR is more concerned with the crackdown on rules violations than on safety.

Teams point out the frequency with which serious issues such as safety regulations seem to follow high profile wrecks and deaths.

3. How might the NASCAR organization, teams, and sponsors work through differences to create a unified culture? What do you think a unified culture would mean for all parties?

ANSWER: Students can have a lively discussion about how to create a unified culture in an ethical manner. They should recognize that a unified culture will need to identify some common ground and a shared vision of a sport that is exciting and fun

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

for the drivers/teams as well as the fans. All parties need to understand the purpose of rules and policies—creating a level playing field while protecting driver safety.

CHAPTER TWELVE INNOVATION AND CHANGE

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW

This chapter explores how organizations change and how managers direct the innovation and change process. First, we look at how difficult innovation can be and discuss the challenge of disruptive innovation. The next section describes the four types of change— technology, product, structure, people—occurring in organizations, and how to manage change successfully. The chapter then describes the organization structure and management approach for facilitating each type of change. Management techniques for influencing both the creation and implementation of change are also covered. The final section of the chapter looks at techniques managers can use to successfully implement change and innovation.

Learning Objectives After reading this chapter you should be able to:

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• • • • • • •

Describe the types of strategic innovation.

Explain the necessary elements for successful organizational change.

Compare and contrast techniques for encouraging technology innovation with those that encourage product and service innovation.

Explain how innovation speed provides a competitive advantage.

Describe the dual-core approach to organizational change.

Explain how a large group intervention can be used to bring about culture change in an organization.

List techniques for overcoming resistance to change.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

The most important aspect for creating an innovative company is requiring people to come up with new ideas.

Asking customers what they want is the best way to create new products that will be successful in the marketplace.

Changing a company’s culture is probably one of the hardest jobs a manager can undertake.

A LOOK INSIDE Coca-Cola Increasingly, Coca-Cola is pushing global subsidiaries to come up with new product innovations based on local tastes. For example, Russians can add a splash of cucumber to their sodas, while Indians can enjoy chunky mango juice. These new products, which used to take about a year to produce, are now going from idea to store shelves in about four months. New products that don’t resonate with locals are just as quickly pulled from the product line-up.

The Strategic Role of Innovation

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Organizations must keep up with changes all around them. Large organizations must act like small, flexible organizations. Manufacturing firms need new digital manufacturing technology, and service firms need new information technology (IT). Organizations must innovate and change, not only to prosper but to survive in a world of stiff competition.

Innovate or Be Disrupted Powerful forces associated with advancing technology, international economic integration, shifting economic conditions and sovereign debt, and the growing power of Arab countries and Brazil, Russia, India, and China (BRIC) have brought about an uncertain globalized economy that affects every business, creating threats and opportunities.

Change, rather than stability, is the norm today. Three types of change include episodic change (occasional innovations during times of stability), continuous change (frequent and incremental changes in response to a shifting environment), and disruptive innovation. Disruptive innovation refers to innovations in products or services that typically start small and end up completely replacing an existing product or service technology for producers and consumers.

IN PRACTICE Netflix What started as a simple idea—renting movies and other DVDs over the Internet— has completely disrupted the entertainment industry. Netflix was founded in 1997, and CEO Reed Hastings offered it to Blockbuster in 2000 because the organization was struggling. Blockbuster passed, and Netflix held on. Then along came streaming in 2007 and original programming a few years later, and suddenly Netflix is the one to beat. The top production, directing, and acting talent in the industry all want to work on Netflix-produced projects.

Strategic Types of Innovation • •

Technology innovations are changes in an organization’s production process, including its knowledge and skill base, that enable distinctive competence.

Product and service changes pertain to the product or service outputs of the organization.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• •

Strategy and structure innovations pertain to the administrative domain in an organization. The administrative domain involves the supervision and management of the organization.

Culture innovations refer to changes in the values, attitudes, expectations, beliefs, abilities, and behavior of employees.

Elements for Successful Change Organizational change is the adoption of a new idea or behavior by an organization, whereas organizational innovation is the adoption of an idea or behavior that is new to the organization's industry, market, or general environment. These terms can be used interchangeably because the change process is essentially the same, regardless of how early or late the innovation is adopted relative to other organizations.

Successful change includes: •

an idea, which is a new way to do things. Creativity is the generation of novel ideas that meet perceived needs or respond to opportunities.

• a perceived need for change; • adoption, when decision makers choose to go ahead with an idea; • implementation, when employees learn to actually use a new idea, technique, or behavior; and • resources, which must be allocated to make change happen, including the human time and energy required to bring about change.

Technology Innovation The organic approach, which is typically associated with change, suggests that technical innovation can be increased by having organic internal processes of flexibility, decentralization, and few rules and regulations. Mechanistic structures, which may be the best structures for efficiency with routine products, are believed to inhibit technical innovation.

HOW DO YOU FIT THE DESIGN Are You Innovative?

Personal Innovativeness reflects the awareness of a need to innovate and a readiness to try new things. Innovativeness is also thought of as the degree to which a person adopts innovations earlier than other people in the peer group.

Innovativeness is considered a positive thing for people in creative companies, creative departments, venture teams, or corporate

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

entrepreneurship. As a manager, a high score suggests you will emphasize innovation and change.

The Ambidextrous Approach The ambidextrous approach incorporates structures and management processes that are appropriate to both the creation and the implementation of innovation. The organization can be designed to behave in an organic way for exploring new ideas and in a mechanistic way to exploit and use the ideas.

The Bottom-Up Approach Many useful ideas come from the people who do the work, serve the customers, fight off the competition, and figure out how to get the jobs done. Companies implement a variety of mechanisms, systems, and processes that encourage a bottom-up flow of ideas and make sure they get heard and acted upon by top executives.

Techniques for Encouraging Technology Change Techniques used to maintain an ambidextrous approach: .

•

Switching structures means an organization creates an organic structure when such a structure is needed for the initiation of new ideas. For example, a day off to brainstorm new ideas and then a return to a mechanistic structure for implementation.

•

Assign innovation to separate creative departments. Departments, such as research and development (R&D), create changes for adoption in other departments. An idea incubator provides a safe harbor where ideas from employees can be developed. Venture teams are empowered to develop new ideas. A skunkworks is a separate, small, informal, autonomous, and often secretive group that focuses on breakthrough ideas. A new-venture fund provides financial resources for employees to develop new ideas, products, or businesses.

•

Corporate intrapreneurship develops an internal entrepreneurial spirit to produce innovations. Idea champions provide the time and energy to make things happen. They fight to overcome natural resistance to change and to convince others of the merit of a new idea. Companies encourage idea champions by providing freedom and slack time to creative people.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

BOOKMARK CREATIVITY INC.: OVERCOMING THE UNSEEN FORCES THAT STAND IN THE WAY OF TRUE INSPIRATION By

Ed Catmull Pixar Animation Studios has put out successful films, and it is a successful business. The management philosophy is radical: Let the creative people have creative control, and financial success will follow. The book gives numerous tips for how to manage and motivate a creative workforce, based on what the author has learned from his experiences at Pixar: Embrace New Experiences.

Encourage Everyone to Speak with Candor. Give Everyone a Voice.

ASSESS YOUR ANSWER The most important aspect for creating an innovative company is requiring people to come up with new ideas.

ANSWER: Disagree. New ideas are essential for innovation, but managers can’t simply issue directives ordering people to come up with new ideas. Managers create the conditions that are conducive to both the creation of new ideas and their implementation. Organizing to sustain innovation is as important as organizing to spur creativity.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

New Products and Services Since new products are designed for sale in the environment, uncertainty about the suitability and success of an innovation is very high.

New Product Success Rate On the average, only 28 percent of all projects undertaken in the R&D laboratories passed the testing stage, which means all technical problems were solved and the projects moved on to production. Less than one-fourth of all product ideas (24 percent) were fully marketed and commercialized, and only 14 percent achieved economic success.

IN PRACTICE Elkay Manufacturing

Managers at Elkay Manufacturing, maker of water fountains, noticed what they call ―the airport dance‖: people doing a shuffle as they tried to fill their water bottles at airport water fountains without splashing water all over themselves. The observation inspired a new machine that fills a 16-ounce bottle in about 5 seconds if the water is at room temperature. The traditional water fountain needed at least 20 seconds. Digital counters on the machines say this innovation has kept at least 1.4 million plastic bottles out of landfills.

Reasons for New Product Success • • •

Successful innovating companies had a much better understanding of customer needs and paid more attention to marketing.

Successful innovating companies made more effective use of outside technology and outside advice, even though they did more work in-house.

Top management support in the successful innovating companies was from people who were more senior and had greater authority.

Horizontal Coordination Model Effective design for new product innovation is associated with the horizontal coordination model.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

The departments of marketing and research must be highly specialized and competent at their own tasks.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

•

Boundary Spanning means that each department involved with new products has excellent linkage with the external environment. R&D personnel are linked to professional associations and are aware of recent scientific developments. Marketing personnel are closely linked to customer needs.

Horizontal Coordination means that technical, marketing, and production people share ideas and information.

IN PRACTICE Corning, Inc. A team in Corning’s specialty materials division spotted an opportunity, making mobile phone screens out of a strong but flexible glass that the company had attempted to sell for automobile windshields. Producing an experimental batch cost $300,000, but managers took the risk. Corning took the project from concept to commercial success in a short time because Corning had the right culture and the right systems.

Open Innovation and Crowdsourcing Forward-looking companies are trying open innovation which means extending the search for and commercialization of new products beyond the organization and beyond the industry.

Crowdsourcing refers to open innovation that solicits ideas, services, or information from online volunteers with a contest.

ASSESS YOUR ANSWER Asking customers what they want is the best way to create new products that will be successful in the marketplace.

ANSWER: Agree and disagree. It depends on the organization. Bringing customers into the product development process has been highly beneficial for many companies. However, many products developed based on what customers say they want do not succeed. In addition, some highly innovative companies, like Apple, believe relying too much on customer input limits the pie-in-the-sky thinking needed to create truly breakthrough products.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The Need for Speed Time-based competition means delivering products and services faster than competitors, giving companies a competitive edge. Another critical issue is designing products that can compete globally and successfully marketing them internationally.

Strategy and Structure Change Companies throughout the world have faced the need to make radical changes in strategy, structure, and management processes to adapt to new competitive demands. Organizations are cutting out layers of management and decentralizing decision making.

