Understandig the US Business System

8/9/2019 Understandig the US Business System

http://slidepdf.com/reader/full/understandig-the-us-business-system 1/28

Third EditionThird Edition

Dr. Wasim Al-Habil.Dr. Wasim Al-Habil.

Chapter 5 . . . . . . . . . . . . . . . . . . . . . .Chapter 5 . . . . . . . . . . . . . . . . . . . . . .

The Evolution of Management andThe Evolution of Management and

Organiation Theor!Organiation Theor!





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Key TopicsKey Topics

The Origins of Public Administration The Origins of Public Administration

The Evolution of Management The Evolution of Management

PrinciplesPrinciples What is Organization Theory?What is Organization Theory?

The Origins of cienti!c Management The Origins of cienti!c Management

The Period of Orthodo"y The Period of Orthodo"y #ureaucracy#ureaucracy

$eoclassical Theory % ystems Theory$eoclassical Theory % ystems Theory





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The Origins of PublicThe Origins of Public

AdministrationAdministration

Management:Management: A term that can refer to both(A term that can refer to both(

)*)* The people responsible for running an The people responsible for running anorganizationorganization

2*2* The running process itself + the utilization of The running process itself + the utilization ofnumerous resources to accomplish annumerous resources to accomplish anorganizational goal*organizational goal*

Hierarchy:Hierarchy: Any ordering of persons, things,Any ordering of persons, things,

or ideas by ran- or level* Administrativeor ideas by ran- or level* Administrativestructures are typically hierarchical in thatstructures are typically hierarchical in thateach level has authority over levels belo'each level has authority over levels belo'and must ta-e orders from level above*and must ta-e orders from level above*



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The Military Heritage of Public Administration:The Military Heritage of Public Administration: .overnment.overnmentadministrators are still considered servants in this sense/ they are publicadministrators are still considered servants in this sense/ they are publicservants because they, too, have accepted obligations, 'hich means theyservants because they, too, have accepted obligations, 'hich means theyare not completely free*are not completely free*

Comparing Military and Civilian Principles:Comparing Military and Civilian Principles:

!! Ob"ective: #irect $very military operation to%ard a clearlyOb"ective: #irect $very military operation to%ard a clearlyde&ned' decisive' and attainable ob"ective!de&ned' decisive' and attainable ob"ective!

(!(! O)ensive: *ei+e' retain' and e,ploit the initiative!O)ensive: *ei+e' retain' and e,ploit the initiative!

-!-! Mass: Concentrate combat po%er at the decisive place and time!Mass: Concentrate combat po%er at the decisive place and time!

.!.! $conomy of force: Allocate minimum essential combat po%er to$conomy of force: Allocate minimum essential combat po%er tosecondary e)orts!secondary e)orts!

/!/! Maneuver: Place the enemy in position of disadvantage throughManeuver: Place the enemy in position of disadvantage throughthe 0e,ible application of combat po%er!the 0e,ible application of combat po%er!

1!1! 2nity of command $nsure unity of e)ort under one responsible2nity of command $nsure unity of e)ort under one responsiblecommander!commander!

3!3! *ecurity 4ever permit the enemy to ac5uire an advantage!*ecurity 4ever permit the enemy to ac5uire an advantage!

6!6! *urprise: *tri7e the enemy at a time8place for %hich he is*urprise: *tri7e the enemy at a time8place for %hich he isunprepared!unprepared!

9!9! *implicity: Prepare clear' uncomplicated plans' concise orders to*implicity: Prepare clear' uncomplicated plans' concise orders toensure thorough understandingensure thorough understanding



7



Comparing Military and Civilian Principles:Comparing Military and Civilian Principles:

!! Policy should de&ned!Policy should de&ned!

(!(! or7 should be subdivided!or7 should be subdivided!

-!-! Tas7s and responsibilities should be speci&cally assignedTas7s and responsibilities should be speci&cally assignedand understood!and understood!

.!.! Appropriate methods and procedures should be developedAppropriate methods and procedures should be developedand utili+ed by those responsible for policy achievement!and utili+ed by those responsible for policy achievement!

/!/! Appropriate resources ;men' money' materials<!Appropriate resources ;men' money' materials<!

