Behavioral theories of organization

Behavioral theories of organization

What is Organizational Behavior?

 Specialized field of study concerned with understanding and analyzing the human behavior in organization

Model for organizational behavior

1.       Cognitive Frame work

2.       Behavouristic Framework

3.       Social learning framework

Cognitive approach

It emphasizes the positive aspects of human behavior and uses concepts such as expectancy, demand, and intention.  Cognition can be simply defined as the act of knowing an item of information.  In cognitive framework, cognitions precede behavior (goal directed behavior) and constitute input into the person’s thinking, perception, problem solving, and information processing.

It means that a person desires a goal and also knows the behavior that will lead to achievement of the goals.

Behavouristic Framework

Pavlov’s  Stimulus – Response( S-R ) model states that Stimulus elicit(bring out) response- Physical reflexes

Stimulus means external factor affecting you and it may change the response of human

Example: discount on a product (stimulus) may change the consumers buying habit(response)

B.F Skinner- Consequences to a response can explain most behavior than a eliciting stimuli.(R-S) .

Behavior is a function of consequences.

 Employees learn by observing the consequences of their actions.

Social learning framework

Behavior can be explained in terms of a continuous reciprocal interaction of cognitive, behavioral and environmental determinants.

Behavior is learned from environment through process of observation learning. Children observe people around them , behave in that way, influenced by parents, Television, friends, political and social environments.

COMMITTEE

Committee

It is a group of people in an organization for making or recommending decisions.

Making decision done by Executive committee

Recommending decision done by Advisory committee.

Minimum 2 persons in a committee, no maximum limit, but if > 7 no intercommunication possible between committee members..

One vote for each member in a committee.

Types of Committees in an organization

1.      Finance committee

2.      Budget committee

3.      Purchase committee

4.      Welfare committee

Group Behavior in a Committee

Y a committee?

A committee is created to solve the problems which cannot be solved by individuals.

Committee does it through meetings. It is a group behavior, as here in meeting members communicate face to face.

Components constituting group behavior in a committee

1.      Chairman members relationship

A committee has its own authority and responsibility. All members have equal authority

 ie. One man one vote.

But the chairman of a committee has more authority, he can cast a vote to break the deadlock and arrive at decision. He convenes the meeting, deliberations and discussions held under his guidance and control. He is responsible to integrate ideas of the committee members.

2.      Participation

A person is put in a committee to contribute something through attending the meetings held.

3.      Group pressure

Integrating ideas of group is greater than individual contributions.

4.      Decision process

5.      Decision making in a committee happens through process of committee deliberations

Reasons for using committee

1.      Pooling of knowledge and experience

2.      Facility of coordination

3.      Representation of interest groups

People from different groups should have their own say in the functioning of organizations.

Example: Self financing college fees regulation committee meeting will be attended by a member from each self financing college to say their opinion.

4.      Fear of too  much authority in a single person

5.      Motivation through participation

To be involved and committed to a decision make employee motivated.

Problems of committee

1.      High cost

Need Lot of time and money

2.      Slow decision

3.      Indecisions

Some time because of lack of time for deliberations meeting can be adjourned without taking a decision.

How to make a committee effective

1.      Appropriate size of committee

2.      Selection of members – based on their personal characteristics

3.      Well defined authority and scope- clearly specify what the committee can do(advise or make decision)

4.      Nature of subject matter- ---policy matters we need committee, routine functions an individual can do it no need of committee

5.      Effective chairman

TYPES OF AUTHORITY

In an organization, there are three types of authority.

·        Line authority gives a manager the right to direct the work of his or her employees and make many decisions without consulting others. Line managers are always in charge of essential activities such as sales, and they are authorized to issue orders to subordinates down the chain of command.

·        Staff authority supports line authority by advising, servicing, and assisting, but this type of authority is typically limited. For example, the assistant to the department head has staff authority because he or she acts as an extension of that authority. These assistants can give advice and suggestions, but they don't have to be obeyed. The department head may also give the assistant the authority to act, such as the right to sign off on expense reports or memos. In such cases, the directives are given under the line authority of the boss.

·        Functional authority is authority delegated to an individual or department over specific activities undertaken by personnel in other departments. Staff managers may have functional authority, meaning that they can issue orders down the chain of command within the very narrow limits of their authority. For example, supervisors in a manufacturing plant may find that their immediate bosses have line authority over them, but that someone in corporate headquarters may also have line authority over some of their activities or decisions.

Functional Authority is given to a line or staff manager to do a specific job. When the job is completed, the authority is taken back.

For e.g. The normal job of the Marketing manager is to sell the products of the company. The Managing Director (MD) may give him authority to conduct a New Year Party for the full company. This authority is called Functional Authority. So, functional authority is given to a manager to do a specific job. This job is not his normal job. When he is doing this new job, he may or may not do his normal job. The manager already has a line or staff authority to do his normal job. Thus, Functional authority is an additional authority given to him to do the new job. When this new job is completed, the functional authority is taken away, and he has to go back to his normal job.

Functional Authority is different from Line Authority because line authority is given only for one particular department. For e.g. A Production manager is given line authority only for the production department. However, Functional Authority may be given for a particular department or for the full organisation. For e.g. In the first example, the Marketing manager is given functional authority to conduct a new year party for the full organisation. So, Functional Authority is not restricted to a particular department.

Functional authority is also different from staff authority. This is because the manager that has staff authority cannot do anything. He can only give advice and service. However, the manager that has functional authority can do something. Here, functional authority is similar to line authority. In fact, it is a type of limited line authority.

Features of Functional Authority

The characteristics or features of functional authority are:-

Functional authority is given to a manager to perform a specific function.

The manager may be a line manager or a staff manager. But mostly functional authority is given to a staff manager.

It is not limited to a particular department. It may even cover the full organisation.

