Review from last class1. Organization theory is a different way of

thinking about organizations.2. In BA 152, we examine organization-level

issues and the organization’s environment.3. We will rely on the rational-contingency

perspective.4. But appreciate that the underlying paradigm

is likely changing.5. Questions?

Strategy andOrganizational Design

BA 152

Organization Strategy, Design, and Effectiveness

CEO, TopManagement

Team

Internal EnvironmentStrengths

WeaknessesDistinctive competence

Leadership StylePast Performance

External Environment

OpportunitiesThreats

UncertaintyResource Availability

Strategic Management

Definemission,officialgoals

Selectoperationalgoals andstrategies

EffectivenessOutcomes

ResourcesEfficiency

Goal attainmentStakeholders

Competing valuesBalanced Scorecard

Organization DesignStructural Form – learning vs. efficiencyInformation and control systemsProduction technologyHuman resource policies, incentivesOrganizational cultureInterorganizational linkages

Strategic Management

Definemission,officialgoals

Selectoperationalgoals andstrategies

Organization Strategy, Design, and Effectiveness

Organizational Goals• Mission – the organization’s reason for

being– Wal-Mart: "To give ordinary folk the chance to

buy the same thing as rich people" – Mary Kay Cosmetics: "To give unlimited

opportunity to women" – 3M: "To solve unsolved problems

innovatively" – Merck: "To preserve and improve human life”– Walt Disney: "To make people happy"

Organizational Goals

• Official Goals - formal statement of that reason (usually found in Annual Report)

Organizational Goals

• Operative Goals – what is actually sought– Overall Performance – Productivity– Resource Acquisition and Management– Market Share– Employee Development– Innovation and Learning

Examples of Official Goals• Bertelsmann

– Trim debt– Achieve EBITA return of 10% in all divisions

ahead of 2005 IPO– Return authority to division heads– Refocus on core businesses (television,

magazines, books, book clubs, music)– Sell specialty publisher & e-commerce unit– Expand U. S. music and magazine holdings

and European television arm

Organizational Goals

• Purpose of Goals– Provide legitimacy (both internal & external)– Give direction and motivation to employees– Provide decision guidelines– Serve as criteria for determining how well

the organization is doing

What Determines an Organization’s Goals?

• Nature of the environment and culture (or is it vice-versa?)

• Environmental opportunities and threats• Organizational strengths and weaknesses• Top management choices

• What is the KFBS mission?• What are our official goals?• What are our operative goals?• How do we go about attempting to achieve

these goals?

Organizational Goals

Organizational Strategies

• What is a strategy?– “A plan for interacting with the competitive

environment to achieve organizational goals.” (Daft)

• Microsoft – Using a PC-Centric strategy with its X-Box.

• Sony – Creating an around-the-clock entertainment portal with PlayStation 2

• Nintendo – Focusing on game-appliance strategy with GameCube

Strategies in the Video Game Industry?

Organizational Strategies

• What is a strategy?– “A plan for interacting with the competitive

environment to achieve organizational goals.” (Daft)

• Michael Porter’s Approach to Strategy

Porter’s Competitive StrategiesCompetitive Advantage

Low Cost Uniqueness

CompetitiveScope

Broad

Narrow

Low-costleadership Differentiation

FocusedLow-costleadership

Focuseddifferentiation

Porter’s Competitive StrategiesCompetitive Advantage

Low Cost Uniqueness

CompetitiveScope

Broad

Narrow

Organizational Strategies• What is KFBS’ strategy?

– Low-cost leadership?– Differentiation?– Focused, low-cost leadership?– Focused, differentiation?– Some combination?

Organizational Strategies

• Can/should you try to do more than one?– Why or why not?

• How do you know if your strategy is working?

Next Time

Organizational Effectiveness