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Chapter 3 Strategy and Org

This document discusses key concepts in strategy and organization design. It defines strategy as a plan for interacting with the competitive environment to achieve goals. There are three main competitive strategies: low cost leadership, differentiation, and focus. It also discusses Miles and Snow's typology of prospector, defender, analyzer, and reactor strategies. Organization design implements goals and strategy and influences success. Effectiveness measures goal achievement while efficiency measures input-output ratios.

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48 views

Chapter 3 Strategy and Org

This document discusses key concepts in strategy and organization design. It defines strategy as a plan for interacting with the competitive environment to achieve goals. There are three main competitive strategies: low cost leadership, differentiation, and focus. It also discusses Miles and Snow's typology of prospector, defender, analyzer, and reactor strategies. Organization design implements goals and strategy and influences success. Effectiveness measures goal achievement while efficiency measures input-output ratios.

Uploaded by

XXXKUTI946
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Strategy and Organization

Design
Chapter 3

Dr. Rasim Serdar Kurdoğlu


MAN 361 Organization Theory
Bilkent University Faculty of Business Administration
What is strategy?
• It is a plan for interacting with the
competitive environment. Managers
must select specific strategy and design
options in order to achieve official and
operative goals within its competitive
environment.
Business Strategy
 Business strategy aims at competitive advantage: Increased
market share, increased profitability
 It aims at business goals and mission of the company
 Three competitive strategies
(1) Low cost leadership: this strategy tries to increase market
share by emphasizing low cost compared to competitors (e.g.
Ryanair).
(2) Differentiation: organizations attempt to distinguish their
products or services from others in the industry (e.g. Rolex
watches).
(3) Focus: focused low cost and focused differentiation. The
organization concentrates on a specific regional market or
buyer group (e.g. Puma).
Consider:
• Apple vs Garmin Watches.
• THY vs Pegagus Airlines
• Migros vs A101
• Nike vs Kinetix
Miles and Snow’s strategy typology: How to
exploit external environment
• The prospector: Innovate, take risks, seek out new
opportunities and grow (e.g., Getir, Arçelik)
• Learning, risk-taking, innovation
• The defender: Stability or even retrenchment. (e.g.,
Vestel)
• Efficiency and tight cost-control
• The analyzer: Maintain a stable business while
innovating on the periphery. (e.g., Sony and IBM)
• Balances efficiency with learning
• The reactor: Responding to environmental threats and
opportunities in an ad hoc fashion (e.g., McDonalds)
• Reacting to current needs
How to give and assess strategic direction?
• Check the external
(rivalry) and
internal
environment
• Check resources
• Check core
competencies
• Check what you
want to achieve
Purpose

Mission: It describes the organization’s


vision, its shared values and beliefs and its
reason for being.
 It sometimes called the official goals,
 A mission statement communicates to
internal and external stakeholders.
Official and operative goals
The Importance of Goals
 Official goals and mission statements describe a value system for the
organization. They legitimize the organization

 Operative goals (short-run performance goals) related to key tasks of the


organization. They are more explicit and comparatively well defined. Operative
goals serve several purposes:
• Employee direction and motivation
• Decision guidelines
• Standards of performance
Organization design
 Organization design is used to implement goals and
strategy and thereby influences the prospects of
success.

 Organization design is not always a highly rational


process which involves careful calculation and
proceeds smoothly through a serious of stages. In
fact, the design of organization is political process in
which established routines and vested interests are
challenged and defended.
 Example: Facebook and Meta
Assessing organizational effectiveness
• Effectiveness: Whether the organization realizes its goals
• Efficiency: Ratio of inputs to outputs
• Balanced Scorecard: Balances traditional financial measures with
critical operational measures
• A balanced scorecard contains four major focal areas:
• financial performance,
• customer service,
• internal business processes,
• the organization’s capacity for learning and growth
• https://www.youtube.com/watch?v=zf-d-O7hVhM&t=191s
The story of Paket taxi and Steve Jobs’ advice
• https://www.youtube.com/watch?v=XQvVq8tZ4Wc&t=547s
• What does it tell to us about strategy, life-cycle, and organization
theory in general?
• What is different in Steve Jobs’ explanations?
• https://www.youtube.com/watch?v=xcTtQ0hiHbE&list=WL&index=8
Team discussion: Mezzaluna vs. McDonalds
• Discussion questions:

1. In terms of Porter’s strategies, how would you define these 2 companies’ strategies (low cost-
differentiation)? Why?

2. How are they different? Their customers and target segments? Their goals? Their values? Their quality of
products and services? Their operations? Preparation of meals? Prices?

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