The Personality of an Organization - Assignment Example

STRATEGIC MANAGEMENT Contents Contents 2 Introduction 4 Answer 5 Notion of “organizational culture” 5 Culture in maintaining organizational stability 6 Advantages and disadvantages of strong culture 7 Answer 2 7 Importance of “Ethics” 7 Advantageous situation for an organization for understanding CSR 9 When the business could have responsible management 10 Answer 3 10 Strategy as a political process 11 Power in organizational strategy development 12 Answer 4 13 Strategic change 13 Causes of Strategic change 13 Analyzing the change 14 Managing strategic change 15 Role of leadership in strategic management 15 Answer 5 16 Michael Porter’s generic strategies 16 Causes of getting stuck in the middle 17 Creating competitive advantage 18 Conclusion 19 References 20 Introduction The growth and success of the organization depends largely on its culture, ethics, values etc. A stable organization helps to enhance its productivity. Culture of a company helps to shape up the behaviour of the organizational members. Strong organizational culture provides many advantage and disadvantage to the company. With the help of definite values and principles the organization unites all its employees. Policies, decision and rules of a company depends largely on its ethical values. Strong ethical values influence the company for performing many social activities. Now a day most of the companies are involved in performing social activities for benefiting the society and its people. This helps the company to attract more customers and build their position in the competitive market. Corporate social activities help to develop responsible management in the company. By doing such activities companies can show that they are not only concerned about their profit but they are also concerned about the environment, society and people. Organization develops strategies for enhancing their business. Power and politics of an organization are important for developing its strategies. Organizational members discuss and evaluate strategies with the help of organizational leaders. The leaders make plans to implement the strategies. Leaders use the power for implementing change in the company. Sometimes many political issues damages or interferes in organizational process. In this case study all of these issues are discussed in details. All of these factors influence the growth and success of the company. Answer 1 Notion of “organizational culture” Personality of an organization is determined by its culture. Organizational culture is determined by the practices and behaviour of organizational members toward their job and colleague. Culture of a company helps to shapes up the habits of its employees. Organizational culture is intangible. It is developed on the basis of some believes, assumptions and rules of the company. Culture influences day to day behaviour of organizational members. In many companies, organizational culture is formed by sharing understanding perception, values of organizational members. The routines and norms which are set by the organizational culture facilitate the company to achieve its goals and objectives. Organizational culture has a significant contribution in developing strategies. For planning and developing strategies a company needs to focus on its history. Based on this the company can decide what type of strategies it should develop which will match with company’s values and ethics. Strategies which are developed by the company are the product of its culture and history. Edgar Henry Schein had produced a model where organizational culture is described in three levels. Artifacts are the first level of this model. This stage describes the characteristics which the organizational members can easily hear, view or feel. For example the behaviour of employees, their dress code, office furniture, mission and vision of the company etc come under artifacts level. All of these factors help to decide the culture of the company. Values and Espoused beliefs form the next level of this model. In this level the organizational culture focuses on the values of the employees. Values of individual employees play an important role in determining the organizational culture. The mindset and thought process of organizational members influences the culture of a company. These factors create deep impact in developing the culture. Third level of this model focuses on assumptions which a company makes regarding the values of its employees. There are many hidden facts and believes which affects the culture of the company. This level deals with the inner aspect of human nature. This level helps to determine the organizational culture which will provide growth to the company. Culture in maintaining organizational stability Culture plays an important role in maintaining the stability of the company. Organizational culture focuses on developing collective commitments. It facilitates the company to enhance its systems and process for achieving organizational goals and objectives. A good organizational culture helps to increase the degree to which organization maintains it status. Culture is established as per the norms and regulations of the company. The organization evaluates the process by which its employees can deliver better performances. Based on the evaluation it develops and enhances its culture. Both visible and invisible elements of the company