STRATEGIC DECISIONS NOTES
This focuses on effectiveness or performance of the organization as a whole. Effectiveness or performance of an
organization as a whole may depend on various factors e.g. role in
social responsibility, corporate image, and business portfolio. Business
portfolio i.e. the combination of businesses owned by an organization,
most determines the organization‘s performance. The performance most
depends on whether the businesses are good and whether the organization
is strong in them. How good a business is and how strong an organization
is in the business determines the attractiveness of the business. An
organization should allocate resources to businesses according to
attractiveness i.e. the more the attractiveness the more the resources
allocated. The amount of resources allocated to a business
determines the size of the business.
Business portfolio reflects how an organization has allocated its
resources among various businesses. How well such resources have been
allocated or utilized determines the organization‘s performance.
Performance is seriously compromised if resource allocation or
utilization violates the criterion of attractiveness e.g. allocating
large resources to unattractive businesses at the expense of attractive
ones. Portfolio analysis, therefore, plays a very important role in
corporate strategic analysis and choice.
Business Portfolio Analysis decisions
This essentially should incorporate current as well potential
businesses. The analysis should address the following two issues:
- What businesses will the organization be in?
- How will the organization allocate its resources among the businesses?
These two issues give rise to the following fundamental strategy challenges:
- How attractive is the group of businesses the organization is in?
- If the organization retains its current businesses, how good is its
performance outlook in the future? - How can the organization strengthen its business portfolio?
Models of Portfolio Analysis
Business portfolio models or matrices are a technique for categorizing
businesses and ranking them on the basis of attractiveness. Portfolio
analysis enables the organization to identify the strategic options that
can help in strengthening its business portfolio in order to enhance
performance. The following matrices are among the most popularly used
portfolio models.
- Market or industry growth refers to the rate at which industry sales
are growing. - Relative market share refers to the ratio of the organization‘s
market share to that of the biggest rival in the industry. - In this 2 x 2 matrix, various businesses are plotted accordingly
depending on their market growth and the organization‘s relative
market share
Which categories of businesses as represented by quadrants of the
matrix, would require the following strategies?
Investment
Divestment
Liquidation
Growth
Joint venture
Strategic alliances
The matrix suggests the following strategy prescriptions or options:
Stars
- Best businesses in portfolio
- Strong businesses in good markets
- Businesses generating and using a lot of cash
- Strategy should defend and grow such businesses
Question Marks
- Heavy net cash users
- Need cash from other businesses
- Today‘s question marks are likely to be tomorrow‘s stars
- These businesses need investment and growth strategies
Cash cows
- Cash-rich businesses
- The cash can be used to develop businesses with better future
prospects e.g.
Question marks.
These businesses need strategies that will maintain them so that the
organization can continue to ‗milk‘ them for cash.
Dogs
- Weak businesses in low growth markets.
- Such businesses need strategies that will drain them for cash.
- Eventually divestment and liquidation strategies are needed.
- Proceeds of liquidation may be used for strengthening other businesses.
The strategies that will be considered by the organization will depend
on the strategic objectives to be achieved or the opportunities,
threats, strengths and weaknesses of the organization.
For example:
Question marks
- The opportunity to be exploited is high market growth rate for such
businesses. - The weakness confronting the firm is low market share.
- Such businesses can be turned into stars by enhancing the
organization‘s market share (possible strategic objective). - One or more of the following are possible strategies:
Improving professional skills of sales force.
More aggressive advertising.
Improving the product.
Motivating channel members
Changing pricing strategy
The entire portfolio should be in cash balance i.e. the need to balance
between the cash generated and cash used.
Market Attractiveness – Business Strength Matrix. Also known by the
following names:
- General Electric Matrix
- McKinsey Matrix
- 3 x 3 Matrix
- Nine Cell Matrix
- Multi-factor Matrix
The logic behind this matrix and the application of the matrix are
similar to those of the BCG.
- Unlike the market growth dimension of the BCG model, the market
attractiveness dimension of the GE model is a product of many factors. - Similarly the business strength dimension of the GE model is a
product of many factors unlike the relative market share dimension
of the BCG model. - The 3 x 3 matrix produces more refined analyses than the 2 x 2 BCG matrix.
