IB module 1 "The concept of business in context"

traditional authority

importance of relationships, family(kinship), customs, traditions

What are the criticism Weber makes about traditional authority?

pointed out the abusive abrasive enforcement of traditional authority
-> traditional authority = weakness for larger organizations 

criticize particularism:

hiring, or firing employees because of factors unrelated to organizations: (religion, race, sex, family connection, relation)

-> unlikely to have the most skilled workers 

proposed a more rational  legal perspective authority, *leadership and decision-making: beaurocratic management

6 principles of beurocratic management

1) wanted more formal rules (explicitly stated rules determining why, what and how to organize): high-level organizational rules: shape decision 

2) hierarchy = clear chain of command (pyramid structure with workers at the base and levels of supervisors, top : big boss)

3) authority of office/position: authority not linked with people or tradition but to explicitly formulated positions 

4) division of labor: assured that expertise is developed in specialized department -> helps authority to be spread and links it with experience

5) systematic pay structure: rational approach to career: based on merit rather than connection

6) separation between work and private life 

criticism of beaurocratic management (even though it is everywhere today)

1) red tape: (most important received) rules for the sake of rules Kakka wrote on this

2) inflexibility: makes organisations inflexible →when the context changes, changing rules proves difficult for bureaucratic organizations

3) restrict explicit particularism, but give room for covered particularism (Weber already worried about this) 

Tayor in context

observed the workers: patterns of high labor cost because of low labor efficiency

industrialization: increasing scale of production, growing complexity, rising need for smarter management → “scientific management”

became the first management consultant

principles of scientific management

Taylor’s beliefs were grounded in the principle of homo economicus (worker is a rationally calculating machine, narrowly self-interested, desires to possess wealth and motivated by money)

→ thought that piece wages would boost efficiency

1) efficiency first:

• standardization of tasks (division of labour)

• specialization of tasks (also of managers)

• piece wage

• clear management hierarchy

2) separation of thinking and doing: planning and procedures implemented by hierarchy that discipline workers

3) science: scientific analysis of work, scientific selection of workers → smart work not only harder work

time and motion studies to :

• find how much each little task took

• find the fewest number of motions required for each task

  • 1) divide work into simple elementary movements

    2) sudy how several skilled worken make each movement

    3) pick out all useless movements and dicard them

    4) use stopwatch to select the quickest and best method

    5) describe record the proper time and motions

Examples scientific management and benefits and downsides

1) Taylor: workers in a steel company → raised wage for best workers → rise in productivity

2) Henry Ford: developed the assembly line

gain of time, efficiency, goods and services more affordable

poor consideration of workers, controlling individual’s behavior

Human relations Elton Mayo

organizations = social systems

Elton Mayo: wanted to build on Taylor’s work and find other factors that could increase efficiency and productivity

mid-20s: breakthrough: observed textile company : scientific management but experienced a high rate of employees turnover → believed it was because of repetitive work → solution:: giving breaks → employee could be motivated by more than just money

Hawthorne studies:

highlighted importance of Human relations (social groups, informal relations, team spirits)

worker's attitude and morale can counteract the negative effects of fatigue, monotony, boredom

Elton Mayo: “The point of view was to regard the business organizations as a social system”

Limitations:

• effects could be a result of the experiment itself (not showing natural work behavior)

Systems Theory

previous theories: bureaucratic management, scientific management and human relation viewed the organisation as a closed system organized without influence on outside forces.

second world war proved that organizations are influenced by outside forces

business thinking: Katz and Khan: open system model → organization more complex than we thought → we can understand businesses better if we think of them as living biological organisms

Through feedback loops the system adapts in order to grow and survive in the environment

System Theory principles:

• Permeability: Systems are open

(1) Information and resources flow in and out through the boundaries of the organization.

(2) Organisations must be open to the environment in order to survive.

• Holism: The organization needs to be viewed as a whole beyond the separate parts

(1) The organization is more than the sum of its parts

(2) The units of the organizations are interdependent, and interact through mutual feedback.