are analyzed in detailed for establishing good organizational culture. This helps the company to maintain a stable balance between all of its elements to which influences the business performances. With the help of cultural analysis the strengths and weakness an organization can be determined. Based on that organization is able to develop effective policies and strategies which will benefit the company in the long run. Stable work process and employees behaviour contributes a lot in achieving the target of a company. Organizational culture determines the behaviour of the organizational members. It shows them the right way right way they should follow for implementing and maintaining the strategies of the company. A stable guide line which is set up by organizational culture benefits the company to improve its performance and productivity. Advantages and disadvantages of strong culture In strong organizational culture most of the organizational members gets same benefits. All of them believe in the values of the company. For strong organizational culture, rules and values of the company are followed strictly by organizational members. Strong culture facilitates the team building activities of the company. This culture influences all the employees to work together for achieving the company’s goals and objectives. Working together improves the efficiency of organizational members. Strong organizational culture is used an effective mechanism to control the behaviour of the employees. As per the working environment of the company organizational culture is developed. Strong organizational culture influences the company to improve its working environment and providing more benefits to employees. There are also some limitations of strong organizational culture which a company has to face while dealing with this culture. Strong culture focuses mainly on the values and believes of the company. If the organizational values are not good or does not match with organizational objectives then strong culture is not able to help the company to achieve its goal. Implementing organizational changes sometime become difficult of the company for its strong culture. Outdated strong organizational culture acts as a barrier to encouraging the diversity of employees. This hampers the performance level of the company. Answer 2 Importance of “Ethics” Ethics are the principals and values which governs the behaviour and activities of a person. Ethics plays a very vital role in business. All the organizations have some definite values and principles which make them different from each other. Business ethics helps the company to conduct business activities in right way. Strong ethical principles of a company help it to manage the business environment and ethical problems. Ethical values of a business contribute a lot to develop morality of organizational members. The values help the organizational members to understand right and wrong things. One of the most important norms of a business is maintaining its moral integrity. This ethical factor influences the organizational members to respect each other. Business ethics also influences the company to act as good corporate citizen. As a result companies get involved in performing many social activities for benefiting environment and common people. Strong ethical principle manages the reputation of a company. It improves the working condition of organizational members by reducing inequality, corruption etc. Business ethics facilitate the company to understand various environmental issues. For developing strong ethical principle organization follows a definite ethical framework. As per subjective ethical framework emotivism focuses on individual feelings. In this case a company uses individual conscience for assessing or evaluating its activities. Egoism is also used for developing ethical values of an organization. As per egoism an activity is considered as right when it promotes and helps the individual for a long term. Relativism helps to build ethical framework where more importance is given to the social group for judging an activity. There are some objectives of the company for using ethical framework. The consequential objective evaluates and highlights the possible outcome of selected strategies and activities of a company. Consequential approach helps to evaluate a decision of a company for maintain its ethical values. Utilitarianism is one of the popular approaches for developing and enhancing ethical values of the company. As per this approach the action which provides greatest pleasure to maximum number of organizational members is considered as an action having high ethical values. Negative Utilitarianism approach focuses on reducing intrinsic disvalue. This approach challenges the moral symmetry of pain and pleasure. Negative Utilitarianism helps the organizational member to develop their moral scene. Ethics helps the company to develop strategies. This facilitates the company to achieve its goals and objectives through right and effective way. The strategy and ethics of an organization go together. Before implementing or developing any organizational strategies a company evaluate the strategies by focusing on ethical issues. Therefore ethics plays an important role in developing corporate strategies. Advantageous situation for an organization for understanding CSR In the modern business environment all the companies are focusing on their