Chapter Two

Strategy, Organization Design,

and Effectiveness

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2004 2-1
 Top Management Role in
Organization Direction, Design, and
Effectiveness
External Environment
Opportunities Organization
Threats Design
Uncertainty
Resource Availability Structural Form Effectiveness
learning vs.
Strategic Direction efficiency Outcomes
Information and Resources
Define Select control systems
CEO, Top Efficiency
mission, operational Production Goal attainment
Management official goals, technology Competing values
goals competitive Human resource
Team strategies policies,
incentives
Organizational
culture
Internal Situation Interorganizational
Strengths linkages
Weaknesses
Distinctive Competence
Leadership Style
Past Performance
Source: Adapted from Arie Y. Lewin and Carroll U. Stephens,
Individual Properties of the CEO as Determinants of Organization Thomson Learning
Design, unpublished manuscript, Duke University, 1990; and Arie Y. Lewin
and Carroll U. Stephens, CEO Attributes as Determinants of Organization Design: 2004 2-2
An integrated Model, Organization Studies 15, no. 2 (1994): 183-212
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

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2004 2-3
Porters Competitive Strategies
Competitive Competitive
Scope Advantage Strategy Example
Low-Cost
Broad Low Cost Leadership Dell Computer
Starbucks
Broad Uniqueness Differentiation Coffee Co.
Focused Low-Cost Enterprise
Narrow Low Cost Leadership Rent-a- Car
Focused Edward Jones
Narrow Uniqueness Differentiation Investments
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2004 2-4
 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, Thomson Learning
Academy of Management Review 3 (1978), 546-562 2004 2-5
 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
Source: Based on Michael Treacy and Fred Wiersema,

on current needs
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, Thomson Learning
Academy of Management Review 3 (1978), 546-562 2004 2-6
Contingency Factors
Affecting Organization Design

Organizational Structure and Design

The Right Mix of Design Characteristics Fits the Contingency Factors

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Contingency Approaches to the
Measurement of Organizational
Effectiveness

External Environment

Organization
Product and
Resource Internal
activities Service
Inputs
and Outputs
processes

Resource-based Internal Goal

approach process approach
approach
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 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, Thomson Learning
California Management Review 22, no. 2 (1979), pp. 71-19. 2004 2-9