1!1! Authority commensurate %ith responsibility should beAuthority commensurate %ith responsibility should bedelegated and located!delegated and located!

3!3! Ade5uate structural relationships!Ade5uate structural relationships!

6!6! $)ective and 5uali&ed leadership!$)ective and 5uali&ed leadership!

9!9! 2nity of command!2nity of command!

=!=! Continuous accountability for utili+ation of resources!Continuous accountability for utili+ation of resources!

!! $)ective coordination!$)ective coordination!

(!(! Continuous reconsideration of all mattersContinuous reconsideration of all matters



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hat is Organi+ation Theory>hat is Organi+ation Theory>

An 0organization1 is a group of people 'hoAn 0organization1 is a group of people 'ho ointly 'or- to achieve at least one ointly 'or- to achieve at least onecommon goal*common goal*

A 0theory1 is a proposition or set ofA 0theory1 is a proposition or set ofpropositions that see-s to e"plain or predictpropositions that see-s to e"plain or predictsomething*something*

The organization theory sho's ho' groups The organization theory sho's ho' groups

and individuals behave in di3eringand individuals behave in di3eringorganization arrangements*organization arrangements* Organization theory 'as al'ays there in theOrganization theory 'as al'ays there in the

authoritarian model o3ered by the military*authoritarian model o3ered by the military*



9

Classical Organi+ation TheoryClassical Organi+ation Theory

The !rst school of organization theory rooted in the The !rst school of organization theory rooted in theindustrial revolution of the )455s*industrial revolution of the )455s*

&haracteristics of &lassical Organization Theory(&haracteristics of &lassical Organization Theory(

)*)* Organizations e"ist to accomplish production+Organizations e"ist to accomplish production+related and economic goals*related and economic goals*

2*2* There is one best 'ay to organize for production There is one best 'ay to organize for production

6*6* Production is ma"imized through specializationProduction is ma"imized through specializationand division of labor*and division of labor*

7*7* People and organizations act in accordance 'ithPeople and organizations act in accordance 'ithrational economic principles*rational economic principles*



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The Origins of *cienti&cThe Origins of *cienti&c

ManagementManagement

Frederic7 Taylor' the ?father@ of scienti&c management' is the pioneerFrederic7 Taylor' the ?father@ of scienti&c management' is the pioneer%ho developed time and motion studies and provided the impetus%ho developed time and motion studies and provided the impetusaround %hich classical organi+ation theory %ould evolve!around %hich classical organi+ation theory %ould evolve!

Through scienti&c management' Taylor believed that there is oneThrough scienti&c management' Taylor believed that there is onebest %ayB to accomplish any given tas7 ;*hafrit+ and Hyde' 993'best %ayB to accomplish any given tas7 ;*hafrit+ and Hyde' 993'

p!(<! He argues that the ?one best %ay@ provides the ?fastest' mostp!(<! He argues that the ?one best %ay@ provides the ?fastest' mostecient' and least fatiguing production method@ ;Dbid!<!ecient' and least fatiguing production method@ ;Dbid!<! Dn 9(' the 2! *! House of Eepresentatives investigated TaylorBsDn 9(' the 2! *! House of Eepresentatives investigated TaylorBs

systematic use of management techni5ues! *ome of the managementsystematic use of management techni5ues! *ome of the managementtechni5ues or as Taylor called them ?duties'@ included:techni5ues or as Taylor called them ?duties'@ included:

)*)* 8eplacing traditional rule of thumb methods of 'or- accomplishment 'ith8eplacing traditional rule of thumb methods of 'or- accomplishment 'ithsystematic, more scienti!c methods of measuring and managing individualsystematic, more scienti!c methods of measuring and managing individual'or- elements/'or- elements/

2*2* tudying scienti!cally the selection and se9uential development of 'or-ers totudying scienti!cally the selection and se9uential development of 'or-ers toensure optimal placement of 'or-ers into 'or- roles/ensure optimal placement of 'or-ers into 'or- roles/

6*6* Obtaining the cooperation of 'or-ers to ensure full application of scienti!cObtaining the cooperation of 'or-ers to ensure full application of scienti!cprinciples/ andprinciples/ and

