1. Strategy, Organization Design, and Effectiveness
Chapter Two
Strategy, Organization Design,
and Effectiveness
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© 2004

2. Top Management Role in Organization Direction, Design, and Effectiveness
External Environment
Organization
Design
Opportunities
Threats
Uncertainty
Resource Availability
Structural Form –
learning vs.
efficiency
Information and
control systems
Production
technology
Human resource
policies,
incentives
Organizational
culture
Interorganizational
linkages
Effectiveness
Outcomes
Strategic Direction
Resources
Efficiency
Goal attainment
Competing values
Define
mission,
official
goals
Select
operational
goals,
competitive
strategies
CEO, Top
Management
Team
Internal Situation
Strengths
Weaknesses
Distinctive Competence
Leadership Style
Past Performance
Source: Adapted from Arie Y. Lewin and Carroll U. Stephens,
“Individual Properties of the CEO as Determinants of Organization
Design,” unpublished manuscript, Duke University, 1990; and Arie Y. Lewin
and Carroll U. Stephens, “CEO Attributes as Determinants of Organization Design:
An integrated Model,” Organization Studies 15, no. 2 (1994):
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3. Goal Type and Purpose Type of Goals Purpose of Goals
Official Goals, mission: Legitimacy
Operative goals: Employee direction and motivation
Decision guidelines
Standard of performance
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4. Porter’s Competitive Strategies
Competitive Scope
Competitive
Advantage
Strategy
Example
Broad
Low Cost
Low-Cost
Leadership
Dell Computer
Uniqueness
Differentiation
Starbucks
Coffee Co.
Narrow
Focused Low-Cost
Enterprise
Rent-a- Car
Focused
Edward Jones
Investments
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5. Miles and Snow’s Strategy Typology
Prospector
Learning orientation; flexible, fluid, decentralized structure
Strong capability in research
Values creativity, risk-taking, and innovation
Defender
Efficiency orientation; centralized authority and tight cost control
Emphasis on production efficiency, low overhead
Close supervision; little employee empowerment
Source: Based on Michael Treacy and Fred Wiersema,
“How Market Leaders Keep Their Edge,” Fortune February 6,
1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,
Strategic Management (St. Paul, Minn.: West, 1995), ; and
Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.
Coleman, Jr., “Organizational Strategy, Structure, and Process,”
Academy of Management Review 3 (1978),
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6. Miles and Snow’s Strategy Typology (cont’d)
Analyzer
Balances efficiency and learning; tight cost control with flexibility and adaptability
Efficient production for stable product lines; emphasis on creativity, research, risk-taking for innovation
Reactor
No clear organizational approach; design characteristics may shift abruptly depending on current needs
Source: Based on Michael Treacy and Fred Wiersema,
“How Market Leaders Keep Their Edge,” Fortune February 6,
1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,
Strategic Management (St. Paul, Minn.: West, 1995), ; and
Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.
Coleman, Jr., “Organizational Strategy, Structure, and Process,”
Academy of Management Review 3 (1978),
Thomson Learning
© 2004

7. Contingency Factors Affecting Organization Design
Environment
Size/
Life Cycle
Technology
Culture
Strategy
Organizational Structure and Design
The Right Mix of Design Characteristics Fits the Contingency Factors
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8. Contingency Approaches to the Measurement of Organizational Effectiveness
External Environment
Resource
Inputs
Organization
Internal
activities
and
processes
Product and
Service
Outputs
Resource-based
approach
Internal
process
approach
Goal
approach
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© 2004

9. Reported Goals of U.S. Corporations
Goal % Corporations
Profitability 89
Growth 82
Market Share 66
Social Responsibility 65
Employee welfare 62
Product quality and service 60
Research and development 54
Diversification 51
Efficiency 50
Financial stability 49
Resource conservation 39
Management development 35
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© 2004
Source: Adapted from Y. K. Shetty, “New Look at Corporate Goals,”
California Management Review 22, no. 2 (1979), pp

10. Four Models of Effectiveness Values
STRUCTURE
Flexibility
Human Relations Emphasis
Primary Goal: human resource
development
Subgoals: cohesion, morale, training
Open Systems Emphasis
Primary Goal: growth,
resource acquisition
Subgoals: flexibility, readiness,
external evaluation F O C U S
Internal
External
Internal Process Emphasis
Primary Goal: stability, equilibrium
Subgoals: information management,
communication
Rational Goal Emphasis
Primary Goal: productivity, efficiency,
profit
Subgoals: planning, goal setting
Control
Adapted from Robert E. Quinn and John Rohrbaugh,
“A Spatial Model of Effectiveness Criteria: Toward a
Competing Values Approach to Organizational Analysis,”
Management Science 29 (1983): ; and Robert E. Quinn
and Kim Cameron, “Organizational Life Cycles and Shifting
Criteria of Effectiveness: Some Preliminary Evidence,”
Management Science 29 (1983):
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11. Effectiveness Values for Two Organizations
STRUCTURE
FLEXIBILITY
Human Relations
Emphasis
Open Systems
Emphasis
ORGANIZATION A
ORGANIZATION B F O C U S
INTERNAL
EXTERNAL
Internal Process
Emphasis
Rational Goal
Emphasis
CONTROL
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12. Identifying Company Goals and Strategies
Workbook
Activity
Identifying Company Goals and Strategies
Goals from
Exhibit 2.8
Strategies
from Porter
Company #1
Company #2
Company #3
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© 2004

13. Competing Values and Organizational Effectiveness
Workshop
Activity
Competing Values and Organizational Effectiveness
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© 2004