Chapter 12

Organization Size
and
Life Cycle
 Differences Between Large & Small
Organizations
Economies of Scale – is due to the
inverse relationship between the
quantity produced and per-unit
fixed costs.

As the company grows &

production units increases, a
company has better chance to
decrease its costs.
 Is Bigger Better?
In terms of Organizational Size
Large organizations
are able to get back to
Companies
business following a
strive for disaster.
growth to standardized,
compete mechanistic & complex.
globally.

Small companies
are flexible and responsive
4 Stages in The Organizational Life Cycle
Organization Characteristics During Four Stages
of Life Cycle
 What is Bureaucracy?
6 Dimensions of Bureaucracy & Basis of
is a threat to liberty.
Organizational Authority based on Max Weber
Bureaucracy
 Size and Structural Control

Formalization
Rules
Procedures
written
documentation

Centralization
level of hierarchy with
authority to make decisions
 Bureaucracy in a Changing World
Approaches to Busting
Bureaucracy

•Increasing authority of
workers.
 No longer works
for today’s
challenges.
•The increasing
Creativity, professionalism of
Flexibility are employees is attacking
limited. bureaucracy.
Three Organizational Control Strategies
 Organizational Decline and Downsizing
The decrease of an organization’s
resources over time is caused by:
• Organizational atrophy
• Environmental decline or
competition
Downsizing
• Vulnerability
refers to intentionally
reducing the size of a
company’s workforce.
5 Stages of Organizational Decline & the
Widening Performance Gap
 Summary

Organizations experience pressures to

grow.

Organizations evolve through stages

of the life-cycle.
Larger organizations adopt
bureaucratic characteristics.
Many organizations experience decline.
 Any
Questions?