Competitor Analysis-Soft Drink Industry

Question 1: Discuss each of the following theories of organisational design

1.1 Classical Organisational theory

1.2 Neoclassical Organisation Theory.

1.3 Systems Theory

1.1 Classical Organisational Theory.

One of the leading proponents of classical organisation theory was Max Weber a leading German sociologist. Weber ( 1947:7) argued that power is principally exemplified within organisations by the process of control. He further distinguished between authority and power by defining power as any relationship within which one person could impose his will, regardless of any resistance from the other, whereas authority existed when there was a belief in the legitimacy of that power. Weber classified organisations according to the nature of that legitimacy as hereunder;

„X Charismatic authority, which is based on the sacred or outstanding characteristic of the individual.

„X Traditional authority which is essentially a respect for custom

„X Rational legal authority which is based on a code or set of rules.

Rational legal authority developed into the most predominant form of authority of the three. Weber (1947:9) contested that rational legal authority is attained through the most efficient form of organisation, bureaucracy. He further argued that managers should not rule through arbitrary personal whim but by a formal system of rules.

Weber believed that bureaucracy is the most efficient form of an organisation, and based on his ideas concerning the legitimacy of power Weber outlined the characteristics of bureaucracy in its purest form and includes,

„X An organisation having clearly defined and documented set of rules such as a company handbook and other written instruments of company policy.

„X Specialisation which entails division of labour according to functional expertise. In modern times this is the notion of individual departments such as sales, procurement, accounting, administration, information technology etc

„X A clearly defined hierarchy of offices or chain of command which relates to system of supervision based on clear levels of authority.

„X Rules which entails a stable comprehensive system of conduct which can be learned and may require technical qualifications to understand and administer

„X Impersonality, which entails no hated or passion with equality of treatment for all clients of the organisation.

„X Individual advancement based on merit, meaning promotions should go to those who deserve and perform well on the job.

„X Professional managers are required but those that own the company do not necessarily have to posses the expertise needed to keep it running smoothly

Key Criticisms of Classical organisation theory.

Thompson and McHugh (2002:87) argue that the classical theory is essentially prescriptive. The writer agrees with this analysis and further argues that this approach is entirely at variance with modern management thinking which emphasises on empowerment, teamwork and motivated performance

.

1.2 Neoclassical Organisation Theory.

The Neoclassical Organisation theory developed as reaction to the tough authoritarian structure of classical theory. The most serious objections to classical theory are that it created over-conformity and rigidity thus working against creativity, individual growth and motivation. Neoclassical theory emphasised on addressing many of the problems inherent on classical theory. This section will use empirical evidence and theory to discuss Neo-classical theory as regards individual growth, creativity and motivation.

Scientific Management.

Frederic Winslow Taylor (1856-1915) attempted to systematically analyze human behaviour at work by making individuals into the equivalent of machine parts. Just as machine parts were easily interchangeable, cheap and passive, so too should human parts be the same in the machine model of organisations. There was eventual resistance to what some workers considered dehumanisation of work even though studied and encouraged management to study the relationship between work breaks, working hours and productivity.

Howthorne Works.

The Howthorne studies showed how work groups provide mutual support and effective resistance to management scheme to increase output. The study found that workers did not respond to classical motivational approaches but rather that workers were also interested in the reward and punishments of their work group.

Elton MayoÐŽ¦s Hawthorne Experiments.

Mayo( 1933: 12) concluded that any change has a positive impact on productivity. The act of paying attention to employees in a friendly and non threatening way was sufficient by itself to increase output. Uris (1986: 225) in his ÐŽ§wartЎЁ theory of productivity argued that nearly any treatment can make the wart go way implying nearly anything will improve productivity.

Mayo came to the following conclusions

„X Work is a group activity

„X The social word of the adult is primarily patterned about work activity

„X The need for recognition , security and sense of belonging is more important in determining workerÐŽ¦s moral and productivity than physical condition under which he works

„X Informal groups within the work plant exercise strong social controls over the work habits and attitudes of the individual worker.

„X Group collaboration does not occur by accident, it must be planned

and developed.

Simon (1945:16) proposed a model of limited rationality to explain HawthorneÐŽ¦s experiments and stated that workers could respond unpredictably to managerial attention. The writer argues that MayoÐŽ¦s theory is a bit too idealistic in attempting to remove any from of conflict from the organisation.

David McclellandÐŽ¦s