Organizational Design & Development- Chapter 2: THE ROLE OF STRATEGIC DIRECTION IN ORGANIZATION DESIGN

The Prospector Strategy:

Nike, which innovates in both products and internal processes, exemplifies the prospector strategy. Nike's new Air Jordan XX3, for example, is the first in a program of shoes based on designs that can be produced using recycled materials and limited amounts of toxic chemical based glues.

Porter's Competitive Strategies 1. Strategy: Differentiation

Organization Design: • Learning orientation; acts in a flexible, loosely knit way, with strong horizontal coordination • Strong capability in research • Values and builds in mechanisms for customer intimacy • Rewards employee creativity, risk taking, and innovation

2. Strategy: Low-Cost Leadership

Organization Design:. • Efficiency orientation; strong central authority; tight cost control, with frequent, detailed control reports • Standard operating procedures • Highly efficient procurement and distribution systems • Close supervision; routine tasks; limited employee empowerment

The low-cost leadership strategy is concerned primarily with:

Stability rather than taking risks or seeking new opportunities for innovation and growth. A low cost position means a company can achieve higher profits than competitors because of its efficiency and lower operating costs; e.g. Low-cost leaders such as Ryanair or Wal-Mart can undercut competitors' prices and still earn a reasonable profit.

Contingency Factors Affecting Organization Design- S.E.T.C. The Right Mix of Design Characteristics Fits the Contingency Factors, they are:

Strategy Environment Technology Size/Life Cycle Culture

3. Miles and Snow's Strategy Typology

Strategy: Analyzer Organization Design: • 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

2. Miles and Snow's Strategy Typology

Strategy: Defender Organization Design: • Efficiency orientation; centralized authority and tight cost control • Emphasis on production efficiency; low overhead • Close supervision; little employee empowerment

1. Miles and Snow's Strategy Typology

Strategy: Prospector Organization Design: • Learning orientation; flexible, fluid, decentralized structure • Strong capability in research

4. Miles and Snow's Strategy Typology

Strategy: Reactor Organization Design: • No clear organizational approach; design characteristics may shift abruptly, depending on current needs

1. Focus Strategy

The organization concentrates on a specific regional market or buyer group. The company will try to achieve either a low-cost advantage or a differentiation advantage within a narrowly defined market.

Competitive Advantage

The overall aim of strategic Intent is to help the organization achieve a Sustainable ___ ___.

Mission:

The overall goal for an organization; the organization's reason for existence. It describes the organization's Shared Values and Beliefs and its reason for being.

TRADITIONAL EFFECTIVENESS APPROACHES

Traditional approaches to measuring effectiveness look at different parts of the organization and measure indicators connected with outputs, inputs, or internal activities.

Rivalry among Existing Competitors.

___ among competitors is influenced by the preceding four forces, as well as by cost and product differentiation. Porter has referred to the "advertising slugfest" when describing the scrambling and jockeying for position that occurs among fierce rivals within an industry.

A rapidly changing environment may call for:

a more flexible structure, with strong horizontal coordination and collaboration through teams or other mechanisms.

Porter's Competitive Strategies.: Managers then determine whether the organization will compete on a ___ (competing in many customer segments) or a ___ (competing in a selected customer segment or group of segments). These choices determine the selection of strategies

broad scope, narrow scope

THE BALANCED SCORECARD- APPROACH TO EFFECTIVENESS

combines Several Indicators of Effectiveness into a Single Framework, balancing Traditional Financial Measures with Operational Measures relating to a company's critical success factors.

Design the organization to support the firm's ___

competitive strategy.

3. The abilities of managers to use tangible and intangible resources

3. tangible (e.g., supplies, people) and intangible (e.g., knowledge, corporate culture) resources in day-to-day organizational activities to achieve superior performance

True or False: In terms of size and life cycle, young, small organizations have an extensive division of labor, numerous rules and regulations, and standard procedures and systems for budgeting, control, rewards, and innovation. Size and stages of the life cycle

False In terms of size and life cycle, young, small organizations are generally informal and have little division of labor, few rules and regulations, and ad hoc budgeting and performance systems.

ORGANIZATIONAL PURPOSE

May be referred to as the overall goal, or mission. Different parts of the organization establish their own goals and objectives to help meet the overall goal, mission, or purpose of the organization.

Strategic Intent

Means that all the Organization's Energies and Resources are Directed toward a Focused, Unifying, and Compelling overall Goal.