It is an additional authority. It is given to a manager in addition to his normal (line or staff) authority.

It is removed when the work is completed.

Advantages of Functional Authority

The importance or merits or advantages of functional authority are:-

The specific function is given to another manager. So, the line manager can concentrate on his regular job.

The specific function is performed by an expert. So, it will be done efficiently.

The service of the staff managers will be utilised fully for the benefit of the organisation.

It is suitable for large organisations.

The authority and responsibility is well-defined.

CORPORATE STRATEGY

CORPORATE STRATEGY

Corporate strategy

The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals.

 Corporate strategy is often stated explicitly in a "mission statement".

Corporate Strategy

Issues include:

• Scope of Business-----What Business you are in??

Product scope. How specialized should the firm be in terms of the range of products

it supplies? Coca-Cola (soft drinks), SAB Miller (beer), Gap (fashion retailing), and

Swiss Reliance (reinsurance) are specialized companies: they are engaged in a single

industry sector. General Electric, Samsung, and Bertelsmann are diversified

companies: each spans a number of different industries.

Geographical scope. What is the optimal geographical spread of activities for the

firm? In the restaurant business, Clyde’s owns 12 restaurants in the Washington DC

areas, Popeye’s Chicken and Biscuits operates throughout the US, McDonald’s

operates in 121 different countries.

Vertical scope. What range of vertically linked activities should the firm encompass?

Walt Disney Company is a vertically integrated company: it produces its own movies,

distributes them itself to cinemas and through its own TV networks (ABC and

Disney Channel), and uses the movies’ characters in its retail stores and theme parks.

Nike is much more vertically specialized: it engages in design and marketing but

outsources many activities in its value chain, including manufacturing, distribution,

and retailing.

• Resource deployment----How you are going to use your resources??
• Competitive advantage----What are your competitive advantages??
• Coordination of Production, Marketing, Personnel etc.----

Corporate planning

Corporate planning represents a formal, structured approach to achieving objectives and to implementing the corporate strategy of an organization.

It is the process of drawing up detailed action plans to achieve an organization's goals and objectives, taking into account the resources of the organization and the environment within which it operates.

Methods of developing Corporate Strategy

1.            Boston   matrix

Market Share and Market Growth

To understand the Boston Matrix, you need to understand how market share and market growth interrelate.

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. The higher your market share, the higher the proportion of the market you control.

 Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.

Understanding the Matrix

The Boston Matrix categorizes opportunities into four groups, shown on axes of Market Growth and Market Share:

These groups are explained below:

Dogs: Low Market Share / Low Market Growth
In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. You won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. And because market growth is low, it's going to take a lot of hard work to improve the situation.

Cash Cows:
High Market Share / Low Market Growth
Here, you're well-established, so it's easier to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing, and your opportunities are limited.

Stars:
High Market Share / High Market Growth
Here you're well-established, and growth is exciting! There should be some strong opportunities here, and you should work hard to realize them.

Question Marks (Problem Child):
Low Market Share / High Market Growth
These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there.

2.            SWOT Analysis/TOWS Matrix

The SWOT analysis allows managers to develop a strategic plan by examining organizational strengths and weaknesses in terms of the opportunities and threats presented by its environmental elements. Subsequent strategies and tactical decisions can produce a competitive advantage.

A SWOT Analysis examines the companies:

• Strengths...Internal
• Weaknesses...Internal
• Opportunites...External
• Threats...External
• 
  
  

By developing a SWOT analysis, a company can determine what its distinctive competencies are. This will help determine what the organization should be in business for, what its mission should be.

3.            Product life cycle
Four Stages to the Product Life Cycle:

1. Introduction
2. Growth
3. Maturity
4. Decline

INTRODUCTION

Failure rate for new products can range from 60%-90%, depending on the industry. A product does not have to be an entirely new product, can be a new model (car).

Marketing Mix(MM) considerations

Need to build channels of distribution/selective distribution
Dealers offered promotional assistance to support the product...PUSH strategy.
Develop primary demand/pioneering information, communications should stress the benefits of the product to the consumer, as opposed to the brand name of the particular product, since there will be little competition at this stage and you need to educate consumers of the product's benefits.
Price skimming...set a high price in order to recover developmental costs as soon as possible.
Price penetration...set a low price in order to avoid encouraging competitors to enter the market, also helps increase demand and therefore allows the company to take advantage of economies of scale.
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GROWTH

Need to encourage strong brand loyalty, competitors are entering the market place. Profits begin to decline late in the growth stage.
May need to pursue further segmentation.

MM considerations

May need to perform some type of product modification to correct weak or omitted attributes in the product.
Need to build brand loyalty (selective demand), communications should stress the brand of the product, since consumers are more aware of the products benefits and there is more competition, must differentiate your offering from your competitors.
May begin to move toward intensive distribution-the product is more accepted, therefore intermediaries are more inclined to risk accepting the product.
Price dealing/cutting or meeting competition, especially if previously adopted a price skimming strategy.

MATURITY

Sales curve peaks-severe competition, consumers are now experienced specialists.

MM Considerations

A product may be rejuvenated through a change in the packaging, new models or aesthetic changes.
Advertising focuses on differentiating a brand, sales promotion aimed at customer (PULL) and reseller (PUSH).
Move to more intense distribution
Price dealing/cutting or meeting competition
Provides company with a large, loyal group of stable customers. Generally cash cows that can support other products.
Strategies during maturity include:

DECLINE

Sales fall off rapidly. Can be caused by new technology or a social trend.
Can justify continuing with the product as long as it contributes to profits or enhances the effectiveness of the product mix.
Need to decide to eliminate or reposition to extend its life.

MM Considerations

Some competition drop out
Need to time and execute properly the introduction, alteration and termination of a product.