Applications of organisation theory

Organisation theory helps us to analyze complicated situations in the organisations with which we work, and to discover or invent effective and creative means for dealing with them. It opens the mind to many aspects of life both inside and outside organisations that usually are taken for granted.

Some applications[13] of organisation theory are mentioned below:

Strategy/Finance

To improve the value of a company we need to know how to organise to achieve organisational goals.

The management by objectives is based on the principles of “black box”, which emphasizes the importance of the systemic activity of targeting.

To monitor and control performance we need to understand how to achieve results by structuring activities and designing organisational processes.

In 1980s the banking institutions were the first to implement the “single window” service (single entry point).

Marketing

Marketing is the organising of the field of information about goods, their qualities and prices. Marketers strive to decrease (down to zero) the long-term transaction costs, using such tools as brand name and positioning. Market communication creates the trust in mass manner.

Promoting a successful corporate brand needs to get the organisation behind the delivery of its promise; a thorough understanding of what an organisation is and how it operates will make their endeavours to align the organisation and its brand strategy more feasible and productive.

The notion of the ‘de-marketing’ appeared due to the situations, when too high demand leaded to the lack in stocks and delay of supplying, so the clients disliked the brand, and the reputation was disconsidered.

It is the case of car in Russia in 2009-2010, when the period of waiting for the purchased car was 3-6 months.

Information technology

The programmers, software and hardware specialists in any company play very special role – they analyse all the aspects of organisation’s functioning and transform the communication processes and information flows into the computer model form.

The way data flows through the organisation affects work processes and outcomes, so knowing organisation theory can help IT specialists identify, understand and serve the organisation’s informational needs as they design and promote the use of their information systems.

The information needs order, managing the millions of messages is possible only if the IT specialist understand the functioning of the concrete organisation.

Operations

Value chain management has created a need for operations managers to interconnect their organising processes with those of suppliers, distributors and customers.

For example[14], if you manufactured a product, you wanted to control the material sources, the transportation, the warehousing, the production, and possibly even the retailing of your product.

The theory held that more vertical elements that were under your direct control, the more efficiently you were able to perform.

International competitive pressures caused organisations to realise that they simply were not good at everything; thus, they began to focus on what they did best. In other words, they focused on their core competencies. This shift away from vertical integration encouraged organisations to look outside of themselves for services.

These interrelationships became extremely complex to manage. Initially, the management of these relationships and linkages was primarily performance-based. Having too many linkages in the supply chain would often cause unresponsiveness to customer demands. Time-to-market became the buzzword of successful competitive positions; the organisation that managed its supply chain most effectively tended to have the competitive advantage, at least in terms of customer responsiveness and order fulfilment. Soon, managers realised that time responsiveness was not the only important element in customer satisfaction. The supply chain linkages-the links among upstream suppliers, manufacturers, and downstream distributors-also had a cost element and resource-efficiency element associated with them.

This realisation generated a need for value chain management, which is the management of all the linkages of the supply chain in the most efficient way. Sometimes this includes the elimination of elements of the supply chain; for example, Web marketing has eliminated the need for retail outlets. Amazon.com is a well-known example of eliminating the need for physical "bricks-and-mortar" retail locations.

Another example is Atomic Dog Publishing. This textbook company leases online textbooks to students for a semester. Because the texts are online, Atomic Dog has cut out an intermediary between text development and customers; in other words, Atomic Dog manages its value chain through disintermediation by eliminating the need for college bookstores.

Organisation theory not only supports the technical aspects of operations and systems integration, but explains their socio-cultural aspects as well.

Human resources

Nearly everything HR specialists do from recruiting to compensation has organisational ramifications and hence benefits from knowledge provided by organisation theory; organisational development and change are particularly important elements of HR that demand deep knowledge of organisations and organising, and organisation theory can provide content for executive training programs.

To start the recruitment process, the HR service is provided with the strategic output of the company. If you are the HR manager and you have to hire new staff, you should not only know, for which position you are going to hire a person. You need also to understand the future of the position, e.g., is it a recruitment to replace a person for several months (when the constant employee is in Master degree education), or for one project, either for the new strategic innovation department.

Communication

Corporate communication specialists must understand the interpretive processes of organisational stakeholders and need to address the many ways in which different parts of the organisation interact with each other and the environment, in order to design communication systems that are effective or to diagnose ways existing systems are misaligned with the organisation’s needs.

The environment determines the perspectives for the company growth: when journalists reported, that Nike had used children labour in Cambodia[15], the clients refused to buy Nike sport’ clothes and shoes. So, the relationship with the environment, with mass-media, with authorities, with social responsibility’ agencies etc. were re-organised in Nike.

So, in any field of applying business or economic skills and knowledge, the understanding of organisation is a necessary advantage for your competitiveness as a professional on labour market.

Questions and answers – examples

1. Why with equal price we buy the reputed good? What is the base of this choice?

We trust a brand, due to the a) time and b) number of customers with positive references. We can not control the real quality of the good, and we should rely on the reputation.

We organise the information on the market – reputation is one of the tools of organising the purchases’ experience.

2. Why should I do my work?

There are many reasons, why subordinated persons obey to the authorities. The first obvious answer is the legal – this work in written in my job description. But, sometimes, we just do it, because it is easier to do, than to face the personal charisma of our chief. Another explanation is related to the reason, that your precursor did this work. At least, your colleagues ask you to do it, because only you have got the education and only you possess the necessary knowledge and skills.

3. What are the arguments pro and contra the tenders’ mechanism for State institutions?

Theoretically, the tender is the mechanism which assures the maximisation of efficiency in the supplies for enterprises, especially, for State institutions. The freedom of market competition should present the minimal costs for maximal quality.

There are some practical problems, which appear in reality of implementing tenders:

a) problems related to the quality of supplies:

ü the minimal costs usually don’t permit to assure the maximal quality;

o the work of preparing tender papers is hard due to the necessity of preventing all potential lacks in quality, the précised and detailed description of the order must anticipate all possibilities to swindle;

ü according the rules, the customer must choose the company, which offer the minimal price for fixed quality. That means, that if one day a company offers a product with important advantage, on a new level of quality or new specific consumption’ functionality, this product is excluded, even if the difference in price is not compatible with difference in quality.

b) problems related to the volume or guarantee:

ü sometimes, the company-participant overestimates ist capacity to fulfil the command. In such cases, the company can supply the less volume or just refuse to execute the command which has been won.

Examine the University functioning in this situation.

When the University is seeking a supplier of textbooks, it announces the tender.

Any company has the right to take part. But in several cases the tender was won by unknown companies, which disappeared just in the period after tender.

The authorities did not find the companies, all their data where out of date, the companies just disappeared.

No one gained from this situation, the customer (University) lost time.

According the legislation in such situations, the next tender has been announced, the new companies took part.

Would it be more to gain from it, if the University could appeal to a number of reputed companies? Or should we prefer the freedom of contracts?

4. Why the trust is important?

Trust plays an important role in economic, business or social world. Basically, that means, that a person believes someone or something is right, true or good.

The division of labour is based on the trust of an employees’ category, that all others in the company are doing their work correctly. And even more: if there is a problem, the employees will easier find interpersonal contact (even with crossing horizontal borders between departments and vertical hierarchical grades) to solve the problem and probably to have better results.

On the market, the trustworthy company has to spend less costs to communication with customers, the suppliers, the creditors or partners. So, we can say, that the trust saves money on decreasing transaction costs.

Date: 2016-03-03; view: 787