Management



Management

Q1. What is the relationship among organizational theory, organizational design and change, and organizational structure and culture?

Organization theory describes how the company functions and what procedures it follow. The objective of the organization theory is to create value for the stakeholders is a key for success in the long term. Some organizations only focus on creating value for their shareholders, hence fall back and do not perform up to the standard. However, those firms who cater to all their stakeholders do well in the long run and often establish a very strong brand name. Organizations feel that fundamental functions of an organization like finance, sales, production and marketing lead to value creation for the stakeholders. These functions are independent of each other these areas have different working and each function are considered very important.

Two hundred years of research in economics and finance show that, in the absence of monopolies and externalities, social welfare is maximized when each firm in the economy maximizes its total market value. The total cost is not just the cost of equity, but also includes the market value of all other financial claims including debt, preferred stock and warrants. The managers should take into account the interests of all stakeholders in the enterprise side. Creating value for stakeholders assists in maximizing the value as an organization (Capstone, Schabracq, 2007).

Strategic Resources must be used in order to help the organization to create value for the organization. It helps the organization to develop an integrated perspective with the help of all the functions of an organization. When these areas are integrated, the organization is better able to create value for the organization. The leadership plays a crucial role in this regard; it can influence the whole team to make their contribution that assist in building value for the stakeholders.

It is important to divide the resources into different kinds that help organizations to achieve their goals that are creating value for not only the shareholders, but also the stakeholders. Organization's resources could be divided into two types that enabling and Value-Driving. Enabling Resources is the basic tools that help an organization to carry out its work. Such enabling resources include the cash, raw materials and all other important sources that help an organization to carry out its objectives.

Organizations use enabling resources that help organizations to create value for their customers, shareholders and all the stakeholders involved. It totally depends upon the leadership on how it uses its resources to create value for the stakeholders over time. It is the responsibility of leadership on how to manage and use strategic resources for value creation. There are times when the management fails to identify such resources leading to problems for the organization. Hence, the organization designs the theory in a way that meets the objective of organizational theory that is to create value for all the stakeholders (Burke, Warner, 2010).

If the company fails to achieve its objective of creating value for stakeholder and needs ...