Q.2.

You are a consultant to Company X. The CEO insists that effectiveness must be evaluated by
an increase in stock price to satisfy stockholders. The marketing vice president insists that the
main goal is to reduce the time to bring products to the customer. The manufacturing vice
president states that costs should be the key focus of the organization. What approach is each
manager using to evaluate organizational effectiveness, and what can this organization do to
ensure that effectiveness is properly evaluated?

Answer-

Organisational effectiveness is how well an organization can achieve it’s objectives with
minimum waste. The CEO takes the GOAL based approach with the metric of Maximization
of shareholder wealth as the indicator. The marketing VP also uses the goals based approach
but for him market share is the key. The manufacturing VP on the other hand takes the
INTERNAL PROCESS approach aimed at reducing costs. The overall effectiveness should
be measured on increase in shareholder wealth and all other divisions effectiveness be
rescaled and measured for this paramater