Organisational Theory, Structure and Design

December 2023 Examination

1.Henri Fayol, the father of the classical approach was the first to present his observations
on organisational management. What according to you are the 4 major principles driving
this approach that are still relevant in today’s organisations? Give suitable examples. (10
Marks)

Ans 1.

Introduction

Management is a process through which members of an organization get work done with the
help of other people. The decision-making process and performance of management are
guided by various principles of management. Various management theories have come from
many management thinkers. Two such eminent thinkers are Frederick Winslow Taylor (F.W.
Taylor) and Henry Fayol.

In management theory, Henri Fayol, a French mining engineer, contributed fourteen

management principles and various concepts of general theory of administration.

Concept & Application

Henry Fayol is also known as the 'Father of Modern Management Theory', who gave a new perception
to the concept of management. He introduced a general principle that could be applied to all levels of
management and every department. Fayol principle is practiced by managers to organize and regulate
the internal activities of an organization. He focused on achieving managerial efficiency. Four of these
principles are particularly relevant in today's organizations:

 Division of labor: In practice, employees specialize in different areas and have different
skills. Different levels of expertise can be distinguished within knowledge areas (from generalist to
specialist). Personal and professional development supports this. According to Henri Fayol,
specialization promotes efficiency of the workforce and increases productivity. Furthermore, the
specialization of the workforce increases their accuracy and speed. Among the 14 principles of
management, this management principle applies to both technical and managerial activities. For
example, in a manufacturing plant, workers may be assigned specific tasks, such as assembling engines
or painting cars. It allows workers to become experts in their tasks and produce products and services
more efficiently.

 Unity of command: The management principle 'unity of command' means that an

individual employee must receive orders from a manager and the employee is accountable to that
manager. If tasks and related responsibilities are given to an employee by more than one manager, this
can create confusion leading to potential conflict for employees. Responsibility for mistakes can be
established more easily using this principle. For example, a sales representative should have a single
manager monitoring their performance, rather than multiple managers who give them different
instructions.

 Scalar chain: Hierarchy presents itself in any organization. It varies from senior
management (executive board) to the lowest levels of the organization. Henri Fayol's "hierarchy"
management theory states that there should be a clear line of authority (from top to bottom and all
managers at all levels). It can be seen as a type of management structure. Every employee can contact
the manager or superior in case of emergency without challenging the hierarchy. Particularly, when it
concerns reporting about disasters to immediate managers/superiors. For example, in a company with
a hierarchical structure, employees will typically report to their manager, who will report to their
manager, and so on, up to the CEO.

 Esprit de corps: The management principle 'Esprit de Corps' among the 14 principles of
management is to strive for employee participation and unity. Managers are responsible
for developing morale in the workplace; Personally and in the field of communication.
Esprit de corps contributes to the development of culture and creates an atmosphere of
mutual trust and understanding. For example, organizations can promote esprit de corps
by sponsoring team-building activities, celebrating employee successes, and rewarding
teamwork.
 These four principles are also relevant in today's organizations because they are based on
fundamental human principles, such as the need for efficiency, clarity, and teamwork. By
following these principles, organizations can improve their performance and achieve their
goals.Here are some examples of how today's organizations are using Fayol's principles
to achieve success:

• Google: Google uses the division of labor principle to organize its employees into teams focused on
specific products or services. This allows employees to specialize in their areas of expertise and
produce high quality products and services.

• Apple: Apple uses the unity of command principle to ensure that its employees have clear roles and
responsibilities. Every employee has a manager who monitors their performance and provides them
feedback. This helps ensure that employees are aligned with the company's goals and are working
towards the same objectives.

• Tesla: Tesla uses the scalar chain principle to communicate information and make decisions
efficiently. There is a clear hierarchy in the company, with each employee reporting to his manager.
This allows decisions to be made quickly and effectively, and ensures that information is
communicated accurately throughout the organization.

• Amazon: Amazon uses the esprit de corps principle to create a sense of community among its
employees. The company offers a variety of benefits and perks to its employees, and it sponsors team-
building activities and programs. This helps to motivate employees and create a positive work
environment.

Conclusion

By following Fayol's principles these organizations have been able to achieve great success.
These principles are still relevant in today's world, and can be used by organizations of all
sizes to improve their performance. Organizations today adapt these principles to their
specific needs and structures, demonstrating their enduring relevance in the ever-evolving
world of management and leadership.
2. LookBook is launching its new mobile application. It is facing many internal
management problems. According to Greiner’s Organisational Growth Model, explain the
different phases of crisis that the company may go through. Highlight with examples. (10
Marks)

Ans 2.