7*7* Establishing logical divisions 'ithin 'or- roles and responsibilities bet'eenEstablishing logical divisions 'ithin 'or- roles and responsibilities bet'een'or-ers and management* :;rom the boo- of the Principles of cienti!c'or-ers and management* :;rom the boo- of the Principles of cienti!cManagement, <bid*, 6=Management, <bid*, 6=



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FayolBs si, principlesFayolBs si, principles

;ayol>s maor 'or-,;ayol>s maor 'or-, General and Industrial Management General and Industrial Management , 'hich published in, 'hich published in;rance in ))@ and translated to English in )2, also came 'ith general;rance in ))@ and translated to English in )2, also came 'ith generalprinciples that can improve the performance of management in every type ofprinciples that can improve the performance of management in every type oforganization*organization*

;ayol>s si" principles are(;ayol>s si" principles are( Technical :production of goods= Technical :production of goods= &ommercial :buying, selling, and e"change activities=&ommercial :buying, selling, and e"change activities= ;inancial :raising and using capital=;inancial :raising and using capital= ecurity :protection of property and people=ecurity :protection of property and people= AccountingAccounting Managerial :coordination, control, organization, planning, and command ofManagerial :coordination, control, organization, planning, and command of

people=people=

hafritz, Ott, and Bang :255= states that 0;ayol believed that his concept ofhafritz, Ott, and Bang :255= states that 0;ayol believed that his concept ofmanagement 'as universally applicable to every type of organization1 :p*6)=*management 'as universally applicable to every type of organization1 :p*6)=*

This generic model of ;ayol>s general principles had an impact on public This generic model of ;ayol>s general principles had an impact on publicadministration because it 'as theorized to 'or- in both public and privateadministration because it 'as theorized to 'or- in both public and privateorganizations*organizations*



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The Period Of Orthodo,yThe Period Of Orthodo,y

<t covers the development of the public<t covers the development of the publicadministration bet'een the WW< and WW<<*administration bet'een the WW< and WW<<*

The tenets of orthodo"y ideology held that the 'or- The tenets of orthodo"y ideology held that the 'or-of government could be neatly divided into decision+of government could be neatly divided into decision+

ma-ing and e"ecution :politics+administrationma-ing and e"ecution :politics+administrationdichotomy of Woodro' Wilson=*dichotomy of Woodro' Wilson=*

This dichotomy, 'hich played an important role in This dichotomy, 'hich played an important role inthe historical development of PA, 'ould hardly havethe historical development of PA, 'ould hardly havebeen possible of scienti!c management had notbeen possible of scienti!c management had notevolved 'hen it did*evolved 'hen it did*

According to Cynn :)@=, orthodo"y 0'as !nishedAccording to Cynn :)@=, orthodo"y 0'as !nishedo3 in public administration after World War << in ao3 in public administration after World War << in aseries of articles and boo-s1 :p*6)= including theseries of articles and boo-s1 :p*6)= including the'or-s of imon, Dahl, Appleby, Waldo, Cong, and'or-s of imon, Dahl, Appleby, Waldo, Cong, andMar"*Mar"***



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Orthodo, and PaulOrthodo, and Paul

ApplebyAppleby Paul Appleby 'as the Dean of Ma"'ell chool at yracusePaul Appleby 'as the Dean of Ma"'ell chool at yracuse

niversity*niversity* Appleby :)7= contends similarly that, 0 .overnment isAppleby :)7= contends similarly that, 0 .overnment is

di3erent because it must ta-e account of all the desires,di3erent because it must ta-e account of all the desires,

needs, actions, thoughts and sentiments of )75,555,555needs, actions, thoughts and sentiments of )75,555,555people*1 :hafritz et al*, 2557( p*)6=*people*1 :hafritz et al*, 2557( p*)6=*

Paul Appleby, by some accounts 'rote the de!nitive endnotes on thePaul Appleby, by some accounts 'rote the de!nitive endnotes on thepolitics+administration dichotomy* Essentially, Appleby inpolitics+administration dichotomy* Essentially, Appleby in Big Democracy Big Democracy :)7= compared government to business and determined government:)7= compared government to business and determined government'as di3erent and that politics is 'hat comprises that di3erence*'as di3erent and that politics is 'hat comprises that di3erence*