What would be the strategy prescriptions of this model?
At this point every manager is expected to undertake a business
strategic analysis. The basic question here is how to succeed in the
market place. A choice has to be made among various strategy options.
Strategy options must be chosen that will enhance the organization‘s
competitive position. Therefore strategic analysis at business level is
concerned with identifying and generating strategies that can help the
business to develop a solid and sustainable competitive advantage. The
strategies can be identified with the help of models, the relevant
models depending on the strategic objectives to be achieved.
In the Strategic evaluation and choices, The strategic options generated
during strategic analysis must be evaluated in order to select the best
options. Strategy is aimed at achieving a firm‘s strategic objective. An
objective can be achieved by doing a number of things, each being a
strategy in itself. For example, British Airways‘ objective of having at
least 70% of their employees professionally qualified in their jobs can
be achieved through the following strategies:-
- Training employees on the job.
- Training employees off the job.
- Hiring only qualified people.
- Giving training grants or allowances to employees to enable them
attend courses on their own. - Poaching from other airlines.
The various strategy options for achieving an objective should be
evaluated in order to choose the best one(s) among them. Some pertinent
evaluation criteria are:
- Effectiveness in achieving the objective.
- Potential competitive advantage.
- Likely competitor responses.
- Benefits e.g. financial benefits.
- Cost
- Affordability
- Resources
- Ease of implementation
There are a number of ways the criteria can be used to evaluate
strategic options. One such way is to assign weights to the criteria and
compute weighted scores for the options as illustrated in the example below.
The weights and scores can be generated by any one of the following methods:
- Evaluator‘s judgment
- Brainstorming
- Jury of experts
- Empirical
- After the evaluation, the strategic option(s) with the highest
weighted scores can be chosen for implementation. In this
illustration, it could be the first strategic option only, or the
first and third strategic options together.
Therefore, the best strategies for ensuring that employees would be
professionally qualified as desired are:
- Training employees on the job.
- Hiring only qualified people.
- Current employees who were not qualified would be trained on the
job, while ensuring that no one who is not qualified would be hired
in future. - If three strategies were needed or possible, the third strategy
would be to poach from other airlines people who were already
qualified and perhaps more experienced in the airline industry. - According to the weighted scores, training employees off-the-job and
giving training grants and allowances would be bad strategic options.
Discussion questions
• What do you consider to be the possible similarities and differences
in the strategic management process in large and small enterprises?
• It has been observed that the there is growing popularity of strategic
planning in Kenya today than ever before. What are the possible
explanations for this popularity?
ANALYTICAL FRAMEWORKS AND STRATEGIC MANAGEMENT
Professionalism means conforming either to the technical or ethical
standards of profession or an occuplion regarded as such. The important
role that managers play in modern business organizations requires a
professional approach or what is called professionalism in management.
Challenges presented by external and internal environment require
practitioners who are qualified and professional trained on professional
outlook Managerial skills are so important to organizations and society
that cannot be ignored. The increasing importance of managerial function
requires the managers lo strive for the high standards expected of
professionals. Possession of technical ability proficiency in financial
management and resources utilization and acquisition of human relations
skills go a long way in enhancing effectiveness of a professional
manager in today’s environment.
A profile of a professional manager viz nature of his job or overall
responsibility and knowledge abilities and skills required to be
effective and efficient manager in the changing business environment.
The primary responsibilities include examining organizational objectives
assessing available resources, their strengths and weaknesses, results
to be achieved, remundying deficiencies and designing a strategy of
action to achieve the required results. He needs to struck a balance of
skills which demand perception and judgment. The professional manager
affairs in such a manner that he succeeds in. achieving the tasks set by
the Board of Directors. The job of professional manager can be described
in the job
DEVELOPING A STRATEGY
Strategy making involves a few steps
- Identifying specific roles suitable for the company in view of
society’s needs and the company resources. - Integrating various roles with other company efforts to obtain
combined effects. - Expressing the plans interms of targets.
- Setting up sequences and timing of changes.
Developing a strategy and translating it into managerial action
requires decision making at each stage.