The Dual Core Approach The dual-core approach to organizational change compares management and technical innovation. Management innovation refers to the adoption and implementation of a management practice, process, structure, strategy, or technique that is new to the organization and furthers organizational goals.

Organizations have a technical core and a management core. Innovation can originate in either core.

Organization Design for Implementing New Management Processes Organizations that adopt management changes have a larger administrative ratio, are larger in size, and are centralized and formalized compared with organizations that adopt technical changes.

Organizations that must adopt frequent management changes use a top-down process and a mechanistic structure.

IN PRACTICE GlaxoSmithKline The CEO of GlaxoSmithKline decided on an experimental approach to get his R&D scientists thinking and acting like start-ups. He broke the R&D unit into small groups of 20 to 60 people, called Discovery Performance Units (DPUs).

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Each group has scientists from all disciplines working together and focusing their combined expertise on finding new drugs for specific types of diseases, such as cancer or auto-immune diseases.

Culture Change Changing corporate culture shifts how work is done and can lead to renewed commitment and empowerment of employees. However, changing culture can be difficult because it challenges people’s core values and established ways of thinking.

Forces for Culture Change [Use WORKBOOK activity here.]

Reengineering and the shift to horizontal forms of organizing require greater focus on employee empowerment, collaboration, information sharing, and meeting customer needs, which means managers and employees need a new mind-set.

Another force for culture change is the diversity of today’s workforce. Many are implementing recruiting, mentoring, and promotion methods, diversity training programs, tough policies regarding sexual harassment and racial discrimination, and new benefits programs that respond to a diverse workforce.

A growing emphasis on learning and adaptation in organizations calls for new cultural values. All these changes require new values, new attitudes, and new ways of thinking and working together.

IN PRACTICE

Taco Bell Taco Bell’s new innovation culture dates back to 2012. It took a team made up of representatives from both Frito Lay and Taco Bell about two years to figure out how to infuse taco shells with Doritos flavoring in a winning new product called the Doritos Locos Taco. The product has been such a success that the organization now encourage innovative ideas to ―bubble up‖ from employees, customers, and suppliers. Innovations are not exclusively about food offerings— they can pertain to restaurant operations as well.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ASSESS YOUR ANSWER Changing a company’s culture is probably one of the hardest jobs a manager can undertake.

ANSWER: Agree. Changing people and culture is typically much more difficult than changing any other aspect of the organization. Managers often underestimate the difficulty of changing culture and fail to appreciate that it takes a determined, consciously-planned effort over a long period of time.

Culture Change Interventions Organization development (OD) focuses on human and social aspects of the organization to improve the organization’s ability to adapt and solve problems.

Today the concept has been enlarged to examine how people and groups can change to an adaptive culture in a complex and turbulent environment. OD is a process of fundamental change in the human and social systems of the organization, including organizational culture.

The large group intervention approach brings together participants from all parts of the organization in an off-site setting to discuss problems or opportunities and plan for change.

Team building promotes the idea that people who work together can work as a team.

A work team can be brought together to discuss conflicts, goals, the decision-making process, communication, creativity, and leadership.

With interdepartmental activities, representatives from different departments are brought together in a mutual location to expose problems or conflicts, diagnose the causes, and plan improvements in communication and coordination.

IN PRACTICE UnitedHealth Group “We were too self-centered and needlessly aggressive,‖ said Stephen Helmsley, CEO of UnitedHealth Group. The atmosphere within the company was toxic. To

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

encourage more civil, emotionally intelligent, and collaborative behavior, Helmsley sent managers to sensitivity training to become more aware of their own biases and impact and be more sensitive to others. Today, people at UnitedHealth are respectful in one of the most sensitive areas of human endeavor.

Tactics for Implementing Change Implementation is the most crucial part of the change process. Change is frequently disruptive and uncomfortable for managers as well as employees. Change is complex, dynamic, and messy.

Leadership for Change Companies that are successful innovators reinforce the value and importance of innovation. Leaders are innovation champions who think about innovation, demonstrate its importance through their actions, and make sure that people are investing time and resources in innovation issues. Transformational leadership, is particularly suited for bringing about change. Top leaders create a compelling vision, that supports experimentation, risk-taking, and sharing of ideas.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Understanding and appreciating the curve of change enables managers to guide people through change. The change curve, Exhibit 12.8, is the psychological process people go through during a significant change. With effective change leadership, changes can take hold and lead toward better performance.

Techniques for Implementation • • • • • • •

Establish a sense of urgency for change.

Establish a coalition to guide the change.

Create a vision and strategy for change.

Find an idea that fits the need.

Develop plans to overcome resistance to change. Align with needs and goals of users, and utilize extensive communication and training, an environment that affords psychological safety, and participation and involvement.

Create change teams.

Foster idea champions.

Techniques for Overcoming Resistance • • • • •

Top management support.

Participation and involvement.

Alignment with needs and goals of users.

Communication and training.

An environment that affords psychological safety.

Design Essentials •

Organizations face a dilemma. Change—not stability—is the natural order of things in today’s global environment.

•

Four types of change—technology, products and services, strategy and structure, and culture—may give an organization a competitive edge.

For technology innovation, an organic structure works best because it encourages a bottom-up flow of ideas.

For changes in strategy and structure, a top-down approach is typically best.

Culture changes are the responsibility of top management. One method for bringing about this level of culture change is organization development (OD).

The implementation of change can be difficult. Strong leadership is needed to guide employees through the turbulence and uncertainty and build organizationwide commitment to change.

Managers can increase the likelihood of success by thoughtfully planning how to deal with resistance.

• • • • •

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT INNOVATION AND STRUCTURE A classic article describes how Raytheon used a structural device that works with all segments of the company and performs innovation as a service. In 1969, Raytheon established what it called the New Products Center (NPC), a 35person technical innovation group which participated in the early development phases of 39 new products, most of which have remained on the market and exceed $100 million in annual sales.

NPC considers each business sector in the company as a potential client.

Thus, the NPC is a means to cross organizational barriers and to use resources across divisional or functional boundaries. The management of the NPC considers every skill and resource in the company as available to it and contrives to use them.

When a company invests in a new product line, it may be considered a new venture, and the company establishes a team to develop that new business, often in an isolated location called a "skunkworks." A skunkworks engages in the development of only one new product at a time and is disbanded when it finishes its task. A new products center develops many products simultaneously and is a permanent fixture, with fixed staff and ongoing funding.

Raytheon's NPC has four groups within it: the new concepts group, computer group, materials group, and product engineering group. NPC is made up of generalists who work in a variety of fields simultaneously, and cross each other's boundaries with ease. The Computer Group contains specialists who design the electronic controls for the products the generalists develop in the New Concepts Group. The Materials Group is also made up of specialists who innovate with respect to the materials used in the new products. The Product Engineering Group works with the "clients" (product line groups in Raytheon) to assist in the transfer of the product to the client after successful models have been demonstrated.

Freedman suggests that the following are important features of a successful new products center: 1.

The goal should be to aid the company's growth and profit. The only criterion of success is the number of new products that are successfully marketed.

2.

The required ingredients include the right people (i.e., creative engineers) and the right environment (i.e., an atmosphere where invention is reinforced).

3.

The NPC must have successful relationships with clients. This requires effective channels of communication and mutual trust. The NPC staff must consider themselves to be employees of the client, and devote energy to developing sensitivity to each client.

4.

The NPC must have top management sponsorship and funding.

(Funding does not come from clients, but when they commit to a new product, they must provide their own investment money.)

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. Why do you think crowdsourcing has become popular in recent years? What might be some disadvantages of taking a crowdsourcing approach? When might a company be better off taking a more limited approach to open innovation?

ANSWER: The approach to open innovation that solicits ideas, services, or information from online volunteers rather than from traditional employees is referred to as crowdsourcing. The most straightforward way to enlist the help of a crowd is with a contest. There has been a huge surge of interest in Internet-based innovation contests over the past few years, because companies get a chance to integrate external with internal input into the front end of new product development. Crowdsourcing has become popular because companies can manage threats and take advantage of opportunities in the global economy. The disadvantage is that hackers could obtain valuable information.

When information is sensitive, a company might be better off taking a more limited approach to open innovation. Horizontal coordination, using mechanisms such as cross-functional teams, increases both the amount and the variety of information for new product development. However, there might be culture clash if two collaborating firms have very different cultures. Also innovation is frequently disruptive and uncomfortable for managers as well as employees.

2. Describe the dual-core approach. How does the process of management change normally differ from technology change? Discuss.

ANSWER: The dual-core model argues that innovation takes place separately in the management and technical cores of the organization. Management change normally follows the top-down process and is facilitated by a mechanistic organization structure.

Technology change is typically just the opposite, following a bottom-up process in an organic structure. An organization can adopt the structure needed, depending upon the type of change that is most important to its performance.

3. What does it mean to say managers should organize for both exploration and exploitation?

ANSWER: This means that many organizations are exploring ways to responding to global forces. Some adopt self-directed teams and horizontal structures that enhance communication and collaboration. Some adopt structural innovations such

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

as the virtual network approach. Others become involved in joint ventures or consortia to exploit opportunities and extend operations or markets internationally.

4. Do you think factory employees would typically be more resistant to changes in production methods, changes in structure, or changes in culture? Why? What steps could managers take to overcome this resistance?

ANSWER: Factory employees would be more resistant to changes in culture. Changing culture can be particularly difficult because it challenges people’s core values and established ways of thinking and doing things. Managers could overcome this resistance through reengineering and the shift to horizontal forms of organizing. They could empower employees and use collaboration and information sharing. Managers and employees would need a new mind-set. Mutual trust, risk taking, and tolerance for mistakes would become key cultural values. Effective change managers build a coalition of people throughout the organization who have enough power and influence to steer the change process. For implementation to be successful, there must be a shared commitment to the need and possibilities for change 5. ―Change requires more coordination than does the performance of normal organizational tasks. Any time you change something, you discover its connections to other parts of the organization, which have to be changed as well.‖ Discuss whether you agree or disagree with this quote, and why.

ANSWER: I agree with this quote. The four types of change as summarized in Exhibit 12.2 are technology, products and services, strategy and structure, and culture. The four types of change are interdependent—a change in one often means a change in another. A new product may require changes in the production technology, or a change in structure may require new employee skills. For example, when Shenandoah Life Insurance Company acquired new computer technology, it was not fully utilized until clerks were restructured into teams that were compatible with the technology. The structural change was an outgrowth of the technology change. Since organizations are interdependent systems, changing one part has implications for other organization elements.

