MBA management

Organizational Environment

Organizational Environment

By a process called ‘organizing’ the structure of an organization is created and maintained. The process involves deciding the activities necessary to realize the objectives of the organization, grouping those activities in a logical pattern, and assigning those activities to a position with responsibility and authority.

‘Organizational process’ is a means to achieve the authority- responsibility relationships and coordinate the activities of the individuals and groups. Otherwise speaking, organizational process is a structural representation of inter- personal relationships. Organizational process incorporates 8 different activities;

i. Identify the objectives;
ii. Determine the task- requirements to realize these objectives;
iii. Break the tasks into jobs;
iv. Integrate the jobs into specially centers;
v. Select personnel for ach job.
vi. Assign the job to the selected individual;
vii. Delegate authority for performing the job; and
viii. Fix the span of control for monitoring & hierarchy (superior subordinate relationship) for performance appraisal.

Some Definitions for Organization

1. “Organization is a pattern of ways in which large numbers of people… engaged in a complexity of tasks, relate themselves to each other in the conscious, systematic establishment and accomplishment of mutually agreed purposes.”
-J.M Pfiffner and F>P> Sherwood, Administrative Organization, Prentice hall of India, New Delhi, 1968.

2. “Organizations benefit from the participants, supplementary similarities, complementary differences or combinations of the two” ----- International encyclopedia of the Social sciences p.332.

3. “Organizations are systems composed of many subsystems functioning in an environment” ___H.G. Hicks and C.R. gullet, “Preface “, Organizations: theory and Behaviour. Mc Graw Hill, Singapore, 1976.

4. “The rational coordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through division of labour and function, and through a hierarchy of authority and responsibility.” _E.H. Shein. Organizational Psychology, Prentice Hall of India, New Delhi, 1973.

Whether it is a government organization, private organization, mutual benefit organization, business concern, service organization, or general weal organization, an organization is shaped by its inherent environment. It is considerably large in size, having complexity, a mutually agreed objective, a define pattern of behavior, different levels of authority – responsibility relationship, coordination, scientific rationality, a system, structure and technology, interacting with other systems of its environment. Normally, organizations have an environment within and they also face an environment outside.

I. Environment within an organization

Environment within an organization is conditioned by several factors, forces, laws, people, relationship, tasks, communication, structure, design, technology etc. generally speaking there are 3 layers of environment applicable to any organization: i) internal environment, ii) interactive environment or intermediary environment, and iii) external environment.

The following are the dynamic and static forces that determine the internal environment of an organization.

i) Organizational objectives
ii) Its policies
iii) Office structure, organization’s design
iv) Its hierarchy (responsibility__ authority relationship)
v) Internal Power policies
vi) Groups and inter group dynamics
vii) Organizational culture
viii) Decision making methods
ix) Motivation
x) Leadership
xi) Communication
xii) Conflict & stress management
xiii) Change management
xiv) Quality control
xv) Training & development

II. Intermediary or interactive Environment

If refers to those aspects/ features/ forces that frequently interact with the organization. It is also referred to as’ task environment’, ‘specific environment’. Those forces which are specific to an organization’s immediate environment “that are directly relevant to the organization and affecting its goal and degree of goal attainment’ (R.A. Sharma, Organizational Theory and Behaviour: Tata McGraw Hill: New Delhi, 2000, 2nd dn. P. 18) are known as task environment or specific environment. It is also known as direct action environment which includes as task environment or specific environment. It is also known as direct action environment which includes suppliers, labour unions, specific laws, customers, suppliers and competitors.

a) Suppliers: The major stakeholders of an organization, who supply the major inputs like machines, raw material, working capital, labour, power, etc., have direct influence on the working of an organization. The supply of these inputs have a direct influence in the timely accomplishment of goals and targets.

b) Labour Unions: Unionization along with unionism has affected the organizations considerably. Thee ego or the attitude of union leaders have a great say in regular running of industries.

c) Specific Laws: Some of the specific laws restraining, restricting and regulating the organizations, including the companies Act, Factories Act, Industrial disputes Act and Provident Fund Act, have a direct influence over the organizations.

d) Customers: They are the most important stakeholders who decide the quality, size and shape of the products, the kind of services of the organizations. Organizations must address this direct influence satisfactorily.

e)Competitors: Competition keeps the goods, services and products quality- Globalization) introduction, the competition has driven organizations to change their style of functioning to keep themselves afloat and ahead of their competitors.

