SOCI110 Module 2 - GOALS, STRATEGIES & EFFECTIVENESS
In this module you will learn
the difference between official and operative
goals of an organization
generic organizational strategies (Porter's low-cost
leadership, differentiation, and focus strategies; Miles & Snow's prospector,
defender, analyzer and reactor strategies)
three traditional approaches to organizational
effectiveness (goal, system resource, internal process approaches); within
the goal approach, standard strategies to handle multiple and inconsistent
two contemporary balanced approaches to effectiveness
(stakeholder-constituency and competing values approaches)
1. OFFICIAL & OPERATIVE GOALS
Goal: a desired state of affair an organization
attempts to reach
Official goals (or mission):
an outcome that an organization states it is trying to achieve.
Operative goal: an end sought through the
actual operating procedures of the organization.
Official goals are typically vague, describing
a value system; they are akin to ideologies.
Operative goals are more concrete, short term;
they describe what the organization is actually trying to do.
Coomon types of operative goals:
The purposes of official goals, on one hand, and
operative goals, on the other, are different.
overall performance (EX: profitability, growth,
amount of services delivered)
resource (EX: obtain financing, research grants,
market (EX: increase market share by x%)
innovation (EX: develop new products)
productivity (EX: measured in terms of units produced
per employee, or cost per unit produced)
Goal Type and Purpose (Daft E2.3 p. 56)
|Type of Goals
||Main Purposes of Goals
|Official goals (mission)
||Employee direction & motivation
Criteria of performance
Q - Zachary Cronbach is head of the marketing
department of Columbus Tool and Die Co. One of his goals is to increase
market share by 10% in the next year. This is an example of an ___
Q - "Official goals provide (a), while operative
goals and strategies provide (b)." Match (a) and (b) with 1 or 2
2. GENERIC ORGANIZATIONAL STRATEGIES
Strategy refers to the techniques used
by an organization to reach its goals.
Two studies have described generic strategies
used by organizations.
1. Michael Porter's Competitive Strategies
Michael Porter distinguishes three main strategies.
He argues that each strategy implies a specific pattern of organizational
Michael Porter's Competitive Strategies
(cf. Daft E2.5 p. 62)
Organizational Design Emphasis
||Increase market share
by emphasizing low cost compared to competitors.
efficiency with strong centralizaiton, tight cost control
standard operating procedures
efficient procurement & distribution
close supervision, routinization of tasks, limited empowerment of employees
||Attempt to distinguish organization's product
or service from others in the industry.
EX: Godiva Chocolates.
innovation & risk-taking
||Concentrate on specific
market (region or group of customers).
Note: Porter distinguishes further between
focused low-cost & focused differentation strategies. See Daft.
Q - Food Lion's old slogan "When we save, you
save!" exemplifies which of Michael Porter's 3 competitive strategies?
2. Raymond Miles & Charles Snow's Framework
Miles and Snow have proposed an alternative typology
of organizational strategies that distinguishes between prospector, defender,
analyzer, and reactor strategies.
3. EFFECTIVENESS - TRADITIONAL ("PURE")
Q - Are effectiveness and efficiency the same
thing? Find counterexamples of
Effectiveness - the degree to which an
organization realizes its goals (which may be multiple)
Efficiency - amount of output produced
for a given unit of input
The three traditional approaches to effectiveness
are related to the model of an organization as an open system. The
three approaches are each associated with the output, input,
and internal process of the organization, respectively.
an organization that is effective but not efficient
an organization that is efficient but not effective
1. Goal Approach (associated with
Emphasizes the ability of organization to achieve
its operating goals.
straightforward approach, especially when goals
often appropriate for for-profit irganizations
(can use profitability, market share,...)
goals are often multiple & conflicting
goals not always easy to identify & to measure,
especially for not-for-profit organizations (EX: "public safety" as a police
MORE ON GOAL MULTIPLICITY & INCONSISTENCY
(in relation to the Goal Approach)
The following exhibit illustrates the typical
multiplicity & inconsistency of goals of business organizations.
Multiple operative goals are often conflicting.
EX: profit (return to stockholders) versus market share (which
may mean reinvesting profits into R&D, advertising, etc., which reduces
Therefore organizations use standard techniques
for managing multiple & conflicting goals, including
Q - A student who chooses social activities and
work for money over studies throughout most of the semester and then concentrates
on studying as final exams approach is managing conflicting goals by which
bargaining: when managers disagree
about which of multiple inconsistent goals to pursue, bargaining may lead
to a coalition (= alliance among managers who agree on goals)
satisficing: accept a satisfactory,
rather than optimal, level of performance on any single goal ("satisfice"
was coined from "satisfy" + "suffice")
sequential attention: attend to a
goal for a period of time, and then turn to other goals
priority setting: define preference
ordering among goals
Q - How does one call an alliance among several
managers who agree on organizational goals?