Appleby states that(Appleby states that(00Other institutions admittedly are not free from politics, but government isOther institutions admittedly are not free from politics, but government ispolitics* .overnment administration di3ers from all other administrativepolitics* .overnment administration di3ers from all other administrative'or- to a degree not even faintly realized outside, by virtue of its public'or- to a degree not even faintly realized outside, by virtue of its publicnature, the 'ay in 'hich it is subect to public scrutiny and public outcry*nature, the 'ay in 'hich it is subect to public scrutiny and public outcry*:Paul Appleby in 0#ig .overnment1 reprinted:Paul Appleby in 0#ig .overnment1 reprinted in Classics of Publicin Classics of Public

Administration, Administration, )2=)2=



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uther Gulic7Bs PO*#COEuther Gulic7Bs PO*#COE

.ulic->s boo- 0The Papers on the cience of Administration1 :)64=*.ulic->s boo- 0The Papers on the cience of Administration1 :)64=*

.ulic- argues that for governmental organizations to achieve.ulic- argues that for governmental organizations to achievetechnical eFciency there is need to arrange or structure units andtechnical eFciency there is need to arrange or structure units and

departments according to their level of homogeneity, as failure todepartments according to their level of homogeneity, as failure todo so, as he argues has often been the case, can only lead todo so, as he argues has often been the case, can only lead tounsatisfactory results*unsatisfactory results*

Of signi!cant importance is .ulic->s prescription of the functions ofOf signi!cant importance is .ulic->s prescription of the functions ofthe chief e"ecutive, 'hich he derived from Genry ;ayol>s generalthe chief e"ecutive, 'hich he derived from Genry ;ayol>s generalprinciples of management*principles of management*

Ge coined the famous POD&O8# from planning, organizing,Ge coined the famous POD&O8# from planning, organizing,staFng, directing, coordinating, reporting, and budgeting, andstaFng, directing, coordinating, reporting, and budgeting, andthese 'ere to be e9ually applicable to all forms of organizationsthese 'ere to be e9ually applicable to all forms of organizationsirrespective of type, conte"t and size, presumably e"hibiting someirrespective of type, conte"t and size, presumably e"hibiting somegeneral science based 9ualities*general science based 9ualities*



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Federalism I FinanceFederalism I Finance

;iscal federalism is the !nancial relations bet'een and among the;iscal federalism is the !nancial relations bet'een and among theunits of government in a federal system*units of government in a federal system*

The assets and !nancial resources are divided and shared bet'een The assets and !nancial resources are divided and shared bet'eenand among the three levels of government* ;or e"ample, incomeand among the three levels of government* ;or e"ample, income

ta" goes for the federal government and house and property ta"ta" goes for the federal government and house and property ta"goes for the state government*goes for the state government*

The theory of !scal federalism, or multiunit government !nance, is The theory of !scal federalism, or multiunit government !nance, isone part of the branch applied economic -no'n as public !nance*one part of the branch applied economic -no'n as public !nance*

Medicaid is a federally aided, state+operated, and state+Medicaid is a federally aided, state+operated, and state+administered program that provides medical bene!ts for a certainadministered program that provides medical bene!ts for a certainlo'+income people in needed of health and medical care*lo'+income people in needed of health and medical care*

.rant( <t is an intergovernmental transfer of funds :or other assets=*.rant( <t is an intergovernmental transfer of funds :or other assets=*ince long along time, state and local governments have becomeince long along time, state and local governments have becomeincreasingly dependent upon federal grants for an almost in!niteincreasingly dependent upon federal grants for an almost in!nitevariety of programs*variety of programs*



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ureaucracyureaucracy

The 'ord bureaucracy is derived from t'o 'ords/ 0bureau1 The 'ord bureaucracy is derived from t'o 'ords/ 0bureau1and 0Hratos*1 While the 'ord 0bureau1 refers to the oFceand 0Hratos*1 While the 'ord 0bureau1 refers to the oFcethe .ree- suF" 0-ratia or -ratos1 means po'er or rule*the .ree- suF" 0-ratia or -ratos1 means po'er or rule*

We use the 'ord 0bureaucracy1 to refer to the po'er of theWe use the 'ord 0bureaucracy1 to refer to the po'er of theoFce :Gummel, )I, 654=*oFce :Gummel, )I, 654=*

