398 CHAPTER NOTES 09 ORG SIZE

398 CHAPTER NOTES 09 ORG SIZE - CHAPTER NINE ORGANIZATION...

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CHAPTER NINE ORGANIZATION SIZE, LIFE CYCLE, AND DECLINE CHAPTER OVERVIEW This chapter explores the question of large versus small organizations. It introduces the notion of bureaucracy in relation to organization size, growth, decline, and performance. Models of life cycle development stages and of the mechanisms for organizational control are introduced. Strengths and weaknesses of bureaucracy are analyzed. Finally, the chapter discusses organizational decline and some of the methods for dealing with downsizing. Organization Size: Is Bigger Better? Pressures for Growth Organizations often experience pressures for growth even at the expense of making the best products or showing the greatest profits. Pressures for growth are often experienced when economic stagnation is felt at the time the organization stops growing. Dilemmas of Large Size Arguments for large versus small size are summarized in Exhibit 9.1. Huge resources and economies of scale are needed for many organizations to compete globally with products such as building a 747 jet. But the argument for small size stems from the need for responsiveness and flexibility in fast-changing markets. As global trade has accelerated, smaller organizations have become the number. Big-Company/Small-Company Hybrid Many small organizations today have a flat, organic structure, but they can become victims of their own success as they grow large, shifting to a mechanistic structure and failing to reward an entrepreneurial approach. A big-company/small-company hybrid is the solution for many. Large companies can retain flexibility and customer-focus by decentralizing, cutting layers of hierarchy, and often organizing into a divisional structure as discussed in Chapter 3. The front/back approach may also be used to achieve benefits of small size by dividing the company into units with different roles. Back focuses on creating and producing products and services, while front focuses on integrating and delivering products and services to customers. Organizational Life Cycle Stages of Life Cycle Development [Use LECTURE ENHANCEMENT on pre-birth stages here.] Whenever an organization enters a new stage in its life cycle, a new set of rules emerges for how the organization functions internally and how it relates to its environment.
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398 CHAPTER NOTES 09 ORG SIZE - CHAPTER NINE ORGANIZATION...

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