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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
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01

THE ROLE OF STRATEGIC


DIRECTION IN ORGANIZATION
DESIGN

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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.

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Top Management Role in Organization Direction, Design,
and Effectiveness

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02

ORGANIZATION PURPOSE

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Organizational Purpose
Strategic intent – organization’s energies and resources are
directed toward a focused, unifying, and compelling goal.

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Organizational Operating Goals

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Goals Types and Purposes

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A FRAMEWORK FOR SELECTING


STRATEGY AND DESIGN

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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

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04

PORTER’S COMPETITIVE FORCES


AND STRATEGIES

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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.

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EXAMPLE:

Your Date Here Your Footer Here 15


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HOW STRATEGIES AFFECT


ORGANIZATION DESIGN

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“ Structure follows
Strategy.”
- Alfred Chandler

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DIFFERENTIATION STRATEGY

Research Broad Job


and Design Description
ORGANIC/LEARNING
ORIENTATION
De-
Values
centralized
Customer
Decision
Making
Shared
Information

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LOW-COST LEADERSHIP STRATEGY

Routine
Operations MECHANISTIC/ Tasks

EFFICIENCY
ORIENTATION
Centralized
Process
Decision
Engineering
Making

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OTHER FACTORS AFFECTING


ORGANIZATION DESIGN

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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

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07

ASSESSING ORGANIZATIONAL
EFFECTIVENESS

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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.

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Sometimes efficiency leads to
effectiveness, but in other
organizations, efficiency and
effectiveness are not related.
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Organization may achieve its
profit goals but be inefficient.

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08

TRADITIONAL EFFECTIVENESS
APPROACHES

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Traditional Effectiveness Approach

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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

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09

BALANCED SCORECARD
APPROACH TO EFFECTIVENESS

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Balanced Scorecard Approach Effectiveness Criteria

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