00#ureaucracy1 is rule conducted from a des- or oFce, i*e*#ureaucracy1 is rule conducted from a des- or oFce, i*e*by the preparation and dispatch of 'ritten documents andby the preparation and dispatch of 'ritten documents andelectronic ones*electronic ones*

#ureaucracy is borro'ed by the !eld of public#ureaucracy is borro'ed by the !eld of publicadministration :PA= from the !eld of sociology*administration :PA= from the !eld of sociology*

<t 'as borro'ed by PA in much a similar 'ay that practices<t 'as borro'ed by PA in much a similar 'ay that practicesof business 'ere borro'ed from the !eld of businessof business 'ere borro'ed from the !eld of businessadministration and economics*administration and economics*



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ureaucracy I Ma, eberureaucracy I Ma, eber

Weber :)7@= presents bureaucracy as both a scienti!cWeber :)7@= presents bureaucracy as both a scienti!cand generic model that can 'or- in both the public andand generic model that can 'or- in both the public andprivate sectors :8ainey, )@=*private sectors :8ainey, )@=*

Ma" Weber>s 'or- about bureaucracy, translated intoMa" Weber>s 'or- about bureaucracy, translated intoEnglish in )7@, 'as one of the maor contributions thatEnglish in )7@, 'as one of the maor contributions that

has inJuenced the literature of public administration*has inJuenced the literature of public administration*

Weber>s bureaucracy consists of the traditional 'ay ofWeber>s bureaucracy consists of the traditional 'ay of

thin-ing in public administration that relied on the samethin-ing in public administration that relied on the same

0ingredients1 to reform public administration based on the0ingredients1 to reform public administration based on thescience of administration :Thompson, 255=*science of administration :Thompson, 255=*



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ureaucracy I Ma, eberureaucracy I Ma, eber

Weber>s bureaucracy has the follo'ing characteristics(Weber>s bureaucracy has the follo'ing characteristics(

)*)* The bureaucrats must be free agents* The bureaucrats must be free agents*

2*2* The bureaucrats are arranged in a clearly de!ned hierarchy The bureaucrats are arranged in a clearly de!ned hierarchy

of oFces*of oFces*

6*6* The functions of each oFce are clearly speci!ed in 'riting* The functions of each oFce are clearly speci!ed in 'riting*

7*7* The bureaucrats accept and maintain their appointment The bureaucrats accept and maintain their appointmentfreely*freely*

** The appointments to oFce are based on the technical The appointments to oFce are based on the technical9uali!cations*9uali!cations*

@*@* The bureaucrats receive money salaries and pension rights* The bureaucrats receive money salaries and pension rights*

4*4* The oFce must be the bureaucrat>s sole* The oFce must be the bureaucrat>s sole*I*I* A career system is essential*A career system is essential*

** The bureaucrats do not have property rights* The bureaucrats do not have property rights*

)5*)5* The bureaucrats> conduct must be subect to systematic The bureaucrats> conduct must be subect to systematiccontrol*control*



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4eoclassical Organi+ation Theory4eoclassical Organi+ation Theory

There is no precise de!nition for 0neoclassical1 in the content of There is no precise de!nition for 0neoclassical1 in the content of

organization theory*organization theory*

This school 'as important because it initiated the theoretical This school 'as important because it initiated the theoretical

movement a'ay from he over+simplistic mechanistic vie's ofmovement a'ay from he over+simplistic mechanistic vie's ofclassical school*classical school*

The neoclassicalists raised issues and initiated theories that became The neoclassicalists raised issues and initiated theories that became

central to the foundations of the most schools or approaches tocentral to the foundations of the most schools or approaches to

organization theory that follo'ed*organization theory that follo'ed*

The maority of the 'riters and authors of the neoclassical school The maority of the 'riters and authors of the neoclassical school

came after the end of the WW<<*came after the end of the WW<<*

They sought to 0save1 classical theory by introducing modi!cations They sought to 0save1 classical theory by introducing modi!cations

based upon research !ndings in the behavioral sciences*based upon research !ndings in the behavioral sciences*



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4eoclassical Organi+ation Theory I Herbert4eoclassical Organi+ation Theory I Herbert

*imon*imon

Gerbert imon loo-ed bac- at the Kprinciples> andGerbert imon loo-ed bac- at the Kprinciples> andargued that they lac-ed all scienti!c rigor and theyargued that they lac-ed all scienti!c rigor and theycould be mere proverbs*could be mere proverbs*

