Thomson Learning

2004
2-1
Chapter Two
Strategy, Organization Design,
and Effectiveness
Thomson Learning
2004 2-2
Top Management Role in
Organization Direction, Design, and
Effectiveness
CEO, Top
Management
Team
External Environment
Opportunities
Threats
Uncertainty
Resource Availability
Internal Situation
Strengths
Weaknesses
Distinctive Competence
Leadership Style
Past Performance
Strategic Direction
Organization
Design
Effectiveness
Outcomes
Define
mission,
official
goals
Select
operational
goals,
competitive
strategies
Resources
Efficiency
Goal attainment
Competing values
Structural Form
learning vs.
efficiency
Information and
control systems
Production
technology
Human resource
policies,
incentives
Organizational
culture
Interorganizational
linkages
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Design, unpublished manuscript, Duke University, 1990; and Arie Y. Lewin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): 183-212
Thomson Learning
2004 2-3
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
Thomson Learning
2004 2-4
Porters Competitive Strategies
Competitive
Scope
Competitive
Advantage

Strategy

Example

Broad

Low Cost
Low-Cost
Leadership

Dell Computer

Broad

Uniqueness

Differentiation
Starbucks
Coffee Co.

Narrow

Low Cost
Focused Low-Cost
Leadership
Enterprise
Rent-a- Car

Narrow

Uniqueness
Focused
Differentiation
Edward Jones
Investments
Thomson Learning
2004 2-5
Miles and Snows
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), 100-113; 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), 546-562
Thomson Learning
2004 2-6
Miles and Snows
Strategy Typology (contd)
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), 100-113; 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), 546-562
Thomson Learning
2004 2-7
Contingency Factors
Affecting Organization Design

Organizational Structure and Design


The Right Mix of Design Characteristics Fits the Contingency Factors




Thomson Learning
2004 2-8
Contingency Approaches to the
Measurement of Organizational
Effectiveness
Organization

Internal
activities
and
processes
Resource
Inputs
Product and
Service
Outputs
Resource-based
approach
Internal
process
approach
Goal
approach
External Environment
Thomson Learning
2004 2-9
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
Source: Adapted from Y. K. Shetty, New Look at Corporate Goals,
California Management Review 22, no. 2 (1979), pp. 71-19.
Thomson Learning
2004 2-10
Four Models of
Effectiveness Values
Human Relations Emphasis

Primary Goal: human resource
development
Subgoals: cohesion, morale, training

Internal Process Emphasis

Primary Goal: stability, equilibrium

Subgoals: information management,
communication

Rational Goal Emphasis

Primary Goal: productivity, efficiency,
profit
Subgoals: planning, goal setting


Open Systems Emphasis

Primary Goal: growth,
resource acquisition
Subgoals: flexibility, readiness,
external evaluation

Flexibility
Control
Internal External
STRUCTURE
F
O
C
U
S
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): 363-377; and Robert E. Quinn
and Kim Cameron, Organizational Life Cycles and Shifting
Criteria of Effectiveness: Some Preliminary Evidence,
Management Science 29 (1983): 33-51.
Thomson Learning
2004 2-11
ORGANIZATION
B
ORGANIZATION
A
Effectiveness Values
for Two Organizations
Human Relations
Emphasis
Internal Process
Emphasis
Rational Goal
Emphasis
Open Systems
Emphasis
STRUCTURE
F
O
C
U
S
FLEXIBILITY
CONTROL
INTERNAL EXTERNAL
Thomson Learning
2004 2-12
Identifying Company
Goals and Strategies
Goals from
Exhibit 2.8
Strategies
from Porter
Company #1
Company #2
Company #3
Workbook
Activity
Thomson Learning
2004 2-13
Competing Values and
Organizational Effectiveness
Workshop
Activity
Goal or
subgoal
Performance
Gauge
How to
measure
Source of
data
What do you
consider
effective?
(Example)
Equilibrium
Turnover
rates
Compare
percentages
of workers
who left HRM files
25%
reduction in
first year
1
Open
System 2
3
Human
Relations 4
5
Internal
Process 6
7
Rational
Goal 8