6. A noted organization theorist said, "Pressure for change originates in the environment.

Pressure for stability originates within the organization." Do you agree? Discuss.

ANSWER: This question is designed to facilitate discussion about change. Although there is no correct answer, the statement would generally be considered true in most organizations--especially those that do not yet excel in horizontal linkages.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Developments in the external environment precipitate the need for the organization to respond with their own innovations in technology, new products, administration, or people. The environment also provides the basis of comparison for organizational performance. Resistance to change, on the other hand, usually lies with employees, structure, habits, and the established order within the organization. Managers must work with the internal need for stability in nudging the organization toward change.

7. Of the five elements in Exhibit 12.3 required for successful change, which element do you think managers are most likely to overlook? Discuss.

ANSWER: For any change to be successful, organization participants must perceive a need, and then have an idea, a proposal, implementation of the idea, and resources to bring about the change from beginning to end.

The element most managers overlook is implementation. They concentrate on the initial stages of change, which are identifying the problem and developing an idea to solve the problem. But the latter stage of the process is often the most difficult. Too little time and effort is allocated to implementation, and hence the change may never be realized.

Failure to implement is probably the largest reason why changes fail.

8. How do the underlying values of organization development compare to the values underlying other types of change? Why do the values underlying OD make it particularly useful in shifting to a constructive culture as described in Chapter 11 (Exhibit 11.5)?

ANSWER: Values underlying organizational development are for a participative system of change that brings interdepartmental representatives to surface conflict, diagnose its causes, and plan improvement. Other strategies for change vary greatly, although there is little place for forcing and coercion except as a last resort. The constructive culture rewards and celebrates the creators of new ideas, products, and work processes. Both approaches call for learning and growing. In fact, OD is known as a method for bringing about that level of culture change by applying behavioral sciences in a process of planned organization-wide change, with the goal of increasing organizational effectiveness.

9. The manager of R&D for a drug company said that only 5% of the company's new products ever achieve market success. She also said that the industry average is 10% and wondered how her organization might increase its success rate. If you

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

were acting as a consultant, what advice would you give her about designing organization structure to improve market success?

ANSWER: The most relevant advice concerning organization structure would reflect the horizontal linkage model. Design the organization so that marketing and research departments are highly specialized. Encourage them to develop broad and effective contacts within their own external sub-environments. Marketing should know about customers, and research should know about new technologies. Internally, teams and task forces should be created that bring marketing and research personnel together to make joint decisions. The structure should enable extensive discussion and conflict as needed to collaborate on decisions that meet the needs of both departments. When the new product reflects only the interest of the research people, often it will fail to meet customer needs.

When it is designed strictly on the basis of customer needs, it may be technically deficient or inefficient to produce. Organization structure must be designed to facilitate horizontal linkages across the organization and with the environment.

10. Examine the change curve illustrated in Exhibit 12.8 and the five techniques for overcoming resistance to change discussed at the end of the chapter. Describe at which point along the change curve managers could use each of the five techniques to successfully implement a major change.

ANSWER: The change curve (Exhibit 12.8) has four points: •

•

•

•

Peak of Expectations: A manager sees a need for a change in work procedures in her department. A manager should use the technique of communication and training. Communication means informing users about the need for change and the consequences of a proposed change, preventing rumors, misunderstanding, and resentment.

Realization of the difficulty and complexity of change: Employees may question why they need to change. A manager should use the technique of alignment with needs and goals of users. The best strategy is to make sure change meets a real need and is good for users. As a last resort, managers may overcome resistance by using the technique of forcing and coercion, threatening employees with job loss.

Despair: The supervisor may become frustrated, and everyone can potentially reach a point of despair. Managers should use the technique of creating an environment that affords psychological safety in which people feel secure in making the required changes.

Light at the end of the tunnel. With effective change leadership, the changes can lead toward better performance. A manager should use the technique of participation and involvement. Participation gives those involved a sense of control over the change activity.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WORKBOOK ~ INNOVATION CLIMATE Record the ratings given by the student whose organization scored the highest, and by the student who interviewed another person with the highest organizational score. Focus the discussion on organizational characteristics which foster an innovative environment in the organization. What textbook principles are illustrated in the examples?

CASE FOR ANALYSIS ~ FABULOUS FOOTWEAR This case deals with a manufacturer of women’s shoes that purposely changes styles frequently to take advantage of the flexibility of a small organization. However, decision making in the organization follows such a convoluted pattern that conflict is a given. Workflow needs to be re-examined and adjusted for efficiency. Suggest that students use the organization flow chart in the text to diagram the workflow or communication flow in the organization; they will readily see the problems.

1. How would you characterize the structure of Fabulous Footwear? Explain.

ANSWER: It seems that the company is fairly mechanistic in its structure. The flow of information and communication currently being used within the company seems to be mixed. In some cases, it follows the prescribed chain of command even though persons in that order perform no useful function. For example, the sales manager Mr. Shipton simply forwards the approved sketch of new designs from Mr. Allison to Mr. Freeman. At other times the chain of command is ignored to improve efficiency. The salespeople transmit orders for new styles directly to Mr. Freeman rather than Mr. Furgeson, for example. A more practical organizational structure needs to be designed.

2. In what ways is the structure appropriate or inappropriate for frequent changes in shoe styles? What structure changes would you recommend?

ANSWER: The mechanistic structure ensures input from all relevant departments, but it may not be the most appropriate structure, given the nature of the business. Since shoe designs are changing so rapidly, quick communications, a timely approval and ordering system, and flexibility in production setup are all needed. A more organic structure would allow the company to respond to factors in the environment more rapidly.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. If you were the CEO, how would you get employees to use the new information technology available within Fabulous Footwear?

ANSWER: Most important, the CEO and other top managers, like Olsen, need to communicate the benefits of the new IT system, with a particular focus on explaining how the system solves specific problems and meets emerging needs within the organization.

Although the system has already been installed, they could encourage employees at all levels to participate in revising it to maximize its use and purpose. Top management will also need to roll out an extensive training program, and one component of the program will need to address employees’ fears and concerns about the new system. They need to be reassured with confidence- building exercises.

CASE FOR ANALYSIS ~ LAMPREY, INC. This case deals with a dilemma for Jim, who is assigned the task of preparing a report analyzing the financial benefits of moving production from a U.S. plant to Mexico. He is experiencing discomfort because of the number of persons who will lose jobs. At the same time, the union’s unwillingness to cooperate in wage concessions or work rule changes seems to provide the company with no other choice.

1. Should the company go ahead with the move to Mexico or try one more time to work things out in the Oconomo facility?

ANSWER: The answer to this question depends on attitudes students have towards unions, loss of American jobs, and financial responsibility. Most students will advocate trying once more to work things out. Many will say that the union reps and workers may not realize they are about to lose their jobs, and that awareness may change their perspective.

2. If Jim decides to try to turn around the plant in order to keep the jobs in Oconomo, how should he go about implementing the change? What steps should he take?

ANSWER: Jim can and should use many of the techniques for implementing change described in the chapter. His first step must be to explain to the union reps, and perhaps to all employees, how dire the circumstances are. That is sure to create the sense of urgency needed to get the ball rolling. His commitment to the plant and its

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

people should help build a coalition, although he will definitely need to get the CEO on board with the decision. Given the resistance he’s seen so far, it would probably be best for Jim to involve as many people as possible in developing both the vision for the future and the strategic steps for achieving it. He will need input from all areas to make sure the proposed solutions are a good fit for the organization’s needs. Change teams and idea champions would be very useful in this situation.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. Why do you think the union leaders are resisting change so strongly? How might Jim overcome the union leaders’ resistance to change?

ANSWER: There are several reasons the union may resist so strongly. Any discussion should consider the barriers to change from the text. For example. the union may fail to perceive any benefits to change, want to avoid the uncertainty of any change, and fear that change of work rules will result in loss of power, status, wages, and eventually jobs.

This discussion should center on developing plans to overcome resistance to change as outlined in the chapter. The union obviously does not see the need for the change and must be convinced that a real need exists. The company needs to inform the union of the consequences of the proposed changes and of not changing. They also need to better involve the union in coming up with recommended changes. If the union understands the financial realities, maybe they can recommend changes and then will be committed to them.

CHAPTER THIRTEEN DECISION-MAKING PROCESSES

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Decision-making processes can be thought of as the brain and nervous system of an organization. First, the chapter defines decision making and the different types of decisions managers make. Next, the chapter examines individual decision making, including cognitive biases. The next section describes an ideal model of decision making and then examines how managers actually make decisions. The chapter explores several decision-making models and describes their use. Finally, the chapter discusses special issues, such as high-velocity environments, decision mistakes, and learning.

Learning Objectives After reading this chapter you should be able to: • • • • • • • •

Explain the differences between programmed and nonprogrammed decisions.

Describe the ideal, rational approach to decision making, comparing it with the bounded rationality approach to decision making.

Describe how cognitive biases can cause decision errors.

Explain the management science approach to decision making.

Describe the Carnegie and incremental decision models.

Identify the components of the garbage can model of decision making.

Explain how to determine the best decision-making approach by using the contingency decision-making framework.

Describe how high-velocity environments and decision mistakes influence decision making for today’s managers.

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

Managers should use the most objective, rational process possible when making a decision.

When a manager knows the best solution to a serious organizational problem and has the necessary authority, it is best to simply make the decision and implement it rather than involve other managers in the decision process.

Making a poor decision can help a manager and organization learn and get stronger.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

A LOOK INSIDE Apple Managers make many successful decisions every day. Apple has topped Fortune magazine’s list of the world’s most admired companies for seven straight years (2008–2014), but the company was all but dead in the mid-1990s. If the board had not decided to bring back co-founder Steve Jobs as CEO (he had been fired from his own company years earlier), Apple might not even exist today. In 1996, Apple lost $816 million on sales of $9.8 billion. Yet, thanks to decisions made by Jobs (who led the company from 1997 until he died in 2011) and other top managers, Apple is soaring today. Since 2010, Apple has been the largest U.S. corporation in terms of market valuation. The decision to bring Jobs back has been called one of the greatest business decisions of all time.

Types of Decisions Organizational decision making is the process of identifying and solving problems, including the two stages of problem identification--the stage in which information about environmental and organizational conditions is monitored to determine if performance is satisfactory and to diagnose the cause of shortcomings--and problem solution--the stage in which alternative courses of action are considered and one alternative is selected and implemented.

