Strategy, Organizational Design, and Effectiveness

Organizations Efficiency Organization Efficiency Organization Mechanistic Mechanistic Vertical hierarchy Vertical hierarchy Routine tasks Routine tasks Managerial authority Managerial authority Learning Organization Learning Organization Organic Organic Little hierarchy Little hierarchy Empowered employees Empowered employees Participation and open information Participation and open information

Managerial Roles Top Management Top Management Determine goals, startegy, and desiogn Determine goals, startegy, and desiogn External and internal environment External and internal environment Middle Management Middle Management Same role, but on a smaller scale Same role, but on a smaller scale

The Process Consideration of Environment Consideration of Environment Establishment of strategic direction Establishment of strategic direction Setting the goals and strategies Setting the goals and strategies Formation of the organization’s design Formation of the organization’s design Implementing the goals and strategies Implementing the goals and strategies Evaluation of firm’s efforts Evaluation of firm’s efforts Have our goals and staregies been successful Have our goals and staregies been successful

Organizational Purpose Mission Statements Mission Statements Why do we exist? Why do we exist? Official goals Official goals Serves as a guide Serves as a guide Examples: Examples:

Organizational Purpose Operative Goals Operative Goals Short-term Short-term Actual goals Actual goals Examples: Examples:

OB Review- Why Do We Need Goals? Why are a company’s goals important for its employees? Customers? Why are a company’s goals important for its employees? Customers? How does this affect the entire organization? How does this affect the entire organization?

Strategy & Design Strategy Strategy “A plan for interacting with the competitive environment to achieve organizational goals.” “A plan for interacting with the competitive environment to achieve organizational goals.” Goals v. Strategies Goals v. Strategies

Porter’s Competitive Strategy Low-Cost Leadership Differentiation Focused Low-Cost Leadership Focused Differentiation Competitive Advantage Low Cost Uniqueness Broad Competitive Scope Narrow Competitive Scope

Miles & Snow’s Strategy Four Strategies Four Strategies Prospector Prospector Growing environments Growing environments Defender Defender Hold onto existing customers Hold onto existing customers Analyzer Analyzer Stable product, innovate around periphery Stable product, innovate around periphery Reactor Reactor Respond to conditions as they occur Respond to conditions as they occur

Ramifications on Organizational Design Low-Cost Leadership Low-Cost Leadership Focus on efficiency Focus on efficiency Strong, centralized authority Strong, centralized authority Close supervision on routine tasks Close supervision on routine tasks Differentiation Differentiation Learning orientation Learning orientation Research capabilities Research capabilities Build customer relationships Build customer relationships Rewards creativity and innovation Rewards creativity and innovation

Ramifications on Organizational Design Prospector Prospector Learning orientation Learning orientation Research oriented Research oriented Defender Defender Efficiency orientation Efficiency orientation Close supervision Close supervision Analyzer Analyzer Combines both efficiency and creativity Combines both efficiency and creativity Reactor Reactor No stable direction No stable direction

Other Factors Environment Environment Is it fast paced? Is it fast paced? Technology Technology How is it used within the company? How is it used within the company? Style/Life Cycle Style/Life Cycle Size of company Size of company Culture Culture Company’s current cultural climate Company’s current cultural climate

Efficiency and Effectiveness Efficiency and Effectiveness Efficiency and Effectiveness Effectiveness Effectiveness Hard to measure Hard to measure Several different approaches Several different approaches

Contingency Effectiveness Approaches Goal Approach Goal Approach Resource-based Approach Resource-based Approach Internal Process Approach Internal Process Approach

Goal Approach Did company reach its desired output? Did company reach its desired output? Operative goals Operative goals Advantage Advantage Disadvantage Disadvantage

Resource-Based Approach Focuses on inputs Focuses on inputs Advantages Advantages Disadvantages Disadvantages

Internal Process Approach Looks at transformation process Looks at transformation process Measures internal organizational health and efficiency Measures internal organizational health and efficiency

Integrated Model HR Emphasis Open Systems Emphasis Internal Process Emphasis Rational Goal Emphasis Focus Internal External Structure Flexible Control

Integrated Effectiveness Model Focuses on various areas of the company Focuses on various areas of the company Two components Two components Focus Focus Structure Structure