Organization Theory
Introduction
Organizations are important aspects in a company or firm. Companies designate committees or organizations to maximize the full potential of each of its members. Organizations are useful in a company for a trickle down of information and assignments, and easier accomplishment of tasks. For a company or firm, having different organizations is a mean to an end in order to achieve its short-term or long-term goals.
(2006) reports that an organization, by its most basic definition, is an assembly of people working together to achieve common objectives through a division of labor. He added that people form organizations because individuals have limited abilities, and an organization provides a means of using individual strengths within a group to achieve more that can be accomplished by the aggregate efforts of group members working individually. With organizations, businesses and companies are more efficient in delivering goods and services to consumers. It has been reported that organizations are not merely physical, they are also social and technological systems, being multi-dimensional, and with aspects which are immeasurable (2006). Drawn from physical and engineering models, systems theory considers organizations as systems with boundaries, which make exchanges with the environment and must adapt to environmental changes in order to survive (2006). They are open systems, which interact directly with the environment and produces inputs (taking in raw materials, finance and recruits from the outside world) and outputs (provide products and services, pay wages and dividends, technology and human resources transform input to outputs).
For many years there have been countless theories and models of how business organizations function and what their essential characteristics are. The theory states that a successful organization acts on relevant information and ignores the irrelevant. Ultimately, the organization that excels at processing information facilitates learning and the development of new knowledge (2006).
Factors of the Organization Theory
Several factors determine the success, effectivity and efficiency of an organization. These factors are its environment, size, life cycle and control, and the dynamism of each is important.
(2001) points out that organizations actively adapt to their environments, and organizations whose structures are not fitted to the environment (which includes other organization, communities, customers, governments, etc.) will not perform well and will fail. If the environment is stable, this selection process will lead to most organizations being well adapted to the environment, not because they all changed themselves, but because those that were not well adapted will have died off ( 2001). It has also been reported that the economy is a giant network of organizations linked by buying and selling relationships, where every company has and is dependent on suppliers (inputs) and customers (outputs) for resources and money ( 2001). The environmental interchange is continuous, as the organization must advertise and sell its products to customers who are in the broader environment (2006). If the company cannot sell its product, then it will not survive, as it draws its very sustenance from the environment to become a viable organization. While a business firm or a company generally interacts with its sectors, its main emphasis is on making a profit. Since it is an economic organization, its executives carefully define a particular segment of the economic environment they want to exploit; analyze market demands of the cultural sector for a particular product, and initiate organizational policies to encourage the market to buy their product. In the case of Nokia Corporation, they are highly dependent on the environment or market on where to advertise and sell their products. Nokia invests a lot of money for effective advertisements such as TV commercials, internet, printed ads, billboards and endorsements. Their use of technology and influence in the cultural sector of society are positive factors in effectively selling their products. Almost all people all over the world uses cellular phones and greatly patronize Nokia’s brand over others, regardless of age, sex or race, being user-friendly and effective in communication and entertainment.
Another factor of the organizational theory is the size of the organization. It has been reported that size refers to the capacity, number of personnel, outputs (customers or sales), and resources of an organization (2001). It is a property at the interface between internal structures and the environment, and is often treated as an independent variable that shapes and determines other structural variables (2006). Size often characterizes the scale of the work being conducted, as the increase in size is related to increase structuring of organizations activities but decreased concentration of power. Organizational size is positively associated with structural differentiation, as larger organizations are more complex, and besides increasing the types of activities, it increases the number of activities within each type. It has been reported that large size increases structure, which increases pressure for more administration to control and coordinate the increased heterogeneity of work activities (2006). However, within subunits increased size increases the number of similar activities, which reduces the amount of administration required to coordinate them, meaning a larger size of members in an organization results to higher maintenance and possibly greater outputs. The size of an organization is important for Nokia Corporation, as they need more employees for increased production, research and development, and promotion of their product all over the world. In relation to this is the individual competence of the employee, including the people’s skill, education, experience, values and social skills. Competence cannot be owned by anyone or anything but the person working for Nokia, who possesses them, because when all is said and done employees are voluntary members of the organization ( 2001).
