Organizational Culture and Corporate Strategy - Case Study Example

Organisational Culture and Corporate Strategy. The Case of Coca Cola May, 2009. Table of Contents 0Introduction 1Overview of the cultural issues and problems in my organisation 2.0 How Cultural Factors affect Strategy 2.1 Using the Cultural Web to solve the Cultural problems in my organisation 3.0Conclusion and Recommendation 1.0Introduction Andrews (1997: p. 52) defines corporate strategy as "the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities". Corporate strategy in effect maps out the businesses in which an organisation intends to compete in a way that focuses resources to convert distinctive capabilities into competitive advantage. (Andrews, 1997). 2.0 How Cultural Factors affect an Organisational Strategy The definition of corporate strategies emphasises the need for the organisation to satisfy the needs of all the stakeholders if the organisation is to achieve is overall objective of maximising shareholder value. Stakeholders include employees, customers and the communities in which the organisation operates. Employees, customers and communities therefore have a significant impact on the success of the organisation and thus on the corporate strategy of the organisation. In formulating corporate strategy, organisations need to identify and priorities strategic issues, which involves scanning, selecting, interpreting and validating information. (Schneider, 1989) To properly formulate its corporate strategy, an organisation must assess its organisational strengths and weaknesses, as well as its environmental threats and opportunities, which will enable it choose among alternative courses of action. (Hofer and Schendel, 1984) cited in Schneider, (1998). This indicates that an organisation must perform a SWOT (strengths, weaknesses, opportunities and threats) analysis prior to formulating corporate strategy. A number of factors have been identified as having an effect on corporate strategy formulation: for example, Kets de Vries and Miller (1984) suggest that managerial personality and experience is an important determinant of the strategy formulation process; Janis (1972) considers group dynamics as an important factor affecting the formulation of corporate strategy while Frederickson (1984); Lyles and Mitroff (1985) suggest that organisational structure plays an important role in strategy formulation. Schneider (1998) citing Schein (1985) notes that National culture could play an important role in strategy formulation as it derives from assumptions regarding relationships with the environment as well as relationships among people. Schneider (1998) argues that these assumptions will influence how information is gathered and how that information is interpreted within the organization. The strategy formulation process can therefore not be considered 'culture-free' because information is embedded in social norms and acquires symbolic value as a function of a particular set of beliefs in a particular set of cultures. (Feldman and March, 1981). There are considerable differences in cultures across countries. Culture is defined as "a system of shared assumptions that has developed over time to solve problems of environmental adaptation and internal integration". (Schneider,, 1998: p. 152) citing Schein (1985); Van Maanen and Barley (1983). Culture is expected to affect the process by which the environment is known and responded to because it is thought to influence the way people perceive, think, feel and evaluate. (Schneider,, 1998). There are two sets of cultural assumptions that are thought to be specifically relevant to the formulation of corporate strategy. These include external adaptation and internal integration. (Schneider, 1998). On the one hand, external adaptation refers to the relationship with the environment while internal integration on the other hand refers to the relationships among people. The forgoing indicates that cultural factors have a significant effect on corporate strategy and thus calls for a critical consideration of cultural differences especially for multinational companies that usually operate in a number of different countries with varying degrees of culture. A company therefore stands to gain a lot from being ethical. Companies that are perceived as being unethical may suffer from declining sales and thus declining profit margins. There are also differences as far as ethical issues are concerned. What may be considered unethical in one country may be considered ethical in another country. For example, Muslim communities do not eat pork meat and thus will consider a company that attempts to market pork related products as contravening their cultural believes. In addition there are considerable differences in relation to organisational hierarchy across countries. In countries where power distance is considered very important, information is likely to flow only from top to bottom and not from bottom to top. In addition, an autocratic form of leadership is likely to prevail in such societies. On the contrary, in a country where power distance is considered less important, there would be a two way flow of information and a democratic leadership style is likely to prevail. For example, Motorola faced a number of problems when it expanded its activities to South Korea. (Siegal et al., 2007). In like manner IKEA, the giant furniture dealer faced difficulties when it expanded its activities into the United States. (Grol et al., 1998). 