1. Strategy, Organization Design, and Effectiveness
Chapter Two
Strategy, Organization Design,
and Effectiveness

2. Organization Direction, Design, and Effectiveness

3. Organizational Purpose
Strategic intent - organization’s energies and resources are directed toward a focused, unifying, and compelling goal
Operative Goals
Overall Performance
Resources
Market
Employee Development
Innovation and Change
Productivity
Mission
Competitive Advantage
Core Competence

4. The Importance of Goals
Official goals and mission statements describe a value system
Legitimize the organization
Operative goals serve several purposes
Employee direction and motivation
Decision guidelines
Standards of performance

5. Selecting Strategy
A strategy is a plan for interacting with the competitive environment
Managers must select specific strategy design
Models exist to aid in formulating strategy:
Porter’s Five Forces
Miles and Snow’s Strategy Typology

6. Porter’s Competitive Five Forces
Managers should understand forces in industry and environment
The Threat of New Entrants
The Power of Suppliers
The Power of Buyers
The Threat of Substitutes
Rivalry among Existing Competitors
Porter suggests that companies adopt strategies based on five forces analysis

7. Porter’s Competitive Strategies

8. Miles and Snow’s Strategy Typology
Managers should seek to formulate strategy that matches the demands of the external environment.
Prospector
Learning orientation; flexible, fluid, decentralized structure
Values creativity, risk-taking, and innovation
Defender
Efficiency orientation; centralized authority and tight cost control
Emphasis on production efficiency, low overhead
Analyzer
Balances efficiency and learning; tight cost control with flexibility and adaptability
Emphasis on creativity, research, risk-taking for innovation
Reactor
No clear organizational approach; design characteristics may shift abruptly depending on current needs

9. How Strategy Affects Organization Design
Managers must design the organization to support the firm’s competitive strategy.
Strategy impacts internal organization characteristics

10. Contingency Factors Affecting Organization Design

11. Assessing Organizational Effectiveness
Managers must evaluate goals
Effectiveness can be difficult to measure
Managers determine what to measure
Effectiveness takes into consideration a range of variables at both the organizational and departmental levels.

12. Sample Goals Profitability Market Share Growth Social Responsibility
Profitability
The positive gain from business operations or investments
Market Share
The proportion of the market the firm is able to capture relative to competitors
Growth
The ability of the organization to increase its sales, profits, or clients
Social Responsibility
How well the organization serves the community
Product Quality
The ability of the organization to achieve high quality products/services

13. Resource and Internal Process Goals
Resource-based indicators look at the inputs regarding processes
The use of tangible and intangible resources in operations (i.e. supplies, people)
Internal processes must be measured for effectiveness
Operational efficiency
Growth and development of employees

14. Contingency Approaches to the Measurement of Organizational Effectiveness

15. Balance Scorecard Approach

16. Design Essentials Organization exist for a purpose
Organization exist for a purpose
Strategic intent include competitive advantage and core competence
Strategies may include many techniques
There are models to aid in the development of strategy
Organizational effectiveness must be assessed
No approach is suitable for every organization