Q - What does "satisficing" mean?
2. System Resource Approach (associated
Emphasizes the ability of the organization to
scarce & valued resources.
Indicators of system resource effectiveness:
bargaining position: acquiring scarce resources
correct perception and interpretation of the environment
ability to respond to environmental changes
useful when other indicators of performance are
unavailable (EX: quality of a university measured as amount of research
grants, acquisition of top faculty, average SAT score of entering students)
assessment of effectiveness is indirect (EX: police
department has acquired 3 new cruisers; but did the crime rate go down?)
3. Internal process approach (associated
with INTERNAL PROCESS)
Emphasizes internal health & efficiency.
Indicators reflect 2 different perspectives:
Example of the economic efficiency perspective:
human relations perspective: team
spirit, positive work climate, good communications, good "atmosphere"
economic efficiency perspective:
given costs of Input (I) and Output (O), measured as O/I
Honda produces 870 cars per day with
2423 workers -> O/I = 0.36 c/w per day
Jeep produces 750 cars per day with 5400 workers
-> O/I = 0.14 c/w per day
Thus Honda is more efficient than Jeep
consistent with current emphasis on quality (EX:
human relations perspective consistent with current
trend of empowerment of human resources
Q - The degree to which an organization achieves
its goals is its ___ . (EFFICIENCY/EFFECTIVENESS?)
internal health often subjective (elements are
hard to quantify)
does not consider impact of the organization on
Q - Two colleges of comparable size are located
in adjacent towns. The admissions office at College A has been telling
prospective students that College A is better than College B because their
freshman class has an average SAT score 23 points higher than the freshman
class at College B. Which effectiveness approach is the admissions
office of College A using?
Q - In evaluating the effectiveness of professors,
universities are more likely to use the number of scholarly publications
rather than their teaching ability. Why is this?
Q - Managers at the PETSEC Corporation believe
that efficiency is the key to success. Therefore, they instituted
a piece-rate incentive program to increase productivity. This is
an example of which traditional approach to effectiveness?
Q - The system resource approach emphasizes
the ____ of an organization. (INPUT/OUTPUT/TRANSFORMATION PROCESS?)
4. EFFECTIVENESS - BALANCED APPROACHES
1. Stakeholder (aka Constituency)
A stakeholder is any group (within or outside
the organization) that has a stake in the organization's performance
NOTE: let us not confuse a "stakeholder" with
a "stockholder" or a "steakholder"!
EX: How does it apply to a university?
Minicase: Delta Airlines (Daft
p. 70). Illustrates how CEO Allen's cost-cutting efforts pleased
stockholders but alienated employees and damaged the reputation of the
firm in Atlanta.
it is a broad view of effectiveness
it does consider the external environment
Q - The strength of the constituency (aka stakeholder)
approach is that it takes a broad view of effectiveness and ___ ?
hard to weigh different criteria to obtain single
difficult to satisfy all criteria simultaneously
2. Competing Values Approach (Quinn &
In Q&R's research experts rate indicators
of effectiveness for similarity; statistical analysis produces 2 underlying
Putting these 2 dimensions together produces 4
models representing different emphases on basic values: the open system
model, the rational goal model, the internal process model, and the human
Minicase: Ford Motor Company
(Daft old edition p. 68). The company has shifted to a growth-oriented
strategy since 1994, resulting in an increase in domestic share of 7% and
progress in other countries. This illustrates a shift from the rational
goal model to the open system model.
FOCUS: internal (emphasis
on efficiency & well being of employees) <--> external (emphasis
on well being of organization itself with respect to its environment)
STRUCTURE: stability (emphasis
on efficiency & top-down control) <--> flexibility (emphasis
on learning & change)
Q - The Stevens Corporation has goals of growth
and resource acquisition. In the competing values approach to effectiveness,
the organization would be described primarily by which model?
integrates different criteria into single perspective
aknowledges simultaneous coexistence of opposing
values with different priorities depending on circumstances
Q - A recent article in the DTH States: "Chapel
Hill-Carrboro schools have long been regarded as the best in the state,
and a comparison of funding, salaries and test scores with county schools
seems to substantiate that belief." What approach(es) to measuring
organizational effectiveness is the author of the article using?
Last modified 24 August 2001