social responsibilities for benefiting the society and environment. Establishing green environment and green issues has become an important factor for the companies (McManus, 2011). Organizations consider their social responsibilities as a part of their work. The ethical values of the companies are developed in such a way which influences their employees to perform social responsibilities. When an organization will feel that by benefiting its employees, stakeholders and the society it can improve its position or increase its productivity then it should focus more of performing CSR activities. If the organization is only concerned about its profit then it will develop bad reputation which will hamper its employee engagement and profitability (Elms, Brammer, Harris and Phillips, 2010). Therefore in such situation it is advantageous for the company to get involved in doing CSR activities. The Stakeholder theory focuses on the framework for handling corporate challenges through exploring ethical issues. The stakeholders of a company can be its owner, employees, customers, suppliers etc. They are directly or indirectly associated with the performance of the company. The organization is responsible to satisfy all of its stakeholders (Jennings and Wattam, 1998). All the stakeholders of an organization contribute in different ways to enhance the company’s position and performance. Therefore analyzing the needs and requirements of the stakeholders will provide many advantages to the company (Teale, Dispenza, Flynn and Currie, 2003). By this process the company will focus on its ethical issues and perform its corporate social responsibilities for benefiting all its stakeholders. When the business could have responsible management An organization having effective corporate governance of contributes a lot in developing responsible management. Corporate governance helps to establish values by focusing on sustainable ways of development. With the help of this process the company utilizes its resources effectively to increase its profits (Cannon, 2012). Shareholders of the organizations are valued for this. The organization can have responsible management by satisfying its stakeholders. By utilizing the power and importance of the stakeholders the company can control its strategic decisions which help the management to become responsible. For improving its management, an organization can hire non executive directors, make contracts with stakeholders and pass important information to all of its share holders and stake holders. This will facilitate the company to solve different problems and control various situations (Crane and Matten, 2007). Therefore by satisfying its stakeholders, shareholders and performing its social responsibilities effectively an organization can have responsible management. Answer 3 Strategic plans at times have failed to deliver the desired results owing to power and politics. Data reveals that less than 10% of strategic plans have failed owing to conflicts of power and politics. Though power and politics are detrimental in implementing and managing strategic change in an organization, it still has a lot of potential that can lead to organizational success. Certain degree of power and level of politics are required to implement strategic change in an organization (Hardy, 1996). Strategy as a political process Strategic change cannot be implemented with differing interest, incongruent behaviour, etc so an effective political system needs to be developed to manage such inconsistencies in an organization. Politics in an organization refers to the informal and unofficial way to implement strategic changes and attaining organizational goals by influencing various factors which otherwise could not have been achieved. Politics is an integral part of organization that influences the change agents that ensures achievement of goals and objectives. Different employee has different attitude, perception, personality, etc which influences the group interest. Such qualitative in congruencies need to be aligned to meet the goals and objectives that are in the best interest of the organization. Resources are scarce and individuals and groups in an organization use unofficial ways to gain access to such resources in their or their group’s interest to meet their targets. Strategic implementation of objectives through political system ensures organizational effectiveness. Individuals in an organization have different values, beliefs, perceptions, learning, etc which help them to identify likeminded individuals and form unofficial groups aimed at fulfilling their needs by sharing organizational resources. Managers in an organization should try to look at formulating strategies through such political system so as to increase the competitiveness that will lead to organizational success. Political system in an organization is aimed at controlling resources, influencing relations and associations with powerful individuals and groups and building strong powerful alliances (Schwenk, 1989). Power in organizational strategy development Every organizational members needs power to achieve their target and objectives. Power means the capacity to deliver outcome. Power plays a vital role in developing organizational strategy. Power is one of the important things in implementing the strategic process of the company. Plans are also considered as powerful tool for developing organizational