Organizational Life Cycle PDF

Preview

Summary

Download Organizational Life Cycle PDF

Description

Organizational Life Cycle Samstag, 28. Dezember 2019

12:36

For technology companies, life cycles are getting shorter, to stay competitive

Entrepreneurial Stage- company is created Crisis: need for leadership Collectivity Stage- identifying with the mission Crisis: need for delegation Formalization Stage- use of rules/procedures Crisis: too much red tape Elaboration Stage- collaboration/teamwork Crisis: need for revitalization

Organizational life cycle: suggests that organizations are born, grow older and eventually die.

Stages of life cycle development are: 1) Entrepreneurial stage: • The emphasis is to create a product or service and survive in the marketplace • Founders tend to devote their full energies to the technical activities of production and marketing • organization is informal and non-bureaucratic, hours of work are long • Control is based on the owner’s personal supervision. • Growth is from a creative new product or service • Entry Strategy: ➢ Entering the market early -> pick of environmental resources, rapid growth, better chances of survival ➢ Entering the market later -> reduces operational uncertainty, correct way to compete is apparent, lower R&D investment, survival as the more efficient producer • Goal: Survival Crisis: Need for leadership As the organization starts to grow, the larger number of employees causes problems. The creative and technically oriented owners are confronted with management issues, they may prefer to continue to focus on making and selling the product or inventing new products. Entrepreneurs must either adjust the structure of the organization to accommodate continued growth or else bring in strong managers. 2) Collectivity stage: • Organization begins to develop clear goals and direction

• Departments are established along with a hierarchy of authority, job assignments and a division of labour • Personal rewards aimed at individuals who contribute to organizational success • Innovation from employees and managers • Goal: Growth • Pressures for Growth: Organization goals, economies of scale, executive advancement, economic health Crisis: Need for delegation Lower-level employees find themselves restricted by the strong topdown control. Top managers want to make sure that all parts of the organization are coordinated and pulling together, but middle-managers are resistant to micro-management from above. The organization needs to find mechanisms to control and coordinate departments without direct supervision from the top. 3) Formalization stage: • Involves the installation and use of rules,procedures and control systems • Communication is less frequent and more formal • Engineers, human resource specialists may be added • Top management becomes concerned with issues such as strategy, planning and introduces systems to support and monitor delegation of control of operations to middle management • Product groups or other decentralized units may be formed to improve coordination • Incentive systems based on profits may be implemented to ensure that managers work toward what is best for the company • New coordination and control systems can enable the organization to continue growing by establishing linkage mechanisms between top management and field units • Innovation from separate innovative groups • Goal: Internal stability/market expansion

Crisis: Too much red tape. The organization seems bureaucratized. Middle managers and innovation may be restricted. 4) Elaboration stage: • The solution to the red tape crisis is a new sense of collaboration and teamwork • Formal systems may be simplified and replaced by manager teams and task forces that may operate across functions or divisions of the company • Alternatively, the company may be split into multiple divisions to maintain a small-company philosophy • Extensive rewards tailored to product and department succes • Goal: Image/Reputation building Crisis: Need for revitalisation At some point, the organization enters a period of relative decline which may be temporary or terminal. To counter decline, efforts to streamline and innovate may be made. Under pressure from shareholders to revive company fortunes, top managers are often replaced. A need for renewal may occur every 10 to 20 years. Summary: For technology companies, life cycles are getting shorter; to stay competitive, companies have to successfully progress through stages of

the cycle faster. Briefcase 3: Grow when possible. With growth, you can provide opportunities for employee advancement and greater profitability and effectiveness. Apply new management systems and structural configurations at each stage of an organization’s development. Interpret the needs of the growing organization and respond with the management and internal systems that will carry the organization through to the next stage of development.

Organizational characteristics during the life cycle...