Managerial problems may be either programmed or non-programmed. Programmed decisions are repetitive and well defined, and procedures exist for resolving the problem.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Nonprogrammed decisions are novel and poorly defined, and no procedure exists for solving them. Many nonprogrammed decisions involve strategic planning because uncertainty is great and decisions are complex. Managers and organizations are dealing with more nonprogrammed decisions because of the rapidly changing business environment

IN PRACTICE Twitter Social media platforms like Twitter are struggling to determine how to address the issue of ―dehumanizing speech.‖ Threats of violence and hate speech are clearly prohibited, but dealing with deception and misinformation are more challenging, especially since these terms are hard to define. Compounding the problem is that there is not yet any legal precedent for dealing with such matters.

Individual Decision Making Individual decision making can be described in two ways. The rational approach suggests an ideal method for how managers should try to make decisions. The bounded rationality perspective describes how decisions actually have to be made under severe time and resource constraints Rational Approach The rational approach stresses systematic procedures and a logical sequence of 8 steps: 1. Monitor the decision environment.

2. Define the decision problem.

3. Specify decision objectives.

4. Diagnose the problem.

5. Develop alternative solutions.

6. Evaluate alternatives.

7. Choose the best alternative.

8. Implement the chosen alternative.

IN PRACTICE Veracruz Consulting

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

In this mini-case study, the rational approach is used to make a decision about a personnel problem. 1. Joe is absent again. 2. Joe has been absent four times 3. Joe should work regularly. 4. Joe has a drinking problem. 5. Alternatives include firing Joe, issuing a final warning. etc. 6. The cost of training a replacement is the same for each alternative.7 Joe does not admit to a drinking problem. 8. Write up the case and issue the final warning.

Bounded Rationality Perspective The bounded rationality perspective suggests that managers make decisions based on intuition in circumstances in which: time constraints exist; multiple factors affect a decision; and problems are ill-defined.

Constraints and Tradeoffs Constraints affect the decision maker. For many decisions, the organizational circumstances are ambiguous, require social support, a shared perspective on what happens, and acceptance and agreement. Personal constraints—such as decision style, work pressure, desire for prestige, or simple feelings of insecurity—constrain the search for alternatives or the acceptability of an alternative.

The Role of Intuition Bounded rationality is associated with intuitive decision making. Experience and judgment rather than sequential logic or explicit reasoning are used to make decisions. In a situation of great complexity or ambiguity, previous experience and judgment incorporate intangible elements at both the problem identification and problem solution stages. Managers make decisions based on what they sense to be right rather than on what they can document with hard data.

Intuition can also balance and supplement rational analysis to help managers make better decisions.

HOW DO YOU FIT THE DESIGN? Making Important Decisions How do you make important decisions? To find out, think about a time when you made an important career decision or made a major purchase or investment.

Linear means using logical rationality to make decisions. Nonlinear means to use primarily intuition to make decisions. If you scored from -3 to -5, then intuition and a satisficing model is your dominant approach to major decisions. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

If you score +3 to +5, then the rational model of decision making as described in the text is your dominant approach. The rational approach is taught in business schools, but many managers use intuition based on experience, especially at senior management levels when there is little tangible data to evaluate.

Quasirationality means combining intuitive and analytical thought. In many situations, neither analysis nor intuition is sufficient, so managers use a combination

ASSESS YOUR ANSWER Managers should use the most objective, rational process possible when making a decision.

ANSWER: Disagree. Striving for perfect rationality in decisions is ideal, but not realistic. Many complex decisions do not lend themselves to a step-by-step analytical process. There are also numerous constraints on decision makers.

When making Nonprogrammed decisions, managers may try to follow the steps in the rational decision making process, but they also have to rely on experience and intuition.

BOOKMARK Blink: The Power of Thinking without Thinking by Malcolm Gladwell Snap decisions can be just as good as – and sometimes better than – decisions that are made cautiously and deliberately. Yet they can also be seriously flawed or dangerously wrong. The author explores how our ―adaptive unconscious‖ arrives at complex, important decisions in an instant – and how we can train it to make those decisions good ones.

Cognitive Biases © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Specific Biases That May Influence Decision Making Cognitive biases are severe errors in judgment that all humans are prone to and that typically lead to bad choices. These biases can include: being influenced by initial impressions, seeing what you want to see, being influenced by emotions, being overconfident, escalating commitment (managers continue to follow a course of action after it should be deemed a failure), fearing failure or less (especially when the situation includes prospect theory, the threat of a loss has a greater impact on a decision than the possibility of an equivalent gain, and being influenced by the group (which can lead to groupthink, the tendency of people in groups to suppress contrary opinions).

Overcoming Cognitive Biases Several ideas help managers be more realistic and objective when making decisions.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Evidence-Based Management Evidence-based management means a commitment to make more informed and intelligent decisions based on the best available facts and evidence. It means being aware of one’s biases, seeking and examining evidence with rigor. The best decision makers foster a culture of inquiry, observation, and experimentation.

Encourage Dissent and Diversity Dissent and diversity are useful in complex circumstances because they open the decision process to a wide variety of ideas and opinions rather than being constrained by personal biases or groupthink. Some groups assign a devil’s advocate, who has the role of challenging the assumptions and assertions made by the group.

Organizational Decision Making Research into organization-level decision making has identified four primary types of organizational decision-making processes.

Management Science Approach The management science approach to organizational decision making is similar to the rational approach by individual managers. The Management Science Approach uses statistical and mathematical procedures to develop solutions to complex problems. It is an excellent device for decision making when problems are analyzable and when the variables can be identified and measured.

However, quantitative data do not convey tacit knowledge. Managers have to sense informal cues that indicate problems. In these situations, the role of management science is to supplement manager decision making.

Carnegie Model The Carnegie Model indicates that organization-level decisions involve many managers and that a final choice is based on a coalition among those managers. A coalition is an alliance among several managers who agree about organizational goals and problem priorities. Coalitions are needed because goals are ambiguous and inconsistent, and managers are limited and have constraints.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE The New York Times In March 2011, The New York Times asked readers to pay for its journalism online.

Executives and editors spent most of 2009 debating the issue, both formally and informally. Managers studied survey responses to gauge how readers would react to a subscription plan. Eventually, a coalition agreed to the idea of a tiered subscription service that allows website visitors to read 20 articles a month at no charge.

Coalitions make decisions that satisfice which means accepting a satisfactory, not a maximum level of performance. Problemistic search means that managers look for a solution to resolve a problem quickly. Discussion and bargaining are important in the problem identification stage.

ASSESS YOUR ANSWER When a manager knows the best solution to a serious organizational problem and has the necessary authority, it is best to simply make the decision and implement it rather than involve other managers in the decision process.

ANSWER: Disagree. Few organizational decisions are made by a single manager.

Organizational decision making is a social process that combines multiple perspectives. Managers have to talk to one another about problem priorities and exchange opinions and viewpoints to reach agreement. When managers don’t build coalitions, important problems may go unsolved and good decisions may fail because other managers don’t buy into the decisions and effectively implement them.

Incremental Decision Model The incremental decision model tells about the structured sequence of activities undertaken from the discovery of a problem to its solution. Major organization choices are a series of small choices that combine to produce the major © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

decision. Organizations move through several decision points and may hit barriers called decision interrupts The incremental model has three phases. The identification phase includes problem recognition and diagnosis. The development phase includes search procedures and the design of solutions. In the selection phase, a solution is chosen and authorized.

Organizational decisions do not follow an orderly progression from recognition through authorization. Minor problems arise that force a loop back to an earlier stage. However, organizational decisions may not follow an orderly progression; minor problems may interrupt the cycle, causing the process to loop back and begin again until the problem is solved.

IN PRACTICE Los Angeles Rams When the Los Angeles Rams went looking for a new head coach, they started with a pool of about 30 candidates. One of them was Sean McVay, who was only 30 years old at the time, significantly younger than most coaches and even some players. The Rams’ executive team tried to study how best to decide on a new head coach, but instead had to rely on research into the success of other young coaches (mixed results) and interviews with a broad spectrum of stakeholders. In the end, the team chose McVay, who became the youngest coach to lead a team to the Super Bowl two years later.

Organizational Decisions and Change Two approaches to decision making have evolved to help managers cope with uncertainty and complexity.

Combining the Incremental and Carnegie Models Integrating the Incremental Process and Carnegie Models is possible because the two models do not disagree with each other. They describe how decisions are made when either problem identification or solution is uncertain. The Carnegie Model is concerned primarily with the problem identification phase in decision making. Coalition building is necessary to reach agreement about which problems to solve. The incremental process model is primarily concerned with the problem solution phase of

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

decision making. Problems are solved a step at a time and may require trial and error and recycling.

Garbage Can Model The Garbage Can Model deals with the pattern or flow of multiple decisions within organizations. It applies to organizational circumstances that experience tremendous uncertainty, characterized by organized anarchy: an extremely organic organization. Organized anarchy results from: problematic preferences; an unclear, poorly understood technology; and transitory participation by employees.

Problems, potential solutions, participants, and choice opportunities are independent streams of events that flow to and through organizations. The garbage can model is characterized as a random decision process. People may propose a solution when there is no problem because they like the idea.

Choices may be made without solving a problem because managers are not sure what will work. A few problems may persist without ever being solved because people get accustomed to them and don't consider how to solve them or forget about trying to solve them.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Volkswagen This mini-case study examines the decision-making process Volkswagen’s leadership used when determining how to respond to a crisis: Researchers revealed that Volkswagen had used some kind of illegal software to defeat emissions testing. Management tried several other options before finally admitting to the public that they had used a defeat device to bypass U.S. emissions standards.

Contingency Decision-Making Framework The use of an approach is contingent on the organization setting. Two characteristics of organizations that determine the use of decision approaches are problem consensus and technical knowledge in organizations.

Problem Consensus Problem consensus refers to the agreement among managers about the nature of a problem or opportunity and about which goals and outcomes to pursue. When managers agree, there is little uncertainty—problems, goals, and performance standards are clear. When managers disagree, direction and performance expectations are in dispute, creating uncertainty.

Technical Knowledge about Solutions Technical knowledge refers to understanding and agreement about how to solve problems and reach goals. This variable can range from agreement and certainty to disagreement and uncertainty about cause–effect relationships leading to problem solution. [Use WORKBOOK activity here]

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Contingency Framework Exhibit 13.9 describes the contingency decision-making framework which brings together the two dimensions of problem consensus and technical knowledge about solutions.