Introduction

In the dynamic landscape of the digital age, businesses often find themselves wading through
the treacherous waters of rapid growth and expansion. As companies like Look Book launch
new products or platforms, such as their new mobile applications, they face a variety of
internal management challenges. If these challenges are not addressed effectively, they may
turn into crises that may hinder the company's progress. Larry Greiner's organizational
development model provides a broader perspective on this phenomenon, proposing that
organizations go through predictable stages of development, each culminating in a unique
crisis. This model serves as a roadmap for businesses, allowing them to anticipate and
prepare for potential challenges.

Concept & Application

1. According to Larry Greiner's organizational development model, companies go through six

stages of development, each of which is marked by a crisis that must be overcome to
continue growth. There are six steps:

2. 1. Growth through creativity: This is the startup stage, where the company is small and
agile and can innovate quickly. The crisis that arises during this stage is leadership crisis. As
a company grows, it needs a more structured leadership structure. If the company is
unable to develop it, it will shut down in this stage.
 3. 2. Growth through direction: During this stage, the company develops a more formal
structure and management team. The crisis that arises during this stage is the autonomy
crisis. As a company becomes more bureaucratized, employees may feel less autonomous
and become less engaged. If the company is unable to resolve this crisis, it will be mired in
bureaucracy.

4. 3. Growth through delegation: During this stage, the company decentralizes decision
making and gives more autonomy to employees. The crisis that arises during this stage is
the control crisis. As the company gives more freedom to employees, it may lose some
control over its operations. If the company is unable to manage this loss of control
effectively, it may experience problems such as quality control problems and reduced
efficiency..

5. Growth through coordination: During this stage, the company develops systems and procedures
to coordinate its activities across different departments and locations. The crisis that arises during
this phase is the red tape crisis. As the company develops more systems and processes, it can
become bureaucratic and slow-moving. If the company is unable to streamline its systems and
processes, it will become less competitive.

6. Growth through collaboration: During this stage, the company focuses on collaboration and
teamwork. The crisis that occurs during this phase is a development crisis. As a company continues
to grow, maintaining collaboration and teamwork may become more difficult. If the company is
unable to resolve this crisis, it may face problems like conflict and siloing.

7. Growth through alliances: During this stage, the company forms strategic alliances with other
companies. The crisis that arises during this stage is a crisis of identity. As the company forms
alliances, it may lose some of its unique identity. If the company is unable to maintain its identity, it
may become less competitive.

Here are some examples of how companies have experienced the crises associated with each phase
of Greiner's Organizational Growth Model:
  Leadership Crisis: Apple faced a leadership crisis after the departure of Steve Jobs in the
early 1990s. The company struggled to find a new CEO who could take it forward. It was not until
Jobs returned to the company in 1997 that Apple regained its momentum.

 Autonomy Crisis: Toyota experienced an autonomy crisis while expanding into the United
States in the 2000s. The company's Japanese management style did not mesh well with the
American workforce. Toyota was able to overcome this crisis by giving American employees more
autonomy and developing a more collaborative management style.

 Control crisis: Walmart experienced a control crisis in the 2010s as it expanded into new
markets. The company struggled to maintain control of its supply chain and its operations in new
countries. Walmart was able to recover from this crisis by investing in new technologies and
developing strong relationships with its suppliers.

 Red tape crisis: General Electric experienced a red tape crisis in the 2000s as it became
more bureaucratic. The company's slow decision-making process made it difficult to compete in
the rapidly changing technology industry. GE was able to recover from this crisis by streamlining its
systems and processes and giving employees more autonomy.

• Growth crisis: Google experienced a growth crisis in the 2010s as it expanded into new markets
and new product areas. The company struggled to maintain its focus and innovation. Google was
able to recover from this crisis by reorganizing its structure and creating more cross-functional
teams.

• Identity crisis: Facebook faced an identity crisis in 2010 after the Cambridge Analytica scandal.
The company struggled to maintain its reputation of being a reliable platform. Facebook is still
working to overcome this crisis by investing in privacy and security measures and being more
transparent about its data collection practices.

Greiner's organizational development model is a helpful framework for understanding the challenges
that companies face during growth. By identifying the crises associated with each stage of growth,
companies can develop strategies to overcome them and continue growth.
Conclusion

Understanding these stages and their associated pitfalls can help Lookbooks manage the challenges of
launching their mobile application and moving forward effectively.

3. Ashish and Avanti are planning to enhance the organisational effectiveness of

their e-commerce start-up business. Keeping the above scenario in mind,

a. How do you think they will measure the organisational effectiveness of their business?
Add examples (5 Marks)

Ans 3a.

