This document discusses the role of strategic direction in organizational design. It outlines how top management gives direction to organizations by determining goals and strategy, which then influences how the organization should be designed. Two frameworks for selecting strategy and design are described: Porter's competitive strategies of differentiation and low cost leadership, and Miles and Snow's typology of prospector, defender, analyzer, and reactor strategies. The effect of these various strategies on organizational design is also discussed, such as how low cost leadership requires a mechanistic and efficient design while differentiation requires a more flexible and fluid structure.

1. ROLE OF STRATEGIC DIRECTION IN
ORGANIZATION DESIGN
P. MADHUMITHA
RA1952001020079
MBA – 1B

2. ROLES OF STRATEGIC DIRECTION IN
ORGANIZATIONAL DESIGN
• An organizational goal is a desired state of affairs that the organization attempts to
reach.Top managers give direction to organizations.this direction alters how
organizations should be designed.
• Top management’s primary responsibility:- determine an organizations goals,strategy,
and design, thereby adopting the organization to a changing environment.
Direction (goal setting process)
1. Assessment of oppurtunities and threats (both Internal and external environments).
2. Define strategic intent: overall mission/ goals fit to the previous environmental
assessments.

3. • 3. Organizational design: design the organization to achieve these specific
goals.
• 4. Effectiveness/ outcomes: Measure results and feed back into the
international situation analysis.
. Organizational Purpose:- Organizations exists for a purpose.
• Strategic intent: means that all the organizations energies and resources and
directed towards a focused , unifying , and compelling overall goals .
• Mission:- the overall goal for an organization , the reason for its existence.
Also called
official goals,the purpose is to communicate to both internal and external
stakeholders,
What the organization is trying to achieve. Also provides legitimacy to any
potential stakeholders.

4. OPERATING GOALS.
• Designate the ends sought through the actual operating procedures of the
organization and explain what the organization is actually trying to do . They
describe specific measurable outcomes and are often concerned with the short
run.(performance goals,resource goals,markEt goals ,employee development
goals,market goals etc..
Overall performance:
1. Profitability: reflects the overall performance of “ For-Profit”organizations
. 2. Other metrics: NGO and similar organizations have goals that specify the
delivery of services to clients or members.

5. TWO FRAMEWORKS FOR SELECTING STRATEGY
AND DESIGN
• Porter model of competitive strategies vs Miles and Snow Strategy Typology.
• A strategy is a plan for interacting with the competitive environment to achieve
organizational goals. Goals define where an organization wants to go,strategies define
how it will get there.
• Porter’s Competitive Strategies: By adopting differentiation or low cost leadership
companies are more profitable and less vulnerable.
• Differentiation:- the organization attempts to distinguish its products or services from
others in the industry. The end goals Is a unique product offering , often ignoring
price point .often focuses on innovation to keep competitive edge.

6. • Low cost leadership : increases market share by keeping costs low compared to
competitors. Focuses on efficient facilities , cost reductions, and production efficiently.
Focuses on stability and attempts to mitigate risk
• Competitive scope : both broad and narrow scopes can effectively target the market.

7. MILES AND SNOW’S STRATEGY TYPOLOGY
• Organizations strive for a fit among internal organization characteristics ,strategy ,and the external
environment .having a clearly defined competitive strategy is considered one of the defining factors in an
organizations success.
• Miles and Snow’s Strategy Typology four strategies:
. 1. The prospectors : innovate ,take risks,seek out oppurtunities and grow. Best suited a dynamic ,growing
Environment ,focused on creativity.
2. The defender focuses on stability Or even entrenchment hold onto current customers by producing
reliable ,high quality products.best in a stable environment
3. The analyzer
4 . The reactor

8. EFFECT OF STRATEGIES ON ORGANIZATIONAL
DESIGN
• Low cost leadership : Mechanistic efficiency to organizational design.
Strong,centralized authority.
• Differentiation: structure is fluid and flexible with strong horizontal coordination.
Employees are empowered to take risks.
• Prospector: similar to differentiation
• Defender: efficiency approach like low cost leadership
• Analyzer : mixed of characteristics ,fluid like its strategy.
• Reactor: no direction or clear approach to design.