DETERMINANTS OF STRATEGY
The considerations that affect a strategy are
- Demand for firm’s goods and services
- Supply of services
- Competitive conditions in the industry
- Key success factor
- Growth potentials and profit prospects
- Market strength
- Financial capacity of the management etc
Strategic management as a stream of decisions and actions which leads to
the development of an effective strategy or strategies to help to
achieve corporate objectives. The end result of strategic management is
a strategy or a set of strategies for the
organisation. Strategic management is the process which deals with
fundamental organizational renewal and growth with the development of
the strategies, structures and systems necessary to achieve such renewal
and growth, and with the organizational
systems needed to effectively manage the strategy formulation and
implementation process. Firstly this includes two sub-processes within
the overall strategic management process. Through the formulation and
implementation of sub-processes, the development
of strategies, structures and systems is done to achieve the objectives
of organizational renewal and growth of the strategic management
process. It is also considered as managing the organizational systems
which are required for strategic management. For
instance, the administrative arrangement necessary for formulation and
implementation of strategies would also be included in the process of
strategic management. In simple words, Strategic Management can also be
defined as the formulation and Implementation
of plans and the carrying out of activities relating to the matters
which are of vital, Importance or continuing .importance to the total
organisation. This is an allen compassing view of strategic management
and considers all plans and activities which are Important for an
organisation. Strategic management is a systematic approach to a major
and increasingly important responsibility of general management: to
position and relate the firm to its environment in a way which ensures
Its continued success and make
it secure from surprises. The emphasis is on the
environment-organisation relationship for the purpose of achieving the
objectives of continued success and protection from environmental
surprises through the adoption of a systematic approach to general
management. Strategic management is defined as the set of decisions and
actions resulting in formulation and implementation of strategy.
Strategies designed to achieve the objectives of an organisation.
The functions of strategic management can be designed as a set of
activities related to the maintenance of an organization in operations.
This includes
- Planning for future (developing organizational objectives and purposes).
- Developing organization structure and Developing of Effective
information System. - Motivating people (seeking cooperation from different members of the
organization). - Use of necessary control systems.
- Providing Leadership (Long term survival of the organisation).
Thus, Strategic management is considered as either decision-making and
planning, or the set of activities related to the formulation and
implementation of strategies to achieve organizational objectives. The
emphasis in strategic management is on those general
management responsibilities which are essential to relate the
organisation to the environment in such a way that its objectives are to
be achieved. This model is widely accepted and comprehensive.
Significant improvement in sales, profits and productivity. Allows for
identification, prioritization and exploitation of opportunities.
Provides an objective view of management problems. Creates a
framework for internal and external communication. It gives
encouragement to forward thinking. It gives a degree of discipline and
formality to the management of a business. Identification on
organizations existing mission, objectives, and strategies is the logical
starting point for strategic management.
Mission statement
Every organization has a mission, objectives, and strategy, even if
these elements are not consciously designed, written or communicated.
The strategic- management process is dynamic and continous. A change in
any one of the major components in the model can necessitate a change in
any or all of the other components. Strategists do not go through the
process in lock step fashion. Many organizations conduct formal meetings
semiannually to discuss and update the firm‘s mission,
opportunities/threats,
strengths/weaknesses, strategies, objectives, policies, and performance.
These meetings are commonly held off-premises and called retreats. The
rationale for periodically conducting strategic-management meetings away
from the work site is to encourage more
creativity and condor among participants. Good communication and
feedback are needed throughout the strategic management process. A
number of different forces affect the formality of strategic management
in organizations such as:-
• Size of an organization is a key factor;
• Smaller firms are less formal in performing strategic-management tasks.
• Management styles
• Complexity of production process
• Nature of problems
• Purpose of planning system
• Guides executives in defining the business their firm is in, the end
it seeks, and the means it will use to accomplish.
• The strategy formulation process begins with definition of the company
mission.
• This is a declaration of an organisation‘s reason for being.
• It answers the pivotal question, ‖what is our business‖
• Sometimes called
• A creed statement
• A statement of purpose
• A statement of philosophy
• A statement of beliefs
• A statement of business principals
• A vision statement
• Characteristically, it is a statement, not of measurable targets but
of attitude, outlook and orientation
In general terms, the mission statement addresses the following questions:
- Why is this firm in business?