strategies (Jennings and Wattam, 1998). The organization analyzes its position and requirement and based on this it develops plans for establishing and implementing strategies. The outcome of organizational strategies is affected by its power. Internal and external organizational environment exert power in forming organizational strategies. Mainly emerging strategies are developed by using organizational power. These strategies are formed by after considering many opinions and perspectives. Micro power helps to form the strategies through the process of persuasion, direct confrontation, bargaining etc (Lukes, 2007). Micro power influences the organization to achieve growth by doing strategic alliance. This power helps the company to control and co ordinate different organizational processes which influence the strategic decision. The process of strategic change and development of strategy takes place through a systematic process where distribution of power plays an important role (Mintzberg, Ahlstrand and Lampel, 2009). As per the distributed power the organizational members take part and contribute in strategic development process of the company. The energy for developing strategy is provided by power. Power can come in the organization from internal and external sources. The internal sources of power are organizational structure, its control on strategic resources, organizational environment etc. External sources of power are involvements of agents, labour money etc. Power of an organization is indicated by its status, representations, resources etc (Hardy, 1996). Therefore strategic decisions of the company are influenced by external and internal power. Answer 4 Strategic change Strategic change is related to change in organization’s structure, culture, technology, people and environment. Change is an integral part of an organizational success and growth. Changes in the environment forces an organization to identify, implement and manage strategies that will lead to the change. Changes are pervasive i.e. it takes effect at all levels. It needs to be implemented at every stage otherwise will lead to conflicting results. Any change which is initiated for a purpose that is aimed at organizational growth or which will lead to competitive advantage is called strategic change. Change does not imply simply altering organizational resources, policies, requirements to meet the externalities, but there should be a driver that will lead to the change. Such changes are best attributed to strategic change (Johnson, Whittington, Angwin, Scholes, and Regnér, 2014). Causes of Strategic change Strategic changes are implemented owing to changes in various factors like technology, environment, business relationships, people and power. Environment changes include economic, geographic, political, etc. Growing competition, government regulation, etc will lead to organizational change. Business relationships like strategic partnerships, mergers, acquisitions, business process integration, etc are critical drivers of organizational change aimed at strategic outcome. Technological change like requirement of new emission standard will lead to implement such changes within the organization. High compliance requirement will also lead to change in organizational reporting. The externalities act as stimulus that initiates the change. Various factors that are stated above are directly or indirectly linked to each other. Each factor follows the other when strategic change is implemented. Organizations facing stiff market competition would like to increase its competitive advantage. It might merge or acquire companies that will support its strategy to reduce its cost to fight the competition. A merger or acquisition will lead to organizational restructuring which will lead to change in workforce strength, culture, policies, framework, etc that will support the overall strategy i.e. merger or acquisition. Strategic change can be either a pro active or reactive. The reactive approach is discussed above whereas in case of pro active approach changes are implemented to avoid the impact when externalities hit the organization. Strategic change can be implemented owing to factors like organizational re-structuring, re-positioning and re-vamping. Restructuring is done when new set of policies, managers, employees, business process, communication and reporting, etc are implemented to meet strategic objectives of an organization. Repositioning refers to the overall change in an organizations business practice i.e. diversifying business. Revitalizing as a part of strategic change implies the change in organizational culture. The strategic change matrix comprises four quadrants where on the horizontal axis the extent of change is measured and on the vertical axis the nature of change is determined. The four types of strategic changes i.e. adaptation, evolution, reconstruction and revolution are placed in either of the quadrants based on the nature of change i.e. incremental or big bang or on extent of change i.e. realignment or transformation (Johnson, Whittington, Angwin, Scholes and Regnér, 2014). Analyzing the change One of the most popular theories i.e. force field analysis helps to identify the problems post implementation of the strategic change. It analyses the various factors that have favoured the change and those which are against the change. Forces that drive the change include dynamic and flexible