III. External Environment

Otherwise called general environment refers to factors like natural responses, technology, economy, population factors, political forces, government, and socio- cultural factors that influence the organizations.

a)Natural resources: The availability or the scarcity of natural resources pertaining to a particular industry/ company may help the organization to grow or ruin. The organization may increase, change or look for an alternative resource.

b) Technology: Technology also has a tremendous impact on the organization. Depending on the innovations and advancement in technology, the organizations have to update or outdate their existing technology, methods of operation, overheads and salary payment for the employees of the organization.

c) Economy: The general economic trend _ local, national or global, has an impact on the income generation, expenditure, consumption, overheads and salary payment for the employees of the organization.

d) Population: The thickly populated countries like china, India and Bangladesh have a demographic advantage as the cheap labour really helps the organizations in these countries. Apart from this, sex and age also determine the environment of the organization.

e) Politics: The political stability or instability of the party and the government in power does have a say in the flow of investment from abroad or even on the share market.

f) Government: The laws, enforcement, economic policies framed by the governments from the basic environment for almost all the organizations. Some governments are even toppled by the lobby & money power of the organizations.

g) Socio-cultural variables: Social norms, cultural norms and social institutions do affect the general environment of organizations. Closed society or open society does have its own cultural norms which in turn affect the working cultural and the ambience of the organization.

Hence it is important to observe that an organization cannot operate on an ivory tower. It has to take into consideration on the environmental variables within & outside the organization for its smooth functioning and continued existence. To be successful, an organization has to ascertain the environment. The more uncertain the environment, the better should be the care taken by the organization.

Assessing environmental uncertainty

Robert B. Duncan in his treatise,’ Characteristics of organizational environments and perceived Uncertainty “identifies 2 variables for assessing the environmental uncertainty;

(i) The depth of environmental complexity, and
(ii) The rate of environmental stability / fluidity.

The completely involves a number of variables viz., purchase power, economic conditions, changing technology, pollution control laws & measures, fashion, etc. On the other hand, the stability- fluidity factor is multi-dimensional. Some aspects of the environment may remain static while others may change. Based on these two variables of complexity and dynamism, the interactive environment may fall into these 4 categories;

i) Homogenously } {low perceived} uncertainty
ii) Heterogeneously } stable {moderately low perceived}
iii) Homogenously } unstably {moderately high perceived} uncertainty
iv) Heterogeneously } high perceived}

The best examples for each category could be:

i) Soap box industry
ii) Educational institution
iii) Apparel industry
iv) Share-markets

Current scenario in which the change is a permanent factor calls for a close study of these dynamic forces. G. Dess and D. Beard in their treatise, “ Dimensions of organizational Task Environments “ talk about a 3 dimensional approach in assessing the uncertainty : capacity, volatility, and complexity.

Hence we can conclude that organizations are influenced by; (i) the environmental complexity: (ii) diverse elements present in the environment; (iii) the degree of change in the environmental elements; and (iv) the unpredictable environmental forces.

Organizational Structure and Design

In order to realize the goals of an organization a formal structure is designed. This shows the interdependency of structure and organizational objectives. ‘Structure’ is seen as a pattern of official / organizational relationships among various parts of the organization. Otherwise ‘structure’ of an organization includes

(a) The matrix of formal relationships in an organization and the duties attached to them;
(b) The tasks and the departmentation;
(c) Regrouping / coordinating these tasks;
(d) The hierarchy; and
(e) The policies, guidelines and rules.

F.W. Taylor in his The Principles of Scientific Management (1998) called them the ‘Structures of control’. Max weber in The Theory of Social and Economic Organization (1964) called them ‘authority structures’. P.R. Lawrence and J.W Lorsch, in their book Organization and Environment (1969) opined that organization ‘structures are appropriately designed to match the relationships of the particular nature of the business, the external environmental factors, and the market conditions.’

In a nutshell, organization’s structure facilities order and control for effective management of an organization.

