Top management plays a key role in defining an organization's mission, goals, and strategies. They must consider both external factors like opportunities/threats and internal factors like strengths/weaknesses. The organization's design, including its structure and systems, should support its competitive strategy and allow it to effectively achieve its goals. There are various frameworks for analyzing an organization's strategy, structure, and effectiveness, including Porter's competitive strategies, Miles and Snow's strategy typology, and Quinn and Rohrbaugh's competing values model.

1. 1
Chapter Two
Strategy, Organization Design,
and Effectiveness
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Top Management Role in Organization
Direction, Design, and Effectiveness
CEO, Top
Management
Team
External Environment
Opportunities
Threats
Uncertainty
Resource Availability
Internal Environment
Strengths
Weaknesses
Distinctive competence
Leadership Style
Past Performance
Strategic Management
Organization
Design
Effectiveness
Outcomes
Define
mission,
official
goals
Select
operational
goals,
collaborative
strategies
Resources
Efficiency
Goal attainment
Stakeholders
Competing values
Structural Form –
learning vs.
efficiency
Information and
control systems
Production
technology
Human resource
policies,
incentives
Organizational
culture
Interorganizational
linkages
Source: Adapted from Arie Y. Lewin and Carroll U. Stephens,
“Individual Properties of the CEO as Determinants of Organization
Design,” unpublished manuscript, Duke University, 1990; and Arie Y. Lewin
and Carroll U. Stephens, “CEO Attributes as Determinants of Organization Design:
An integrated Model,” Organization Studies 15, no. 2 (1994): 183-212

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Goal Type and Purpose
Type of Goals Purpose of Goals
Official Goals, mission: Legitimacy
Operative goals: Employee direction and motivation
Decision guidelines
Standard of performance

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Porter’s Competitive Strategies
Competitive
Scope
Competitive
Emphasis Strategy Example
Broad Low Cost
Low-Cost
Leadership GoFly Ltd.
Broad Uniqueness Differentiation
Starbucks
Coffee Co.
Narrow Low Cost
Focused Low-Cost
Leadership
Enterprise
Rent-a- Car
Narrow Uniqueness
Focused
Differentiation
Edward Jones
Investments

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Miles and Snow’s
Strategy Typology
 Prospector
• Learning orientation; flexible, fluid, decentralized structure
• Strong capability in research
• Values creativity, risk-taking, and innovation
 Defender
• Efficiency orientation; centralized authority and tight cost
control
• Emphasis on production efficiency, low overhead
– Close supervision; little employee empowerment
Source: Based on Michael Treacy and Fred Wiersema,
“How Market Leaders Keep Their Edge,” Fortune February 6,
1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,
Strategic Management (St. Paul, Minn.: West, 1995), 100-113; and
Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.
Coleman, Jr., “Organizational Strategy, Structure, and Process,”
Academy of Management Review 3 (1978), 546-562

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Miles and Snow’s
Strategy Typology (cont’d)
 Analyzer
• 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
 Reactor
• No clear organizational approach; design characteristics
may shift abruptly depending on current needs
Source: Based on Michael Treacy and Fred Wiersema,
“How Market Leaders Keep Their Edge,” Fortune February 6,
1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,
Strategic Management (St. Paul, Minn.: West, 1995), 100-113; and
Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.
Coleman, Jr., “Organizational Strategy, Structure, and Process,”
Academy of Management Review 3 (1978), 546-562

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Contingency Factors
Affecting Organization Design
Organizational Structure and Design
The right mix of design characteristics fit the contingency factors

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Contingency Approaches to the
Measurement of Organizational Effectiveness
Organization
Internal
activities
and
processes
Resource
Inputs
Product and
Service
Outputs
System
resource
approach
Internal
process
approach
Goal
approach
External Environment

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Reported Goals
of U.S. Corporations
Goal % Corporations
Profitability 89
Growth 82
Market Share 66
Social Responsibility 65
Employee welfare 62
Product quality and service 60
Research and development 54
Diversification 51
Efficiency 50
Financial stability 49
Resource conservation 39
Management development 35
Source: Adapted from Y. K. Shetty, “New Look at Corporate Goals,”
California Management Review 22, no. 2 (1979), pp. 71-19.

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Four Models of
Effectiveness Values
Human Relations Model
Goal values: human resource
development
Subgoals: cohesion, morale, training
Internal Process Model
Goal values: stability, equilibrium
Subgoals: information management,
communication
Rational Goal Model
Goal values: productivity, efficiency,
profit
Subgoals: planning, goal setting
Open Systems Model
Goal values: growth,
resource acquisition
Subgoals: flexibility, readiness,
external evaluation
Flexibility
Control
Internal External
STRUCTURE
F
O
C
U
S
Adapted from Robert E. Quinn and John Rohrbaugh,
“A Spatial Model of Effectiveness Criteria: Toward a
Competing Values Approach to Organizational Analysis,”
Management Science 29 (1983): 363-377; and Robert E. Quinn
and Kim Cameron, “Organizational Life Cycles and Shifting
Criteria of Effectiveness: Some Preliminary Evidence,”
Management Science 29 (1983): 33-51.

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ORGANIZATION
B
ORGANIZATION
A
Effectiveness Values
for Two Organizations
Human Relations
Model
Internal Process
Model
Rational Goal
Model
Open Systems
Model
STRUCTURE
F
O
C
U
S
FLEXIBILITY
CONTROL
INTERNAL EXTERNAL

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Identifying Company
Goals and Strategies
Goals from
Exhibit 2.8
Strategies
from Porter
Company #1
Company #2
Company #3
Workbook
Activity

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Competing Values and
Organizational Effectiveness
Workshop
Activity
Goal or
subgoal
Performance
Gauge
How to
measure
Source of
data
What do you
consider
effective?
(Example)
Equilibrium
Turnover
rates
Compare
percentages
of workers
who left HRM files
25%
reduction in
first year
1
Open
System 2
3
Human
Relations 4
5
Internal
Process 6
7
Rational
Goal 8