Internal variables

Internal variables
 Internal variables
 Internal variables are situational factors within
the organization.
 The major variables within the organization
that management must consider are
 objectives,
 structure,
 tasks,
 technology,
 people.
Objectives
 An organization is a group of people with
conscious, common objectives. Expressed
another way, an organization may be viewed
as a goal-attaining vehicle that enables
people to do collectively what they could not
do individually.
 Objectives are the specific end states or
desired results the group wishes to attain by
working together
Objectives
 Management develops objectives through the
planning process and communicates them to
members of the organization. This process is
a powerful mechanism of coordination
because it lets members of the organization
know what they should be trying to
accomplish.
Objectives
 There is great diversity of objectives among
organizations, especially those of radically
different types. Business organizations are
primarily concerned with providing a
particular good or service within specific cost
and profit constraints. This concern is
reflected in objectives for such areas as
profitability and productivity.
Objectives
 Organizations such as governmental
agencies, educational institutions, and
nonprofit hospitals are not primarily
concerned with profits, but they are
concerned with costs. This concern is
reflected in a set of objectives revolving
around providing a specific service within
specific budget limits.
 Structure
 organizations are comprised of several levels of
management and several subunits. Another
term for these subunits is functional areas, not
to be confused with the functions of
management. Functional area refers to the work
the unit performs for the organization as a
whole, such as marketing, producing, personnel
training, or financial planning.
 The structure of an organization is the logical
relationship of management levels and
functional areas arranged in such a way as to
permit the effective attainment of objectives
Tasks
 An outgrowth of division of labor is the
creation of tasks. A task is an assigned job,
series of jobs, or piece of work that is to be
completed in a specified manner within a
specified period of time. Technically, tasks
are assigned not to people but to positions. if
every task is performed as and when it
should be, the organization will succeed.
Tasks: Characteristics
 Organizational tasks are traditionally classified
within three categories. These are working with
people, working with things (machines, raw
materials, or tools), or working with information.
For example, in a typical factory assembly line
employees' tasks involve things. The
supervisory manager's tasks primarily involve
people. The corporate treasurer's tasks involve
information.
Technology
 Technology, the fourth important internal
variable, has a much broader meaning than
commonly believed. Most people think of it as
associated exclusively with inventions and
machines such as semiconductors and
computers. However,
 Technology is a transforming raw materials—
people, information, or physical materials—
into desirable goods and services.
Technology
 Technology includes the combination of:
 skills,
 equipment,
 facilities,
 tools,
 relevant technical knowledge
 needed to bring about desired
transformations in materials, information, or
people
Technology

 Machines, equipment, and supplies, of

course, can all be viewed as components of
technology, but the most important
component by far is the process whereby raw
materials are transformed into the desired
outputs. Technology basically is a technique
which enables this transformation.
Technology
 Theimpact of this variable on management
was strongly affected by three major
technological breakthroughs of the Industrial
Revolution:
 standardization,

 mechanization,

 the moving assembly line.