The Goal Approach

Measures Progress toward attainment of those goals. For example, an important measure for the Women's National Basketball Association is number of tickets sold per game. During the league's first season, President Val Ackerman set a goal of 4,000 to 5,000 tickets per game. The organization actually averaged nearly 9,700 tickets per game, indicating that the WNBA was highly effective in meeting its goal for attendance.

strategic intent: Official and operative goals are a key element in organizations because they meet these needs

establishing legitimacy with external groups, providing employees with a sense of direction and motivation, and setting standards of performance.

Balanced Scorecard Effectiveness Criteria- 3a. Internal business processes,

focus on production and operating statistics, such as speed of order fulfillment and cost per order

Balanced Scorecard Effectiveness Criteria- b. Internal business processes,

focus on production and operating statistics, such as speed of order fulfillment and cost per order.

Balanced Scorecard Effectiveness Criteria- b. Organization's capacity for learning and growth

focusing on how well resources and human capital are being managed for the company's future. Measurements include such things as employee satisfaction and retention, amount of training people receive, business process improvements, and the introduction of new products.

balanced scorecard has evolved into a system that

helps managers see how organizational effectiveness results from accomplishing outcomes in four consistent and mutually supportive areas. Overall effectiveness is a result of how well these interdependent elements are aligned, so that individuals, teams, departments, and so forth are working in concert to attain specific goals that ultimately help the organization achieve high performance and fulfill its mission.

b. Balanced Scorecard Effectiveness Criteria- Customer service indicators measure such things as

how customers view the organization, as well as customer retention and satisfaction.

Indicators tracked with the Goal Approach 4. Social responsibility

how well the organization serves the Interests of Society as well as itself

Typical Operative Goals- Overall Performance: 2. Growth pertains to:

increases in sales or profits over time.

Design must also fit the workflow technology of the organization. E.g. with mass production technology, such as a traditional automobile assembly line, the organization functions best by emphasizing efficiency, formalization, specialization, centralized decision making, and tight control. An e-business, on the other hand, would need to be more ___ and ___

informal and flexible.

Top managers also assess ___ ___ and ___ to define the company's distinctive competence compared with other firms in the industry.

internal strengths, weaknesses

Efficiency

is a more limited concept that pertains to the internal workings of the organization.

The organization's general statement of its Purpose and Philosophy.

is often written down in a Policy Manual or the Annual Report.

Core Competence

is something the organization does especially well in comparison to its competitors.

strategic intent: A core competence

is something the organization does extremely well compared to competitors. Managers look for competitive openings and develop strategies based on them

Organizational efficiency

is the amount of resources used to produce a unit of output. It can be measured as the ratio of inputs to outputs. If one organization can achieve a given production level with fewer resources than another organization, it would be described as more efficient.

organizational effectiveness

is the degree to which an organization realizes its goals

Resource-based Indicators Approach

looks at the Input side of the transformation process. It assumes organizations must be successful in obtaining and managing valued resources in order to be effective.

Porter's Competitive Strategies.: With respect to advantage, managers determine whether to compete through ___ ___ or the ability to offer ___ or distinctive products and services that can command a premium price.

lower costs, unique

Effectiveness is a broad concept. It implicitly takes into consideration a range of variables at both the ___ and ___ levels

organizational, departmental

The Resource-Based Approach is Valuable when

other indicators of performance are difficult to obtain. In many nonprofit and social welfare organizations, for example, it is hard to measure output goals or internal efficiency.

Organizational goals represent the ___ for an organization's existence and the outcomes it seeks to achieve

reason

Typical Operative Goals- Overall Performance: 1. Profitability

reflects the overall performance of for-profit organizations i.e. may be expressed in terms of net income, earnings per share, or return on investment.

From a resource-based perspective, organizational effectiveness is defined as:

the Ability of the organization, in either absolute or relative terms, to Obtain Scarce and Valued Resources and Successfully Integrate and Manage them.

Indicators tracked with the Goal Approach 1. Profitability

the Positive Gain from business operations or investments after expenses are subtracted

Indicators tracked with the Goal Approach 2. Market share

the Proportion of the Market the firm is able to capture relative to Competitors

Indicators tracked with the Goal Approach 5. Product quality

the ability of the organization to achieve High Quality in its Products or Services

Indicators tracked with the Goal Approach 3. Growth

the ability of the organization to increase its Sales, Profits, or Client base over time

The threat of entry in an industry depends largely on___

the amount and extent of potential barriers, such as cost. It is far more costly to enter the auto manufacturing industry, for instance, than to start a specialty coffee shop.