The organizational structure may involve

i) Line-staff relationships
ii) Span of control
iii) Delegation
iv) Unity of command
v) Tall & short structures
vi) Hierarchical structures
vii) Nonhierarchical structures
viii) Hybrid structure
ix) Loose – knit / flexible structure

i) Line—staff relationships: By looking into the working of the employees of an organization, the line--- staff relationship can be best understood.’ Line’ are those who decide on the principles & practices for achieving the objectives of the organization, ‘Staff’ are those who suggest, support and assist the line in realizing the objectives of the organization.

ii) Span of control: it means the number of subordinates that a supervisor/ manager can oversee or manage. The span of control will have a direct influence on the difficulty level & requirements of the job. It is important because it channelizes the communication flow and facilities the decision making process. Normally the span is broad- based at the bottom and narrow at the top level of the hierarchy. The following factors will influence the arriving at the span of control;

i. The managerial ability and skill;
ii. The ability & skill of the subordinates;
iii. The complexity of the job;
iv. The technology, automation, sophistication, etc;
v. The change dynamics of the organization;
vi. The safety measures;
vii. The financial ability of the organization in terms of compensation or wage.

iii) Delegation: A manager/ supervisor cannot perform all the jobs himself. Hence he has a handy mechanism called ‘Delegation of authority’ by which he passes on the work, by breaking it into smaller jobs/ units. As the responsibility of realizing the job is fixed on a subordinate, he has to be granted the required authority to perform it. A subordinate who is delegated the task is called a ‘delegate’.

The authority_responsibility relationship has a few basic premises:

i) Authority & responsibility go hand in hand;
ii) Responsibility cannot be fixed if there is no authority delegated to it;
iii) Authority without responsibility is meaningless;
iv) By assigning delegation a superior cannot escape from the responsibility of the work;
v) Authority can be delegated but not the responsibility;

There are both advantages and disadvantages in ‘delegation’.

Advantages: (a) Manager gets relieved of his workload to pay attention to his managerial work; (b) subordinate’s skill is developed; and (c) subordinates get greater autonomy.

Disadvantages: (i) A subordinate can err; (ii) inefficient/ insufficient communication of the manager may cause trouble; (iii) manager may be unwilling to delegate.

iv) Unity of Command: This principle implies ‘one’—subordinate, one- boss’ principle. In an organization, a subordinate will report to only one superior. Otherwise a subordinate will take orders from one boss only. This avoids confusion and conflicts.

v) Tall & short structures:

Tall Structure may mean layers of supervisors. When especially an organization is involved in wide spectrum of functions, this kind of structure is seen.

Short Structure may mean a few layers of superior. When an organization deals with a few products or functions, this kind of structure seems handy. In fact, short structure organizations give more autonomy & teamwork to its employees.

vi) Hierarchical structures: by following the ‘unity of command’ principle, hierarchical structures are designed. Top from the CEO down to the members/ employees, the organization is compartmentalized into departments.

Departments are created by following the principle of function, geography, product or market orientation.

(a) Departmentation by function: Depending on the Key function of an organization, we may have departments designed on these key functional areas:

1. Manufacturing
2. HR
3. Materials
4. Marketing
5. Finance & budgeting
6. R&D

(b) Departmentation by geographical Location: Depending on the topography, access and proximity, the large organizations have their departmentation. For example, an Indian drug company can have its departmentation this way:

• North-East (Arunachal Pradesh, Assam, Meghalaya, Tripura, Nagaland and Sikkim)
• North (Jammu & Kashmir, Haryana, Himachal Pradesh, Punjab, Chandigarh, Delhi, & Uttar Pradesh)
• West (Maharashtra, Gujarat and Rajasthan)
• Midland (Bihar, Chhattisgarh, Madhya Pradesh and Jharkhand)
• East (Orissa, West Bengal & Andhra Pradesh)
• South (Tamil Nadu Kerala, Pondicherry, Karnataka & Goa)

c) Departmentation by Product: In large organizations, specializing in several products, this kind of departmentation is seen. E.g. Tata, Unilever & Godrej. These organizations for each of their products has a management of that product specialization.

(d) Departmentation by Market- Orientation: Large organizations compartmentalize their organization based on their markets: rural, urban, governmental, industrial, etc. The advantage of this departmentation is the specialized service to each market/customer orientation.

vii) Matrix Design: Matrix or non-hierarchical structure relieves the member/ employees from the close control of the ‘unity of command’ principle. In organizations where diverse functions are performed at once, this kind of flexibility, i.e., members of the team crossing their lines and teaming up with different line and staff, really helps.

