398 CHAPTER NOTES 02 ORG DESIGN

398 CHAPTER NOTES 02 ORG DESIGN - CHAPTER TWO STRATEGY,...

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CHAPTER TWO STRATEGY, ORGANIZATION DESIGN AND EFFECTIVENESS CHAPTER OVERVIEW Organizations are entities for goal attainment. This chapter explores strategic direction in terms of the types of goals and strategies that top management develops, as well as two frameworks for determining strategic action. Several approaches are then explored for measuring organizational effectiveness. CHAPTER OUTLINE The Role of Strategic Direction in Organizational Design The primary responsibility of top management is to determine an organization’s goals, strategy, and design, therein adapting the organization to a changing environment. Direction setting begins with an assessment of opportunities and threats in the environment and an evaluation of internal strengths and weaknesses. Then the company can determine its mission, goals and strategies. Organizational design reflects the way goals and strategies are implemented. This is the role of organization theory. Consider how organization design is affected by the choice of goals and strategy. New goals and strategy are often selected based upon environmental needs, and then the top management attempts to redesign the organization to achieve those ends. Performance measurements feed back into the internal environment, so that past performance of the organization is assessed by top management in setting new goals and strategies for the future. Organizational Purpose Purpose may be referred to as the overall goal or mission. Different parts of the organization establish their own goals to help the organization achieve its overall purpose. Mission The official overall goal for an organization is its mission . The mission describes the organization's vision, its shared values and aspirations, and its reason for existence. Operative Goals Operative goals designate the ends sought through operating procedures and describe specific measurable outcomes in the short run. These goals concern overall performance, boundary spanning, maintenance, adaptation, and production activities. Overall performance goals may be expressed in terms of profitability, delivery of 1
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service, growth, or volume. The opening case illustrates the growth goals of 3M.
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398 CHAPTER NOTES 02 ORG DESIGN - CHAPTER TWO STRATEGY,...

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