The concept of life cycle to an organization

Full Answer Section

Crisis Management: Sweet Treats successfully navigated the growth phase by introducing new products, partnering with local coffee shops for distribution, and effectively managing its finances. They also managed to retain their core values of quality and craftsmanship during this period.

Current Stage: Sweet Treats is currently in the Maturity Stage. They are facing the challenge of increased competition and need to adapt their strategies to remain competitive.

Pressure to Grow

2. Why Organizations Feel Pressure to Grow:

• Increased Market Share: Growing allows companies to capture a larger portion of the market and potentially gain dominance.

• Economies of Scale: Expansion can lead to lower production costs per unit, increasing profitability.

• Diversification: Growth can reduce risk by expanding into new markets and products.

• Investor Expectations: Investors often favor companies that demonstrate growth potential.

Benefits of a Large Organization:

• Greater Resources: Access to more capital, technology, and talent.

• Brand Recognition: Increased brand awareness and influence.

• Market Power: Ability to negotiate favorable terms with suppliers and distributors.

• Economies of Scale: Lower production costs and potentially higher profits.

Drawbacks of a Large Organization:

• Bureaucracy: Complex organizational structures can slow decision-making and innovation.

• Loss of Flexibility: Large companies may struggle to adapt to market changes quickly.

• Increased Complexity: Managing a larger workforce and operations can be challenging.

• Potential for Inefficiency: Scaling up operations can lead to inefficiencies and waste.

Digitalization in Manufacturing

3. "Jobs Being De-skilled" in Manufacturing:

The case study refers to "jobs being de-skilled" as a result of automation and digitalization. This means that tasks previously requiring specialized knowledge and skills are now performed by machines or automated systems.

• Example: In the past, skilled machinists with years of experience were needed to operate complex manufacturing equipment. Now, advanced robots and CNC machines can perform these tasks with precision and speed, requiring less human intervention and specialized skills.

Saving Older Skillsets:

Whether older skillsets are worth saving depends on the specific company and its future goals.

• For companies transitioning to fully automated systems: Older skillsets may become less relevant and difficult to adapt.

• For companies pursuing hybrid approaches: Combining human skills with automation, older skillsets can be valuable for troubleshooting, maintenance, and quality control.

4. Transitioning to New Manufacturing Technologies:

Companies can facilitate the transition from old to new technology by:

• Training and Development: Invest in training programs to equip employees with the necessary skills for the new technology.

• Upskilling and Reskilling: Provide opportunities for employees to learn new skills and adapt to the changing demands of the workplace.

• Employee Communication: Openly communicate the changes and the benefits of adopting new technologies.

• Collaboration: Involve employees in the implementation process, seeking their input and feedback.

• Support and Resources: Provide necessary support and resources to help employees transition to new roles and responsibilities.

Rivalrous vs. Non-Rivalrous Goods

a. Rivalrous and Excludable:

• Example: A slice of pizza. It can only be consumed by one person, and the bakery can exclude anyone who doesn't pay.

b. Non-Rivalrous and Excludable:

• Example: A subscription to a streaming service. Many people can watch the same movie simultaneously without diminishing each other's enjoyment, and the service can prevent access to those who haven't paid.

c. Rivalrous and Non-Excludable:

• Example: A public park bench. The bench is limited in capacity, so people can only sit if there is space available. However, it is impossible to exclude anyone from using it once it is available.

d. Non-Rivalrous and Non-Excludable:

• Example: A public radio broadcast. Many people can listen simultaneously without diminishing anyone else's enjoyment, and it is impossible to prevent anyone from tuning in.

Adverse Selection vs. Moral Hazard

a. Moral Hazard: The person with car insurance is less likely to take precautions because they know the insurance will cover any losses.

b. Adverse Selection: The person with a family history of cancer is likely to be a higher-risk individual, leading the insurance company to charge higher premiums.

c. Moral Hazard: The person with health insurance is more likely to engage in risky behavior, knowing that their medical expenses will be covered.

d. Moral Hazard: The tenured professor may reduce their work effort, knowing they are guaranteed employment.

e. Adverse Selection: The bank is likely to be reluctant to loan money to a person with an unstable job, as they are considered a higher risk of default.

Sample Answer

Life Cycle of an Organization

1. Applying the Life Cycle Concept:

Let's take the example of a local bakery, "Sweet Treats," which has been operating in the community for 15 years.

• Stage 1: Startup: Sweet Treats began as a small, family-owned bakery focused on creating high-quality, handcrafted desserts.

• Stage 2: Growth: As word-of-mouth spread about their delicious pastries, Sweet Treats expanded their offerings, hired additional staff, and established a loyal customer base.

• Stage 3: Maturity: Sweet Treats reached a stable point, operating consistently with a well-defined customer base and established operations. They introduced a loyalty program and a catering service to further engage customers.

• Stage 4: Decline (Potential): The bakery currently faces a potential decline due to increased competition from larger chain bakeries offering cheaper products.