Ge deconstructed .ulic->s POD&O8# and dethronedGe deconstructed .ulic->s POD&O8# and dethronedthem as confusing facts 'ith values and lac-ing allthem as confusing facts 'ith values and lac-ing allscienti!c rigors :tillman, 2555=*scienti!c rigors :tillman, 2555=*

<n his boo- KAdministrative #ehavior( A tudy of<n his boo- KAdministrative #ehavior( A tudy of

Decision Ma-ing Process in AdministrativeDecision Ma-ing Process in AdministrativeOrganization> :)74=, he dra's on 0logical positivistOrganization> :)74=, he dra's on 0logical positivistcontinental analytic philosophy1 :tillmann, 2555,continental analytic philosophy1 :tillmann, 2555,pg* 22= to e"plain administrative behavior*pg* 22= to e"plain administrative behavior*



21


*imon*imon

Gerbert imon loo-ed bac- at the Kprinciples> and arguedGerbert imon loo-ed bac- at the Kprinciples> and arguedthat they lac-ed all scienti!c rigor and they could be merethat they lac-ed all scienti!c rigor and they could be mereproverbs*proverbs*

Ge deconstructed .ulic->s POD&O8# and dethroned themGe deconstructed .ulic->s POD&O8# and dethroned themas confusing facts 'ith values and lac-ing all scienti!cas confusing facts 'ith values and lac-ing all scienti!crigors :tillman, 2555=* Trigors :tillman, 2555=* The POD&O8# functions of thehe POD&O8# functions of thepublic administration orthodo"y 'ere inconsistent,public administration orthodo"y 'ere inconsistent,conJicting, and inapplicable in public administrationconJicting, and inapplicable in public administration:hafritz et al*, 2557=*:hafritz et al*, 2557=*

<n his boo- KAdministrative #ehavior( A tudy of Decision<n his boo- KAdministrative #ehavior( A tudy of DecisionMa-ing Process in Administrative Organization> :)74=, heMa-ing Process in Administrative Organization> :)74=, hedra's on 0logical positivist continental analyticdra's on 0logical positivist continental analyticphilosophy1 :tillmann, 2555, pg* 22= to e"plainphilosophy1 :tillmann, 2555, pg* 22= to e"plainadministrative behavior*administrative behavior*



22


*imon*imon

Ge argued that a true scienti!c method should be used in the study ofGe argued that a true scienti!c method should be used in the study ofadministration, but 'hat 'as used by the orthodo"y lac-ed the empiricaladministration, but 'hat 'as used by the orthodo"y lac-ed the empiricalbasis to do so*basis to do so*

imon :)7@= believed that for 0almost every principle Lof orthodo"y oneimon :)7@= believed that for 0almost every principle Lof orthodo"y onecan !nd an e9ually plausible and acceptable contradictory principle*1can !nd an e9ually plausible and acceptable contradictory principle*1

imon proposed the fact+value dichotomy because it provides a strongerimon proposed the fact+value dichotomy because it provides a strongerbasis for a science of administration* Through the behavioral approach,basis for a science of administration* Through the behavioral approach,imon narro'ed the scope of rationalism by separating facts from valuesimon narro'ed the scope of rationalism by separating facts from valuesand introducing his concept of bounded rationality*and introducing his concept of bounded rationality*

#ounded rationality refers to the bounds that people put on their decisions*#ounded rationality refers to the bounds that people put on their decisions*#ecause truly rational research on any problem can never be complete,#ecause truly rational research on any problem can never be complete,

human ma-e decisions on satisfactory as opposed to optimal information*human ma-e decisions on satisfactory as opposed to optimal information*

imon reected the politics+administration dichotomy because of its failureimon reected the politics+administration dichotomy because of its failureto 0de!ne a value+free domain re9uired for the development of a science ofto 0de!ne a value+free domain re9uired for the development of a science ofadministration, since administrators are involved in policy functions andadministration, since administrators are involved in policy functions andthus values consideration1 :p*)I@=*thus values consideration1 :p*)I@=*



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Modern *tructural Organi+ation TheoryModern *tructural Organi+ation Theory

