Organizational Life Cycle

Presented by Group E

What is an organization?

Organization in its simplest form is a person or group of people intentionally organized to accomplish an overall, common goal or set of goals.

What is organizational life cycle?

Content
1.Organization Birth 2.Population Ecology Model of Organizational Birth 3.Institutional theory of organizational growth 4.Greiners model of organizational growth 5.Organizational Decline 6.Weitzel and Jonsons model of decline 7.Managerial implications

Organizational Birth
Entrepreneurs Opportunities Utilize resources Create value

Risks involved
Liability of newness Inability to predict Mistake in judgment Lack of formal structure Conditions of Environment

Examples
Sinful something Something Fishy Sandys chocolate Factory Maya

Purpose of a Business Plan

Action Plan Road Map Sales tools Example : Google

SWOT Analysis

Population Ecology Theory

A theory that seeks to explain the factors that affect the rate at which new organizations are born(and die) in a population of existing organizations. The availability of resources determines the number of organizations in a population.

Population Ecology Theory

Number of Organizatio n
Birthrate tapers off Birthrate is rapidly increasing

Time

Factors Accounting for rapid birthrate Increase in knowledge and skills available to generate similar new organizations. When an organization becomes successful, it acts as a roll model. Factors Accounting for birthrate tapering off Availability of resources for late entrants diminishes. Difficulty of competing with

Survival Strategies

Set of Strategies that organization follows to survive are:

r-Strategy vs K-Strategy

Specialist Strategy vs Generalist Strategy

r-Strategy vs K-Strategy

r-Strategy: A strategy of entering a new environment. Major advantage that r-strategy obtain is first mover advantage. Example: Apple entered the market with i-pad and ipods K-Strategy: A strategy of entering an environment late, after other organizations have tasted the water. Example: Samsung and Sony erricsson entered after Nokia and Motorola have proved their global success.

Specialist Strategy vs. Generalist Strategy

Specialist Strategy: Organizations that concentrates their skills to pursue a narrow range of resources in a single niche for e.g Smart phones. By concentrating on one niche they tend to outperform Generalist in that niche. For e.g. Nvidia, leader in Graphics chip but could not compete with Intel or AMD for microprocessors or memory chips Generalist Strategy: Organizations that spread their skills thinly to compete for a broad range of resources in many niches. They outperform Specialist when environment is uncertain as they have better spread across many niches. Example: Inexpensive cell phones

Organizational Growth
Develop skills & competences. Control over scarce resources & reduce uncertainty Division of labor & specialization Institutional theory of organization growth
Legitimacy Stake holders

Isomorphism

Greiners Model Of Organizational Growth

Stages

1. Growth Through Creativity

Crisis of Leadership

2. Growth Through Direction

Crisis of Autonomy

Growth through Delegation 1. Solve crisis of Autonomy

2.Reduce costs and improve products 3.Explosive growth leads to crisis of Control

Growth through Coordination

Stage 4: Growth through coordination
To resolve crisis of control, managers must find right balance of centralized and decentralized control. Crisis of red tape

Growth through Collaboration

Greater spontaneity in management action through teams and skillful confrontation of interpersonal differences. More organic by making adjustment and less use of standardization.

Decline and Death

 When an organization fails to anticipate , recognize , avoid , neutralize or adapt to external or internal pressures that threaten its long term survival .

The Liability of Newness

The risk of dying is highest at the point of founding of an organization and decreases with growing age of the organization

The learning of the new roles takes time and leads to economic inefficiencies Trust among the organizational members has yet to be developed New organizations have not yet built stable portfolios of clients Subject to stronger selection pressures

Organizational Inertia
Internal forces that resist change

Organizations usually do not have the ability to easily change their strategy or structure

Power and Conflict, Mechanistic Structure, Risk aversion, Desire to maximize rewards, Overly bureaucratic culture

Changes in the environment

Structure and strategy have to be adapted quickly

Constant pressure to match competitors

Organizations sometimes grow too fast or too much

The greater the uncertainty in the environment, more likely it is that some organizations will fail

Weitzel and Jonsons model of decline

Decline occurs by degrees and at each stage managers prompt action can reverse the decline.

Stage 1: Blinded organizations are unable to recognize the internal or external problems that threaten their long-term survival Stage 2: Inaction despite clear signs of declining performance such as decreased sales or profits, top management takes little actions to correct problems

Weitzel and Jonsons model of decline

Stage 3: Faulty action managers may have made the wrong decisions because of conflict in the top-management team, or they may have changed too little too late Stage 4: Crisis by the time this stage has arrived, only radical changes in strategy and structure can stop decline Stage 5: Dissolution decline is irreversible and the organization cannot recover

Weitzel and Jonssons Model

Managerial Implications
Continuous Analysis of organization structure, environment and the niches that the organization occupies. Consult external consultants to analyze organization decline Utmost priority to the stakeholders.

References:
Organizational Legitimacy and the Liability of Newness Jitendra V. Singh, David J. Tucker and Robert J. House, Administrative Science Quarterly Vol. 31, No. 2 (Jun., 1986), pp. 171-193

Stinchcombe, A.L. (1965): Social Structure and Organizations. In: March, J.G. (ed.), Handbook of Organizations. Chicago: Rand McNally & Company, 142-193. Organizational Theory, Design And Change - Gareth R. Jones, Mary Mathew

The E Group, T.A Pai Management Institute (TAPMI), Manipal, India

Arun Pathrose Sunandha K Rahul Babu Namrata Mahapatra Chandni Kumar Santhosh Annam Krishnamohan Dwivesh Chander Nitin Jindal Tushar Nanda

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