Chapter 1: Organizations and Organization Theory 5

Competing On Price
Recently, Air Canada joined the discount airline market and now competes with Porter Airlines
and WestJet. Air Canada’s Rouge service and WestJet’s Encore service are both designed to
compete on price and in some cases are offering 50 percent reductions on certain routes. As
well, Encore is expected to compete head-on with Air Canada on its smaller regional hubs. Air
Canada needs to be concerned as “[by] expanding to more locations, Encore also sets up its
parent carrier for international expansion, eventually allowing, say, someone from Brandon to
go on an Italian holiday in Rome entirely on WestJet planes.”8 Similarly, Air Canada faces com-
petition from Porter Airlines as it adds locations and increases the numbers of jets in its fleet.

Organization Theory in Action

W
elcome to the exciting, complex, and often surprising world of organiza-
tion theory. The shifting fortunes of Air Canada illustrate organization
theory in action. Everyone at the company was deeply involved in organi-
zation theory every day at work. However, managers did not fully understand how
the organization related to the environment or how it should function internally.
Familiarity with organization theory helped Robert Milton and his management
team analyze and diagnose what was happening and the changes needed to keep
the company competitive. Organization theory gives us the tools to explain Air
Canada’s birth, decline, and rebirth and to understand Air Canada’s turnaround.
It helps us explain what happened in the past, as well as what may happen in the
future, so that we can manage organizations more effectively.
Before exploring the field of organization theory and design any further, please com-
plete the You & Design feature to assess your overall approach to organization design.

YOU & DESIGN

Evolution of Style
This questionnaire asks you to describe yourself. For each item, give the number “4” to the phrase
that best describes you, “3” to the item that is next best, and on down to “1” for the item that is
least like you.

1. My strongest skills are 3. What has helped me the most to be successful is my

___a. Analytical skills ability to
___b. Interpersonal skills ___a. Make good decisions
___c. Political skills ___b. Coach and develop people
___d. Flair for drama ___c. Build strong alliances and a power base
2. The best way to describe me is ___d. Inspire and excite others
___a. Technical expert 4. What people are most likely to notice about me is my
___b. Good listener ___a. Attention to detail
___c. Skilled negotiator ___b. Concern for people
___d. Inspirational leader ___c. Ability to succeed in the face of conflict and
opposition
___d. Charisma
(Continued)

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