 Technology:
Standardization and Mechanization
 The first application of standardization, the use of
uniform, interchangeable components in
manufacturing, is attributed to Eli Whitney, inventor
of the cotton gin. He came up with the idea of
standardization while working on a contract to
produce army muskets, which until then had been
individually handcrafted. Using standardized parts
drastically reduced both the initial cost and the cost
of repair. Because the parts of a Whitney musket
were interchangeable with others of the same type,
a gun could easily be repaired in the field by simply
replacing the defective part.
 Technology:
Standardization and Mechanization
 The concept of standardization stimulated a high
degree of specialization by opening up new avenues
for the use of unskilled or minimally skilled labor. On it is
based the mass production of goods and services
characteristic of our society. Few products today are
not standardized to some degree. Even custom
automobiles use many standardized components.
 Standardization and mechanization, the use of
machines in place of people, are now widespread even
outside of manufacturing. Low-cost fast food, for
example, is based on McDonald's application of such
practices to making hamburgers.
Technology:
The Moving Assembly Line.
 Standardizationand mechanization
were already widespread when the
automobile industry began at the turn
of previous century. In its first years
workers followed each auto through
production, changing work stations
whenever it was time to add a major
new component.
 Technology:
The Moving Assembly Line.
 Then, in August 1913, Henry Ford introduced the
idea of moving the cars by a conveyor belt and
having the workers remain stationary. Because
workers no longer lost time changing work
stations, the time required to build a Model T car
was greatly reduced. To comprehend what this
meant, you should know that before Ford used the
conveyor belt the average auto wholesaled for
$2100. Ford's Model T retailed for $290 in 1918.
Technology:
The Moving Assembly Line.
 Today the moving assembly line is used
almost universally in manufacturing
complex products of all kinds. To take full
advantage of it, tasks performed by
workers have become increasingly
narrow. Some assembly-line jobs are now
so specialized that a worker might do
nothing more than tighten a few screws on
the same component day in and day out.
Technology
 Standardization, mechanization, and the moving
assembly line had a profound effect not only on
the design of tasks but on all of management. As
a result of these and later innovations, technology
and tasks can strongly affect organizational
effectiveness.
 The classification of technologies by Joan
Woodward and James Thompson reflects the
interrelationship between tasks and technology.
 Woodward's Technology Categories.
She found, through a study of manufacturing
firms, that the technologies of production firms
all fit within one of three categories:
 1. Unit, small-batch, or custom processing is
a technology in which only one unit or a small
quantity of units is produced at one time. Often
the item is custom-made to the buyer's
specifications or is a prototype. Boeing
commercial and military jet aircraft, and space
vehicles are produced by unit processing. So,
too, are all custom-made products, such as
custom surfboards, boats, furniture, and clothing.
 Woodward's Technology Categories.
She found, through a study of manufacturing
firms, that the technologies of production firms
all fit within one of three categories:
 2. Mass or large-batch production is used to
make large quantities of items that are identical
or similar. This type of production makes heavy
use of mechanization, standardized parts, and
assembly-line techniques. Almost all consumer
goods are built with mass-production technology.
 Woodward's Technology Categories.
She found, through a study of manufacturing
firms, that the technologies of production firms
all fit within one of three categories:
 3. Process production uses automated
equipment, usually around the clock, to produce
continuously large volumes of an identical
product. Examples of process production
operations are gasoline refining, steel and
copper smelting, and operating of electric
utilities.
 Thompson's Technology Categories. He
developed a different, but not contradictory,
system of classifying technologies. According
to him, technologies can be described by the
following three categories:
 1. Long-linked technology is characterized by a
series of interdependent tasks that must be
performed in sequence. A mass-production
assembly line is a typical example. Each task in
the assembly of an automobile must be
performed in a specific order. The engine, for
instance, cannot be mounted before the frame is
built.
 Thompson's Technology Categories. He
developed a different, but not contradictory,
system of classifying technologies. According
to him, technologies can be described by the
following three categories:
 2. Mediating technology is characterized by the
meeting of groups, such as clients or customers,
who are or wish to be interdependent. For
example, banking is a mediating technology that
links depositors and borrowers. Telephone
companies mediate between people who wish to
make calls and those who wish to receive them.
Employment agencies link suppliers of labor with
buyers of labor.
 Thompson's Technology Categories. He
developed a different, but not contradictory,
system of classifying technologies. According
to him, technologies can be described by the
following three categories:
 3. Intensive technology is characterized by the
application of specific techniques, skills, or
services to make a specific change in a specific
input. Editing a film would be an example of
intensive technology.
 Link between Thompson and
Woodward Categories
 The categories proposed by Thompson are not
inconsistent with those of Woodward. Long-linked
technology is essentially equivalent to mass production
and some forms of process production. Intensive
technology is equivalent to custom technology. Its intent
is to maximize flexibility. Mediating technologies fall
between custom processing and mass production in
many respects. They are used primarily when some
standardization is possible and efficient, but output
cannot be wholly uniform. A mediating technology
enables the organization to deal with variations in the
needs of the parties linked to some degree.
 No type of technology is "best."
 Each has advantages and is most suitable for
performing certain tasks or attaining certain
objectives. To give an obvious example, a
custom-built Ferrari racing car is mechanically
superior in every respect to a mass-produced car.
However, the mass-produced car also has
advantages. It costs much less to make and is
perfectly adequate for an average driver on
average roads.
 People
No technology is useful and no task can
be performed without the cooperation of
people, the fifth internal variable
 In our course we often speak of organizations
doing this, management doing that. But it is
important to remain aware that "management," the
"organization," and "subordinates" are groups of
people. When a plant closes, some individual, not
an abstract management, made the decision.
When output is of low quality, it is not "workers" but
several individuals who have not been motivated
or taught to do the work correctly.
People
 Ifmanagement—individual managers—fails
to recognize that each employee is an
individual with unique feelings and needs, the
organization's ability to attain objectives will
be seriously impaired. Management, after all,
attains objectives through other people.
People, therefore, are a central factor in any
model of management.
Person characteristics
How a person behaves in general and at work results
from a complex combination of individual and
environmental characteristics . In no two people do
these characteristics take the identical form.
 Person characteristics: Abilities
 Perhaps the most obvious way in which people differ
is in ability, the capability to perform a specific
activity. Some people have more ability than others
to perform such tasks as typing, computer
programming, conducting meetings, preparing written
reports, supervising others, planning or just about
any other type of work the organization needs
performed to attain its objectives.
 These differences in ability are partly the result of
inherited characteristics such as intelligence and
physical stature. But usually, especially at work,
ability is learned.
 Person characteristics: Usage of
Abilities
 Organizations almost always attempt to take
advantage of differences in ability when deciding
who is to perform a task. Selecting the person
best able to perform a job is a logical means of
increasing the potential gains of specialization.
One would assume that the person with the
greatest ability should perform a given task most
effectively. However, in practice it is common for
other factors that influence behavior to cause a
person not to perform in accordance with his or
her true ability.
Person characteristics: Changing of
Abilities

