1. Review from last class 1.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?

2. Strategy and Organizational Design BA 152

3. Organization Strategy, Design, and Effectiveness CEO, Top Management Team Internal Environment Strengths Weaknesses Distinctive competence Leadership Style Past Performance External Environment Opportunities Threats Uncertainty Resource Availability Strategic Management Define mission, official goals Select operational goals and strategies Effectiveness Outcomes Resources Efficiency Goal attainment Stakeholders Competing values Balanced Scorecard Organization Design Structural Form – learning vs. efficiency Information and control systems Production technology Human resource policies, incentives Organizational culture Interorganizational linkages

4. Strategic Management Define mission, official goals Select operational goals and strategies Organization Strategy, Design, and Effectiveness

5. 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"

6. Organizational Goals Official Goals - formal statement of that reason (usually found in Annual Report)

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

8. 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

9. 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

10. 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

11. 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

12. Organizational Strategies What is a strategy? –“A plan for interacting with the competitive environment to achieve organizational goals.” (Daft)

13. 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?

14. 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

15. Porter’s Competitive Strategies Competitive Advantage Low Cost Uniqueness Competitive Scope Broad Narrow Low-cost leadership Differentiation Focused Low-cost leadership Focused differentiation

16. Porter’s Competitive Strategies Competitive Advantage Low Cost Uniqueness Competitive Scope Broad Narrow

17. Organizational Strategies What is KFBS’ strategy? –Low-cost leadership? –Differentiation? –Focused, low-cost leadership? –Focused, differentiation? –Some combination?

18. Organizational Strategies Can/should you try to do more than one? –Why or why not? How do you know if your strategy is working?

19. Next Time Organizational Effectiveness