The Notion of Organizational Culture - Assignment Example

QUESTIONS Explain, discuss and evaluate the notion of “organizational culture” and explain why it can be so important and the meaning of organizational stability? When might it be advantageous or disadvantageous for an organization to have a “strong culture”? Organisational culture is different shared beliefs, values and attitudes held by members of an organisation, developed over time, that guides behaviours and norms within the organisation. In essence, it is the fundamental principles of how activities are performed within an organisation that has been adopted and embraced by organisational membership. Culture dictates what behaviours are acceptable and appropriate within the organisation and the particular meaning that organisational members attribute to these behaviours. Organisational culture greatly contributes to organisational stability. Stability, from a practical definition, is the company’s current financial state, its leadership competency, production that assists in giving the organisation continual growth and ensures that employees develop their skills and competencies at a stable and constant pace. From a financial perspective, strong and cohesive organisational cultures can contribute to much higher profitability for a firm. As one example, a firm might have a strategic objective of differentiating the firm in a competitive market using corporate social responsibility as a set of values driving business activity. This hypothetical organisation, by establishing a mission or vision of philanthropy or volunteerism, utilise communications strategies and role modelled leadership behaviours to ensure all members of the organisation maintain a shared set of values related to CSR. Over time, volunteerism and charity work drive behaviours of philanthropy and ethics in the firm, which makes the business stand out in its market for high integrity and community improvement. This can translate into much higher profits as there is growth in a trend called ethical consumption whereby more consumer segments maintain more favourable attitudes toward firms with a powerful set of ethical values. Using appropriate public relations tools to promote these activities, whilst also establishing an ethical-based culture, would lead to higher profitability. Stability, in this case, is guaranteed from a financial perspective by using a cohesive ethical culture to leverage more consumer demand. Organizational culture is a type of collective wisdom that underlines assumptions of employees and their routines within the organisational model (Johnson, et al. 2014). Culture is built using stories, rituals and symbols to establish a cohesive culture. Daily behaviours of organisational members, over time, establish what are acceptable behaviours, a type of social learning that coerces other organisational members to mould their own actions against these symbolic models of behaviour. Hence, an advantage is that strong organisational culture is a type of normative control system for a firm where socio-professional aspects dictate appropriate behavioural outcomes of all organisational members. From an economic perspective, maintaining control over the organisational staff is important to ensure compliance to policy and procedures that underpin the firm’s strategic objectives. If quality and productivity highlight the normative cultural values and beliefs, then having a cohesive culture would ensure all members focus on these concepts and perform their job role tasks efficiently and against established performance expectations. Hence, through such a culture, when established, a firm can achieve competitive advantage through dedicated and competent human capital which has stability-related implications related to higher profitability and organisational performance. Having a strong culture is both advantageous and potentially detrimental. Some cultures have been established historically and as an organisational legacy, where all members are accustomed to performing their job roles the same way, every day. When a firm requires prescriptive (rapid) change to meet external market demands, organisational members accustomed to legacy systems and processes might be resistant to change. Strong cultures can make members of the organisation unwilling to consider new methods of doing business. This could be discouraging of individuals expressing unique, creative ideas and serve as a barrier to innovation that is critical for many firms to maintain competitive advantage. It could lead to strategic drift which involves not changing rapidly enough to meet or better service evolving external market conditions (Johnson, Whittington and Scholes 2011). Strong cultures can also be advantageous to an organisation. Performance-driven cultures are often rewarded with performance-based remuneration, underpinned by transactional leadership ideology. This gives incentives for organisational members to take advantage of training when available, empowers decision-making and can improve job satisfaction when successes are celebrated throughout the organisation. Deeper commitment to achieving strategic goals and higher job role motivations ensure the business is achieving top-level performance expectations. All members, in a strong culture, that remain focused and committed can be a substantial source of competitive advantage. As illustrated, organisational culture is a type of normative control system that underpins shared meaning and assumptions that drive behavioural outcomes. It is highly valuable for potentially improving the economic condition of the organisation and builds strong human capital that can differentiate a firm from less-competent competition with less cohesive cultures. The main disadvantage, as illustrated, is that it can conflict the process of introducing vital and rapid change