- What are our economic goals
- What is our operating philosophy in terms of quality, company image,
and self-concept? - What are our core competencies and competitive advantages?
- What customers do and can we serve?
- How do we view our responsibilities to stockholders, employees,
communities, environment, social issues, and competitors
A good mission statement describes an organization‘s purpose,
customers, products or services, markets, philosophy, and basic
technology
Importance of a Clear Mission
High performing companies have got a more comprehensive mission
statement than low performers
Organizations‘ carefully develop a written mission statement for the
following
reasons
• To ensure unanimity of purpose within the organisation
• To provide a basis, or standard, for allocating organisational resources
• To establish a general tone or organisational climate
• To serve as a focal point for individuals to identify with the
organisation‘s purpose and direction; and to deter those who cannot from
participating further in the organizations activities
• To facilitate the translation of objectives into a work structure
involving the assignment of tasks to responsible elements within the
organisation
• To specify organisational purposes and translation of those purposes
into objectives in such a way that cost ,time, and performance
parameters can be assessed and controlled
Vision VS Mission
• Some organisations develop both a mission statement and a vision
statement.
Wherereas the mission statement answers the question, ‖what is our business‖
The vision statement answers the question, ‖what do we want to become‖
The process of developing a mission statement
• A clear mission statement is needed before alternative strategies can
be formulated and implemented
• It is important to involve as many managers as possible in the process
of developing a mission statement, because through involvement, people
become committed to an organisation.
• A widely used approach is to select several articles about mission
statements and ask managers to read these as background information
• Then ask managers to personally prepare a mission statement for the
organisation
• A facilitator, or a committee of top managers, should merge those
statements into a single document and distribute this draft mission
statement to all managers
• A request for modifications, additions, and deletions is needed next,
along with a meeting to revise the document
• The process of developing a mission statement represents a great
opportunity for strategists to obtain needed support from all managers
in the firm
• During the process of developing a mission statement, some
organizations use discussion groups of managers to develop and modify
the mission statement
• Some organizations hire an outside consultant or facilitator to manage
the process and help draft the language.
Fundamental factors to be incorporated in the Mission
• Basic product or service, primary market; principal technology
• Company goals: Survival, Growth, Profitability
• Company philosophy (beliefs, values, aspirations etc.)
• Public image
• Company self-concept (how it relates to its external environment)
• Customers
• Quality
Corporate Social Responsibility
• In defining the company mission, strategic managers must recognize the
legitimate rights of the firm‘s claimants
• These include, stakeholders and employees and outsiders affected by
the firms actions.
- Customers
- Suppliers
- Governments
- Unions
- Competitors
- Local Communities
- General Public
• Strategic managers can use a continuum that encompasses four types of
social commitment
- Economic
- Legal
- Ethical
- Discretionary social responsibility
Economic Responsibilities
• This is the most basic CSR of a business
• The CSR is assured to be providing goods and services to society at a
reasonable cost In discharging the economic responsibility; the company
also emerges as socially responsible by providing productive jobs for
its workforce, and tax payments for its local, state and federal
governments.
• Legal responsibilities
Reflects the firms obligations to comply with the laws that regulate
business activities
The consumer and environmental movements focused increased public
attention on the need for social responsibility in business by lobbying
for laws that govern business in the areas of pollution control and
consumer safety
Effects of CSR on mission statement
In developing mission statements, managers must identify all stakeholder
groups and weigh their relative rights and abilities to affect the firms
success Some companies are proactive in their approach to CSR, making it
an integral part of their mission statement. Others are reactive,
adopting socially responsible behaviour only when they must.
Environmental scanning
The Internal
All strategic managers must have an in-depth understanding of the
strategic factors within the organization. These factors are the
internal strengths and weaknesses that act to either constrain or
support a strategy. The strategic factors in a corporation‘s internal
environment are:-
- Structure
- Culture and
- Resources.