3. Volume pertains to:

total sales or the amount of products or services delivered.

strategic intent: Competitive advantage refers to

what sets the organization apart from others and provides it with a distinctive edge.

Competitive Advantage refers to

what sets the organization apart from others and provides it with a Distinctive Edge for meeting Customer or Client Needs in the Marketplace.

Examples of ambitious goals that demonstrate strategic intent;

" Canon's to "Beat Xerox," and Coca-Cola's "To put a Coke within 'arm's reach' of every consumer in the world."

In a broad sense, Resource Indicators of Effectiveness encompass the following dimensions:

1. Bargaining position 2. The abilities of the organization's decision makers to perceive and correctly interpret the real properties of the external environment 3. The abilities of managers to use tangible and intangible resources 4. The ability of the organization to respond to changes in the environment

3. Strategic Intent:

1. Define Mission i.e. Official Goals & 2. Select Operational Goals i.e. Competitive Strategies

1. Traditional Approaches to Measuring Organizational Effectiveness

1. External Environment: Resource Inputs: Resource-based approach

Balanced Scorecard Effectiveness Criteria- four effectiveness categories considered by the balanced scorecard.

1. Financial performance, 2. Customer service, 3. Internal business processes, 4. Organization's capacity for learning and growth

Effectiveness Outcome: G.R.E.B.

1. Goal attainment 2. Resources 3. Efficiency 4. Balance Scorecard

Briefcase: As an organization manager, keep these guidelines in mind. Fill in the blanks: 1. Establish and communicate Organizational ___ and ___. 2. Communicate Official Goals to provide a statement of the Organization's Mission to ___ Constituents. 3. Communicate operational goals to provide ___ (d.g.s) direction, guidelines, and standards of performance

1. Mission, Goals. 2. External 3. Internal

Five (5) Top Management Roles in Organization- Direction, Design, and Effectiveness.: E.I.S.O.E 1. External Environment are: O.T.U.R

1. Opportunities 2. Threats 3. Uncertainty & 4. Resource Availability

Typical Operative Goals include: P.R.E.M.P.I

1. Performance 2. Resource 3. Employee Development 4. Market 5. Productivity 6. Innovation and Change

The Important Goals to consider are Operative Goals, because official goals (mission) tend to be abstract and difficult to measure. Indicators tracked with the Goal Approach include: P.M.G.S.P.

1. Profitability 2. Market share 3. Growth 4. Social responsibility 5. Product quality

2. Internal Situations: S.W.D.L.P

1. Strengths 2. Weaknesses 3. Distinctive Competencies 4. Leadership Style & 5. Past Performance

4. Organization Design

1. Structural Form i.e. Learning vs Efficiency 2. Information & Control Systems 3. Production Technology 4. HR Policies & Incentives 5. Organizational Culture 6 Inter-organizational Linkages

Porter's Competitive Forces and Strategies N.S.B.S.R

1. The Threat of New Entrants. 2. The Power of Suppliers 3. The Power of Buyers 4. The Threat of Substitutes. 5. Rivalry among Existing Competitors.

1. Bargaining position

1. the ability of the organization to obtain from its environment scarce and valued resources, including financial resources, raw materials, human resources, knowledge, and technology

2. Traditional Approaches to Measuring Organizational Effectiveness

2. Organization: Internal activities and processes Internal process approach

Balanced Scorecard Effectiveness Criteria- b. Financial performance,

2. Reflects a concern that the organization's activities contribute to improving short- and long-term financial performance. It includes traditional measures such as net income and return on investment.

2. The abilities of the organization's decision makers to perceive and correctly interpret

2. the real properties of the external environment

3. Traditional Approaches to Measuring Organizational Effectiveness

3. Product and Service Outputs Goal approach

4. The ability of the organization to respond to changes in the environment

4. The abilities of managers to use tangible (e.g., supplies, people) and intangible (e.g., knowledge, corporate culture) resources in day-to-day organizational activities to achieve superior performance

5. The ability of the organization to respond to changes

5. In the environment

Strategic intent provides:

A Focus for Management Action.