processes. References Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). Exploring strategy: text & cases. Harlow: Pearson Education. Johnson, G., Whittington, R and Scholes, K. (2011). Exploring strategy: text and cases. Harlow: Financial Times Prentice Hall. Explain, discuses and evaluate the importance of “Ethics” and evaluate when might it be advantageous for an organisation to have an understanding of its CSR and when the business could have responsible management? Ethics represent a type of moral philosophy which dictates what might constitute correct or wrong behaviours. It is maintaining a set of virtues and righteousness that underpin a type of moral imperative where the main objective is to treat people with goodwill and act in accordance to how a person would expect everyone else to behave (Teale, et al. 2003). In fact, Johnson, et al. (2014: 129) refers to ethics as being a sensible expenditure for the organisation that has many implications for long-term strategic success for an organisation that devotes these expenditures on CSR and ethical culture development. Having ethical values and behaviours driven by an ethical stance can be critical for an organisation’s market positioning. As an example, the company Starbucks has established an ethical culture that remains focused on improving the lifestyles of various farmers across the world, devoting resources to these foreign raw materials growers to improve local schools and other aspects of community infrastructure. Starbucks has a mission to be inspirational and nurturing of the human spirit, which underpins a stakeholder-centric set of values that drive business activity. Starbucks provides grants and loans to many foreign coffee producers which illustrates a strong ethical focus. This improves market reputation for Starbucks and builds trust and cooperation along the entire supply chain that has many positive implications for the firm, including economic strength and brand reputation strength. There is also a growing trend in ethical consumption in many disparate consumer segments throughout the world. Therefore, buyers with these values can exert pressure on companies to develop an ethical code of conduct and begin engaging in corporate social responsibility. Ethical consumerism theorises that a firm will achieve greater market attractiveness and profitability when it uses publicity to reinforce its ethical commitments and values. The ethical buyer segment compares an organisation with a strong ethical focus with competitors that do not have such a strong set of ethical values and will inevitably favour the more ethical firm. Hence, as iterated by Johnson et al. (2014), having a focus on corporate social responsibility would be a sensible expenditure as reputation and market identity for a firm can be a very valuable brand-related asset. Elms et al. (2010) iterates that ethics should actually be central to discourse concerning the development and implementation of corporate strategy. The major automaker, Toyota, competes against very powerful competitors throughout the world. Many of these companies have a difficult time differentiating their product offerings in an environment where production technologies are becoming globally-standardised and where benefit and features of some cars are similar to other competitive market offerings. Toyota, therefore, has built a strong publicised emphasis on CSR, with a differentiation strategy of building environmentally-friendly vehicles with less ecological impact to competition. Toyota is involved with a focus of putting more corporate emphasis on consumer safety, offering superior products in terms of ensuring accident protection. Other activities underpinning Toyota’s strong ethical stance is managing businesses specialising in afforestation and development of renewable energy sources under the precept of always being faithful to the duty of promoting good. Toyota has built this ethics-based culture through CSR as a means of positioning the firm against competition (who often does this on factors of price or product), which gives Toyota a unique and more respected reputation in its consumer marketplace. Suppliers to Toyota are expected to adhere to the guiding principles of CSR determined by Toyota to be a valuable resource for brand identity. Hence, with growth in ethical consumerism, an organisation should have responsible management that emphasises corporate social responsibility. Ethical-minded consumers will reject a company without strong ethical values and beliefs in favour of patronising a moral organisation. Corporate social responsibility can be used as a marketing tool that gives unique distinctiveness against less-ethical competitors, translating into more profitability and development of important brand equity that has future implications for being able to diversify a firm and capture new market interest in the organisation. Self-interest as a main corporate objective is no longer relevant when many stakeholders have new expectations for responsible business behaviour and the notion of giving back to the communities that support these business’ growth. Therefore, understanding opportunities to engage in CSR has implications for future profitability and growth for an organisation. As demonstrated, ethics are important for an organisation to achieve competitive advantages and have a positive market reputation. CSR, when properly promoted to stakeholders, gives the firm a higher level of market favourability and could underpin higher profitability. As a significant opportunity to differentiate a firm from competition, establishing an ethical culture with responsible management could position a firm more effectively against competition, especially in an environment where it is difficult to distinguish a business when there is considerable product-related standardisation. References Elms, H., Brammer, S., Harris, J. and Phillips, R. (2010). New directions in strategic management and business ethics, Business Ethics Quarterly, 20(3), pp.401-425. Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). Exploring strategy: text & cases. Harlow: Pearson Education. Teale, M., Dispenza, V., Flynn, J. and Currie, D. (2003). Management decision-making: towards an integrated approach. New York: Pearson. Explain, discuses and evaluate the role that power and politics may have in an organisations strategic development. Power and politics are very relevant and influential in strategic development. Hardy (1996) refers to power as being a driver of strategic change because legitimate power is necessary to facilitate and implement new strategic objectives. Power should be viewed as being the force that ensures desired outcomes whilst politics are the tangible exercises of power within the organisation (Hardy). Politics, in an organisational context, is the ability to obtain desired goals (ends) not necessarily sanctioned by the organisation. Politics involves achieving personally-inspired outcomes that is achieved by influencing others who are seen as having legitimate power. Legitimate power in the organisation is determined by organisational structure and the ability of managers to control resources and information and politics is using this power to achieve organisational or personal goals. Johnson, et al. (2014) suggest that power as a form of control can be accomplished by building alliances and similar coalitions to gain positive support for a particular objective. Power, in this sense, is not just having tangible control of resources and information, but the ability to coerce others to follow a desired course of action (Johnson et al.). In the organisation, when change is required to adapt to evolving market conditions, it is important to gain followership of a new leadership vision or mission, whether emergent change or prescriptive change. Building alliances can be accomplished through effective discourse and persuasion tactics to ensure that the new change strategy meets with minimal resistance and strong organisational member dedication. Hardy (1996: S3) calls it a type of strategic paralysis when change cannot be sufficiently implemented due to an inability to coerce others to agree to a desirable course of action. Power can be illustrated by the major airplane manufacturer, Boeing, which has a strong strategic emphasis on quality and efficiency in a highly regulated environment. The firm utilises an autocratic management structure where employees are controlled to comply with performance-related expectations and policies (thorough quality output) and are rewarded for meeting stringent performance objectives. Legitimate power, such as threat of termination or other disciplinary actions for non-performance, sanctioned by the organisation, influences strategic change implementation. Because there is a culture of compliance and expectations for achieving productivity and quality-oriented goals, managers can implement strategic change with minimal resistance at Boeing. The ability to control resources and information underpins how power and politics influence strategic change in a hierarchy-driven model of business. Power is also present when firms seek development of strategic alliances in order to leverage multiple talents, finance and expertise. For example, a firm with little market power that cannot control supply chain costs might see an alliance to give the firm more market dominance and bargaining power. Through sheer size and scope of an alliance, now the switching costs to various supply vendors become higher. Toyota uses this legitimate power as a political methodology, forcing vendors that want to keep these lucrative supply contracts to adopt the ethical principles of Toyota and perform this ethical stance in all of their business dealings. Alliances, in the case of Toyota, ensure that all parts meet quality standards that has significant implications for Toyota’s market reputation. Coercing and persuading supply chain partners to focus on the desired outcome for CSR and ethics, for Toyota, illustrate the role of power and politics in the strategic management process. Furthermore, in an environment where change is constant and must be injected into the organisational model regularly, power and politics are significant aspects of strategic development. There will be some individuals that believe a change is timed poorly or will not meet expected end results, hence underpinning a resistance. Managers can utilise their leadership talents to coerce important and influential decision-makers in the organisation to consistently iterate the importance of the change or even threaten disciplinary action (legitimate power) to ensure compliance. Now, dominant coalition groups that have embraced the change can pressure others to embrace the change, a form of control that has socio-political implications on behaviour modification. This is referred to as building support and association from elites within the organisation (Johnson et al.). Through a blend of charismatic leadership strategies and skills in negotiation, power is facilitated through political activity to ensure that strategic change is implemented productively and with minimal barriers stemming from human behaviour and resistance. Power and politics, as illustrated, are very important and highly influential in the strategic development process. It provides the basis by which compliance is ensured in the face of strategic change and provides opportunities to build coalitions that pressure others into compliance. New strategic directions and objectives cannot, in the organisation, be facilitated without the support and actions of others, hence gaining their followership through legitimate power exercise or persuasive political activity is critical for new strategic changes. References Hardy, C. (1996). Understanding power: bringing about strategic change, British Journal Of Management, 7, pp. S3-S16. Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). Exploring strategy: text & cases. Harlow: Pearson Education. Explain, discuses and evaluate the strategic change? Discuss the approaches available to the manager -leadership should be added as a sup topic to strategic change. There are four different types of strategic change: revolution, adaptation, evolution and reconstruction (Johnson, et al. 2014). Change can be emergent or prescriptive and which type of change is dependent on the specific goals of management and the market conditions in which an organisation operates. Strategic change is the modification of an organisation’s mission or vision that is designed to implement a set of new strategic goals and objectives. It represents a change in strategic direction that is facilitated through consideration of a firm’s core competencies, resources, exploitation of competitive advantages and the synergies within the organisation. Strategic change ensures that the internal is aligned with the external. An organisation’s ability to achieve organisational performance is highly dependent on this alignment, capturing new opportunities and identifying potential threats that stem from the external market, both micro-level and macro-level. For example, an organisation might be facing short-term financial problems as a result of having a product that is maturing in the market, becoming outdated and replaced by new competitive offerings with unique benefits and features. Therefore, the firm might need to adopt a new innovation focus in order to avoid revenue reductions in a situation that has become critical to the firm. Strategic change would involve, therefore, from a theoretical perspective in such a situation, building a research and development team, changing quality standards, and improving customer service innovations to better differentiate the firm whilst pursuing new product innovation opportunities. To facilitate strategic change, leadership as a competency of management strategists cannot be under-emphasised. Change is persuasive in nature and requires considerable negotiation to ensure minimal resistance and gain organisational member commitment toward a new change objective, especially when radical from established norms and processes. Mullins and Cummings (1999) iterate that personality-related strengths of strategic managers will predict the ability to implement change. Managers, to gain commitment to change, must open lines of effective and recurring communications, perhaps serve as a mentor or coach to assist in employees, and create continuous discourse about why a change is necessary and vital to the organisation’s success. Many individuals, when they do not believe in the change or its relevancy toward achievement of a particular outcome, will resist the change and avoid compliance with new processes; especially when the firm has a strong and cohesive organisational culture that has legacy in doing things a particular way. Leadership, the ability to influence and coerce others, is a tactic in facilitating positive strategic change and gaining commitment. Kurt Lewin, a respected business theorist, also suggests a model for guiding strategic change. This involves unfreezing established behaviours, or getting organisational members accustomed to new styles of thinking and acting. Unfreezing occurs by forcing organisational members to re-examine their core beliefs and assumptions, thereby creating a type of controlled crisis, that creates higher levels of motivation for organisational members to seek new change practices and procedures. Coupled with effective communication and even empathy in leadership, employee and management buy-in becomes more achievable and implements more effective change. Once the new level of thinking and behaving has been established, managers seek refreezing new behaviours, solidifying these desirable behavioural changes through celebration of victories related to the new strategic goal or providing reward systems for those who have complied and ensured the change was facilitated smoothly and without barriers of resistance. Managers can also utilise strategies that are emergent to make change occur slower and more incrementally. This might be establishing new training packages to ensure that employees understand the expectations associated with their unique contribution to a new strategic change idea. This ensures that employee concerns are recognised and managers take steps to consider the social and psychological needs of employees. Giving them opportunities to be interactive in the change can be facilitated through training or other hands-on learning (such as with new software implementation), making them feel important and vital as contributors to the organisation’s new vision or strategic goal. This again speaks to the critical advantages of leadership which facilitates more motivation and commitment and gains followership related to new change initiatives. As illustrated, strategic change can be prescriptive or emergent and it is generally aligned with ensuring the organisation’s internal structure and value chain is aligned with external market conditions and scenarios. To implement change, unfreezing old behaviours and solidifying new ones is critical to ensure that change is not resisted and that employees/managers become accustomed to new ways of doing things. Coupled with effective leadership, strategic change can be implemented more successfully and without barriers. Only a charismatic and aspirational leader who moulds their behaviours toward a new vision or mission will have the ability to inspire others to embrace a strategic change and work toward gaining the skills necessary to provide support services for a new strategic objective. References Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). Exploring