Structure
A structure is a formal arraignment of roles and relationships of people
in such a way that work is directed toward the achievement and
accomplishment of an organization goals and mission. The structure of
any organization is viewed in terms of communication
authority and work flow. There are five types of organization structures
- Simple
- Functional
- Divisional
- Matrix
- Conglomerate
Culture
An organizations culture is the collection of beliefs, expectations and
values that are shared by its members and are passed from one generation
of employees to another. The result is norms which are rules or codes of
conduct that define that behavior is acceptable
from top management to the rank and file. Infact, the behavior of people
in an organization is shaped by corporations of the world have
distinctive cultures that are somehow responsible for their ability to
create, implement, and maintain their world leadership positions.
Resources
On the most practical ways to develop a master strategy of a corporation
is to choose particular roles that are appropriate in view of
competition and corporations resources. Corporation‘s resources are
considered in terms of financial, physical and human,
organizational systems and technological abilities. These resources are
normally dealt with under functional areas of marketing, finance,
research and development, operations, human resources and information‘s.
External Environment
• This is determined by conducting an external strategic management
audit (sometimes called environmental scanning or industry analysis).
• This audit focuses on identifying and evaluating trends and events
beyond the control of a single firm.
• An external audit reveals key opportunities and threats confronting an
organisation so that managers can formulate strategies to take advantage
of the opportunities and avoid or reduce the impact of threats.
External forces can be divided into five broad categories:
• Economic forces
• Social demographic, and environmental forces;
• political, governmental, and legal forces;
• technical forces;
• competitive forces.
• Sources of information
• Key magazines
• Trade journals
• Newspapers
• Collection of primary data through questionnaires
• Suppliers
• Distributors
• Customers
• Competitors
• Universities
• Libraries
• Periodic scanning reports can be submitted to the department
concerned, normally strategic planning department or the relevant department
• Once the information is gathered, it should be assimilated and
evaluated for decision making
Technological forces
• This is very rapid
• Includes the internet
• W.W.W, EDI, money transfer, etc…
• Help to identify opportunities as well as threats in business
Competition, products, market, customers, pricing etc…
• Facilitates efficiency and effectiveness in business transaction
• The organisation must effectively utilize the opportunities availed by
the technological forces and minimize the threats
• The organisation must change with the changing technology to remain
competitive
Economic forces
• Inflation
• Unemployment
• Availability of Credit
• Level of disposable income
• Propensity of people to spend
• Interest rates
• Economies of scale
• Value of Kshs in world markets
• Foreign countries economic conditions
Social cultural forces
• Social cultural, demographic, and environmental changes have a major
impact upon virtually all products, services, markets, and customers
• Small, large, for-profit and non profit companies are affected by
threats and opportunities created by the above factors
• Managers must understand the dynamics of this environment and make
decisions which will enable the organizations attain their goals and
objectives
• In Kenya the scourge of AIDS/HIV pandemic on the productivity of the
workforce must be addressed.
• Cultural practices in certain communities must be eliminated
• Tribalism has to be reduced to bare minimum/cohesive nation a must for
prosperity
• Population explosion needs to be curbed
• Poverty levels should be monitored
• Shelter
• Literacy levels/Education institutions should be improved and quality
education
• Infrastructure
• Health facilities should be improved
• Number of marriages
• Number of divorces
• Number of births
• Immigration and emigration rates
• Social security programmes
• Life expectancy rates
• Per-capita income
• attitudes towards business
• Lifestyles
Political forces
• Central government, local and foreign governments are major
regulators, deregulators, subsidizers, employers, and customers of
organizations
• Political, governmental, and legal factors can therefore represent key
opportunities or threats for both small and large organizations
• Government regulations and deregulations
• Change in tax laws
• Voters participation rates
• Level of defense expenditures
• Legislation on equal employment
• East African Community
• Relationship between Kenya, Tanzania, Uganda
• Movement of people across the borders
• Size of government budgets
• Location and severity of terrorist activities
• General election impact on the people, policy and economy.
Establish long term objectives
The strategic management is the major vehicle for planning and
implementing major changes an organization makes. Many organizations
tend to spend substantial amount of time and effort in developing the
strategic plan, without devoting sufficient attention to the means and
circumstances under which the strategic plan to be implementation has
often been seen that changes come through the implementation. Though
strategic management begins with strategic planning, the other
components are no less important.