 Thisis one reason why many organizations

prefer to increase a person's ability to
perform a specific task through training
whenever possible, if that person's other
characteristics seem well suited to the new
work. Ability is perhaps the easiest individual
characteristic to change.
Person characteristics: Aptitude
 Aptitude is a person's potential capacity to do
something. The result of either or both inborn
qualities and learned experience, aptitude can be
thought of as latent talent in a specific area. The
influence of aptitude is often most apparent in
areas such as music and sports. For example,
outstanding athletes often can play a new sport
well almost immediately.
Person characteristics: Aptitude
An aptitude in a specific area usually
facilitates acquiring an ability to perform
effectively in that area. Aptitudes become
important to management when selecting
people for training. Unless the manager
correctly assesses a person's aptitude for the
work, the time and expense of training may
be wasted.
Person characteristics: Needs
 A need is an internal state of psychological or
physiological deficiency.
 The most basic needs are physiological (food, water,
and shelter) and the psychological need for affiliation
(the companionship of other people). Many people
also seem to have needs for power and achievement,
but these may not surface until more basic ones are
met. When an active need is not satisfied, a person
will behave in a way that will lead to satisfaction,
even though the individual may not even be
consciously aware of the need.
Person characteristics: Expectations
 Based on past experience and an
assessment of the present situation,
people form expectations about the
probable outcome of a given behavior.
Consciously or unconsciously, they
decide how likely or unlikely it is that
something will occur. These expectations
exert a strong effect on present behavior.
Person characteristics:
Expectations (example)
 For example, if a salesperson expects that
making nine more sales calls a week will
increase sales by 15 percent and thereby
lead to a bonus, he or she will probably make
those calls. However, if the salesperson
believes that the product is so good or bad
that a sales call will not change the outcome,
or if there is no reward associated with higher
sales, this expectation may lead to the
behavior of taking the afternoon off
Person characteristics: Perceptions
 Perception is the mental awareness of a
stimulus received by the senses. Perception
is critical because it determines "reality" for
the individual. People respond not to what
actually is occurring in their environment,
but to what they perceive to be occurring.
 No two people perceive anything in
exactly the same way.
 Person characteristics: Perceptions
 Perception determines whether a person senses a
need and what his or her expectations are in a
given situation. What is "really" happening affects
behavior only to the degree it is perceived. Thus, if
management wants people to behave in ways that
will lead to attainment of objectives, it cannot just
create an environment encouraging this.
Management must also communicate effectively to
people that this environment exists and that
desired behavior will in fact lead to satisfaction of
individual needs. Unless workers perceive and
believe in the "reality" management creates, they
will not behave accordingly
Person characteristics: Attitudes
Daryl Bern defines attitudes as "likes and
dislikes . . . our aversions toward and
affinities to objects, persons, groups, or
any other identifiable aspect of our
environment."
Person characteristics: Values
 Values are general beliefs about what is
good, bad, or neutral in life. Values, like many
individual characteristics, are learned. They
are taught in schools and religious institutions
and by parents and are reinforced by other
social contacts and even by entertainment
media.
Interrelatedness of internal variables
 SUMMARY

 1.The major variables of the internal

environment are structure, objectives, tasks,
technology, and people.
 2. All but the smallest organizations are
divided horizontally into specialized
functional areas and vertically to create
levels of management. The structure of an
organization is the logical relationship of
functional areas and management levels
used to attain objectives effectively.
 SUMMARY
 3. Objectives are specific end states or desired
results the members of the organization wish to
attain by working together. Establishing and
communicating objectives is a powerful device for
coordinating work divided among specialized
groups, provided the objectives of subunits are
coordinated with those of the organization as a
whole.
 4. A task is a job or piece of work assigned to be
completed in a specified manner within a specified
time period. Tasks may be classified as working
with things, with people, or with information.
 SUMMARY

 5. Technology is any means by which inputs

are converted to outputs, including
machinery, tools, skills, and knowledge. The
potential productivity of specialized division
of labor was greatly increased by the
technological innovations of standardization
and the moving assembly line.
 SUMMARY

 6. According to Woodward, small-batch or

unit technology is custom production. In
mass-production technology a large quantity
of essentially identical products is made.
Process production uses automated
equipment to produce large quantities of
identical output.
 SUMMARY

 7. According to Thompson, long-linked

technology is characterized by a series of
interdependent tasks that must be performed
in sequence. Mediating technology involves
a process that brings together groups that
wish to be interdependent. Intensive
technology applies specific skills,
techniques, or services to make a specific
change in a specific input.
 SUMMARY
 8. Managers are concerned with the behavior
of people as individuals, in groups, and as
leaders. The aspects of individual behavior
most significant to managing are abilities,
aptitudes, attitudes, needs, values,
expectations, and perception.
 9. All the internal variables are interrelated. A
change in one therefore affects all others to
some degree. Improving one variable, such
as technology, may not improve productivity
if the change has a negative effect on
another variable, such as people.