• •

•

•

Cell1: rational decision procedures are used because problems are agreed on and cause–effect relationships are well understood, so there is little uncertainty. Decisions can be made in a computational manner.

Cell 2: there is high uncertainty about problems and priorities, so bargaining and compromise are used to reach consensus. Problems are decided through discussion, debate, and coalition building, using the Carnegie model.

Cell 3 : situation, problems and standards of performance are certain, but alternative technical solutions are vague and uncertain. Techniques to solve a problem are ill defined and poorly understood. The incremental decision model describes how organizations use trial and error to solve a problem.

Cell 4: high uncertainty about both problems and solutions is difficult for decision making. Individual managers use inspiration, an innovative, creative solution not reached by logical means or imitation, adopting a decision tried elsewhere. Elements of the garbage can model appear.

Special Decision Circumstances Managers make high-stakes decisions more often and more quickly in an increasingly less predictable environment. They reach decisions through a complex interaction with other managers, subordinates, environmental factors, and organizational events.

High-Velocity Environments High-velocity environments ─characterized by rapid competitive and technological changes─ call for the following actions: track information in real time to develop a deep and intuitive grasp of the business; begin immediately to build multiple alternatives; seek advice from everyone, and depend heavily on one or two savvy, trusted colleagues as counselors; involve everyone in the decision and try for consensus; integrate choices with other decisions and the overall strategy of the company.

To improve good decision making under high-velocity conditions, organizations stimulate constructive conflict through point–counterpoint, which divides decision makers into two groups and assigns them different, often competing responsibilities.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Decision Mistakes and Learning Only by making mistakes can managers and organizations go through the process of decision learning and acquire sufficient experience and knowledge to perform more effectively in the future. Companies will be successful in decision making by adopting a learning approach. They will make mistakes but will resolve uncertainty through trial-and-error.

ASSESS YOUR ANSWER Making poor decisions is how managers and organizations learn and get stronger.

ANSWER: Disagree. Managers don’t want people to intentionally make poor decisions, of course, but smart managers encourage people to take risks and experiment, which can lead to failed decisions. Learning from the failures is the key to growing and improving. In addition, although managers strive to make good decisions, they understand that decisions sometimes must be made quickly based on limited information, and that trial and error is an important way the organization learns and grows stronger.

Design Essentials • • • • • •

Most organizational decisions are not made in a logical, rational manner. Decision processes are characterized by conflict, coalition building, trial and error, speed, and mistakes.

Cognitive biases cloud decision making and have negative consequences for an organization. Managers can avoid escalating commitment, loss aversion, and groupthink by using evidence-based management and encouraging dissent.

Organizational decision-making approaches include the management science approach, the Carnegie model, the incremental decision model, and the garbage can model.

Only in rare circumstances do managers analyze problems and find solutions by themselves.

Conflict and coalition building occurs when problems are not agreed on. Priorities must be established to indicate which goals are important and what problems should be solved first.

The most novel decision making is the garbage can model which describes how decision processes can seem almost random in highly organic organizations.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

•

Many organizations operating in high-velocity environments must make decisions with speed, which means staying in immediate touch with operations and the environment.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT A VIGILANT PROBLEM-SOLVING APPROACH TO DECISION-MAKING Irving Janis, known for his writings on groupthink, provides a descriptive model of vigilant problem solving for high-quality decision making. The model depicts a challenge (threat or opportunity) which begins the problem-solving process. It then provides the following components: Step 1-Formulate the problem: What requirements should be met?

What seems to be the best direction of solution?

Step 2-Use information resources: What prior information can be recalled?

What new information should be obtained?

Step 3-Analyze and reformulate: What additions or changes are there in the requirements?

Are there additional alternatives?

What additional information might reduce uncertainties?

Step 4-Evaluate and select the alternative: What are the pros and cons for each alternative?

Are requirements met? If not, consider modification.

How can costs and risks be minimized?

What additional plans are needed for implementation and monitoring?

Decide if any defects in the decision making procedure occurred: Gross omissions in survey of objectives.

Gross omissions in survey of alternatives.

Poor information search.

Selective bias in processing information at hand.

Failure to examine some major costs and risks of preferred choice.

Failure to work out detailed implementation, monitoring, and contingency plans.

Closure - Internal consolidation of the choice: Bolster it by playing up the advantages and playing down the disadvantages.

Solicit supportive information.

Refute unwelcome information about drawbacks.

Social commitment to the choice:

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. When you are faced with choosing between several valid options, how do you typically make your decision? How do you think managers typically choose between several options? What are the similarities between your decision process and what you think managers do?

ANSWER: Answers will vary. Encourage students to identify which steps of each approach—the rational approach and the bounded rationality perspective—they may have used in the past. Another interesting point of discussion would be to examine cognitive biases, using examples from students’ personal experiences.

2. A professional economist once told his class, "The individual decision maker should process all relevant information and select the economically rational alternative." Do you agree?

ANSWER: After reading this chapter, students will generally disagree with this statement.

Managers usually do not possess all relevant information and do not use rational decision processes. Economists tend to assume that quantitative analysis and economic logic underlie most decisions. This is the case for well understood decisions for which the organizations have experience. But for non- programmed decisions which frequently occur--and characterize most decisions of top management--intuition, judgment, and hunch may determine the decision outcome. Managers often have a feel for relevant problems and possible solutions based upon experience within the organization that cannot be captured into a formal model. Thus it is not accurate to assume that individuals behave in an economically rational way when making organizational decisions.

3. If managers frequently use experience and intuition to make complex, nonprogrammed decisions, how do they apply evidence-based management, which seems to suggest that managers should rely on facts and data?

ANSWER: When intuition is criticized, the argument usually assumes that intuition leads to random decision outcomes. This is not the case, because intuition utilizes right brain processes and subconscious thinking. A manager's intuitive skills are built up through trial and error experience. Evidence-based management means making decisions by being careful and thoughtful. By always seeking evidence, managers can avoid relying on faulty assumptions. The best decision makers question their knowledge and assumptions.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

4. The Carnegie model emphasizes the need for political coalition in the decision making process. When and why are coalitions necessary?

ANSWER: Coalitions are necessary because there is natural conflict and disagreement within an organization. As described in chapter 2 on the environment, departments pursue different goals, have different time horizons and attitudes, and work with different environmental constituencies. An organizational decision, however, may affect several organizational groups. Coalition building provides a mechanism to negotiate and reach agreement among several managers whose ideas and cooperation are needed for implementation.

Coalitions are thus necessary whenever differences of opinion or goals are present. Once managers agree about goals and the priority of problems, then the organization can proceed to solve the problem.

5. What are the three major phases in Mintzberg's incremental decision process model? Why might an organization recycle through one or more phases of the model?

ANSWER: The first phase is problem recognition. In this phase managers become aware of the problem and engage in diagnosis to gather more information to define the problem.

The second phase is called development, in which managers may use search procedures to find a solution from previous organizational experience or to design a custom made solution. The organization then enters the selection phase where the solution is chosen.

The organization may select the decision through the process of judgment, analysis, or bargaining, which is then followed by formal authorization by upper level managers.

An organization may recycle through one or more of these phases because the chosen alternative may not work. These failures are called "interrupts." The organization will cycle back to an earlier stage to reevaluate whether the problem truly exists, whether a different solution should be developed, or whether an alternative solution should have been elected. An organization experiencing uncertainty about how to solve the problem may try several solutions and recycle many times before the problem is finally solved.

6. An organization theorist once told her class, "Organizations never make big decisions.

They make small decisions that eventually add up to a big decision." Explain the logic behind this statement.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Discussion of this question can make students aware that the image of a single person at the top of an organization making big decisions

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

often is not the case. The statement is somewhat exaggerated by the word "never." But it is true that the general pattern in organizations is to make small, incremental decisions.

The incremental decision process model, for example, and the illustration of the Gillette Company illustrate how a single large decision such as selecting the location for a new plant or designing a new product concept can involve many small decisions. The incremental decision model emphasizes small decisions made incrementally that lead to a big decision and problem solution. Small decisions may also be made simultaneously by several managers. This would occur when a coalition is built and various managers are pooling their ideas and making decisions about whether to participate. They may also be asked to carry out a small part of the larger decision. Big decisions involve many small decisions and trial and error before the final outcome is reached.

7. How would you make a decision to select a building site for a new waste- treatment plant in the Philippines? Where would you start with this complex decision, and what steps would you take? Explain which decision model in the chapter best describes your approach.

ANSWER: Answers will vary.

8. Why would managers in high-velocity environments worry more about the present than the future? Would an individual manager working in this type of environment be more likely to succeed with a rational approach or an intuitive approach? Discuss.

ANSWER: As long as managers in any environment strive to maintain a clear grasp on external opportunities and threats, managers in a high-velocity environment would not worry too much about the future because it changes so rapidly. Research has shown that firms which are more concerned with the future in these environments have only a loose grip on immediate happenings and are unsuccessful. Trying to make specific plans for such a rapidly changing environment would take so much time, that management could not concentrate on the current situation.

An individual manager working in a high-velocity environment would more likely succeed with an intuitive approach. In a situation of great complexity or ambiguity, previous experience and judgment are needed to incorporate intangible elements at both the problem identification and problem solution stages. A survey of managers conducted found that 45 percent of corporate executives say they rely more on instinct than on facts and figures to make business decisions

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

9. Can you think of a decision you have made in your personal, school, or work life that reflects a stronger desire to avoid a loss than to make a gain? How about a time when you stayed with an idea or project for too long, perhaps even escalating your commitment, to avoid a failure? Discuss.

ANSWER: Answers will vary. Upon entering college, a student may decide to go to medical school, take all the pre-med courses and exams, and once accepted, feel obligated to complete a medical degree and pursue a career in medicine despite a growing lack of interest in medicine. The student might continue in medical school and a medical career because of not wanting to lose all the time, effort, and money already committed to becoming a doctor.

10. Why are decision mistakes usually accepted in organizations but penalized in college courses and exams that are designed to train managers?

ANSWER: This question is to facilitate discussion about student education prior to becoming managers. Student performance is generally penalized through lowering of grades when mistakes are made on exams, papers, projects, or case analyses because college course material generally fits into cell 1 of the contingency decision framework.

College courses use a well-defined body of knowledge and attempt to measure the students' mastery of that body of knowledge. Goals are defined and underlying causeeffect relationships are known. The question is more one of whether the student has studied enough to correctly apply a rational process that will lead to the correct outcome.