About the implementation of strategic plans, the need (or proper
corporate culture, organization structure and appropriate policies
regarding appraisal need to be stressed. Strategic Management is a
stream of decisions and actions with a view to develop an
effective strategy (or strategies) which would help the organization
achieve its Corporate goals. Strategic management involves strategic
analysis. Strategic choice making and strategic implementation
strategies exist at all levels-Corporate level business level and
operational level. There is a need for strategic vision for strategic
managers and the benefits of strategic management.
The strategic management process is the way in which strategists
determine objectives and make strategic decisions. In the management of
business in earlier times, the focus of the manager’s job was on
decision for today’s world in today’s business. This approach may have
been satisfactory then. However, the changes that have been taken place
over a period of time in the environment have led to the need for a
different approach to management Instead of focusing all their time on
today’s problems, the managers began to see the value of trying to
anticipate the future and to prepare for it. They did this in several
ways. One way vas to evolve systems and prepare manuals (or procedures)
for decisions which are routine and repetitive in nature as this allowed
more time for
important decisions. Another way was to prepare budgets and thereby
anticipate future sales and flow of funds.
Long range planning
These things helped, but they tended to be based on the present business
and its present conditions and as such these mechanisms could not deal
well with the change‘s by themselves. The lack of emphasis on future in
budgeting led to long range planning. Long
range planning focused on forecasting the future by using economic and
technological tools. The formulation of these plans has bean the
responsibility of corporate staff group, whose reports forwarded lo top
management. The top management could approve,
disapprove or modify these plans. However, the corporate planners ware
not the decision makers.
Long range planning had some impact, but not as much as would be
expected if the top management were involved. Moreover, the corporate
planners were producing what can be termed “first-generation plans”.
First-generation planning means the firm chooses the
most probable appraisal of the future environment and of its own
strengths and weaknesses. From this, ‘it evolves the best possible
strategy for a match of the environment and plan for the most likely future.
Modern approach is called “strategic planning.” The top management,
including the board of directors and corporate planners have important
roles to play in strategic management. But the starting roles are for
the general managers of the corporation and its
major operating divisions. Strategic management focuses on analysis thus
strategies are then prepared for each of these likely future scenarios.
Generate, evaluate and select strategies
Interaction of organization with its environment in the light of its
strengths and weaknesses results into various strategic alternatives.
This process may result in to large number of alternatives through which
an organization can relate itself to the environment.
However, all alternatives can not be chosen even if all of them produce
the same results. Obviously managers may like to limit themselves to the
serious consideration of some of the strategic alternatives so that they
are saved from unnecessary exercise. Therefore, the strategic
alternatives to be identified in the light of strategic opportunities
and threats generated through environmental analysis, and organizational
mission and objectives.
The identification of various strategic alternatives leads to the level
when managers consider some alternatives serious/y and may choose one of
the most acceptable. This is the stage of strategic decision process and
all factors for decision making are relevant.
Since the particular strategy attempts to affect the organizational
operation in some predetermined manner, the choice process
systematically considers how each alternative strategy affects the
various critical factors of the organizational functioning. Further, the
chosen alternative to be acceptable in the light of organizational
objectives. Thus, it is not necessary that the chosen alternative is the
best one. In the choice process, apart from the various organizational
and environmental factors, personal factors play considerable role
because choice of strategy reflects the personal values and aspirations
of strategist.
Establish policies and annual objectives
Annual objectives serve as guidelines for action, directing and
channelling efforts and activities of organizational members. They serve
as standards of performance and as such give incentives for managers and
employees to perform. They provide a basis for organizational design.
Annual objectives are essential for strategy implementation because they:
- Represent the basis for allocating resources;
- Are primary mechanism for evaluating managers;
- Are the major instruments for monitoring progress toward achieving
longterm objectives; and - Establish organizational, divisional and departmental priorities.
Annual objectives translate long-range aspirations into this year‘s
targets. Annual objectives should be consistent across hierarchical
levels and form a network of supportive aims. They should be:
- Measurable,
- Consistent,
- Reasonable,
- Challenging,
- Clear,
- Communicated throughout the organization,
- Characterized by an appropriate time dimension, and
- Accompanied by commensurate rewards and sanctions.
