Strategy, Organization
Design, and Effectiveness
Reported by: Gezelle de Ocampo &
Aubrey Camille Cabrera
Chapter 2: Strategy, Organization
How Strategies Affect
Design, and Effectiveness 05 Organization Design
OUTLINE:
The Role of Strategic Other Factors Affecting
01 Direction in Organization 06 Organization Design
Design
Assessing Organizational
02 Organization Purpose 07 Effectiveness
A Framework for Selecting Traditional Effectiveness
03 Strategy and Design 08 Approaches
Porter’s Competitive Balanced Scoreboard
04 Forces and Strategies 09 Approach to Effectiveness
2
01
THE ROLE OF STRATEGIC
DIRECTION IN ORGANIZATION
DESIGN
3
The Role Of Strategic Direction In Organization Design
• An Organization is created to achieve some purpose
• Top executives decide on the end purpose of the
organization VISION and the direction it will take to
accomplish it MISSION.
4
Top Management Role in Organization Direction, Design,
and Effectiveness
5
02
ORGANIZATION PURPOSE
6
Organizational Purpose
Strategic intent – organization’s energies and resources are
directed toward a focused, unifying, and compelling goal.
7
Organizational Operating Goals
8
Goals Types and Purposes
9
03
A FRAMEWORK FOR SELECTING
STRATEGY AND DESIGN
10
Selecting Strategy and Design
• 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
11
04
PORTER’S COMPETITIVE FORCES
AND STRATEGIES
12
Porter’s Competitive Strategies
• Differentiation strategy – to distinguish products or services
from others in the industry
• Low-Cost Leadership – increase market share by keeping
costs low compared to competitors. Organizations may
choose to focus broad or narrow in reaching multiple
markets.
13
EXAMPLE:
Your Date Here Your Footer Here 15
05
HOW STRATEGIES AFFECT
ORGANIZATION DESIGN
17
“ Structure follows
Strategy.”
- Alfred Chandler
18
DIFFERENTIATION STRATEGY
Research Broad Job
and Design Description
ORGANIC/LEARNING
ORIENTATION
De-
Values
centralized
Customer
Decision
Making
Shared
Information
19
LOW-COST LEADERSHIP STRATEGY
Routine
Operations MECHANISTIC/ Tasks
EFFICIENCY
ORIENTATION
Centralized
Process
Decision
Engineering
Making
20
06
OTHER FACTORS AFFECTING
ORGANIZATION DESIGN
21
22
Other Factors Affecting Organization Design
Mass Production Young & Small
Stable Environment Technology • Informal
• Little Division of
Creative and
• Vertical Control • Efficiency Open
Labor
SIZE & LIFE CYLE
• Efficiency • Formalization Communication
• Few Rules and
• Specialization
TECHNOLOGY
• Specialization Regulations
ENVIROMENT
• Standard • Flexible Structure
CULTURE
• Centralized • Ad hoc Budgeting
procedure Decision Making and Performance • Horizontal
• Centralized • Tight Control System Coordination
Decision Making
Large Organization • Lenient Rules and
E-business • Extensive Division Regulations
Turbulent
Environment of Labor
• Flexible Structure
• Numerous Rules
• Flexible Structure • Informal and Regulations
• Horizontal • Standard
Coordination procedure
23
07
ASSESSING ORGANIZATIONAL
EFFECTIVENESS
24
Effectiveness VS Efficiency
Effectiveness is the degree to Organizational efficiency is
which an organization the amount of resources
realizes its goals. used to produce a unit of
output.
Effectiveness evaluates the It can be measured as the
extent to which multiple ratio of inputs to outputs.
goals whether official or
operative are attained.
25
Sometimes efficiency leads to
effectiveness, but in other
organizations, efficiency and
effectiveness are not related.
26
Organization may achieve its
profit goals but be inefficient.
27
08
TRADITIONAL EFFECTIVENESS
APPROACHES
28
Traditional Effectiveness Approach
29
Traditional Effectiveness Approach
Resource-based Internal Process
Goal Approach
Approach Approach
•A strong, adaptive
•Bargaining position corporate culture and •Profitability
•Ability to interpret the real positive work climate
properties of the external •Market share
environment •Operational efficiency
•Ability to use tangible and
intangible resources in day- •Growth
to-day organizational •Undistorted horizontal and
activities to achieve superior vertical communication •Social responsibility
performance
•Growth and development
•Ability to respond to of employees •Product quality
changes in the environment
30
09
BALANCED SCORECARD
APPROACH TO EFFECTIVENESS
31
Balanced Scorecard Approach Effectiveness Criteria
32