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Chapter 1 Management Economics Notes

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37 views

Chapter 1 Management Economics Notes

Uploaded by

Gabby Operario
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 1 MANAGEMENT ECONOMICS

Organizational architecture has 2 varied different meanings

 Literally refers to the organization’s-built environment and in other sense,


 Architecture metaphorically – as a structure which fleshes out the organization’s
 Organizational architecture or organizational space – the influence of the spatial environment
on humans in and around organizations
 Organizational architecture or organizational design- the creation of roles, processes, and formal
reporting relationships in an organization
 Organization space describes the influence of the spatial environment, on the health, the mind
and the behavior of humans in and around organizations. It is an area of research in which
interdisciplinarity is a central perspective it draws from management organization and
architecture added with knowledge from. For instance, environmental psychology, social
medicine or spatial science. In essence it may be regarded as a special field of expertise of
organizations , studies and change management.
 People applied on architecture, this perspective on organizational is elaborated in organizational
space
 Organizational design or architecture of an organization as a metaphor provides the framework
through which an organization aims to realize its core qualities as specified in its vision
statement it provides infrastructure into which business processes deployed and ensures that
the organizations’s core qualities are realized across the business processes deployed within the
organization. In this way, organizations aim to consistently realize their core qualities across the
services they offer to their clients.

From the PPT

Chapter 1: Introduction

1. Define organizational architecture and discuss how economics can be used to

help managers solve organizational problems and structure more effective organizational

architectures.

2. Define Economic Darwinism and discuss its implications related to the benchmarking

of business practices.

Overall Purpose

• Provide a framework for analyzing organizational problems

• Provide basic managerial economic concepts

• Apply these concepts to operational decisions

Organizational Architecture Objectives


• Assignment of decision rights

• Methods of compensation

• Performance evaluation of individuals and units

Managerial Economics Objectives

• Which markets to enter

• Product differentiation

• Production choices

• Pricing decisions

• Market analysis and competitor behavior

The Economic Perspective

• Economics provides a framework for analyzing decisions

• How do individuals make choices?

• the role of incentives

• How can managers structure organizational architecture to motivate employees?

• incentive conflicts and opportunistic behavior

Economic Darwinism

• Only the fittest survive

• competition encourages efficient decisions

• maximizing shareholder value

• firms must adapt or close

• Firms “benchmark” successful practices

• best practices are emulated

• Appropriate organizational architecture can

• lower costs

• ensure high quality production

• Existing architecture is not random

• Surviving architectures are optimal relative to competitors

• As environments change, the appropriate architecture changes

Book Overview
• Basic concepts

• Managerial economics

• Designing organizational architecture

• Application of organizational architecture

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