Managers who work within a system and cannot isolate particular decisions to one particular textbook section, typically experience uncertainty about goals or how to achieve those goals. They use trial and error and will occasionally make errors. In many ways, the traditional classroom environment is not a good training ground for organizational decision making. Instead, the classroom environment is good for educating students in the use of frameworks and models that can be taught and will add to the students' thinking and information processing ability. Managers must also acquire experience through trial and error to handle the less well understood aspects of problem solving, and to gain savvy in taking an informed perspective on organizational problems.

But students who have become familiar with decision mistakes such as escalating commitment may be less inclined to make those mistakes in the organizational setting. By applying patterns that they have observed in case study analysis as a student, managers will not have to "reinvent the wheel" and learn by experience from every situation they encounter in the organizational setting.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

WORKBOOK ~ STYLE OF DECISION MAKING Generally speaking, a score of 22 or higher suggests a systemic thinking style, which means a focus on the big picture and how the parts fit together. A score of 20 or lower suggests an analytic style, which breaks things down into specific parts of an overall problem and looks for underlying causes.

CASE FOR ANALYSIS ~ GOVERNMENT DTS

1. What type of decision process does Pitcher seem to be using in his work with other departments? What type of process should he be using in this situation? Explain.

ANSWER: Pitcher is approaching the decision process as if he is an individual following the systematic steps of a management science approach to decision making. He believes he is there to monitor the environment, define and diagnose management problems, and develop, choose, and implement the best solution. However, he should be viewing his work as part of a team’s efforts. He would get far more cooperation from others if he used the Carnegie model and built a coalition with other managers to define, diagnose, and resolve the problems. Furthermore, working collaboratively with others would allow his task force to develop superior solutions because they factor in a broad range of information and ideas.

2. How would Davidson apply the Carnegie model to make a decision about Pitcher at this point? Explain.

ANSWER: Although Pitcher has upset a lot of people, it may be possible for Davidson to restore the situation. First, he needs to get Pitcher on board with a different, more collaborative approach. If he succeeds, he could continue to build a stronger coalition with the other relevant managers. Together, they should be able to define and diagnose the problems more accurately and to develop and implement the best possible solutions.

3. Does the type of decision process Pitcher appears to use when working with other departments reflect any personal constraints (Exhibit 13.3)? Any cognitive biases? Explain.

ANSWER: Pitcher’s approach definitely exhibits personal constraints and cognitive biases.

He sees himself as better informed than other managers, and he views his work as more important and higher in priority than the other managers’ projects. He

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

feels that he’s not getting support, stating that the other managers have been ―uncooperative.‖ Finally, a tight deadline is putting pressure on him. In terms of cognitive biases, Pitcher could be seeing what he wants to see (uncooperative peers and unsupportive leaders), allowing himself to be influenced by emotions (frustration, anxiety), and exhibiting signs of overconfidence (his superiority in his knowledge of management approaches). Although it is not expressed in the case, it is easy to imagine that he fears failure and the loss of esteem, given that his assignment comes from the White House.

CASE FOR ANALYSIS ~ DUBOIS FRENCH EATERY 1. The initial problem for Alissa was how she would manage locations one hour apart and maintain high quality and service. The current problem is Hugo’s management style. To what extent would you say these two problems are programmed versus nonprogrammed? Explain ANSWER: Managerial problems may be either programmed or non-programmed.

Programmed decisions are repetitive and well defined, and procedures exist for resolving the problem. Nonprogrammed decisions are novel and poorly defined, and no procedure exists for solving them. Many nonprogrammed decisions involve strategic planning because uncertainty is great and decisions are complex. This is a nonprogrammed decision because it deals with a rapidly changing business environment. Prior to hiring Hugo, Alissa had never faced a similar problem, so she has no procedure to fall back on in attempting to resolve the issue.

2. What type of decision process led Alissa to hire Hugo (e.g., rational, intuitive, satisficing, nonprogrammed, bounded rationality, Carnegie model, etc.)? What type of decision process should Alissa have used? Why? ANSWER: Alissa made a decision based on intuition. Bounded rationality is associated with intuitive decision making. Experience and judgment rather than sequential logic or explicit reasoning are used to make decisions. Managers make decisions based on what they sense to be right rather than on what they can document with hard data.

Hugo’s experience and amazing talents as a chef, his natural ease in managing staff, and the charm and joy he displayed in his interaction with customers soon convinced Alissa that she had found the perfect person to direct the new restaurant. Looking back, she realized her own enthusiasm for expansion and a starry-eyed impression of the Frenchman, shared by an adoring public, led to mistakes in her business judgment. She should have followed a more systematic approach to evaluating Hugo’s skills and abilities as a restaurant manager. She should also have tried harder to find alternate candidates for the position. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

3. By the end of the second year, problems loomed. Patrons loved Hugo, but there were delivery problems, bill-paying delinquency, lax business attitude, and the possibility of Hugo opening a competing restaurant. If you were a consultant, what would you advise Alissa to do? Why? ANSWER: Students can discuss Alissa’s three decision options—firing Hugo, hiring a manager for the second location, or closing the first location so Alissa can manage the second location with Hugo as a partner. Students can discuss whether keeping Hugo, even though he is not a successful manager, is an example of an escalating commitment, in which managers continue to follow a course of action after it should be deemed a failure. Managers are unwilling to acknowledge a mistake and put additional resources into a poor course of action. If time permits, it might be interesting to challenge students to develop one or more additional alternatives.

CHAPTER FOURTEEN CONFLICT, POWER, AND POLITICS

CHAPTER OVERVIEW LEARNING OBJECTIVES CHAPTER OUTLINE LECTURE ENHANCEMENT DISCUSSION QUESTIONS WORKBOOK CASE FOR ANALYSIS

CHAPTER OVERVIEW This chapter examines the nature of conflict and use of power and political tactics to reduce conflict. First, intergroup conflict, characteristics of organizations that contribute to conflict, and the use of a political versus a rational model of organization to manage conflict interests are explored, as well as tactics for reducing conflict and enhancing

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

collaboration. Subsequently, there is an examination of individual and organizational power, the vertical and horizontal sources of power, and how power is used to attain organizational goals. Next comes a look at empowerment, or sharing power with lower- level employees.

Politics, the application of power and authority to achieve desired outcomes, will also be covered, as well as tactics managers can use to influence others and accomplish goals. .

Learning Objectives After reading this chapter you should be able to: • • • • • •

Identify organizational characteristics that can cause intergroup conflict.

Compare and contrast the rational and the political models of organization.

Describe the vertical sources of power in organizations.

Explain the concept of strategic contingencies as it relates to horizontal power in organizations.

Define politics and explain why political activity is necessary.

Identify tactics for increasing and for using power.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CHAPTER OUTLINE Managing by Design Before reading the chapter, students will give their opinions on the following statements: • • •

A certain amount of conflict is good for an organization.

A factory worker on the assembly line is in a low power position and should accept that he or she will have little influence over what happens.

When managers use politics, it usually leads to conflict and disharmony and will likely disrupt the smooth functioning of the organization.

A LOOK INSIDE Omnicom In the summer of 2013, executives from Omnicom Group Inc. and Publicis Groupe SA announced with much fanfare in Paris that the two companies were merging to create the largest advertising agency in the world. As the summer of 2014 approached, however, the deal had not been completed and clashes over position and power were largely to blame. For one thing, the two sides couldn’t agree on which company would legally be the acquirer. Beyond that, each company wanted its senior executives to fill top positions.

Communicating about the details of the merger grew increasingly complicated.

The battle for control went on for nearly a year before Wren and Lévy issued a joint statement in May 2014 saying that the deal was off.

Interdepartmental Conflict in Organizations Intergroup conflict requires three ingredients: group identification, observable group differences, and frustration.

Intergroup conflict is the behavior that occurs among groups when participants identify with one group and perceive that other groups may block their goal achievement, involves group identification, observable group differences, and frustration. Competition is rivalry among groups in the pursuit of a common prize, whereas conflict presumes direct interference with goal achievement.

Intergroup conflict within organizations can occur horizontally across departments, or vertically between different levels of the organization. Conflict can also occur between different divisions or business units within an organization.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

[LECTURE ENHANCEMENT on conflict vs. competition]

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Sources of Conflict Sources of intergroup conflict include goal incompatibility, differentiation, task interdependence, and limited resources. These characteristics are determined by the factors of environment, size, technology, strategy and goals, and organizational structure.

ASSESS YOUR ANSWER A certain amount of conflict is good for an organization.

ANSWER: Agree. Conflict is inevitable in all human relationships, including those in organizations, and is often a good thing. Some conflict can be healthy because it contributes to diverse thinking and leads to change. If there is no conflict whatsoever, there is likely no growth and development either.

•

• • •

Goal incompatibility. The achievement of one department’s goals often interferes with another department’s goals, leading to conflict. Exhibit 14.1 shows examples of goal conflict between typical marketing and manufacturing departments.

Differentiation. Managers differ in orientation among in different functional departments. Departments or divisions differ in values, attitudes, and standards of behavior, and these subcultural differences lead to conflicts.

Task interdependence, the dependence of one unit on another for materials, resources, or information, tends to increase the potential for conflict as opposed to pooled interdependence when units have little need to interact.

Limited resources, over matters as common as budget, may involve competition among groups.

IN PRACTICE National Rifle Association (NRA) Internal conflict has rocked the NRA in recent years. Former president Oliver North tried to oust long-time CEO Wayne LaPierre, but without enough support from NRA members, he failed. North has since left the organization, along with second-in-command Chris Cox. The inner turmoil is just one of many issues plaguing the NRA, along with legal battles, allegations of financial

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

impropriety, and more. The NRA is now under investigation by Congress.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Rational versus Political Model When goals are in alignment, there is little differentiation, departments have pooled interdependence, and resources seem abundant, managers can use a rational model in which goals are clear and choices are made in a logical way. However, the political model is used when differences are great, and groups have separate interests, goals, and values. Disagreement and conflict are normal, so power and influence are needed to reach decisions. Although managers strive to use a rational approach, the political model often prevails.

Tactics for Enhancing Collaboration Tactics for enhancing collaboration to reduce damaging conflicts include: •

•

• • •

Create integration devices. Teams, task forces, and project managers are integration devices. Labor-management teams are an integration device that increase worker participation and provide a cooperative model for unionmanagement problems.