Official goals and mission statements describe

A Value System for the organization and set an overall Purpose and Vision; Legitimize the organization;

The role of top management is important because managers can interpret the environment differently and develop different goals.: Give an example.

A new CEO at Borders Group believed the book retailer was missing an opportunity by emphasizing its 'bricks and mortar stores' while paying little attention to the online world of book retailing. CEO, quickly saw e-commerce as "a necessary component of our business." Borders ended its alliance with Amazon.com and reopened its own branded website.

Typical Operative Goals 5. Productivity goals

Akamai's chief financial officer, Timothy Weller, sees this statistic as "the single easiest measure of ___ ___ E.g. Managers at Akamai Technologies, which sells Web content delivery services, keep a close eye on sales per employee to see if the company is meeting ___ ___.

3. The Analyzer

Amazon.com strategy is to defend its core business of selling books and other physical goods over the internet, but also to build a business in digital media, including initiatives such as a digital book service, an online DVD rental business, and a digital music store to compete with Apple's iTunes.

The Direction-Setting Process typically begins with

An Assessment of the Opportunities and Threats in the External Environment, including the Amount of (CUR) Change, Uncertainty, and Resource Availability.

Use a balanced mixture of characteristics for an

Analyzer strategy.

Porter's Competitive Strategies.: Example of differentiation

Apple has never tried to compete on price and likes being perceived as an "elite" brand. Its personal computers, for example, can command significantly higher prices than other PCs because of their distinctiveness. The company has built a loyal customer base by providing innovative, stylish products and creating a prestigious image. Consider the launch of the iPhone.

Why are goals important?

Both Official and Operative goals are important for the organization, but they serve very different purposes.

Official Goal Statements typically define:

Business Operations and may focus on (VMC) Values, Markets, and Customers that distinguish the Organization.

The threat of new entrants to an industry:

Can create pressure for established organizations, which might need to hold down prices or increase their level of investment; e.g. when managers at Nike learned that fast-growing athletic apparel company Under Armour planned to get into the business of selling athletic footwear, they quickly invested in reviving their company's long-dead cross-training category by designing the new SPARQ trainer.

How Strategies Affect Organization Design

Choice of strategy affects internal organization characteristics. Organization design characteristics need to support the firm's competitive approach. For example, a company wanting to grow and invent new products looks and "feels" different from a company that is focused on maintaining market share for long-established products in a stable industry

Each provides a framework for ___ ___

Competitive Action.

Porter's Competitive Strategies.: The focus strategy, in which the organization concentrates on a specific market or buyer group, is further divided into focused low cost and focused differentiation. To use this model, managers evaluate two factors,

Competitive Advantage and Competitive Scope.

The Mission Statement Communicates to:

Current and prospective employees, customers, investors, suppliers, and competitors what the organization stands for and what it is trying to achieve.

Organization Direction is implemented through

Decisions about Structural Form, including whether the organization will be Designed for a (LE) Learning or an Efficiency Orientation, also, choices about (IC.PT.HP.C.L) Information and Control Systems, the Type of Production Technology, Human Resource Policies, Culture, and Linkages to other organizations.

What are Operative goals?

Describe Specific Measurable Outcomes and are often concerned with the Short Run. These goals typically pertain to the Primary Tasks an organization must perform. Specific goals for each primary task provide direction for the day-to-day decisions and activities within departments.

What do Operative Goals do?

Designate the ends sought through the Actual Operating Procedures of the organization and explain what the organization is actually trying to do.

In finding its competitive edge within these five forces, Porter suggests that a company can adopt one of three strategies: They are:

Differentiation, Low-cost leadership, or Focus.

The Best business strategy is to make products and services as distinctive as possible to gain an edge in the marketplace.

Disagree. Differentiation, making the company's products or services distinctive from others in the market, is One effective strategic approach. A Low-Cost Leadership approach can be equally or even more effective depending on the organization's strengths and the nature of competition in the industry.

2. Focus Strategy: Example

E.g. Puma, the German athletic-wear manufacturer. In the mid-1990s, Puma was on the brink of bankruptcy. CEO Jochen Zeitz, then only 30 years old, revived the brand by targeting selected customer groups, especially armchair athletes, and creating stylish shoes and clothes that are setting design trends. Puma is "going out of its way to be different," says analyst Roland Könen.