strategy: text & cases. Harlow: Pearson Education. Mullins, J.W. and Cummings, L.L. (1999). Situational strength: a framework for understanding the role of individuals in initiating proactive strategic change, Journal of Organizational Change Management, 12(6). What does Michael Porter mean by the comment “Stuck in the middle” Michael Porter, when discussing the concept of being stuck in the middle, is referring his Generic Strategies model that is designed to facilitate more effective competitive advantage. Porter’s Generic Strategies model dictates that organisations should seek differentiation strategies, focus strategies or cost leadership (Johnson et al. 2014). Porter asserts that company leaders should seek only a single strategy in the pursuit of competitive advantage and, when seeking multiple strategies, can position a firm for failure and never achieving the desired competitive advantage. This represents being stuck in the middle, having multiple strategies under the Generic Strategies model undermine successes toward a particular strategy. To illustrate this, a strategist might determine that it would be most profitable and beneficial for the company to seek a cost leadership strategy. Cost leadership is accomplished through maximisation of existing corporate assets, achieving low operating costs, standardising production systems, or even outsourcing as a means of outperforming competition in terms of having lower operational costs (Johnson, et al.). This hypothetical organisation seeking cost leadership may have identified through external environmental analyses that customers are growing very price-sensitive and are seeking products from companies with a more competitive product pricing structure. Therefore, cost leadership, the ability to control costs throughout the entire value chain, can provide opportunities to give customers a product at a lower pricing structure than competing businesses, giving them a competitive advantage in terms of providing more attractive products to important buyer segments. Porter, however, warns that a firm seeking cost leadership should not attempt to differentiate as a combination of generic strategies. In cost leadership, when successful, the firm has a reputation in the market for being more economically valuable than competing products and customers will gain trust and confidence in this firm with cost leadership ideology. The firm now attempts to differentiate, such as working on R&D to innovate and launch creative products to position the firm as a market pioneer. What this accomplishes is essentially confusing customers, according to Porter, making the firm stuck in the proverbial middle. Customers have grown loyal to the cost leadership company that now offers lower price products for consumers, differentiating the firm in terms of consumption costs. Now, the firm attempts to make itself appear as an innovator, which can mystify customers who no longer understand, fully, what they can expect from the firm long-term. Their brand reputation or identity, therefore, becomes incompatible with customer-perceived reliability and consistency and the firm might never achieve competitive advantage because of this. Johnson et al. (2014) supports this confusion, offering that firms should seek a lock-in position with customer markets and being stuck in the middle only serves to properly differentiate the firm with a single focus that gives the organisation better competitive clout and advantage. To further illustrate this, an organisation seeking a focus strategy might be stuck in the proverbial middle if also seeking a congruent differentiation strategy. Focus strategies are closely akin to niche strategies, using various approaches to gain the attention and commitment of smaller target segments. Southwest Airlines is a relevant example of a firm with a focus strategy, which has developed short point-to-point routes to better service short-haul customers with lower pricing structures than main competition with very high operational costs. Southwest’s rather no-frills methodology ensures that price-sensitive consumers select this business. If Southwest were to attempt a congruent differentiation strategy, such as promoting value-added activities such as Internet access and other service dimensions on-board, it would confuse consumers about what Southwest values and its subsequent economic value to customers. Southwest would have a differentiated identity in focus strategies as being convenient and price-based attraction. Now, consumers are given information and communications about diversity of service systems, confusing customers about Southwest’s image and reputation. Competitive advantage, in such a situation, might never be achieved. As shown, being stuck in the middle is a failure to properly exploit what aspects of a firm can lead to competitive advantages. When an organisation works on more than one generic strategy, customers might not fully understand what is driving an organisation’s beliefs and strategies, giving a perception of less value that might underpin a desire to seek consumption with another competitor that has a more consistent and reliable market image and reputation. The advantages achieved in one generic strategy can undermine successes when pursuing a secondary strategy, something that is not advantageous for achieving market-based competitive advantages. So much of the ability to find competitive advantage is predicted by customer segment attitudes and beliefs about a business, therefore Porter’s recommendation to pursue only a single generic strategy, either focused, differentiated or cost leadership-based, is viable and a firm pursuing multiple strategies will find much less success in the long-term in achieving competitive edge. References Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). 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