Chapter Two

Strategy, Organization Design, and Effectiveness

Thomson Learning © 2004

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Lewin and Carroll U. official goals Select operational goals. Stephens. and Effectiveness External Environment Opportunities Threats Uncertainty Resource Availability Organization Design Strategic Direction Structural Form ² learning vs. Lewin and Carroll U. 1990.´ Organization Studies 15. no. ³Individual Properties of the CEO as Determinants of Organization Design. Design. ³CEO Attributes as Determinants of Organization Design: An integrated Model. Stephens. incentives Organizational culture Interorganizational linkages Effectiveness Outcomes Resources Efficiency Goal attainment Competing values CEO. efficiency Information and control systems Production technology Human resource policies. and Arie Y. Top Management Team Define mission.Top Management Role in Organization Direction. Duke University.´ unpublished manuscript. competitive strategies Internal Situation Strengths Weaknesses Distinctive Competence Leadership Style Past Performance Source: Adapted from Arie Y. 2 (1994): 183-212 Thomson Learning © 2004 2-2 .

mission: Purpose of Goals Legitimacy Operative goals: Employee direction and motivation Decision guidelines Standard of performance Thomson Learning © 2004 2-3 .Goal Type and Purpose Type of Goals Official Goals.

Porter s Competitive Strategies Competitive Scope Broad Broad Narrow Narrow Competitive Advantage Strategy Low-Cost Leadership Differentiation Focused Low-Cost Leadership Focused Differentiation Example Dell Computer Starbucks Coffee Co.Car Edward Jones Investments 2-4 Low Cost Uniqueness Low Cost Uniqueness Thomson Learning © 2004 . Enterprise Rent-a.

´ Fortune February 6. ³How Market Leaders Keep Their Edge. decentralized structure Strong capability in research Values creativity. fluid. and Robert E. low overhead   Defender   Close supervision. and Raymond E. 88-98. Snow.: West. Structure. Hoskisson. Alan D.Miles and Snow s Strategy Typology  Prospector    Learning orientation. Charles c. Paul. 1995. Coleman. Jr.´ Academy of Management Review 3 (1978). and Process. Michael Hitt. Miles. R. ³Organizational Strategy. Minn. flexible. 546-562 Thomson Learning © 2004 2-5 . 1995). risk-taking. 100-113. little employee empowerment Source: Based on Michael Treacy and Fred Wiersema. and Henry L. Meyer. and innovation Efficiency orientation.. centralized authority and tight cost control Emphasis on production efficiency. Strategic Management (St. Duane Ireland.

³How Market Leaders Keep Their Edge. Strategic Management (St. Jr. risk-taking for innovation No clear organizational approach. and Robert E. R. Miles. 1995).´ Academy of Management Review 3 (1978). Hoskisson.´ Fortune February 6.Miles and Snow s Strategy Typology (cont d)  Analyzer   Balances efficiency and learning. Duane Ireland. Coleman. ³Organizational Strategy. tight cost control with flexibility and adaptability Efficient production for stable product lines. Structure. 100-113. Paul. Charles c. Michael Hitt.: West. and Process. and Raymond E. design characteristics may shift abruptly depending on current needs Thomson Learning © 2004 2-6  Reactor  Source: Based on Michael Treacy and Fred Wiersema. Minn.. 88-98. Meyer. and Henry L. research. Alan D. Snow. emphasis on creativity. 546-562 . 1995.

Contingency Factors Affecting Organization Design Organizational Structure and Design The Right Mix of Design Characteristics Fits the Contingency Factors Thomson Learning © 2004 2-7 .

Contingency Approaches to the Measurement of Organizational Effectiveness External Environment Organization Resource Inputs Internal activities and processes Product and Service Outputs Resource-based approach Internal process approach Thomson Learning © 2004 Goal approach 2-8 .

Shetty. ³New Look at Corporate Goals. pp. Corporations Goal % Corporations 89 82 66 65 62 60 54 51 50 49 39 35 2-9 Profitability Growth Market Share Social Responsibility Employee welfare Product quality and service Research and development Diversification Efficiency Financial stability Resource conservation Management development Source: Adapted from Y.S. K. no. Thomson Learning © 2004 . 71-19. 2 (1979).´ California Management Review 22.Reported Goals of U.

Quinn and Kim Cameron. ³Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence. training External Internal Process Emphasis Primary Goal: stability. external evaluation F O Internal C U S Primary Goal: human resource development Subgoals: cohesion. and Robert E.´ Management Science 29 (1983): 363-377. equilibrium Subgoals: information management. goal setting Adapted from Robert E. morale. Control Thomson Learning © 2004 2-10 . efficiency. profit Subgoals: planning. resource acquisition Subgoals: flexibility. readiness. ³A Spatial Model of Effectiveness Criteria: Toward a Competing Values Approach to Organizational Analysis.´ Management Science 29 (1983): 33-51. communication Rational Goal Emphasis Primary Goal: productivity.Four Models of Effectiveness Values STRUCTURE Flexibility Human Relations Emphasis Open Systems Emphasis Primary Goal: growth. Quinn and John Rohrbaugh.

Effectiveness Values for Two Organizations STRUCTURE FLEXIBILITY Human Relations Emphasis Open Systems Emphasis F O C U S ORGANIZATION A INTERNAL EXTERNAL Internal Process Emphasis ORGANIZATION B Rational Goal Emphasis CONTROL Thomson Learning © 2004 2-11 .

8 Company #1 Company #2 Company #3 Thomson Learning © 2004 2-12 Strategies from Porter .Workbook Activity Identifying Company Goals and Strategies Goals from Exhibit 2.

Workshop Activity Competing Values and Organizational Effectiveness Goal or subgoal Performance Gauge (Example) Equilibrium 1 Open System 2 3 Human Relations 4 5 Internal Process 6 7 Rational Goal 8 Turnover rates How to measure Compare percentages of workers who left Source of data What do you consider effective? 25% reduction in first year HRM files Thomson Learning © 2004 2-13 .