Organizational Design & Effectiveness Strategies
Organizational Design and Effectiveness
Strategic Decision Function
Managers determine goals, strategies, and organizational design to adapt to a changing environment. Directors evaluate the firm’s SWOT analysis, considering opportunities, threats, uncertainty, resource availability, strengths, weaknesses, competition, leadership style, and past performance.
General Manager, Hi Address
Strategic Direction
Defines operational goals, mission, and competitive strategies.
Organizational Design
Includes structure, information and control systems, production technology, HR policies, incentives, and organizational culture.
Results of Activity
Focuses on resources, efficiency, goal achievement, and competing values. Top management interprets the environment to set different goals.
Organizational Purpose
Global metal or mission. The mission describes the organization’s vision, values, and reason for existence, communicated to employees, investors, suppliers, and competitors.
Example: Liberty Mutual Insurance – To help staff manage their risks of everyday life, recover from the unexpected, and realize their dreams.
Vision: To be the first and best customer choice in products and services, leading the insurance industry by meeting customer needs.
Operational Goals
Provide internal direction, guidelines, and standards for employee performance, showing measurable results.
- Management and employee motivation
- Guidelines for decision making
- Performance standards
- Measurement standards
Specific Goals
Guide decisions and daily activities of each department.
Overall Performance
Measured by profitability and growth. Example: Chevrolet aims for 15% annual sales growth, producing about 3 million vehicles.
- Resources: Competence acquisition and financing (e.g., Honda sourcing high-quality auto parts).
- Market: Participation level, marketing, and advertising (e.g., Mega Blocks Inc. doubling market share).
- Employee Development: Training, promotion, security, and growth (e.g., Wegmans Supermarket prioritizing employees).
- Innovation and Change: Adapting to a dynamic environment (e.g., 3M’s sales growth with new products).
- Productivity: Efficient use of resources (e.g., Akamai Technology monitoring sales goals).
Importance of Goals
- Provide direction and motivation.
- Guide behavior and decision-making.
- Measure organizational performance.
Porter’s Competitive Strategies
Strategy: Action plan to achieve organizational goals.
Goals: Where you want your company to go.
Strategy: How to get there.
Focus: Specific market segments.
Competitive Advantage: Uniqueness or low cost.
- Leadership in low cost
- Focused low-cost leadership
- Differentiation focus
- Differentiation
Porter studies three models: Leadership at low cost, differentiation, and focus.
Leadership at Low Cost
- Increase market participation
- Seek efficiency
- Standardize procedures
- Empower employees
Differentiation
- Distinguish products/services
- Focus on learning and research
- Reward creativity and innovation
Miles and Snow Strategies
- Foresight: Innovation and growth.
- Defensive: Stability and customer retention.
- Analysis: Stability with innovation.
- Reactive: Responding to market threats and opportunities.
Manager’s Role
- Set organizational design to support competitive strategy.
- Choose leadership focused on low cost, differentiation, or a balanced approach.
- Select the most efficient organizational design.
Factors Affecting Organizational Design
- Strategy
- Environment
- Technology
- Size and life cycle
- Culture
Approaches to Effectiveness
- Goal-based: Identify and assess production targets.
- Resource-based: Efficient resource transformation.
- Internal process-based: Organizational health, efficiency, and employee satisfaction.
- Competing values model: Combines flexibility and control, internal and external focus.
| Structure | Flexibility | Approach |
|---|---|---|
| Emphasis on human relations (Internal) | Emphasis on open systems (External) | |
| Emphasis on internal process (Focus) | Emphasis on rational goals (Control) |
Managers’ Responsibilities
- Define organizational purpose
- Set goals
- Develop strategies
- Design the organization
- Evaluate effectiveness
- Compare goals and strategies with results
- Choose a competing values model