Organizational Systems: Structure, Environment and Change

Definition of an Organization

An organization is a group of people using resources to carry out interrelated and coordinated activities for a given objective.

Systematic Practices to Develop an Organization

To develop and create an organization, it should incorporate three systematic practices:

• Continuously improve everything.
• Develop new applications based on past successes.
• Maintain structures or layers that enable fast decision-making.

Nature of the Organization

An organization typically has the following characteristics:

• a group of people
• relative permanence
• hierarchy of authority, often uninterrupted
• interaction, decision-making and coordination with the environment

Open Systems: Companies and Their Environment

A company is a man-made system that maintains dynamic interactions with its environment — customers, suppliers, competitors, unions and many other external actors.

Dynamic Evolution of Organizations

Organizations are living entities: they change and evolve with their environment. Nothing remains static. Organizations not only change their behavior but also their structure. The ability to alter structure is called the morphological property of organizations.

Growing Complexity and Environmental Rings

The environment of an organization can be represented as three concentric rings. The outer, more abstract ring contains general factors that shape the atmosphere; the intermediate ring contains concrete factors and specific institutions or interest groups that the organization must treat and engage with.

Factors in the Environment

The outer ring includes economic, technical, social, legal and political factors. Customers, suppliers and shareholders belong to that abstract outer ring. These factors include trends and general conditions the organization must address. The organization can also be viewed in terms of the elements that constitute its immediate environment: the intermediate ring.

Accelerating Sources of Change

The five aspects of an organization’s environment have become accelerating sources of change:

• Physical aspects: increasing population, dwindling resources and increased pollution.
• Social aspects: pressure from interest groups that push companies to adopt greater social responsibility.
• Informational aspects: rapid movement of large amounts of information.
• Political issues: more direct contact with various levels of government.
• Moral aspect: increased pressure for ethical conduct.

Trends Transforming Organizations

Key trends that change organizations include:

• Industrial to information society: society is increasingly dominated by information and management-type work.
• Technology: industries increasingly adopt high-tech equipment such as computers and robots and tend to shift production methods accordingly.
• National economy and internationalization: there are increasing trends of industries becoming internationalized.
• Short term focus: companies increasingly take short-term actions, even when they realize the long-term consequences.

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