The basic assumptions of the modern structural The basic assumptions of the modern structuralorganization theory(organization theory(

)*)* Organizational are rational institutions 'hose primaryOrganizational are rational institutions 'hose primary

purpose is to accomplish established obectives*purpose is to accomplish established obectives*

2*2* There is a 0best1 structure for any organization or at There is a 0best1 structure for any organization or atleast a appropriate structure in light of its givenleast a appropriate structure in light of its givenobectives, the environmental conditions*obectives, the environmental conditions*

6*6* pecialization and the division of labor*pecialization and the division of labor*

7*7* Most problems in an organization result fromMost problems in an organization result fromstructural Ja's*structural Ja's*



24

Mechanistic and Organic *ystemMechanistic and Organic *ystem

This system came up as a result of the fast technological This system came up as a result of the fast technologicaladvancements*advancements*

#ritish researchers including Tom #urns and .* M* tal-er,#ritish researchers including Tom #urns and .* M* tal-er,developed the theory of 0mechanistic1 and organic systems1developed the theory of 0mechanistic1 and organic systems1

of organization 'hile e"amining rapid technological changeof organization 'hile e"amining rapid technological changein the #ritish and cottish electronic industry*in the #ritish and cottish electronic industry*

table conditions of organizations suggest use oftable conditions of organizations suggest use ofmechanistic form 'here traditional pattern of hierarchy,mechanistic form 'here traditional pattern of hierarchy,reliance on formal rules and regulations, verticalreliance on formal rules and regulations, verticalcommunications, and structured decision+ma-ing is possible*communications, and structured decision+ma-ing is possible*

Dynamic conditions of organizations re9uire the use ofDynamic conditions of organizations re9uire the use oforganic form 'here there is less rigidity, more participation,organic form 'here there is less rigidity, more participation,and more reliance on 'or-ers to de!ne and rede!ne theirand more reliance on 'or-ers to de!ne and rede!ne theirpositions and relationships*positions and relationships*



25

*ystems Theory*ystems Theory

ince WW<<, the social sciences haveince WW<<, the social sciences haveincreasingly used systems analysis toincreasingly used systems analysis toe"amine their assertions about humane"amine their assertions about humanbehavior*behavior*

ystems theory vie's an organization as aystems theory vie's an organization as acomple" set of dynamically intert'ined andcomple" set of dynamically intert'ined andinterconnected elements, including itsinterconnected elements, including itsinputs, process, outputs, feedbac- loops,inputs, process, outputs, feedbac- loops,and the environment in 'hich it operatesand the environment in 'hich it operatesand 'ith 'hich it continuously interacts*and 'ith 'hich it continuously interacts*



26

Comparison et%een *ystems I ClassicalComparison et%een *ystems I Classical

TheoriesTheories

&lassical theory tends to be one+dimensional&lassical theory tends to be one+dimensionaland some'hat simplistic 'hile systemand some'hat simplistic 'hile systemtheories tend to be multidimensional andtheories tend to be multidimensional and

comple" in their assumptions aboutcomple" in their assumptions aboutorganizational cause+and+e3ectorganizational cause+and+e3ectrelationships*relationships*

The classical school vie'ed organizations as The classical school vie'ed organizations as

static :unchanging structures,/ systemsstatic :unchanging structures,/ systemstheorists see organizations as continuallytheorists see organizations as continuallychanging process of interactions amongchanging process of interactions amongorganizational and environmental elements*organizational and environmental elements*



27

Cybernetics *ystemCybernetics *ystem

&ybernetics is a .ree- 'ord meaning&ybernetics is a .ree- 'ord meaning0steersman*10steersman*1

$orbert Wiener used this 'ord to mean$orbert Wiener used this 'ord to meanmultidisciplinary study of the structures andmultidisciplinary study of the structures andfunctions of control and informationfunctions of control and informationprocessing system in animals and machines*processing system in animals and machines*

The basic concept behind &ybernetics is self+ The basic concept behind &ybernetics is self+regulation+biological, social, or technologicalregulation+biological, social, or technologicalsystems that can identify problems, dosystems that can identify problems, dosomething about them, and then receivesomething about them, and then receivefeedbac- to adust themselves automatically*feedbac- to adust themselves automatically*



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Understandig the US Business System