Glossary

Here you will find the description of some words and phrases that pertain to the concepts in
this course, and also words and phrases used in the videos and readings. If you want to add
another word or expression that we missed, please suggest it in the forums.

A
advisory teams. Groups that provide recommendations to decision makers such as
committees, advisory councils, work councils, and review panels.

ambidextrous organizations. Structurally independent units, each having its own

processes, structures, and cultures but integrated into the existing senior management
hierarchy.

B
best practices. Commercial or professional procedures that are accepted or prescribed as
being correct or most effective.

board of directors. A group of individuals that are elected as, or elected to act as,
representatives of the stockholders to establish corporate management-related policies and
to make decisions on major company issues.

business model. A set of well-established expectations in an industry about the ways the
industry participants create value for all their players, especially their customers.

C
career ladders. Job promotion or progression in an organization from entry level positions to
higher positions with higher pay, skills, and authority that denotes upward mobility with an
organizational hierarchy.

communities of practice. Informal professional groups who are bound together by shared
expertise and passion for a particular activity or interest.

competitive advantage. An attribute that allows an organization to outperform its

competitors.
conglomerate. A network of diversified, independent companies held together by a core
power. (A.K.A. Holdings, Chaebol, Business Houses, GruposEconómicos, QiyeJituan)

contingency. Factors, both external and internal, that directly influence the organizational
design.

control system. The formal routines, reports, and procedures that use information to
maintain or alter organizational activities.

coordination. The integration, harmonization, or execution of orderly patterns of activities in

an organization in order to move in the agreed direction.

core activities. Recurring activities performed in order to attract input providers and
customers who buy the products/services.

core assets. Resources that allow the firm to carry out the core activities.

core competency. A unique ability that a company acquires from its founders or develops
that cannot be easily imitated. Core competencies are what give a company one or more
competitive advantages in creating and delivering value to its customers in its chosen field.

corporate board. A body of elected or appointed members who provide strong oversight
and strategic support for the creation of long-term value.

corporate function. A business unit or division designed to grow and add value to the firm.

corporate governance. The system of rules, practices, and processes by which a company
is directed and controlled to moderate the relationships between management and critical
constituencies.

corporate strategy. The overall scope and direction of a corporation and the way in which
its various business operations work together to achieve particular goals.

creative change. Referring to industry, occurs when core assets are threatened while core
activities are stable.

critical constituencies. The primary stakeholders of a corporation including, but not limited
to, shareholders, employees, managers, and customers.

D
decision-making biases. The tendencies to think in a certain way during a decision making
situation that lead to systematic deviation from expected or rational decision making choices.

departmental team. Group of employees who have similar or complementary skills and are
located in the same unit of a functional structure.

descriptive models of decision making. Decision making models that are develop by
studying how individuals actually behave when they are making decisions.

differentiation. A culmination of efforts to make a business stand out as a provider of unique

value to customers in comparison with its competitors.

dimensions of organizational decision making. Major aspects of an organizational

decision situation that can determine the types of decision making methods to be used.

discretionary role of management. Taking action to modify the future activities of the
organization.

divisional design. An organizational design that creates uni-focused divisions that are
organized according to product groups, services, geography, programs, or markets.

E
efficiency. In terms of organizational design, a vertical structure that emphasizes task
specialization, strict hierarchy, vertical communication, few teams, and centralized decision
making.

efficiency innovations. Breakthroughs that help companies make and sell existing products
at lower prices.

employability vs job security. Employability involves the creation of a work environment

and employment contract that can provide opportunities to employees to develop their
professional skills independent of their organizational position so that they can find jobs
easily in the labor market; Job security, on the other hand refers to a work environment
where employees are provided job security as long as they acquire the skills specific to their
employer’s needs.

external flexibility. External flexibility focuses on exploration of new markets, new products,
and new business models.

F
flexibility. In terms of organizational design, a horizontal structure that emphasizes shared
tasks, fewer rules and regulations, continuous communication, teamwork, and decentralized
decision making.

functional design. An organizational design that breaks reporting units into specific
functions such as R&D, accounting, production, or sales.

G
geographic scope. The physical locations in which a firm can operate.

globalization. It implies the opening of local and nationalistic perspectives to a broader

outlook of an interconnected and interdependent world with free transfer of capital, goods,
and services across national frontiers.

governance. It is the establishment of policies, and continuous monitoring of their proper

implementation, by the members of the governing body of an organization.

H
high commitment work force. A set of employment practices including job design and
organizational culture that are designed to increase the commitment of employees to the
organization.

high flexibility workforce. A set of employment practices including job design and
organizationalculture that are designed to provide flexibility to the employees as well as the
management in structuring employment relations.

horizontal coordination. The ways different units at the same hierarchic level within an
organization coordinate their activities.

hybrid structure. In term of organizational structure, a design that focuses on both

functional and divisional aspects.

I
integration. The process of attaining seamless coordination between multiple business units
of an organization.
interdependency (pooled). In this, each department or unit contributes separately to the
performance of the whole organization.

interdependency (reciprocal). In this, actions of one unit affect the actions of other units,
but the sequence is not predetermined.

interdependency (sequential). In this, actions of one unit directly affect the actions of
another unit in a predetermined sequence.

intermediating change. Referring to industry, occurs when core activities are threatened
with obsolescence, but core assets still retain their capacity to create value.

internal efficiency. Internal efficiency focuses on exploitation of exiting markets, production

processes, and investments.

