Strategic Management and Corporate Culture - Essay Example

Strategic Management Question Culture is basically the foundation of social order in which people live and the rules that people abide by in their daily dealings. Corporate culture is a blend of values, beliefs, symbols, and myths that are developed within a company with time (Sparrow, 2012). Developing a corporate culture is not a one-day exercise; it takes a considerable period of time for an organisation to come up with a corporate culture. Culture basically involves repeated ways of doing things; thus, an organisation must have worked over some time, having repeated ways of operation for a particular behaviour to constitute part of its culture. Corporate culture describes and governs the thinking, feeling and actions of owners of companies and employees. It does not matter whether corporate culture is written as a mission statement or merely understood by organisational publics. Corporate culture may be founded on the beliefs spelled out in the mission statement or be consisted in the part of a corporate symbol. For example, Apple’s corporate culture is reflected in its rainbow-coloured apple. Contemporary managers are always keen on the corporate culture of their organisations. According to Johnson, Whittington, Scholes, Angwin and Regnér (2014), corporate culture has a critical role to play as far as determination of organisational performance is concerned. Fundamentally, how well a business performs is contingent upon the ways through which people behave in organisations. Behaviours, as contended by Mintzberg, Ahlstrand and Lampel (2009), comprise of the actions that lead to production of results. Corporate culture is a subset of these actions; this is why corporate culture is directly proportional to the performance of a business. Capon (2008) believed that all organisations have a developed set of assumptions, understandings, and implicit rules that govern the daily behaviours in the workplace. All businesses have their own cultures that determine the relationships between them and external stakeholders. Corporate culture is not constant and fixed within an organisation. Volberda (2011) posit that all aspects of organisations should feature flexibility in order to enhance adaptability across time, place, and circumstances. If a company is not happy with the current corporate culture, the management can begin looking for ways of changing it into what they want. The management can find alternative symbol, believes, attitudes and even values that can change the direction of behaviour. The management, in this case, should ensure that the newly adopted aspects have the potential to bring out the values and practices they want for a company. The cultural tool may even constitute a new corporate logo symbolising the personality of a company. The importance of corporate culture cannot be overlooked in modern-day businesses. Whittington (1993) posits that culture is the source of identity, collective commitment, stability of the social system, and people’s ability to make sense of the organisation. Historically, corporate culture is the legacy of the organisation and a coercive background structure that influences people in various ways. Several organisations such as Daimler, Toyota, and Sainsbury’s have been strongly influenced by historical legacies over time to the extent that they have become embedded in their corporate cultures. Corporate culture is critical to the creation of a positive work environment. Organisations that focus on company culture create both a positive work environment and set a foundation for long-term prosperity. Positive work environment is characterised by both internal and external stakeholders developing and maintaining good work relationships void of hatred and personal conflicts. In the study by Sparrow (2012), 91% of the respondents argued that a company with a strong culture and sense of purpose have strong financial performance. Hence, it is advantageous for companies seeking financial performance to have a strong corporate culture. Financial performance is determined by parameters such as financial ratios and levels of profitability. A strong corporate culture is also critical for companies seeking uniqueness and competitive advantage. According to Johnson, Whittington, Scholes, Angwin and Regnér, (2014), companies with a strong corporate culture exhibits widespread differentiation and standing out from their competition. It is obvious that every business organisation strives to enhance customer satisfaction. A strong corporate culture, therefore, is advantageous to companies that want to provide quality services that rhyme with customer needs and preferences. Companies without a strong corporate culture are likely to perform poorly financially and largely lack a distinct brand. Customers and employees of companies lacking a strong corporate culture are far less likely to be satisfied. Question 2 Strategic management constitutes the process of formulating and implementing major goals and initiatives. Strategic management is fundamentally the role of top management performed on behalf of company’s owners. The process of strategic management is based on the available resources and assessment of the environment in which an organisation competes. The primary role of strategic management is to provide overall direction to the enterprise. According to Johnson, Whittington, Scholes, Angwin and Regnér (2014), strategic management provides overall direction of organisations; this involves specification of the organisation’s objectives, developing policies and plans designed to achieve the objectives, and allocation of resources for plan implementation. Strategic management is characterised by flexibility as opposed to rigidity; the models of strategic management include a feedback loop meant to monitor execution and inform the next round planning. The way the management approaches the management of choice is contingent upon company’s capabilities, position of the company in the marketplace, company’s overall strengths and weaknesses, and personal values of the leaders. Company’s capabilities comprises of the aspects of the business that an enterprise can handle to a successful completion. The company’s capabilities reflect its overall strengths and weaknesses. Approaching the management of strategic choice requires extensive understanding of the company’s capabilities (Johnson, Whittington, Scholes, Angwin & Regnér, 2014). The management then adopts ways of managing both financial and human resources in ways that can enhance the company’s management of strategic choice. Capon (2008) compared the concepts of core competencies and business capability when he argued that every business organisation has some capability in which it excels and that the business should focus on opportunities in the area where it has core competencies. Building company capabilities involves enhancing the skills and coordination of people across a variety of functional processes used to deliver goods and services to the customers. The company’s capability affect the management choice in the sense that the way managers decide to lead the business should be those supporting skill and coordination development. Companies that want to expand the concept of value chain can outsource some elements from within the company and outside the company. Leaders intending to improve capability of the organisation adopt situational approach to leadership. The basic approaches to situational