organizational structure, informal culture, motivated workforce, etc. While factors like high individualism of employees, inadequate co-ordination, lack of team cohesion, complex organizational structure, etc are the negative drivers or the ones which inhibits strategic change. Managing strategic change Managing any change especially strategic change is not easy owing to the various complexities associated with such changes like complex human behaviour, different social and cultural patterns, complex business processes, etc. There is no universal solution to the factors affecting the change. It is organizational specific and depends on the level of leadership that implement and controls such changes. Developing a strategic change programme will help successfully implement the change at all level. The change programme can be implemented using two approaches i.e. prescriptive and emergent. Prescriptive approach is used when the need for change is immediate or rapid and emergent approach is used when there is adequate time to implement the change and where the organizational culture is highly flexible and open to such change (Johnson, Whittington, Angwin, Scholes and Regnér, 2014). Role of leadership in strategic management Human factor is the most critical aspect in managing change. Leadership is an important factor in facilitating the organizational change that is strategically aligned with organizational objectives. Leadership roles and styles help organization to achieve its strategic objectives. It aims at influencing the behaviour of employees within a group to meet the strategic goals of the organization. Leadership roles are also pervasive i.e. it is observed at various levels within an organization. The top management leads the organization in new ventures and plans that will lead to competitive advantage. The middle level leadership role ensures facilitation of such strategies and controls it. There are various styles of leading a change which are described below with the help of a diagram. There various styles of leadership that will help facilitate the change. The different styles of leadership are persuasion, collaboration, direction and participation. Leaders can persuade the team members by convincing them about the change and how it will benefit them and the organization. Use of reward system and behavioural reinforcement is also attributed to persuasive style of leadership. It will ensure better team cohesiveness through integrating communication and information exchange. Allowing employee feedback and making them change agents so as to quickly widen the scope of change. Leadership role thus helps in successful implementation of strategic change and managing it within an organization (Brooks, 2005). Answer 5 Michael Porter’s generic strategies Michael Porter in his generic strategies theory discussed about stuck in the middle situation for organizations. He explained that profitability of organizations not only depends on the positive returns from its business, but it is primarily because of competitive advantage and the firm’s position in respect to its competitive advantage. In other words it means that organizations profitability depends on the cost advantage and the level of differentiation. Organizations that tried to achieve both the generic strategies of cost leadership and product differentiation have ended up in failing to benefit from either of the strategies that have led to the stuck in the middle situation. Organizations stuck in the middle are characterized by low growth and profitability. Such firms fail to benefit from the trade off situation of cost leadership and product differentiation. It fails to meet the demands of the high value customer which requires cost advantage. If it tries to implement low cost strategy it will end up depleting its existing profit level compared to dominant low cost firms. Porter believes that such situations arise because of the managers who are equally sceptical in either of the strategies and want to implement both the strategies. The stuck in the middle situation as described above has critical implications that lead to organizational failure. Customers of the organization are often confused about the position and have low expectations. Employees of such organization have no clear view of work responsibility. It is characterized by complex and blurred organizational culture and highly de-motivated workforce. Porter’s cost and differentiation matrix shows how organization gets stuck in the tradeoffs between relative differentiation and cost position. The horizontal axis denotes the relative cost position with inferior and superior degree of differentiation, whereas the vertical axis represents the relative differentiation. The matrix has four quadrants which signify the organizational position in respect to the generic strategies of Michael Porter. The first quadrant from the left shows differentiation advantage followed by differentiation with cost, low cost advantage and stuck in the middle. Organizations that are stuck in the middle have inferior relative differentiation and cost differentiation compared to organizations that are superior in differentiation advantage and inferior in low cost advantage and vice versa. Causes of getting stuck in the middle Apart from the organizational stunts that lead to stuck in the middle situation, there are other factors that force organizations to get stagnant in