ASSESSING ORGANIZATIONAL EFFECTIVENESS: Understanding organizational goals and strategies, as well as the concept of fitting design to various contingencies, is a first step toward understanding Organizational ___

Effectiveness

Balanced Scorecard Effectiveness Criteria- 4a. Organization's capacity for learning and growth

Effectiveness Criterion: How well are we learning, changing, and improving? Examples of measures: continuous process improvement, employee retention

Balanced Scorecard Effectiveness Criteria- 1a. Financial performance,

Effectiveness Criterion: How well do our actions contribute to better financial performance? Example of measures: profit, return on investment

Balanced Scorecard Effectiveness Criteria- 2a. Customer service,

Effectiveness Criterion: How well do we serve our customers? Examples of measures: customer satisfaction, customer loyalty

Internal Process Indicators Approach

Effectiveness is measured as the Internal organizational Health and Efficiency. An effective organization has a smooth, well-oiled internal process. Employees are happy and satisfied. Department activities mesh with one another to ensure high productivity.

With a low-cost leadership or defender strategy, select design characteristics associated with an

Efficiency orientation.

An example that demonstrates that efficiency does not always lead to effectiveness

Efforts to increase efficiency, particularly through severe cost cutting, can also sometimes make the organization less effective. One regional fast food chain wanting to cut costs decided to reduce food waste by not cooking any food until it was ordered. The move reduced the chain's costs, but it also led to delayed service, irritated customers, and lower sales.

Goal Type and Purpose: Operative goals:

Employee direction and motivation Decision guidelines Standard of performance

Porter's Competitive Strategies: True or False: A differentiation strategy can increase rivalry with competitors

False: A differentiation strategy can reduce rivalry with competitors and fight off the threat of substitute products because customers are loyal to the company's brand.

Government and nonprofit organizations such as social service agencies or labor unions do not have goals of profitability. What do they have?

Goals that attempt to specify the Delivery of Services to Clients or Members within Specified Expense Levels

Balanced scorecard: Examples Best Buy, Wells Fargo, and Hilton Corporation, for instance, are striving to understand how they perform on all four components of effectiveness and looking at the relationships among the components.

How does Internal Efficiency relate to Customer Satisfaction or Financial Outcomes? How do measures of Employee Engagement, Customer Satisfaction, Sales Performance, and Profitability Interconnect and contribute to overall effectiveness? Hilton found that a boost in customer retention rates led to an increase in revenues. Best Buy has connected employee engagement to better store performance.

Goal Indicators Goal Approach to effectiveness consists of:

Identifying an organization's Output Goals and assessing how well the organization has attained those goals. This is a logical approach because organizations do try to attain certain levels of Output, Profit, or Client Satisfaction.

For a differentiation or prospector strategy, on the other hand,

Innovation, and adaptation, choose characteristics that encourage learning

The Defender is concerned primarily with

Internal efficiency and control to produce reliable, high-quality products for steady customers. This strategy can be successful when the organization exists in a declining industry or a stable environment

Organizational Goal

Is a desired state of affairs that the organization attempts to reach. A result or end point toward which organizational efforts are directed.

A strategy

Is a plan for interacting with the competitive environment to achieve organizational goals.

The Defender Strategy

Is almost the opposite of the prospector. Rather than taking risks and seeking out new opportunities, this strategy is concerned with stability or even retrenchment. This strategy seeks to hold on to current customers, but it neither innovates nor seeks to grow.

Miles and Snow's Strategy Typology (Four Strategies)

Is based on the idea that managers seek to formulate strategies that will be congruent with the external environment. Organizations strive for a fit among internal organization characteristics, strategy, and the external environment.

Prospector Strategy:

Is to innovate, take risks, seek out new opportunities, and grow. This strategy is suited to a dynamic, growing environment, where creativity is more important than efficiency.

How does the balanced scorecard help managers

It helps them to assess the organization from many perspectives so they have a better understanding of total effectiveness. Successful managers keep the organization focused on data in all four components rather than relying on just one, such as finances, which tells only part of the story. Companies

The Power of Suppliers.

Large, ___ ___ can charge higher prices, limit services or quality, and shift costs to their customers, keeping more of the value for themselves. The concentration of suppliers and the availability of substitute suppliers are significant factors in determining supplier power

Goal Type and Purpose: Official goals, mission

Legitimacy

Low-cost doesn't necessarily mean low-price, but in many cases, Give example:

Low-cost leaders provide goods and services to customers at cheaper prices, e.g. The CEO of Irish airline Ryanair said one of the company's strategy: "It's the oldest, simplest formula: Pile 'em high and sell 'em cheap . . . We want to be the Wal-Mart of the airline business. Nobody will beat us on price. EVER."