In V.T.T., academic staff like assistant professors. Associate professors and professors are based in schools and departments. Within that school of Department academic staff will have a line called Division Leader: The academic staff working under a particular Division Leader will also handle classes and courses in cross functional tams under other schools, departments or divisions. This gives a greater autonomy to the teaching faculty of VIT.

viii) Hybrid design: It is not necessary that the organizations should follow the structures as discussed above. They may also hybridize by incorporating the elements of other structures, by following one basic structure. More and more higher educational institutions opt for these hybrid structures. E.g. ICBMS, Loyola College (Pondicherry University Twining Programme) & V.I.T. They collaborate with many an institution by signing M.O.U. and incorporate hybrid structures.

ix) Loose- knit Design: Responding to the fast-changing environment of varied customer taste and market demands, employees in such ‘flexible’ organizations adopt multi- task functions. Such organizations are said to be functioning with loose-knit structures.

Thus the structure design of an organization will depend very much on the organization’s mission, size, complexity, internal and external environment, value system, skill & motivation of the workers, the project, the task, etc.

Technology and Automation

Technological advancement has ushered in an era of global village connected by fast- paced IT & www communication, interplanetary travel and steep increase in the quality of goods and products. Technology has provided for

• The reduction of costs with the help of automation;
• The increase in production;
• The step rise in quality thanks to automation;
• The speedy processes of good—production;
• Better & precise decision making in business & organizations.

Organization & business use technology for

i) R&D
ii) Manufacturing &
iii) IT & Communication

Technology and R & D

1. Last century has witnessed a meteoric rise in R&D, thanks to the application of recent developments in technology.

i) New chemical products & Compounds have changed the changed the chemistry of the industries.
ii) Bio-medical and pharmaceutical technology has positively affected billions around the globe.
iii) GM Technology, Molecular biology, Stem cell research have revolutionized the concept of life & living.
iv) Metallurgy and materials technology have accelerated the growth of automobile industry, shipping, aircraft & space technology.
v) Research in aero dynamism has positively affected the design & manufacture of missiles, bikes, trains etc.
vi) Acoustics and fine-tuned decibels have changed the sense of music among the consumers and the business world.

2. In the manufacturing sector, later part of the 20th century has brought in CAD (Computer Aided Design) and CAM (Computer Aided Manufacturing) and revolutionized the thinking in the young minds of management, business and engineering students and informed them a novel method of accessing the advantages of technology in their operations departments. This has accelerated automation in their fields.

3. The application of computer and system management has made th work in the universities, colleges and schools easy. Industries maintain their databases and even toll& collection centers work efficiently with computer automation. Orders, availability of goods, booking and cancellation of tickets in train, flights and buses- all happen with computer automation. Automation has assumed zooming heights in factories, industries and businesses and has mechanized and automated them to an unbelieving complexity. Robots and computers govern manufacturing industries like automobiles. Supermarkets, stores and shoe marts have ben immensely benefited from computerization.

Technology and Information

We are in the information age, governed by knowledge. IT holds key to the knowledge boom. Programming , software- application, and use of computers and terminals have quickened the pace of automation in IT sector, RAM ( Random Access Memory), ROM (Read Only memory), CD (Computer Disk), Floppy, Pen Drive, CPU ( Central Processing Unit), Programmable Processor, Embedded Processor, Microprocessor, Mainframe Computer, Minicomputer, Microcomputer, WAN ( Wide Area Networks), LAN ( Local Area Network), Intranet, Internet , Files, Note pads, and Stored information have made our life fine-tuned to touch-button style.

The application of IT in telecommunication has really changed our style of functioning in the industries and businesses. Fax, Mobile, e-mail, and www have changed the concept of communication.

Precisely speaking, the IT applications in organizations are of varied nature:

i) IT has helped the office administration & governance: by computerizing the accounts, maintaining the entry, service register and retirements in their systems, salary administration, transactions, visits, etc.

ii) IT has revolutioned the communication in organizations: by employing e-mail, phones, mobiles, fax, satellites, TV and radio, tele and video conferencing, LCD and PPT projections for business transactions & communications.

iii) IT has accelerated, automated and paradigmed the ’knowledge process’: by employing digital library systems, digital talks and shows, EPOS (Electronics point of Sale), Databases, etc.