• Entropy: if you do not take good care of it a system tends to run down

equilibrium: maintaining the balance in order for the system to not deteriorate (disorganization).

• Equifinality: More than one best way, there are many ways to organise (not all as good as others).

view Contingency theory woodward

contingency theory

Joan Woodward:

contingency theory: 

• most dominant form of system theory 

• focuses on how the organization fits the environment 

in her research: 

• bureaucratic approach works best for routine tasks

• organic approach works better for non-routine tasks

Network theory

Granovetter and Burt: look at organizations like networks rather than pyramids → emphasize horizontal rather than vertical relations 

• weak ties -> more jobs opportunity -> bridges to different and more unic infomation

• strong ties -> share the same kind of information

Vulnerabilities of (global) networks: World economy and intense connectivity through global networks has made the network vulnerable. → ex: coronavirus

Key Insights from a brief history of business thinking

- The pendulum swings

- All models of business thinking remain alive & kicking

- Context influences business thinking & business thinking influences context

- Extreme shocks, events, trends, trigger new business thinking.

Which contextual ring is not the focus of Introduction to Business but will receive much attention in the IBA curriculum?

 

• The "organization"

• The "activities"

• The "environment"

the activities

What does entropy refer to in the systems approach to business thinking?

 

• Entropy refers to the notion that a system tends to settle at a “status quo”, move toward a stable form of organization.

• Entropy refers to the notion that a system tends to “deteriorate”, run down, move toward “dis” organization.

• Entropy refers to the notion that a system tends to “run itself”, automatically, move toward an optimal form of organization.

Entropy refers to the notion that a system tends to “deteriorate”, run down, move toward “dis” organization.

What did Max Weber emphasize with his bureaucratic management? 

 

• No separation of work-life and private life.

 

• A weak separation of work-life and private life.

 

• A sharp separation of work-life and private life.

• A sharp separation of work-life and private life.

What motivated workers particularly according to Taylor's scientific management?

 

• Money

• Attention

• Charismatic leaders

money

What was a major finding that influenced the early development of the human relations school?

 

• Worker output went up with dimmer lights.

• Worker output went up with brighter as well as dimmer lights.

• Worker output went up with brighter lights.

Worker output went up with brighter as well as dimmer lights.

Which elements belong to the environmental level of the Business in Context model?

 

• Organizational culture and structure

• Business ethics and leadership

• Cultural and institutional frameworks

• Cultural and institutional frameworks

What is an important conclusion that can be drawn based on contingency theory?

 

• That firms become stronger because of globalization.

• That workers are human beings that are motivated by attention.

• That a bureacratic approach fits routine tasks and an organic approach fits well with non-routine tasks.

• That a bureacratic approach fits routine tasks and an organic approach fits well with non-routine tasks.

What do Kaizen and Keiretsu stand for in the Japanese business context?

 

• The formal and informal relations that firms have with politicians.

• The internal and external network of firms.

• The short-term and long-term focus leaders in firms have.

• The internal and external network of firms.

Which theory of business argues that organizations may be analyzed in terms of inputs, processes and outputs?

 

Network theory

 

Systems theory

 

Scientific management

systems theory

On which “contextual rings” of business do we focus throughout the course?

Environmental, organisational and strategic contexts of business.

What does the systems approach to business thinking emphasise?

hat organisations are made up of interdependent parts, which can only be understood by reference to the whole.

Which model of management did Weber criticise and led him to develop his bureaucratic management?

Traditional authority

How does scientific management view organisations?

As machines

Which studies were groundbreaking for the Human Relations view on management?

Hawthorne studies.

Which perspective emphasises that there is not just “one best way” to organise but that there are many best ways to organise?

Systems theory

With which metaphor did the system theorists like to describe organisations?

Organisations are like living organisms.

Which ties are more likely to give you job opportunities?

Weak ties

How did the views on business evolve in history?

Business thinking swings back and forth between viewing firms more as closed systems or more as open systems

extreme shocks in society trigger new business thinking. True of false?

true