Porter's Competitive Strategies.: Differentiation strategy

Organizations attempt to distinguish their products or services from others in the industry. An organization may use Advertising, Distinctive Product Features, Exceptional Service, or New Technology to achieve a Product perceived as Unique. This strategy usually targets customers who are not particularly concerned with price, so it can be quite profitable.

DESIGN ESSENTIALS

Organizations exist for a purpose. Top managers decide the organization's strategic intent, including a specific mission to be accomplished. The mission statement, or official goals, makes explicit the purpose and direction of an organization.

Innovation and Change

Pertain to Internal Flexibility and Readiness to Adapt to Unexpected Changes in the environment. They are often defined with respect to the development of specific New Services, Products, or Production Processes. E.g. Procter & Gamble is taking a new approach to innovation that brings in ideas from outside entrepreneurs and researchers

Typical Operative Goals 3. Employee Development

Pertains to the Training, Promotion, Safety, and Growth of Employees. It includes both Managers and Workers. Strong employee development goals are one of the characteristics common to organizations that regularly show up on Fortune magazine's list of "100 Best Companies to Work For." For example, family-owned Wegmans Food Markets

Two models for formulating strategies are:

Porter's competitive forces and strategies and the Miles and Snow strategy typology. Organization design needs to fit the firm's competitive approach to contribute to organizational effectiveness.

Managers Analyze Competitors and the Internal and External Environments to find what?

Potential Competitive Openings and learn what New Capabilities the organization needs to Gain the Upper Hand against other Companies in the industry.

The Power of Buyers

Powerful customers, the flip side of powerful suppliers, can force down prices, demand better quality or service, and drive up costs for the supplying organization. Wal-Mart, for example, is so powerful that it can easily put the screws to manufacturers who supply goods for sale at its stores.

Porter's Competitive Strategies.: Successful differentiation strategies require a number of costly activities, such as:

Product research and design and extensive advertising. Companies that pursue a differentiation strategy need strong marketing abilities and creative employees who are given the time and resources to seek innovations.

Typical Operative Goals- Overall Performance:

Profitability, Growth and Output volume

Operative goals

Represent the primary tasks of the organization; Are more explicit and well defined.

A core competence may be in the area of, for example:

Superior Research and Development, Expert Technological Know-How, Process Efficiency, or Exceptional Customer Service. The North Face, Strategy Focuses on the company's Core Competencies of Operational Efficiency and Merchandising know-how. Because of their sourcing, distribution, and financial systems they doubled sales to $500 million and improved profit margins to a healthy 13 percent within five years .

2. The Analyzer

Targeted toward new, more dynamic environments, where growth is possible. The analyzer attempts to balance efficient production for current product or service lines with the creative development of new product lines.

Organization Design is

The Administration and Execution of the Strategic Plan

Three aspects related to Strategic Intent are: M.C.C.

The Mission, Core Competence, and Competitive Advantage.

Two models for formulating strategies are:

The Porter model of- Competitive Strategies and Miles and Snow's- Strategy typology.

Miles and Snow's four strategies that can be developed are:

The Prospector, the Defender, the Analyzer, and the Reactor.

Organization Design reflects:

The Way goals and Strategies are implemented so that the organization's attention and resources are consistently focused toward achieving the Mission and Goals.

1. Reactor

The ___ is not really a strategy at all. Rather, ___ respond to environmental threats and opportunities in an ad hoc fashion. In a ___ strategy, top management has not defined a long-range plan or given the organization an explicit mission or goal, so the organization takes whatever actions seem to meet immediate needs. Although the ___ strategy can sometimes be successful, it can also lead to failed companies.

Typical Operative Goals 1. Resources Goals pertain to

The acquisition of needed material and financial resources from the environment. They may involve obtaining financing for the construction of new plants, finding less expensive sources for raw materials, or hiring top-quality technology graduates. e.g. Resource goals for Stanford University include attracting top-notch professors and students.

Typical Operative Goals 4. Productivity goals is concerned with

The amount of output achieved from available resources. They typically describe the amount of resource inputs required to reach desired outputs and are thus stated in terms of "cost for a unit of production," "units produced per employee," or "resource cost per employee."