L
leadership teams. Multi-skilled employees who collectively produce a common
product/service or make collective decisions.

M
management. A profession, like law and medicine, requiring both abstract knowledge and
experience in the field.

management control system. The formal routines, reports, and procedures that use
information to maintain or alter organizational activities. A control system enables managers
to set targets and compare outcomes to these targets to observe variance in order to take
corrective actions.

managerial succession. The identification and development of individuals to succeed to

senior managerial positions in an organization.

market-creating innovations. Transformations that radically create a new class of

customers or possibly a new market.
matrix structure. It is the practice of managing individuals with more than one reporting line
(in a matrix organization structure), but it is also commonly used to describe managing cross
functional, cross business groups and other forms of working that cross the traditional
vertical business units.

multidivisional structure. One parent company that consists of a number of different

divisions operating separate businesses. Legally, the parent company owns all of the
divisions, but the parent company gives the divisions significant autonomy, which allows
them to act independently at SBUs.

O
operational technology. The combination of skills, knowledge, tools, techniques, and
actions that are used to convert organizational inputs into outputs.

organization. A social unit of people that is structured and managed to meet a need or to
pursue collective goals.

organizational change. The active redirection of organizational resources, employees, and

practices in order to reshape the future development of an organization.

organizational design. The alignment of structure, process, resources, rewards, metrics,

and talent with the strategy of the business.

organizational growth. The increase in the size of an organization’s employees.

organizational culture. It is a way of thinking, behaving, and working in an organization. It

manifests itself through language, material objects, organizational rituals, and practices.

organizational structure. For an organization, the organizational structure is a hierarchy of

people and its functions. The organizational structure of an organization tells you the
character of an organization and the values it believes in. A firm or an organization is a
consciously put together bundle of economic, technological, and social practices.

outcomes of organizational growth. Structural consequences of organizational growth in

terms of its basic organizational design such as the degree of formalization, the increase in
hierarchic positions and expansion of decision making authority down the hierarchy.
P
performance-improving innovations. Replacing old products with new and better models.

performance management. An ongoing process of communication between a supervisor

and an employee that occurs throughout the year in support of accomplishing the strategic
objectives of the organization.

pooled interdependence. Each organizational department or business unit performs

completely separate functions.

prescriptive models of decision making. Decision making models that are developed by
studying how individuals behave if they followed the requirements of rational decision making

progressive change. Referring to industry, occurs when either core assets or core activities
are threatened.

prospect theory. A theory that states people make decisions based on the potential
perceived value of gains and losses rather than their actual value. These perceived values
are defined in terms of deviation from a specific reference point.

R
radical change. Referring to an industry, occurs when core assets and core activities are
both threatened.

reciprocal interdependence. Similar to sequential interdependence in that the output of one

department becomes the input of another, with the addition of being cyclical.

responsive role of management. Evaluating & assessing the demands and constraints
confronting the organization.

Roles of executives: symbolic, responsive, and discretionary roles. The symbolic role
of the manager pertains to the responsibility that comes with making decisions. A manager is
a hero when their plan is a success and a scapegoat when it is a failure. The authority that
comes with being in charge of a task in different situations makes their role important.
However, they are the ones to be replaced if their plan doesn't work out well for the
organization. The responsive role involves careful assessment of the environment, (i.e.,
constraints and dependencies), identifies problems, finds out solutions to those problems,
and respond to the demands of the firm and business, i.e., taking required actions. The
discretionary role of the manager goes beyond the responsive role and involves evaluating
what changes could be made to alter the constraints and dependencies in the organizational
context. In such a role, the manager gets involved in positive activities that help change the
environment for the betterment of the environment and the organization.

S
self-directed teams. Groups that are organized around work processes that complete an
entire piece of work requiring several interdependent tasks with substantial autonomy.

sequential interdependence. One organizational unit in the overall process produces an

output necessary for the performance by the next unit.

shareholders. Own a part of the company through stock ownership, providing financial
interest in the firm’s success.

skunk-works. Multi-skilled employees who are usually located away from the organization
and are relatively free of hierarchy to design a product or service.

stages of organizational life cycle. The sequence of specific life stages of an organization
through time.

stakeholders. Hold an interest in the company’s performance for reasons other than stock
performance, such as job creation or quality products.

strategic tension in organizations. It refers to the expectations in accomplishing

organizational outcomes that are usually contradictory to each other.

strategy. A defined plan of action that positions a company to gain competitive advantages
over its competitor.

symbolic role of management. Maintaining the belief that managerial action is responsible
for organizational outcomes.

symptoms of ineffective organizational design. The departure from the normal

expectations of organizational activities that might indicate the possible deficiencies of
organizational design.

T
task force (project) teams. Temporary teams who are assigned to solve a problem, realize
an opportunity, or design a product or service.

types of decisions in organizations. A way to classify organization decisions based on the

degree of agreement on preferences and the degree of agreement on the cause/effect
relations with an organization.

V
value creation. The performance of actions that increase the worth of goods, services, or
even a business.

vertical coordination. The ways different hierarchic levels within an organization coordinate
their activities.

virtual teams. Teams whose members operate across space, time, and organizational
boundaries and are linked through information technologies to achieve organizational tasks.