Use confrontation and negotiation. Confrontation occurs when parties in conflict directly engage one another. Confrontation is successful when managers with a positive attitude engage in a win-win strategy. Negotiation is the bargaining process that occurs during confrontation and that enables the parties to systematically reach a solution. Collective bargaining, resulting in an agreement specifying each party’s responsibilities for several years, is one type of negotiation to resolve a disagreement between workers and management Schedule intergroup consultation. When conflict is intense, and department members are uncooperative, top managers intervene. Workplace mediation reduces conflict because it brings the disputing parties together.

Practice member rotation.

Create shared mission and superordinate goals.

IN PRACTICE The Freaky Friday Management Technique The sales engineers complained that customer support refused to fix problems.

Customer support said the sales engineers didn’t listen to suggestions. In the movie Freaky Friday, the characters switch places. The managers switch places, but. like the characters in Freaky Friday, they keep their own minds. Managers discovered the core issues that of the conflict and implemented some simple solutions that resolved disputes and got people working together harmoniously.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Power and Organizations Power is defined as the potential ability of one person (or department) to influence other people (or departments) to carry out orders or to do something they would not otherwise have done.

Power exists only in a relationship between two or more people and can be exercised in vertical or horizontal directions.

Individual versus Organizational Power Sources of individual hard power include: legitimate power is the authority granted by the organization to the position, reward power stems from the ability to bestow rewards, and coercive power is the authority to punish others. There are also sources of personal soft power: expert power derives from a person's skill or knowledge, and referent power comes from personal characteristics people admire.

Power in organizations results from the structure of the organization, with power vested in the position rather than in the person. Some positions in the hierarchy have access to great resources or have great responsibility and authority.

Power versus Authority Formal authority is related to power but is narrower in scope. Authority is a force for achieving desired outcomes, but only as prescribed by the formal hierarchy and reporting relationships.

• • •

Authority is vested in organizational positions.

Authority is accepted by subordinates.

Authority flows down the vertical hierarchy.

Vertical Sources of Power Whereas top management typically retains a large amount of power, some employees may obtain power disproportionate to their formal positions, and can influence in an upward direction.

Four major sources for vertical power: • •

Formal position provides legitimate power.

Resources (responsible for allocation of budgets, salaries, equipment, facilities)

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

• •

Control of information. By controlling what information is collected, how it is interpreted, and how it is shared, managers can influence how decisions are made.

Network centrality stems from central location in the organization with access to information and people that are critical to the company’s success

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

People Many top executives strive to build a cadre of loyal and supportive executives to help them achieve their goals for the organization.

IN PRACTICE Jay Bower, Crossbow Group Jay Bower, now president of marketing services firm Crossbow Group, tells this story of his early days as an entry-level marketing analyst. The retail firm he worked for needed an analysis of a discount program, but the IT department was overwhelmed. Bower volunteered to do the extra work, but credited his boss and the CIO for the final report. It served his career well, which is why he now advises new hires to seek opportunities to build networks, share information, and enhance your expertise.

ASSESS YOUR ANSWER A factory worker on the assembly line is in a low power position and should accept that he or she will have little influence over what happens.

ANSWER: Disagree. Although an assembly line worker typically has little formal power and authority, all employees have access to some sources of power. It is up to the individual to network or gather information to expand his or her power in the organization. In addition, when employees band together, they can have a tremendous amount of power. Managers can’t get anything done unless employees cooperate and do the work they’re supposed to do.

The Power of Empowerment Empowerment is power sharing, the delegation of power or authority to subordinates in an organization.

• • •

Employees receive information about company performance.

Employees have knowledge and skills to contribute to company goals.

Employees have the power to make substantive decisions.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Horizontal Sources of Power Horizontal power is not on the organization chart. It refers to relationships laterally and the ability of respective departments to impose their interests on other departments.

Departments are not equal in power as indicated from the results of Perrow’s survey.

Today, finance departments have gained power because of the need to control costs.

Ethics offices have greater power because they reduce uncertainty for top leaders regarding scandals.

Strategic Contingencies Strategic contingencies are those events and activities both inside and outside the organization that are essential for attaining organizational goals; departments involved with strategic contingencies tend to have greater power.

Power Sources There are five strategic contingencies shown in Exhibit 14.8. In some organizations these power sources overlap: Dependency occurs when one department depends upon another for resources or information to accomplish its task; Financial resources to the organization gives a department power.

IN PRACTICE International Alliance of Theatrical Stage Employees The power of labor unions in the United States has weakened significantly, but not for the International Alliance of Theatrical Stage Employees, which has retained its clout and even grown stronger. The primary reason is that they have specialized, hard-to-replace skills. Bringing dazzling stage effects to life requires talent, experience, and hard work. If the stagehands walk out, the performance cannot go on. Even the threat of a strike can be enough to win favorable contract terms.

Centrality means that the department's role is essential to production of the organization's outputs; Nonsubstitutability increases departmental power because its contribution is not easily replaced; Coping with uncertainty from a variety of environmental sources will increase a department's power.

Departments can cope with critical uncertainties by obtaining prior information, prevention, and absorption.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Political Processes in Organizations Definition Power is the available force or potential for achieving desired outcomes, while politics is the use of power to influence decisions in order to achieve those outcomes. A dark view of politics, involving deception and dishonesty for purposes of individual selfinterest, is widely held by laypeople.

Organizational politics involves activities to acquire, develop, and use power and other resources to influence others and obtain the preferred outcome when there is uncertainty or disagreement about choices. Political behavior can be either a positive or a negative force.

ASSESS YOUR ANSWER When managers use politics, it usually leads to conflict and disharmony and will likely disrupt the smooth functioning of the organization.

ANSWER: Disagree. Politics is a natural organizational process for resolving differences and getting things done. Although politics can be used for negative and self-serving purposes, political activity is also the primary way managers are brought together to accomplish good things. Being political is part of the job of a manager, but managers should take care to use politics to serve the interests of the organization rather than themselves.

When to Use Political Activity Political activity tends to appear more frequently when uncertainty is high and there is disagreement over goals, or when managers confront nonprogrammed decisions, as in the Carnegie model. Three domains of political activity include structural change, interdepartmental coordination, management succession, and resource allocation.

Structural change rearranges power relationships and will generate extensive political activity. Management succession ─ promotions, transfers, and hiring new executives at top levels ─ generates political behavior. Resource allocation is so vital to departments that political activity is used to resolve disagreements and reduce uncertainty.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

IN PRACTICE Nissan and Renault Carlos Ghosn was once the well-respected head of Renault. Today he’s in prison. An alliance between Renault and Japanese automaker Nissan was successful, which prompted the French government to push for a full merger. Two Nissan executives, however, decided to fight the merger. They dug into Ghosn’s activities, and their investigation revealed financial improprieties that eventually sent the auto executive to prison and derailed the merger, thus saving their jobs. Ghosn has denied the allegations and accused the two executives of ―dirty‖ politics.

Using Soft Power and Politics Position and responsibility, more than personality and style, may determine a manager’s ability to influence outcomes. However, the political use of power also involves individual-level activities and skills. Managers can develop political competence.

HOW DO YOU FIT THE DESIGN? Political Skills How good are you at influencing people across an organization? Having some basic political skill helps a manager gain broad support and influence. Political skills help a manager build personal and organizational relationships. A score of 6 or higher suggests active political skills, especially in an organization in which things get done politically. If you scored three or less, focus more on building collegial and supportive relationships. Join an organization in which decisions and actions are undertaken by rational procedures not by key coalitions.

Tactics for Increasing Power Tactics for increasing power include: enter areas of high uncertainty; create dependencies; provide scarce resources; and satisfy strategic contingencies.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Political Tactics for Using Power Political tactics for using power include: build coalitions and expand networks; assign loyal people to key positions; use reciprocity; enhance legitimacy and expertise; and make a direct appeal.

IN PRACTICE The Vatican Pope Francis has reshaped the way the Catholic Church is run by changing who is running it. Francis brought his own people to positions of power, and conservative cardinals have been demoted. Francis is replacing these traditionalists with moderate leaders who are in tune with his mission for transforming the church. Francis believes too many within the church have ―succumbed to worldly temptations‖ and that breaking down the power circles can reverse that trend

BOOKMARK Influence: Science and Practice by Robert B. Cialdini The author examines the social and psychological pressures that cause people to respond favorably to political tactics. He identified some basic influence principles including reciprocity, liking, credible authority, and social validation.

Because life as a manager is about influencing others, learning to be genuinely persuasive is a valuable management skill.

IN PRACTICE World Bank

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Former Deputy Secretary of Defense Paul Wolfowitz became president of World Bank but doomed his career by failing to develop relationships and alliances.

Most World Bank leaders were accustomed to ―promoting each other’s interests and scratching each other’s backs.‖ Wolfowitz tried to assert his own ideas without considering the ideas of others and alienated the leadership team. Rather than persuading others, Wolfowitz issued directives to senior bank officers who then resigned following disputes with him.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

Design Essentials • •

• • • •

Conflict, power, and politics are natural outcomes of organizing. Differences in goals, backgrounds, and tasks are necessary for organizational excellence, but these differences can throw groups into conflict.

The rational model of organization assumes that organizations have specific goals and that problems can be logically solved. The other view, the political model of organization assumes that the goals of an organization are not specific or agreed upon.

Tactics for enhancing collaboration include integration devices, confrontation and negotiation, intergroup consultation, member rotation, and shared mission and superordinate goals.

The chapter also discussed the vertical and horizontal sources of power.

Departments responsible for dealing with key resource issues and dependencies are more powerful.

Managers need political skills to exercise soft power to achieve the legitimate goals of a department or organization.

.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

LECTURE ENHANCEMENT CONFLICT VS. COMPETITION It is useful to point out the differences and similarities between conflict and competition as perceived by those who believe that a controlled amount of competition can be healthy in stimulating the organization. Understanding can be increased by the use of an example that contrasts the conflict of street fighting versus the competition of boxing.

CONFLICT – STREET FIGHTING Incomparability of goals: One fighter wants to kill, the other wants to run away.

Opposing behaviors: They hit each other.

Few or no rules on limits of escalation: One pulls a knife on the other. One or both may be forced into the contest: The bully picks on the 90pound weakling.

Dysfunctional outcomes for one and others not involved: hospitalized and the bar is in shambles.

One gets

VS. COMPETITION - BOXING Compatibility of goals: Both want to be the champion.

Some opposing behaviors and some cooperative behaviors: They hit each other, but break up when instructed by referee.

Basic ground rules, including escalation: No hitting below the belt and stop at the bell.

Both enter the contest voluntarily: They sign contracts and want the bout.

