Strategy, Organization Design, And Effectiveness

Strategy, Organization Design, and Effectiveness

CHAPTER 2

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The Role Of Strategic Direction In Organization Design  

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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. It is this PURPOSE and DIRECTION that shapes how the organization is DESIGNED and MANAGED. The primary responsibility (?)is to determine an organization goals, strategy, and design, therein adapting it to a changing environment. 10/15/08

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Middle management does the same for major departments within the guidelines provided by top management. The direction setting process begins with an assessment of the opportunities and threats in the external environment, including the amount of change , uncertainty, and resource availability.

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 Top

management also assesses internal strengths and weaknesses to define the company’s distinctive competence compared with other firms.  The next step is to define the overall mission and official goals based on the correct fit between the external opportunities and internal strengths-(weaknesses and threats?) 5

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 Organization

design reflects the way goals and strategies are implemented (?). Organization Design affects the administration and execution of a strategic plan(?). Organization direction is implemented through decisions about structural form, including whether the organization will be designed for learning or efficiency.

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 Other

factors like information and control systems, the type of production technology human resource policies culture linkages to other organizations has to be taken into consideration.  Finally the figure shows that management evaluates the effectiveness of organizational efforts-(realization of GOALS). 7

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ORGANIZATIONAL PURPOSRE  Organizations

are created and continued to accomplish goals (something).

 Many

types of goals exist in an organization, officially stated goals and departmental operative goals (major distinction).

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MISSION  The

overall goal for an organization is often called the MISSON , (the organization reason for existence).  The mission describes the organization’s vision , its shared values and beliefs.  The mission is sometimes called the OFFICIAL GOALS. 9

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 The

mission statement is often written in a policy manual or the annual report.  The PRIMARY purpose of a mission statement is to serve as COMMUNICATION tool (customers, investors, suppliers, and competitors what the organization stands for and what it is trying to achieve). 10

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OPERATIVE GOALS  Designates

the ends sought through the actual operating procedures of the organization and explains what the organization is trying to do. It describes SPECIFIC MEASURABLE OUTCOMES, and are often concerned with the short run.  Operative goals typically pertain to primary tasks an org. must perform (subsystems). 11

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 These

goals concern overall performance, boundary spanning, maintenance, adaptation, and production activities.

 Specific

goals for each primary task, provide direction for the day-to-day decisions and activities within departments.

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 Overall

Performance. Profitability reflects the overall performance of the organization.  Profitability is a LAG INDICATOR.  Performance

may be expressed in terms of net income, earnings per share, or return on investment. Other overall performance goals are growth and output volume.

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 Resources.

Resource goals pertain to the acquisition of needed material and financial resources from the environment.

 Market.

Market goals relate to market share or market standing desired by the organization (niche strategy).

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 Employee

Development. Pertain to the training, promotion, safety, and growth of employees. It includes both managers and workers. Return on talent is becoming an important measure in today organization evaluation.

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 Innovation

and change. Innovation goals pertain to internal flexibility and readiness to adapt to unexpected changes in the environment. Innovation goals are often defined with respect to development of new services, products, or production processes.

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 Productivity.

Productivity goals concern the amount of output achieved from available resources. Are stated in terms of “ cost for unit of production”, ”units produced per employee”, or “resources cost per employee”.

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 Successful

organizations use a carefully balanced set of operative goals. (BALANCED SCORE CARDS).  Although profitability is important, some of today’s best companies recognize that a single-minded focus on bottom-line profits is not the best way to achieve high performance. 18

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THE IMPORTANCE OF GOALS  Both

official and operative goals are important for the organization (why?), but they serve very different purposes.  Official goals and mission statements describe a value system for the organization; operative goals represent the primary tasks of the organization. (HOW CAN WE ALIGN BOTH ?). 19

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A FRAMEWORK FOR SELECTING STRATEGY AND DESIGN

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