Thus IT has facilitated (i) the collection of information (ii) the control of flow of information; (iii) the forming of attitudes, thereby impacting the motivation, morale , job satisfaction and organizational attachment; ( iv) Process of decision—making ( v) the education, information, media and media communication, and finally movie, music and entertainment industries.

Mc Farlan’ Warren and others in others in their book Corporate Information Strategy and Management (1997) floated a grid, with X axis for future IT impact and Y axis for current IT impact in organizations.

Otherwise speaking

(i) Very high use of IT is seen in ‘strategic’ organizations; e.g., bank, insurance & telecom departments.

ii)‘Turnaround’ organizations are very soon going to employ & engage more IT systems; e.g., supermarkets and warehouses.

iii)'Factory’ category is already using IT to a great extent, including JIT (Just in Time) technology where it is not going to have more or grater applications of IT ; e.g: Airlines, Transport & Railways.

iv)‘Support organizations’ current and future use of IT application is seen & expected to be low; e.g., Museums, Curious, Gardens and Parks.

Organizational Life Cycles

Unlike the previous centuries, the 20th century witnessed phenomenal changes and revolutions in science and technology which in turn affected the growth and life of the business and organizations, Organizations generally go through these phases:

(1) Starting (2) Growing (3) Diversifying (4) Merger (5) Decline (6) Renewal (7) Disbanding.

(1) Starting Stage: When an organization is planned, it takes into effect once the money is appointed and the work get started. At this stage the challenges a business executive faces are; i) planning, ii) procuring the money, iii) getting right people for the jobs iv) organizing them all into one unit.

(2) Growing stage: As the organization starts its production of goods or provision of its services, there may be many challenges faced by its leader in the form of i) Competition, ii) pricing, iii) Paying the salary of its employees, iv) Continuation of the process and the work, v) the wherewithal to continue the organization, vi) motivation & moral of the employees, vii) job satisfaction for its employees, etc.

i) When the current products & services no more fetch required income;

ii) When the organization has enough or more resource it has been left with after realizing its goals in the current business;

iii) When the organization wants to capture a new market/ consumer base which has not so far been exploited;

iv) When the organization wants to use its logistics & distribution channels optimally;

(4) Merger: Merger is a stage in which two or more organizations agree to get united, with the approval of the organization’s shareholders. The challenges faced by an executive in the merger are:

i) Getting a new identity to the newly wrought in organization & getting adjusted to its dictates;

ii) Reduction in the work force (both staff and line);

iii) Loss of independence in decision – making etc;

iv) Clash of ethics, values, etc, as the two or more organizations come to know that they have different ideologies;

Merger can also usher in some advantages, viz. i) better market strategies; ii) Wider consumer- base; iii) better income generation; iv) the synergical surge in capabilities, talents & workforce.

(5) Decline: Decline in business organization may occur due to several reasons:

i) When the organization is unable to pay its bills, settle its debts etc;

ii) When the technology gets easily outdated and the life cycle of services or goods is very short-lived;

iii) When there is a dearth of inspired leadership;

iv) When the planning is improper, poor or inadequate;

v) When learning, training and development is inadequate;

vi) When learning, training and development is inadequate;

vii) When enough income is not generated, and

viii) When there is no coordination between line & staff.

(6)Renewal: Renewal can happen if the decline is detected at early stage by its staff and line. Decline can be arrested and the organization can be directed towards growth and development, if the organization gets the inspired leadership of transformational executives who can change the organization’s culture and ethics. The transformational leader inspire, motivates and guides the staff by injecting new knowledge and skills.

(7) Fall or Disbanding or Death of an organization occurs due to several reasons: i) Inefficient use of resources; ii) Ineffective leadership ; iii) Lack of motivation and morale of the employees; iv) employ turn over ; v) Obsolescence of the technology, product or service ; vi) improper market/ customer orientation, and vii) Mismatching return on investment.

Design Deficiencies

The organizational design deficiencies may include.

i) Improper lines of authority---- responsibility relationship right from the start of the organization;
ii) The lack of adequate organizational structure;
iii) Role – confusion and lack of role- clarification;
iv) Organizations inability to manager run a project owing to dearth of leadership;
v) Improper delegation of authority;
vi) Lack of healthy communication;
vii) Not giving proper weightage to complexity, technology, etc.

