Textbook Notes (369,144)
Canada (162,415)
Business (2,391)
BU398 (137)

Ch2 - Strategy, Organizational Design, and Effectiveness

3 Pages

Course Code
Joel Marcus

This preview shows page 1. Sign up to view the full 3 pages of the document.
Chapter 2 Strategy, Organizational Design, and Effectiveness The Role of Strategic Direction in Organizational Design  The organization’s direction and purpose shapes how the organization is designed and managed  The primary responsibility of top management is to determine an organization’s goals, strategy, and design, therein adapting the organization to a changing environment.  Performance of SWOT and PEST analysis highlights the direction the organization should be taking Organizational Purpose Organizations are created and continued in order to accomplish something. Parts of the organization establish their own goals and objectives to help meet the overall goal, mission or purpose of the organization. Mission (Official Goals) = value system  Overall goal and reason for existence; it is a description of the organization’s vision, its shared values and believes, and its reason for being. o Official goals refers to the business scope and outcomes the organization is trying to achieve  Serves as a communication tool – communicates to current or potential stakeholders what the organization is trying to achieve.  Communicates legitimacy to internal and external stakeholders who identify with the purpose. Operative Goals = primary tasks, more well defined  Designate the ends sought through the actual operating procedures of the organization and explain what the organization is actually trying to do.  Describes specific, measurable outcomes and are often concerned with the short run.  Pertain to the tasks organizations must perform.  Overall Performance reflected by profitability (e.g. net income, EPS, ROI), growth, output volume (businesses) o Government and nonprofits have goals that attempt to specify the delivery of services to clients or members within specified expense levels  Resources pertain to the acquisition of needed material (people or materials) and financial resources from the environment.  Market relate to the market share or market standing desired by the organization. o E.g. Honda’s desire to overtake Toyota as the number one seller of cars in Japan  Employee Development refers to the training, promotion, safety, and growth of employees.  Innovation and Change pertain to internal flexibility and readiness to adapt to unexpected changes in the environment. o Defined in terms of the development of specific new services, products, or production processes  Productivity concern the amount of output achieved from available resources.  Must have a careful balance of operative goals. The Importance of Goals  Act as guidelines for employee behaviour and decision making in that it set constraints on individual behaviour and actions so that employees behave within boundaries that are acceptable to the organization and larger society.  Provide a standard for assessment. A Framework for Selecting Strategy and Design  Organizations need to select specific strategy options to achieve its purpose and goals  A strategy is a plan for interacting with the competitive environment to achieve organizational goals; how an organization will achieve its goals (e.g. aggressive advertising to attract new customers). Porter’s Competitive Strategies  Three competitive advantages: differentiation, low-cost leadership, and focus.  Then choose from a broad or narrow (focused low-cost leadership, and focused differentiation) scope  Differentiation Strategy – organizations attempt to distinguish their products or services from others in the industry; customers are not price sensitive, can be profitable; can reduce rivalry with competitors and threat of substitute products through customer brand loyalty; requires extensive product research and design to create a unique product, and then extensive marketing.  Low Cost Leadership Strategy – tries to increase market share by emphasizing low cost compared to competitors; organization seeks efficiency and cost reduction controls; concerned with stability. o E.g. WestJet  Focus – the company will try to achieve either a low-cost advantage or a differentiation advantage within a narrowly defined market or buyer group. Miles and Snow’s Strategy Typology Based on the idea that managers seek to formulate strategies that will be congruent with the external environment.  Prospector strategy: o To innovate, take risks, seek out new opportunities, and grow o Learning orientation; fluid, flexible and decentralized structure; strong research capability o Values creativity more than efficiency o Differentiation strategy o E.g. RIM, Microsoft, and other leading high-tech companies  Defender strategy: o Concerned with stability or even retrenchment; seeks to hold onto customers but neither innovates nor grows o Internal efficiency oriented to produce reliable, high-quality products for a steady stream of customers o centralize
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.