Operative goals provide this standard for measurement:

The level of organizational performance, whether in terms of profits, units produced, degree of employee satisfaction, level of innovation, or number of customer complaints, needs a basis for evaluation.

Typical Operative Goals 2. Market goals relate to

The market share or market standing desired by the organization. Market goals are largely the responsibility of marketing, sales, and advertising departments. e.g. In the toy industry, Canada's Mega Bloks Inc. achieved its market goal of doubling its share of the toy building block market to 30 percent.

The Threat of Substitutes.

The power of alternatives and substitutes for a company's product or service may be affected by changes in cost, new technologies, social trends that will deflect buyer loyalty, and other environmental changes. Large pharmaceutical companies are under intense pressure from generic competition as patents on numerous popular drugs have expired in recent

Example of Rivalry

The rivalry between Coke and Pepsi is a famous example. Recently, Coke scored big with its sponsorship of the Beijing Olympics, but Pepsi's creative marketing had many Chinese consumers thinking it was an official sponsor too

The Power of Suppliers.

The sole supplier of materials or information to a company will have great power, for example. The Nielsen Company has wielded tremendous power with television networks because it has until recently been the sole source of ratings data that network executives use to make advertising and programming decisions.

A mission statement communicates Legitimacy to Internal and External Stakeholders, who may join and be committed to the organization because___:

They identify with its Stated Purpose and Vision.

The Organization's Strategic Intent

This includes defining an Overall Mission and Official Goals based on the Correct Fit between External Opportunities and Internal Strengths

A FRAMEWORK FOR SELECTING STRATEGY AND DESIGN

To Support and Accomplish the Organization's Strategic Intent and keep people focused in the Direction determined by organizational Mission, Vision, and Operative goals. Managers have to select specific strategy and design options that can help the organization achieve its purpose and goals within its competitive environment.

Another important purpose of goals is:

To act as guidelines for employee behavior and decision making.

Porter's Competitive Strategies.: The low-cost leadership strategy

Tries to increase market share by keeping costs low compared to competitors. The organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight controls to produce products or services more efficiently than its competitors.

1. The Analyzer

Tries to maintain a stable business while innovating on the periphery. It seems to lie midway between the prospector and the defender. Some products will be targeted toward stable environments in which an efficiency strategy designed to keep current customers is used.

True or False: An organization may be highly efficient but fail to achieve its goals because it makes a product for which there is no demand. Likewise, an organization may achieve its profit goals but be inefficient.

True

True or False: If substitute products or potential new competitors enter the picture, the low-cost producer is in a better position to prevent loss of market share.

True

True or False: Large organizations such as Coca-cola, Sony, or General Electric, have an extensive division of labor, numerous rules and regulations, and standard procedures and systems for budgeting, control, rewards, and innovation. Size and stages of the life cycle

True

True or False: Sometimes efficiency leads to effectiveness, but in other organizations, efficiency and effectiveness are not related. An organization may be highly efficient but fail to achieve its goals because it makes a product for which there is no demand. Likewise, an organization may achieve its profit goals but be inefficient.

True

True or False: The Primary Responsibility of Top Management is to determine an Organization's (GSD) Goals, Strategy, and Design, therein adapting the organization to a Changing Environment.

True

True or False: Appropriate goals can act as a set of constraints on individual behavior and actions so that employees behave within boundaries that are acceptable to the organization and larger society.

True:

True or False: The choice of Goals and Strategy influences how the organization should be Designed.

True: Top executives decide the end purpose the organization will strive for and determine the Direction it will take to accomplish it. It is this Purpose and Direction that shapes how the organization is Designed and Managed.

True or False: The mission is sometimes called the Official Goals

True: which refers to the Business Scope and Outcomes the organization is trying to Achieve.

True or False: The Competitive Analysis of the Internal and External Environments is one of the Central Concepts in Strategic Management

True: The best strategies come from systematic analysis of organizational strengths and weaknesses combined with analysis of opportunities and threats in the environment. Careful study combined with experience enable top managers to decide on specific goals and strategies.

Internal process indicators include:

• A Strong, Adaptive Corporate Culture and Positive Work Climate • Operational Efficiency, such as using Minimal Resources to achieve Outcomes • Undistorted horizontal and vertical communication • Growth and development of employees