Organizational design deficiencies could be overcome if the internal and external environment are taken into consideration.

a) Classical design floated by F.W Taylor, Fayol & Weber looked more into jobs than looking into the employees. It failed to cope with widespread changes in worker aspirations and attitudes. There was too much of specialization and resultant division of labour. It depended too much on rules and hierarchy. The fellowship was lacking among the workers. The labour turn over and absenteeism increased. Quality faded. Workers got alienated. Job was not giving satisfaction. Increased supervision brought in more rigidity.

b) Correcting the deficiencies in the mechanistic classical design, a more humanistic ‘organic design’ was brought in by Burns and Stalker. Roethlisberger, Dickson, Hawthorne Experts, douglas Mc Gregor, Chris Argyris and Rensis Likert made significant contribution to neo-classical thinking. Likert’s focus on organizational development insisted on a participative management (system 4) moving away from authorization management (System 1).

c) Blake and Mouton’s OD in a managerial grid form brought in more clarification in the earlier organizational designs by emphasizing the leadership style. Their managerial grid moved towards a humanistic design by focusing on the leadership style.

d) More focus on humanistic designs ignored other aspects of the organization, technology, economy, etc. This deficiency in humanistic design gave scope for contingency and situational design in 1970. It included situational factors, encompassing technology and economy. Contingency design considers different organizational relationship for different environments. Woodward, Fiedler, Lawrence and Lorsch’s contingency design deals with a large number of variables.

In fact the challenge is structuring is structuring an appropriate organizational design to face differing circumstances, minimizing deficiencies.

Organizational Conflict

‘Conflict’ is a disagreement between two individuals, two groups, two ideologies, etc. It exists because one side believes that its interests are negated by the other. In an organization, conflict may occur between individuals or parties. Herbert A Simon in his essay ‘On the Concept of Organizational Goal’ says, “In a multi person situation, one man’s goals may be another man’s constraints.”

Eliminating conflicts from organizations could be productive or counter productive. Conflicts may bring in strained relationships, lack of coordination and control, delay in work, etc. On the positive side of conflict, new areas of focus, improved decision ---making, innovation, etc. May be beneficial to the organization.

Managing conflict is a real tight rope walking. General belief is that all organizational conflicts are dysfunctional. It is not so. Sometimes absence of conflicts can cause a dullness or stagnation. Conflict kindles new thoughts, ideas, healthy competition, and identifies problem areas to be focused on.

Conflict occurs at 4 different levels: i) intrapersonal, ii) interpersonal, iii) intragroup, and iv) intergroup.

i)Intrapersonal: This is within the individual. This arises out of a mental disturbance, frustration or goal conflict. This will affect the person, the group he belongs to, his family, friends and even the organization to some extent.

ii)Interpersonal: This arises out of conflicting views, attitudes, goals, etc . of two or more people. This will have its repercussions on the groups and organization.

iii)Intragroup: The conflicts among the members of the same group which may affect the group processes and its effectiveness. It might even affect the organization marginally.

iv)Intragroup: Rivalry between groups and resultant behavior that leads to competition, conflict, distrust, and promotion of self-interest that affect the overall goal optimization of the organization.

Managing Conflicts: Conflicts are part of organization’s life. There are 5 ways of managing conflicts.

i)Competing style: It is an assertive but a non-cooperative behavioural style. This win- lose approach includes use of force and dominance. If a leader supports such style of behavior from individuals or groups it might lead to frustration and demotivation of other members / groups. Though in general this is not a desired one, certain circumstances like crises management may require such style of behavior.

ii)Cooperative Style: This Lose-win style means being accommodative and having unassertive behaviours. This will be favourable to others, but the person practicing this will be seen meek and submissive. It is a short-term strategy. This style is effective in terms of harmonization and building relationships.

iii)Collaborative approach: This Win –Win behavior suggests strong cooperation and assertion. Conflicts are taken cognizance of and are openly discussed, feelings shared, analyzed and evaluated. This open- minded approach yields results, cooperation, builds trust, gives maximum commitment.

iv)Compromise Logic: This give and take approach gives a long rope in achieving benefits ultimately. This practical, down – to-earth style aims at smooth run but might mar the larger interest of the organization.