The organizational life cycle is a model that proposes that businesses, over time, progresses through a fairly predictable sequence of developmental stages, namely, start-up, growth, maturity, and decline, with diversification sometimes considered to be an additional stage coming between maturity and decline ( 2001). During the start-up stage, companies accumulate capital, hire workers, and start developing their products or services, while toward the end of this stage, companies often experience explosive growth and begin to hire new employees rapidly, because business opportunities exceed infrastructure and resources. This expansion continues into the growth stage where companies increase their resources and workforces dramatically. Despite their expansion, companies may still need additional funds to exploit all the available growth opportunities, so many go public at this point, too. The maturity stage is marked by security and by a slight slowdown, and in this stage, companies have amassed assets and solid profits, by becoming established in the market. In order to avoid the decline stage, mature companies often take a variety of actions to renew their growth, such as acquiring other companies and expanding product lines. If companies fail to implement measures to improve growth, they will most likely enter the fourth and final stage, the decline stage. This stage not only company hiring drops, but also company sales and profits. Furthermore, demand for a company’s products or services decreases, so to compensate for the decline, companies launch downsizing or reengineering campaigns during this stage. If these efforts do not succeed, then companies look for a buyer or shut down. As companies progress through the organizational life cycle, the criteria for their effectiveness change. Companies tend to change their management styles, reward systems, organization structures, communication and decision-making processes, and corporate strategies. As companies mature, they usually strive to become more innovative or they diversify by making acquisitions (2001).
Control is needed in every aspect of an organization. Because of the existence of negative externalities, organization theory is influenced by the concept of control. It refers to the laws, regulations, and social customs that are meant to minimize the negative impacts of organizational activities. In addition, this is how workers are influenced to internalized ideas favored by management, such as how workers control themselves to the benefit of management by working hard, being efficient and productive in their work without being forced to do so. Control is responsible also, on how workers are persuaded to accept ideas such as the need for self-improvement, service excellence or even working hard. It has been reported that the surveillance or close monitoring of the activities of workers also helps management to keep workers in line, as it can be done through reporting requirements, regular performance audits and through high tech methods such as electronic monitoring, which includes computer programs that can monitor the number of keystrokes per hour, log on and log off times, websites visited and so on ( 2001).
Dynamism of the Organizational Theory
(2001) emphasizes that a company such as Nokia has little machinery, other than its employees and because only people can act, they are both the minders of the machines and the machines themselves. For the most part, their competence is directed outwards, to the task of generating revenue, by solving customers’ problems, and it is this outward-directed energy that creates the relationships, networks, and image that comprise the organization’s external structure. In addition, people tend to be loyal, if they are treated fairly and feel a sense of shared responsibility, so the performance of the organization really matters a lot in determining its success in the market. However, part of the organization’s performance is its constant adaptation to change, as the market and the organization itself is very dynamic.
Change is inevitable, and so organizations must continuously change to adapt to their environment, to be able to control their organization. It has been reported that the change process can be thought of as a process, which stops the current process, makes the necessary changes to the current process and runs the new process (2006). In addition, when there is a process in an organization, it is not an easy task to make changes to this process immediately. Sometimes, a single organization may have varied business entities and changes in an entity may be reflected in another entity, and changes are not so easy. However, most of the organizational changes were not so deliberately planned, for they had come about almost spontaneously; as the result of a crisis, to accommodate individuals, or in response to a management fashion (1982). There are different types of organizations, which have many branches across the world with varied cultures ( 2006). The Nokia Corporation exemplifies this, as it has to change its style in promotions in different continents and countries to suit the needs of each consumer. This change allows the organization to give a reactive or a proactive response to the changes that happen internally or externally, and help in its processes to be stable.
Conclusion
(2006) states that, in summary, a business firm is by no means an island unto itself, for it is constantly interacting with the various sectors of its environment, and as the environment changes, so must the firm if it expects to remain a viable institution. The organization must learn how to adapt to be able to become more effective and successful in selling its products, such as in the case of Nokia Corporation. Each member of the organization must do his or her share of the responsibility to maintain the reputation of the organization and to keep in functioning. Continuous reevaluation and innovation must be made to improve the products, to work harmoniously with the members and to arrive to the organization’s desired profit. These will be achieved by cooperation, adaptation and sharing of information.
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