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1he role of sLraLeglc dlrecuon ln organlzauon
deslgn
1he dlrecuon semng process beglns wlLh Lhe
assessmenL of Lhe opporLunlues and LhreaLs ln
Lhe exLernal envlronmenL, lncludlng Lhe
amounL of change, uncerLalnLy, and resource
avallablllLy.
1op ManagemenL 8ole ln Crganlzauon
ulrecuon, ueslgn, and Lecuveness
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
Cverall performance
CovernmenL and nonproL organlzauons such
as labour unlons or servlce agencles do noL
have goals of proLablllLy, buL Lhey do have
goals LhaL auempL Lo speclfy Lhe dellvery of
servlces Lo cllenLs or members.
Crganlzauonal purpose
1he purpose may be referred Lo as overall
goal or mlsslon. ulerenL parLs of organlzauon
esLabllsh Lhelr own goals and ob[ecuves Lo
help meeL Lhe overall goal, mlsslon or purpose
of organlzauon.
Cperauve goals
Cperauve goals deslgnaLe Lo ends soughL
Lhrough Lhe acLual operaung procedures of
organlzauon and explaln whaL organlzauon ls
acLually Lrylng Lo do.
Cverall performance
roLablllLy reecLs Lhe overall performance
of proL organlzauon. roLablllLy may be
expressed ln Lerms of neL lncome, earnlngs
per share or reLurn on lnvesLmenL
8esources
8esources goals perLaln Lo Lhe acqulsluon of
needed maLerlals and nanclal sources from
Lhe envlronmenL
MarkeL
MarkeL goals relaLe Lo Lhe markeL share or
markeL sLandlng, deslred by Lhe organlzauon.
MarkeL goals are Lhe responslblllLy of
markeung, sales, adveruslngdeparLmenLs.
Lmployee uevelopmenL
Lmployee developmenL perLalns Lo Lhe
Lralnlng, promouon, safeLy, and growLh of
employees
lnnovauon and change
lnnovauon goals perLaln Lo lnLernal exlblllLy
and readlness Lo adapL Lo unexpecLed changes
ln organlzauon.
roducuvlLy
roducuvlLy goals concern Lhe amounL of
ouLpuL achleved from avallable resources.
Coal 1ype and urpose
Thomson Learning
2004
2-13

Type of Goals

Purpose of Goals

Official Goals, mission: Legitimacy


Operative goals: Employee direction and motivation
Decision guidelines
Standard of performance
1he lmporLance of goals
Cmclal goals and mlsslon sLaLemenLs descrlbe
a value sysLem for Lhe organlzauon.
Cperauve goals represenL Lhe prlmary Lask of
an organlzauon
orLers Compeuuve SLraLegles
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
Mlles and Snows
SLraLegy 1ypology
!"#$%&'(#"
Learnlng orlenLauon, exlble, uld, decenLrallzed sLrucLure
SLrong capablllLy ln research
values creauvlLy, rlsk-Laklng, and lnnovauon
*&+&,-&"
Lmclency orlenLauon, cenLrallzed auLhorlLy and ughL cosL
conLrol
Lmphasls on producuon emclency, low overhead
Close supervlslon, llule employee empowermenL
Mlles and Snows
SLraLegy 1ypology (conLd)
.,/012&"
8alances emclency and learnlng, ughL cosL conLrol
wlLh exlblllLy and adapLablllLy
LmclenL producuon for sLable producL llnes, emphasls
on creauvlLy, research, rlsk-Laklng for lnnovauon
3&/'(#"
no clear organlzauonal approach, deslgn
characLerlsucs may shl abrupLly dependlng on
currenL needs
Conungency lacLors
Aecung Crganlzauon ueslgn
E
n
v
ir
o
n
m
e
n
t

Technology
S
iz
e
/

L
if
e
C
y
c
le


Organizational Structure and Design


The Right Mix of Design Characteristics Fits the Contingency Factors




Assesslng organlzauonal eecuveness
Lecuveness ls broad concepL. lL lmpllclLly
Lakes lnLo conslderauon a range of
varlables aL boLh Lhe organlzauonal and
deparLmenLal levels.
Lmclency ls more llmlLed concepL LhaL
perLalns Lo Lhe lnLernal worklngs of
organlzauon.
Conungency Approaches Lo Lhe MeasuremenL of
Crganlzauonal Lecuveness
Organization

Internal
activities
and
processes
Resource
Inputs
Product and
Service
Outputs
Resource-based
approach
Internal
process
approach
Goal
approach
External Environment
Conungency eecuveness approaches
1he goal approach
8esource-based approach
lnLernal process approach
Coal approach
1he goal approach Lo eecuveness conslsLs of
ldenufylng how organlzauon has aualned
Lhese goals.
lndlcaLors. LorLs Lo measure eecuveness
have been more producuve uslng operauve
goals Lhan uslng omclal goals.
8eporLed Coals
of u.S. Corporauons
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
8esource-based approach
lL assumes organlzauons musL Lo be successful
ln obLalnlng and managlng valued resources ln
order Lo be eecuve
8esource-based approach
lndlcaLors:
8argalnlng posluon
1he ablllues of Lhe organlzauon's declslon makers Lo
percelve and correcLly lnLerpreL Lhe real properues of Lhe
exLernal envlronmenL
1he ablllLy of managers Lo use Langlble and lnLanglble
resources
1he ablllLy of orrganlzauon Lo respond Lo envlronmenLal
changes.
lour Models of
Lecuveness 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
ORGANIZATION
B
ORGANIZATION
A
Lecuveness values
for 1wo Crganlzauons
Human Relations
Emphasis
Internal Process
Emphasis
Rational Goal
Emphasis
Open Systems
Emphasis
STRUCTURE
F
O
C
U
S
FLEXIBILITY
CONTROL
INTERNAL EXTERNAL
ldenufylng Company
Coals and SLraLegles
Goals from
Exhibit 2.8
Strategies
from Porter
Company #1
Company #2
Company #3
Workbook
Activity
Compeung values and
Crganlzauonal Lecuveness
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
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