Neutral Behaviour: This Lose- Lose style is a passive style, unassertive and neutral. The party which follows this approach stays away from conflict and disagreement. This avoidance style will yield negative results in the long run.

Conflict Management Style

Conflicts can be discussed debated, disputed. Listening may help resolve conflicts. There are 3 attitudes shown towards conflicts: i) Positive, ii) Negative, and iii) Antithetical.

Positive attitude towards conflicts recognizes conflict as a pointer towards solving a problem in a constructive way. This kind of attitude is beneficial both to the people and organization.

Negative attitude towards conflict affects the psyche of the people and erodes trust and strains the relationship, affecting performance.

Antithetical outlook views at conflicts both positive and negative. This rational attitude regards a few conflicts essential in deciding the organizational policies and decisions, whereas it disregards a few others which are not that important.

Negotiation is a process that helps settle disputes and conflicts in organization. Negotiations can be successful if the negotiator is open-minded; prepared; able to listen to reason; can be courteous; and can maintain equipoise.

Another technique for solving conflict is mediation. In negotiation it is a direct encounter. In mediation it is third party intervention. Mediators are supposed to be open and balanced.

Organizational Decline

Before the fall, the organization undergoes the following processes: i) it is ignorant or negligent of the initial stages of decline ; ii) though it feels the need, it fails to recognize the necessity to initiate action; iii) the action that it takes become inadequate or irrelevant; iv) it moves towards a point of collapse; v) it gets automatically dissolved.

Though decline is part of the organizational dynamics, if it is detected at an early stage when incomes/ revenues start falling, when production /manufacture start declining, a transformational leader takes necessary steps to stop the process of decline. Infact, it is easy to take steps for expansion than stop decline. To be honest, at that point of decline the employees & leader think loudly about their survival only. Adjusting the falling ends of production/ manufacture, or fast declining sales, an acceptable system of reformulation which will enable the organization to limp back to normalcy has to be designed by identifying the appropriate tension points, both internal and external.


Organizational environment is made up of three layers: i) internal, ii) intermediate and iii) external. The internal environment is contrived by the organizational structure, chart, hierarchy, design, culture, communication, leadership, motivation, morale, job design etc. The intermediate environment is dependent on the trade union, technology and the customer base, management policies and law, consumer--- orientation, etc. The external environment is dependent on the competition, politico—social environment, ethics and laws, etc.

Organizational structure may be formal or operating one. They might have centralization or decentralization. The line and staff functions are coordinated by unity of command and hierarchy. Hierarchy decides if it is a tall or short structure. Delegation of authority decides decentralization. Span of control, division of labour and departmentation help stratify the organizations into segments of specialization. Project, Matrix or network design is dependent on the organization’s philosophy & policy.

Technology, Automation and information make organizations better poised for the globalized, liberalized & privatized world. They affect and influence R&D manufacture, operations& businesses.

Organizations do have life cycles : i) starting, ii) growing, iii) diversifying , iv) mergering, v) declining, vi) renewing and vii) disbanding/ dissolving.

Classical designs had the deficiency of rigidity. They neglected the human side. The neoclassical designs emphasized on human side, and neglected the technology & economics. The contingency or situational designs emphasized on human side, and neglected the technology & economics. The contingency or situational designs consider variables like technology, economy, besides being strongly humanistic.

Conflicts are part of organizational process. They are both good and bad for the organizations. They can be resolved through negotiation and mediation.

Organizations decline and dissolve, if they are not looked into it/at the initial stage itself and corrective measures are not taken at an appropriate time.
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Review Questions
  • 1. Discuss the three layers of organizational environment.
  • 2. Elaborate on the environmental forces.
  • 3. Enumerate the key elements of organizational structure.
  • 4. Discuss the various organizational designs.
  • 5. How does technology affect the organizational environment?
  • 6. Explain how automation has revolutionized the concept of organization.
  • 7. What is the impact of IT on organization? Discuss.
  • 8. Describe the organizational life cycle.
  • 9. Discuss how the deficiency of each organizational design gave rise to a new organizational design.
  • 10. What is a conflict? How does it help or affect the organizational climate or environment? How can it be resolved?
  • 11. Write a note on organizational decline.
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