CHAPTER 1 * 1. 1- 1- Organizational Theory, Design, and Change Sixth Edition Gareth R. Jones Chapter 1 Organizations and Organizational Effectiveness * 2. What is an Organization? Organization: a tool used by people to coordinate their actions to obtain something they desire or value Organizations provide goods and services Organizations employ people Organizations bring together people and resources to produce products and services Basically, organizations exist to create value Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall * 3. How Does an Organization Create Value? Value creation takes place at three stages: input, conversion, and output Each stage is affected by the environment in which the organization operates Environment – the set of forces and conditions that operate beyond an organization’s boundaries but affect its ability to acquire and use resources to create value Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall * 4. Figure 1.1: How an Organization Creates Value Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall * 5. Why Do Organizations Exist? People working together to produce goods and services create more value than people working alone 5 major reasons why organizations exist: To increase specialization and the division of labor Division of labor allows specialization Specialization allows individuals to become experts at their job To use large-scale technology Economies of scale: cost savings that result when goods and services are produced in large volume Economies of scope: cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall * 6. Why Do Organizations Exist? (cont.) To manage the