the middle. When low cost firms starts adding new features to its offerings and which fails to create the desired value to the customers lead to a stuck in the middle situation. Organizations incurring high cost but which failed to meet customer expectations also lead to such situations. Technological factors also affect the position of organization. Companies with high resources and better technology will offer better products at lower price that will drive away the existing small companies or will get stuck in the middle if they do not exit the industry. At times high exit barriers like heavy initial investments, debt, etc might lead to a stuck in the middle situation. Organizations despite being unprofitable by staying in the middle cannot exit the industry owing to high costs which is higher than the cost of being stuck in the middle. Creating competitive advantage Porter created a value chain that will create competitive advantage that ensures that organizations are not stuck in the middle. The value chain will create competitive advantage for organizations either through cost advantage or relative differentiation. Porter’s value chain identifies the primary and support activities that will lead to competitive advantage of organizations. The primary activities include, operations, marketing, inbound logistics and sales and service, and outbound logistics. The support activities include Organization’s infrastructure, HRM, technology and procurement. The value chain aims to find out the potentiality of each of the factors to determine the competitive advantage. It also identifies the core competencies of an organization compared to its competitors. The value chain is an effective model that guides organization to critically assess the opportunity of the primary activities with the given support activities or identifying scope for enjoying competitive advantage for its support activities with the given primary activities. Conclusion Strategic management aims at achieving better performance through utilizing better organizational metrics like culture, ethics, power and politics, strategic change and competitive advantage. Setting up different plans and strategies for each of the factors will result in achieving organizational objective with optimum resource utilization, less time, good culture and ethical practice, limited role of power and politics, etc. This leads to fairness in management practices and ensures equitable distribution of resources. Strategic management is built on the principle of co-operation and not competition. Competition leads to workplace conflicts and depletion of resources. This jeopardizes organizational sustainability. It also aims to implement and manage strategic change. With the changing environment, markets, regulatory requirements, market economies, etc organizations need to restructure or reposition its business process to gain competitive advantage. At times the cost of implementing such change can be quite high which might lead to unwanted consequences for long term sustainability of an organization. The costs include high employee turnover, low employee morale, conflicting interest, high compensation, etc which will lead to reduced productivity. Lower productivity of individual employee will result in poor performance level that will affect the overall performance of an organization. Strategic management will lead to organizational success only when the implications of organizational change are critically reviewed which will ensure organizational equity and effectiveness. References Brooks, I. 2005. Organisational behaviour: individuals, groups and organisation. Harlow Financial Times Prentice Hall 2005. Cannon, T., 2012. Corporate responsibility: governance, compliance and ethics in a sustainable environment. 2nd edition. Harlow: Pearson. Crane, A. and Matten, D., 2007. Business ethics: managing corporate citizenship and sustainability in the age of globalization. 2nd edition. Oxford: Oxford University Press. Elms, H., Brammer, S., Harris, J. D., and Phillips, R. A., 2010. New Directions in Strategic Management and Business Ethics. Business Ethics Quarterly, 20(3), pp. 401-425. Hardy, C. 1996. Understanding power: Bringing about strategic change. British Journal Of Management, 7, S3-S16. Hardy, C., 1996. Understanding power: Bringing about strategic change. British Journal Of Management, 7(1), pp. 3-16. Jennings, D. and Wattam, S., 1998. Decision making: an integrated approach.(2nd edition). London: Financial Times Pitman Publishing. Jennings, D. and Wattam, S., 1998. Decision making: an integrated approach.2nd edition. London: Financial Times Pitman Publishing. Johnson, G., Whittington, R., Angwin, D., Scholes, K., and Regnér, P. 2014. Exploring strategy: text & cases. 10th edition. Harlow: Pearson Education Limited Lukes, S., 2007. Keywords: Power. Contexts. 6(3), pp. 59-61 McManus, J., 2011. Revisiting ethics in strategic management. Corporate Governance, 11(2), pp. 214-223. Mintzberg, H., Ahlstrand, B. W., & Lampel, J., 2009. Strategy safari: the complete guide through the wilds of strategic management. New York: Prentice Hall. Schwenk, C. R., 1989. Linking cognitive, organizational and political factors in explaining strategic change. Journal of Management Studies, 26(2), 177-187. Teale, M., Dispenza, V., Flynn, J. and Currie, D., 2003. Management decision making: towards an integrated approach. New York: Pearson. Read More