CHAPTER 2 –
ORGANIZATIONAL EFFECTIVENESS
10/4/2025 1
THE ROLE OF STRATEGIC DIRECTION
IN ORGANIZATION DESIGN
• Organizational goal: A desired state of affairs that an organization
attempts to reach
• Primary responsibility of top management is to determine an organization’s
goals, strategy, and design so that the organization adapts to a changing
environment (e.g. Yahoo)
• SWOT analysis: An assessment of the strengths, weaknesses, opportunities,
and threats that affect organizational performance
• Scenario planning: Involves looking at the current trends and discontinuities
and visualizing future possibilities
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TOP MANAGEMENT ROLE IN ORGANIZATION
DIRECTION, DESIGN, AND EFFECTIVENESS
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ORGANIZATIONAL PURPOSE
Strategic intent: All the organization’s energies and
resources are directed toward a focused, unifying, and
compelling goal
Three aspects of strategic intent:
Mission
Competitive advantage
Core competence
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MISSION STATEMENT FOR
CVS HEALTH
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ORGANIZATIONAL PURPOSE
Operating goals:
Designate the ends sought through the actual operating procedures of the
organization
Explain what the organization is actually trying to do
Describe specific measurable outcomes
Are often concerned with the short run
Typically pertain to the primary tasks an organization must perform
Examples of operating goals:
Overall performance, resource, market, employee development, innovation
and change, productivity
Goal conflict:
Pursuing some goals means that others have to be delayed or set aside
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TYPICAL OPERATING GOALS FOR AN
ORGANIZATION
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GOALS TYPES AND PURPOSES
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BLUE OCEAN STRATEGY
Cirque Du Soleil
[Link]
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TWO FRAMEWORKS FOR SELECTING
STRATEGY AND DESIGN
A strategy is a plan for interacting with the competitive environment
Strategies can include any number of techniques to achieve the goal
Models exist to aid in formulating strategy:
Porter model of competitive strategies
Miles and Snow strategy typology
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PORTER’S COMPETITIVE STRATEGIES
Differentiation strategy: Distinguish products or services from
others in the industry
Low-cost Leadership: Increase market share by keeping costs
low compared to competitors
Organizations can compete in many market and customer
segments or focus on a specific market or buyer group
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PORTER’S COMPETITIVE STRATEGIES
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MILES AND SNOW’S STRATEGY TYPOLOGY
Prospector: Analyzer:
Learning orientation; flexible, fluid, Balances efficiency and
decentralized structure learning; tight cost control with
Strong capability in research flexibility and adaptability
Efficient production for stable
Defender: product lines; emphasis on
Efficiency orientation; centralized creativity, research, risk-taking
authority; tight cost control for innovation
Emphasis on production efficiency;
low overhead
Close supervision; little employee
Reactor:
empowerment No clear organizational
approach; design characteristics
may shift abruptly, depending
on current needs
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OTHER CONTINGENCY FACTORS AFFECTING
ORGANIZATION DESIGN
Emphasis given to efficiency and control (mechanistic) versus learning
and flexibility (organic) is determined by the contingencies of strategy,
environment, size and life cycle, technology, and organizational culture
Design must fit the workflow technology of the organization
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CONTINGENCY FACTORS
AFFECTING ORGANIZATION DESIGN
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CLASS ACTIVITY
• Analyze a real organization’s competitive strategy using
Porter’s Strategies and Miles & Snow’s Typology
• Propose measurable indicators to assess its effectiveness
10 minutes to discuss
2 minutes to present
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ASSESSING ORGANIZATIONAL EFFECTIVENESS
Effectiveness evaluates the extent to which multiple goals are attained.
Efficiency relates to the working of the organization and amount of resources
used to produce output.
Measuring Effectiveness:
The Goal Approach
The Resource-Based Approach
The Internal Process Approach
The Strategic Constituents Approach
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APPROACHES TO MEASURING
ORGANIZATIONAL EFFECTIVENESS
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INDICATORS OF ORGANIZATIONAL
EFFECTIVENESS
1. Meeting deadlines; on-time delivery
2. Timely material and equipment acquisition
3. Quality of product or service
4. Customer satisfaction/complaints
5. Market share compared to competitors
6. Employee training and development (number of hours)
7. Staying within budget
8. Shareholder satisfaction
9. Reduction in costs
10. Supply chain delays or improvements
11. Productivity; dollars spent for each unit of output
12. Employee engagement
13. Achieving sales targets
14. Product development cycle time (reduction in cycle time)
15. Number of hours/days and so on to complete tasks
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AN INTEGRATED EFFECTIVENESS MODEL
The competing values model tries to balance concern with various
parts of the organization
Effectiveness is shown through a combination of two dimensions: focus
and structure
Four approaches to effectiveness values:
Open systems emphasis
Rational goal emphasis
Internal process emphasis
Human relations emphasis
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FOUR APPROACHES TO EFFECTIVENESS
VALUES
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EFFECTIVENESS VALUES FOR
TWO ORGANIZATIONS
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