leadership are theory E and theory O (Whittington, 1993). Theory E is basically based on the pursuit of economic value and emphasis on changes of structures and systems. Theory O, on the other hand, emphasises on the necessity of developing organisational capability in addition to emphasising on culture change, learning and participation in change programs. Position in the marketplace determines the methods of handling products in the market. According to Mintzberg, Ahlstrand and Lampel (2009), a business’ position in the marketplace is determined by several factors including the position of the product in the product life-cycle. For example, a product that is in the introduction stage cannot be managed in the same way as a product that is the establishment stage. For example, a company such as Apple has been in the market for a longer period of time than Techno. Their approaches to leadership choices may differ in various aspects of operation. During the launch of Samsung S6, the CEO of Samsung argued that the company is planning to readjust its strategic approaches to leadership in order to rhyme with the company’s position in the market. This implies that the CEO was accepting the fact the company changes their approaches to management to rhyme with the company’s market trends. Similarly, Wal-mart has experienced hurdles to effective management over time; therefore, the company recognises the necessity of focusing on identifying effective approaches to management that can improve customer satisfaction and employee retention. Personal values of the leaders determine the extent to which a company can effectively handle problems and arrive at correct solutions to problems. In the context of organisations, leadership refers to the process of influencing either whole or part of an organisation in the efforts of achieving an aim or a goal. Leadership applying the different leadership styles have different values (Johnson, Whittington, Scholes, Angwin & Regnér, 2014). For example, an autocratic leader believes that people must be forced to work and that workers do not have the authority to question any organisational decision. Democratic leader, on the other hand, believes that workers have equal rights to executives in the process of management decision-making. This implies that an autocratic leader approach the management of strategic choice using different techniques from a democratic leader. Question 3 Environmental analysis focuses on the interaction between human and no-human components of the biosphere. The major goal of the environmental analysis is to offer an integrated and unifying perspective on life on human struggle for realising a positive change (Johnson, Whittington, Scholes, Angwin & Regnér, 2014). Environmental analysis categorises the changes and forces that affect both established and start-up businesses through customer, suppliers and competitors. The tool for carrying out environmental analysis is abbreviated as PEST, representing Political, Economic, Social, and Technological market forces. Business managers conduct PEST analysis in the process of preparing strategic plan. Environmental analysis is usually considered as one of the most complex aspect of business. Analysing the environment of a business requires several details covering all the four aspects of PEST. This calls for a lot of research, which is in most cases time-consuming and costly in terms of finance. Therefore, the business needs to invest a lot of financial and human resources in analysing the environment (Sparrow, 2012). In most cases, organisations have scarce finances that cannot allow successful comprehensive analysis of the environment. Although a lot of details and scarcity of finances limits environmental analysis, the process is not completely hampered because some degree of analysis takes place. Analysing the political factors such as government policies, taxes laws and tariff, government stability, and regulations controlling entry modes require a lot of scrutiny into government resources such as magazines, acts of parliament, newspapers, and websites in order to access useful information. Accessing these resources is sometimes difficult because a lot of time and human resources are required to trace, analyse and present them in understandable forms (Volberda, 2011). Due to the requirements of intellectual property protection, some governments may not readily release critical information concerning operations. However, aspects such as policies, taxes, tariffs, and regulations are meant for the public and should be readily availed for public use. Another factor causing difficulties to environmental analysis is human resource commitment. Citing the challenges involved in the process, some managers and workers may feel that environmental analysis is a complex exercise and avoid it altogether. The laziness and ignorance that characterise organisations may also contribute to lack of seriousness in environmental analysis (Volberda, 2011). The exercise, therefore, may be felt as a difficult task that requires a lot of commitment and time. Another source of difficulties in environmental analysis constitutes the environmental information in terms of establishing objectives, calculating outcomes, and establishing the environmental responsibilities of workers (Mintzberg, Ahlstrand & Lampel, 2009). Effective environmental analysis requires an organisation to gather comprehensive environmental information based on established objectives. However, most organisations experience difficulties in establishing objectives and collecting dependable environmental information based on the objectives. Organisations are also required to calculate outcomes; however, these calculations are complex since they are based on complex statistical calculations. Every worker in an organisation has a responsibility to the environment. Environmental analysis requires every member of an organisation to identify their primary roles towards effecting the same. However, organisations fail to establish the environmental responsibility of each worker because there are several workers in organisation and some workers could be struggling to avoid analysis. In conclusion, environmental analysis is critical to contemporary organisations. Through environmental analysis, organisations get to understand the critical factors in their operating environment that limit or promote organisational performance. However, analysing the environment is faced with several challenges, which constrains the abilities of organisations in carrying out PEST analysis. Factors that make environmental analysis a difficult include lack of easy accessibility of information, inadequate human and financial resource, and lack of commitment from the management and workers. Reference List Capon, C. (2008). Understanding strategic management. Harlow FT Prentice Hall Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regnér, P. (2014). Exploring strategy: Text & cases. Harlow: Pearson Education Limited. Mintzberg, H., Ahlstrand, B. W., & Lampel, J. (2009). Strategy safari :the complete guide through the wilds of strategic management. Harlow : Financial Times Prentice Hall. Sparrow, J. (2012). The culture builders: Leadership strategies for employee performance. Farnham, Surrey, England: Gower. Volberda, H. W. (2011). Strategic management : competitiveness and globalization : concepts and cases. Andover South-Western Cengage Learning. Whittington, R. (1993). What is strategy: and does it matter? Routledge. Read More