Lecture 2: Strategy and Effectiveness - 3 Assessing

Question 1

Efficiency

Answer 1

= Amount of resources used to produce a unit of output
=> Do things right

Question 2

Effectiveness

Answer 2

= Degree to which an organization realizes its goals
=> Do the right things

Question 3

Different ways how to measure organizational effectiveness?

Answer 3

• The Goal Approach
• The internal Process Approach
• The Resource-Based Approach
• Strategic constitutuents approach

Question 4

Goal Approach

Answer 4

1. Indicators
   - Profitability
   - Market share
   - Growth
   - Social Responsibility
   - Product Quality
2. Usefulness
   - Output goals can be readily measured
3. Problems
   - Multiple, conflicting goals
   - Absence of objective indicators

Question 5

Resource-based approach

Answer 5

1. Indicators
   - Bargaining position
   - Use of tangible and intangible resources in the day-to-day business
2. Usefulness
   - when other indicators are hard to obtain
   - when resources are key drivers of the competitive advantage
3. Problems
   - changing customer demand

Question 6

Internal process approach

Answer 6

1. Indicators
   - Corporate Culture
   - Trust among employees
   - Undistorted communication and coordination
   - Operational efficiency
2. Usefulness
   - When resource efficiency and human capital are critical to success
3. Problems
   - Neglects organizational environment
   - Sometimes hard to quantify

Question 7

Strategic constituents approach

Answer 7

1. Indicators
   - Depending on constituent, eg:
   -> Financial return for owners
   -> Pay for employees
   -> Product quality for customers
2. Usefulness
   - Often focuses on inputs, internal processes, and outputs
3. Problems
   - Potentially conflicting goals

Question 8

Human Relations Emphasis

Answer 8

= Internal & Flexibility

Primary goal:
- Human resource development

Subgoals:
- Morale
- Training

Question 9

Internal Process Emphasis

Answer 9

= Internal & Control

Primary goal:
- Stability
- Equilibrium

Subgoals:
- Information Management
- Communication

Question 10

Open Systems Emphasis

Answer 10

= External & Flexibility

Primary goal:
- Growth
- Resource Acquisition

Subgoals:
- Flexibility
- Readiness
- External evaluation

Question 11

Rational Goal Emphasis

Answer 11

= External & Control

Primary goal:
- Productivity
- Efficiency
- Profit

Subgoals:
- Planning
- Goal Setting

Question 12

Contingency Factors and Fit

Answer 12

Contingency Factors call for fit

-> There is a single best way to organize

=> Keys are alignment and structure