Strategy Selection and Organizational Effectiveness

1. 0 Chapter 2 Strategy, Organization Design and Effectiveness

2. Organization Direction, Design, and Effectiveness 0

3. Organizational Purpose 0 • 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 0 • 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 0 • 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 0 • 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 0

8. Miles and Snow’sStrategy Typology 0 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 0 Managers must design the organization to support the firm’s competitive strategy. Strategy impacts internal organization characteristics

10. Contingency FactorsAffecting Organization Design 0

11. Assessing Organizational Effectiveness 0 • 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 0 • 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 0 • 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 0

15. Balance Scorecard Approach 0

16. Design Essentials 0 • 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