2.1 Using the Cultural Web to solve the Cultural problems in my organisation Organisational culture is a tool in the management strategic armory which appears to be invisible yet it influences "why" "how" "what" and "when" things are done in an organisation (Dwyer & Kemp 2000) or "it is the way things are being done here" (Johnson 1992:28, Johnson & Scholes 1997:66). It has been argued by Dwyer & Kemp (2000) that most traditional approach to organisational strategy ignores an important and powerful element of the organisation, that of culture. Organisational paradigm according to Johnson & Scholes (1997) are those set of assumptions, beliefs which are rarely talked about, which are not considered problematic and most often managers in an organisation are unlikely to be explicit about it. It reflects the collective experience without which members of an organisation would have to do things their own way in different situations they face (Johnson 1992, Johnson &Scholes 1997). According to Dwyer & Kemp (2000:3), "the forces at work in the environment and the organisations capabilities in coping with these, are made sense of in terms of the individual experience of managers and the collective assumptions within the paradigm". Figure one below summarises the cultural web and the organisational paradigm as construed by Johnson and Scholes (1997 Fig. 2.10, p. 69) These assumptions are more commonly observed in conversations, discussions between the different stakeholders in an organisation (Dwyer & Kemp 2000). In some situations assumptions are deeply embedded in an organisation and its' members that it can only be manifested through peoples action (Dwyer & Kemp 2000). In all, these assumptions, ways of doing things are the backbone of the organisation (Johnson 1992, Johnson &Scholes 1997). Johnson & Scholes (1997) contend that, using the organisation paradigm a new cultural environment can be created. This is so because, by looking at the cultural web, you see what the organisation is like "now" and you mimic how you want it to be in future. The difference is the change the organisation intends to make. The same idea was supported by Dwyer & Kemp (2000) when the researchers argued that, most organisations only look at the paradigm during a change process. From the cultural web above, six major types of artifacts can be distinguished - rituals and routines, stories, symbols, power structures, organisational structures and control systems (Johnson & Scholes 1997). These artifacts are the wider aspect of an organisation that give a clue of the paradigm, reinforces the assumption behind the paradigm and represent that organisational aspect taken for granted (Johnson & Scholes 1997, Dwyer & Kemp 2000, Johnson 1992). For example, according to Dwyer & Kemp (2000), symbols in an organisation are words, objects, emblem, logos etc. Organisational stories are narrative focus on a single unified sequence of events, they are use to influence other peoples understanding of events. Power structures are the different managerial level through which sequence of events are passed and observed while the control system indicates what is important to monitor, focus attention and resources upon (Dwyer & Kemp 2000). During a strategic change process, an organisation paradigm becomes quite useful because it identify within the cultural web what is now, how the organisation wants it to be. The difference between what it is and what the organisation wants it to be is the intended change (Johnson & Scholes 1997). Looking at the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn't working, and what needs to be changed (Johnson & Scholes 1997:68). Thus with, this the taken for granted assumptions are easily sorted and you start aligning organisational elements with one another, the strategy to reinforces or build the new way of doing things around here(Dwyer & Kemp 2000). 3.0Conclusion and Recommendation The purpose of this paper was to investigate and find out the role of culture in an organisation strategy. Using Co-ca Cola as case study, the paper further examines how change could be implemented in an organisation using the cultural web. The paper makes three important findings. Firstly, in a large organisation like Coca Cola, implementing change means challenging the taken for granted assumptions. This will mean the human resource manager or the change agent looking into the cultural web, to see what the organisation is now, what it want it to be in the future, and taking all the necessary steps to ensure all is done.The cultural web was chosen because it covers all aspects that directly or indirectly affect the Business Strategy, Human Resource strategy, and the corporate strategy. The model was chosen because it covers the SWOT analysis, A focus on the training on teams for fostering a more participatory organizational culture, Training programs for the HR group. Here, and organization culture should be put at the centre of its strategic formulation. In formulating corporate strategy, organisations need to identify and priorities strategic issues, which involves scanning, selecting, interpreting and validating information. (Schneider, 1989) Bibliography Andrews K. (1997). Resources and Strategy: A Reader, edited by Nicolai J. Foss. 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"Strategic Sensemaking and Organizational Performance: Linkages Among Scanning, Interpretation, Action, and Outcomes." Academy of Management Journal 36: 239-270 Read More