Introduction

Organizational effectiveness is the ability of an enterprise, such as Ashish and Avanti's e-

commerce start-up, to achieve its goals and objectives. For e-commerce businesses operating
in a highly competitive digital landscape, measuring effectiveness is important. By analyzing
specific indicators, entrepreneurs can gain information about the operational health of their
enterprise, and make adjustments as needed.

Here are a number of ways to measure the organizational effectiveness of a business. Some common
methods include:

 Goal achievement: It involves comparing the actual performance of the organization with
its stated goals. For example, if a company's goal is to increase sales by 10% in a year, its
organizational effectiveness can be measured by comparing its actual sales growth to its
goal.

 Customer Satisfaction: This involves measuring how satisfied customers are with the
organization's products or services. Customer satisfaction surveys can be used to collect
data on customer satisfaction.
  Employee Satisfaction: This involves measuring how satisfied employees are with their
jobs and workplace culture. Employee satisfaction surveys can be used to collect data on
employee satisfaction.

 Financial performance: This involves measuring the financial performance of the

organization, such as its revenues, profits and returns on investment.

 Operational efficiency: This involves measuring how efficiently the organization is using its
resources to achieve its goals. For example, an organization's operational efficiency can be
measured by tracking its cycle time, waste rates, and productivity.

The best way to measure the organizational effectiveness of a business will vary depending on the
specific goals and objectives of the organization. For example, if a company's primary goal is to
increase customer satisfaction, customer satisfaction surveys would be a key measure of
organizational effectiveness.

In addition to the quantitative measures listed above, there are also several qualitative measures that
can be used to assess organizational effectiveness. These qualitative measures can include:

• Employee Engagement: Refers to how engaged employees are in their work and workplace culture.

• Innovation: This refers to the organization's ability to generate and implement new ideas.

• Agility: This refers to the organization's ability to adapt to change.

• Resilience: This refers to the ability of the organization to recover from setbacks.

Qualitative measures of organizational effectiveness can be collected through interviews, focus groups,
and employee surveys.

By using a combination of quantitative and qualitative measures, organizations can get a

comprehensive picture of their organizational effectiveness. This information can be used to identify
areas where the organization is performing well and areas that need improvement.
The company also uses qualitative measures such as employee engagement, innovation, agility, and
flexibility to assess its organizational effectiveness. The company collects data on these qualitative
measures through employee surveys and interviews.

b. They are in favor of the systems approach. Explain this and state what the benefits of it,
with examples. (5 Marks)

Ans 3b.

Introduction

The systems approach to management, inspired by systems theory, views an organization as a

harmonious group of interrelated and interdependent parts. Rather than viewing an
organization as an isolated entity, the systems approach emphasizes the importance of
understanding the interactions between various components of a business. Ashish and
Avanti's inclination towards this approach for their e-commerce start-up reflects their
understanding of the complex interrelationships that exist within their enterprise.

Concept & Application

Organizations that favor a systems approach are those that believe that the whole is greater than the
sum of its parts. They understand that different components of an organization are interconnected and
that changes in one area can have an impact on the entire organization.

The systems approach is a holistic approach to management that focuses on the relationships between
different components of an organization. It takes into account the internal and external environment
of the organization as well as the needs of its customers, employees and other stakeholders.

There are a number of benefits to using a systems approach, including:

• Better decision making: The systems approach helps organizations make better decisions by
considering all the factors that can influence a decision.
• Increased efficiency and effectiveness: The systems approach helps organizations identify and
eliminate waste and inefficiencies. It also helps organizations to improve their overall performance.

• Enhanced Innovation: The systems approach encourages organizations to think creatively and
develop new and innovative solutions to problems.

• Greater agility: The systems approach helps organizations adapt more quickly and easily to change.

• Strong relationships: The systems approach helps organizations build strong relationships with their
customers, employees, and other stakeholders.

Here are some examples of how organizations are using the systems approach:

• Toyota: Toyota uses a systems approach to improve its manufacturing process. The company has
developed a system called the Toyota Production System (TPS), designed to eliminate waste and
improve efficiency. TPS has helped Toyota become one of the most successful automakers in the
world.

• Walmart: Walmart uses a systems approach to manage its supply chain. The company has developed
a system that allows it to track its inventory from supplier to store shelf. This system helps Walmart
ensure that it has the right products in the right stores at the right time.

• General Electric: General Electric (GE) uses a systems approach to develop new products and
services. The company has a system called the GE Innovation Process, which is designed to foster
innovation and creativity. The GE Innovation Process has helped GE develop many successful new
products and services, such as jet engines and MRI machines.

Conclusion

The systems approach can be used by organizations of all sizes and in all industries. It is a powerful tool
that can help organizations improve their performance, adapt to change, and achieve their goals.