Mostly functional outcomes for both and other parties: Both get paid and the crowd gets entertained.

SIMILARITIES * Both conflict and competition result in "we-they" feelings and distortions of perceptions. * Both can have functional and dysfunctional outcomes.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

DISCUSSION QUESTIONS 1. Give an example from your personal experience of how differences in tasks, personal background, and training lead to conflict among groups. How might task interdependence have influenced that conflict?

ANSWER: Departments attract people with specific values, norms, time horizon, education, and attitudes. These characteristics are compatible with departmental membership, but may be opposite the characteristics in other departments. Thus a highly educated operational researcher who attempts to implement his ideas to less educated people on the shop floor will run into trouble. This specialist may use academic jargon and expect his superior education to be the basis for implementation. The person on the shop floor may not understand the technical details, and is more concerned with day-to-day work rather than sophisticated theory.

People from each group will tend to turn off one another and will not reach a satisfactory outcome. Task interdependence leads to conflict because groups have to interact more frequently as interdependence increases. They depend upon another department to achieve their own department's outcomes. Attempting to influence the other department will lead to conflict. When interdependence is low, little interaction and manipulation is required, hence conflict will be less.

2. Starbucks and Barnes & Noble entered into a partnership that places a Starbucks in each B&N bookstore. What organizational and environmental factors might determine which organization will have more power in the relationship?

ANSWER: The balance of power between Starbucks and Barnes & Noble will be influenced by the same factors that influence the balance of power between departments within an organization. For example, the organization that brings more financial resources to the table, that plays a more central role in the work they do together, that provides a nonsubstitutable function, and that can prevent or absorb uncertainty by providing needed information will possess more power.

3. In a rapidly changing organization, are decisions more likely to be made using the rational or political model of organization? Discuss.

ANSWER: We found in this chapter that the political model is associated with conflict over goals, shifting coalitions and interest groups, ambiguous information, and

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

uncertainty. The learning organization is characterized by decentralized operations in a shifting environment. Realizing that the conflict felt in a learning organization need not be negative, and the ambiguity is brought on by the environment rather than by internal confusion or mismanagement, the learning organization takes on positive characteristics of the political model. The rational model, in contrast, tends to be more centralized and more orderly in dealing with logical questions such as how to select the outcomemaximizing choice or optimize efficiency.

4. What is the difference between power and authority? Is it possible for a person to have formal authority but no real power? Discuss.

ANSWER: Power is an intangible force that is not necessarily reflected on the organizational chart. It is the ability of a person or group to influence other people in order to attain desired outcomes. Power can be exercised in either vertical or horizontal directions. Authority, on the other hand, is prescribed by the formal hierarchy and reporting relationships. It is vested in organizational positions and flows down the vertical hierarchy. A person can have a job title--i.e. authority with a legitimate right to exercise command--and yet be non-influential. Similarly, it is possible for a person to be influential with others in attaining desired outcomes, and yet not have the formal authority of position.

5. Discuss ways in which a department at a health insurance company might help the organization cope with the increased power of large hospital systems such as Carilion by obtaining prior information, prevention, or absorption.

ANSWER: Issues of critical uncertainty can be dealt with by absorption and by taking action to reduce uncertainty. Horizontal power relationships in organizations change as strategic contingencies change. Departments that help organizations cope with new strategic issues will have greater power.

6. State University X receives 90 percent of its financial resources from the state and because tuition is cheap is overcrowded with students. The admissions office is overwhelmed with applications and the university is trying to pass regulations to limit student enrollment.

Private University Y receives 90 percent of its income from student tuition and has barely enough students to make ends meet. The admissions office is actively recruiting students for next year. Using the strategic contingencies notion of power, in which university will the admissions office have greater power? What implications will this have for professors and administrators? Discuss.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: Strategic contingencies are events and activities both inside and outside the organization that are essential for attaining organizational goals; those involved with strategic contingencies tend to have greater power. In the environment of State University X, the critical source of revenues is the state legislature. Financial resources increase power, so those departments and their professors and administrators directly responsible for increasing state allocations--a strategic contingency--could be expected to be most powerful. Since students are in plentiful supply, their numbers do not represent a problem area to the institution. However, since the university would actually be happier with limited numbers of students, they will have little power in the system. Professors and administrators will not have organization-based incentive to empower students in university decision making because the students do not represent a strategic contingency.

In fact, professors and administrators may "usurp" the power that students feel should be theirs.

Private University Y is almost the opposite. It is severely short of money, and financial resources arise directly from student tuition. Students are the critical resource for achieving organizational goals. The organization depends on the students and will try to get more of them to attend the university, and to keep them happy. In this school, administrators will put pressure on professors to satisfy student needs or demands.

Student activities and organizations will have substantial influence in university affairs.

Students represent a strategic contingency so their power is enhanced in Private University Y. 7. A financial analyst at Merrill Lynch tried for several months to expose the risks of investments in subprime mortgages, but he couldn’t get anyone to pay attention to his claims. How would you evaluate this employee’s power? What might he have done to increase his power and call notice to the impending problems at the firm?

ANSWER: The employee has little power. Although the power comes from larger organizational forms and processes, the political use of power involves individual level activities. The employee could have tried to build coalitions and expand networks within the financial analyst’s group, enhance legitimacy and expertise by involving an internal or outside consultant, make a direct appeal to a manager and that manager’s manager.

8. The engineering college at a major university brings in three times as many government research dollars as does the rest of the university combined. Engineering appears wealthy and has many professors on full-time research status. Yet, when internal research funds are allocated, engineering gets a larger share of the money, even though it already has substantial external research funds. Why would this happen?

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

ANSWER: This is an example of a strategic contingency. The Engineering College provides financial resources to the organization, which in turn gives it greater power within the organization. It uses this power to acquire a larger share of internal resources. The internal resources are in one sense a reward for bringing in external resources. In order for other departments to get a larger share of the internal research dollars, they would have to increase their power by bringing in a larger amount of external research grants.

They probably will not be successful in getting additional dollars just by claiming they have a greater need for the dollars, since they are not particularly influential compared to Engineering.

9. Some researchers argue that the concept of exchange underlying the principle of reciprocity (trading something of value to another for what you want) is the basis of all influence. Do you agree? Discuss. To what extent do you feel obligated to return a favor that is done for you?

ANSWER: Students can share their personal experiences on returning favors. Influence: Science and Practice by Robert Cialdini discusses the principle of reciprocity, defined as the sense of obligation people feel to give back in kind what they have received. For example, a manager who does favors for others creates a sense of obligation to return the favor. Cialdini says that smart managers find ways to be helpful to others. Reciprocity is one of the tactics that cause people to respond favorably to social and psychological pressures.

WORKBOOK ~ HOW DO YOU HANDLE CONFLICT? Conflict management style--whether we use solution-oriented, nonconfrontational, or control strategies--affects the ease with which we operate in various types of conflict situations. This self-assessment instrument will give students personal insight from which you can explore the impact of personal style on horizontal, vertical, and interdepartmental conflict. You may need to remind students that structural issues can impact organizational conflict as much or more than personal issues, because persons without significant management experience may overemphasize behavioral effects while they under-emphasize design effects.

CASE FOR ANALYSIS ~ The Daily Tribune

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

The case describes the conflict between the advertising department and the news department of The Daily Tribune. The news editor Rick Arnold is in trouble because he tried to run a story which would have tarnished the image of one of its largest advertisers, East Tennessee Healthcorp (RTH) on the same day as they had placed an advertisement in the paper touting its service to the small towns and rural communities of East Tennessee. Below are some questions that could be used to guide your discussion.

1. Why is Rick Arnold’s news division losing influence at the Daily Tribune?

ANSWER: Arnold is losing management support, mainly because the publisher, managing editor, and head of advertising have formed a coalition around the idea that advertising and the money it generates are more important than an unbiased reporting of the news.

2. How might Rick have handled the ETH story in a more collaborative way?

ANSWER: Despite the time constraints, Rick could have shared the story with the managing editor and the head of advertising. By communicating their shared goals and vision, they might have been able to work collaboratively to develop a story that upheld Rick’s journalistic standards while meeting the expectations and needs of the advertising department.

3. Are there any power sources or political tactics Rick might use to add to his influence as news editor? Explain.

ANSWER: Historically, one of Rick’s tactics has been to reduce uncertainty and satisfy strategic contingencies. In turbulent times when many newspapers are going out of business, the Daily Tribune’s reputation for outstanding reporting helps ensure continued interest from subscribers. Tactics Rick could add are building coalitions and expanding his network of support, setting up a reciprocal arrangement with the head of advertising to extend favors to each other, enhance his expertise, and communicate his shared vision for unbiased journalism—a ―higher purpose‖— with other members of the newspaper staff.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

CASE FOR ANALYSIS ~ The Burlington Plant When Burton Lee took over as plant manager for the New Haven division of a large manufacturing company, he saw the opportunity to transform the lowest performing unit as a pathway to his promotion into top management.

1. What assumptions (rational or political) was Burton using in his initiative to improve the plant? Explain.

ANSWER: Burton believed in the rational model, although it is an ideal that is not fully achievable. In Burton’s view, when a decision is needed, the goal is defined, alternatives are identified, and the choice with the highest probability of success is selected. He had a reputation as an intellectual because he had an undergraduate minor in philosophy. His academic background taught him that there is a logical way to approach and solve problems. He assumed that his colleagues would also recognize the need for change, embrace new technology, and approach the changes in a rational, unemotional way.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Solution Manual for Organization Theory and Design 13th Edition by Richard L Daft

2. What was the underlying cause of the conflict in the case?

ANSWER: The source of intergroup conflict was goal incompatibility. To improve performance, Burton divided the assembly line into cells of self-managed teams, using empowerment to motivate the workers to make decisions. While employees seemed enthusiastic, supervisors balked, worrying that they were losing prestige. Some workers balked because they were afraid of decision-making and needed guidance. Eventually, other plant managers objected, perhaps fearing that Burton’s new methods would work, thus requiring them to change their management approaches.

3. How do you think the workers viewed Burton’s initiative? What might Burton have done differently to gain the cooperation of the workers? Explain.

ANSWER: Burton should have realized that politics is often needed to achieve the legitimate goals of an organization. Burton wanted to bring about structural change and didn’t realize that political behavior plays a role in structural change of high uncertainty. He should have used the political tactic of building coalitions to get worker cooperation and management support. Involving the workers in assessing and diagnosing problems and developing solutions would have allowed him to gain their trust and support.

© 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.