They should be compatible with employees‘ and managers‘ values and
should be supported by clearly stated policies
Policies
Policies are specific guidelines, methods, procedures, rules, forms, and
administrative practices established to support and encourage work
towards stated goals. They are broad, precedent-setting decisions that
guide or substitute for repetitive managerial decision-making.
Therefore, they are directives designed to guide the thinking,
decisions, and actions of managers and their subordinates in
implementing a firm‘s strategy. Policies set boundaries, constraints and
limits on the kind of administrative actions that can be taken to reward
and sanction behaviour. They clarify what can and cannot be done in
pursuing of an organization‘s objectives. Policies let both employees
and managers know what is expected of them, thereby increasing the
likelihood that strategies will be implemented successfully. Whatever
their scope and form, policies serve as a mechanism for implementing
strategies and achieving objectives. Policies represent the means for
carrying out strategic decisions and hence should be stated in writing
whenever possible.
Functional strategies
They are the shot-term activities that each functional area within a
firm must undertake in order to implement the grand strategy. Functional
level strategy primarily focuses on achieving maximum use of resources
i.e attaining maximum resources productivity.
Functional strategies address issues regarding the coordination and
integration of activities within a single function. They must be
consistent with both short and long-term objectives.
Allocate resources
Once the creative and analytical aspect en strategy formulation has been
decided, the organization tries to convert the strategy into something
operationally effective. To bring the result toe strategy to be put to
action because mere choice of even the soundest
strategy may not lead to its objectives. In strategy implementation,
various activities involved are design of organization structure to suit
the chosen strategy, effective leadership, development of functional
policies, allocation of resources, development of
effective information system and use of control system, etc.
Measure and evaluate
Review and control may be treated as the fast stage of strategic
management process. However, this is an on-going process and review and
control to be taken as the process for the future course of action. For
effective implementation and consequently achievement of organizational
objectives, it is necessary that there is continuous monitoring of the
implementation of the strategy so that suitable action is taken whenever
something goes wrong.
Review and control of strategy and its implementation may result into
various actions that the organization has to take to be successful
depending on the situation. Such action may be required in the area of
correcting implementation of strategy, choice of strategy
or change in organizational mission and objectives and consequently
leading to change in that identification of strategy. Therefore,
strategic management process be taken as dynamic so that new action is
taken whenever there is any change in any of the factors
affecting strategy.
Factors to Consider in Strategy Formulation
- The most important outcome from successful strategy implementation
is real value added through goal achievement and increased
stakeholders satisfaction. - Successful strategy implementation depends on various factors.
- For effective strategy implementation, there must be congruence
between several
elements: organization structure, culture (shared values), resource
(budget) allocation, staff competencies and capabilities, support
systems, reward systems, policies and procedures, and leadership style. - Organizational structure is the formal framework by which job tasks
are divided, grouped, and coordinated. - It helps people pull together in their activities that promote
effective strategy implementation. - The structure of an organization should be compatible with the
chosen strategy and if there is incongruence, adjustments will be
necessary either for the structure or the strategy itself. - For a successful strategy implementation, a supporting organization
structure is critical. - Positioning of the functions in the organization structure sets more
focus on key functions whose performance is critical to the success
of a firm‘s strategy and institutionalizes the decision making of
the heads of these functions. - When the business strategy changes, organization structure is
received in light of the changes in strategy to maintain the
relevance of the structure.
Organizational culture is a system of shared meaning and beliefs held by
organizational members that determines, to a large degree on how they
act. It provides the social context in which an organization performs
its work. It guides the organization‘s members in: Decision making,
Determining how time and energy are invested, and Deciding which options
are looked on favourably from the start and which types of people are
selected to work for the organization. It is the strategy implementer‘s
task to bring the corporate culture into alignment with the strategy and
keep it there once a strategy is chosen. Culture can either be a
strength or a weakness. As strength, culture can facilitate
communication, decision-making, and control, and can create co-operation
and commitment. As a weakness, culture may obstruct the smooth
implementation of strategy by creating resistance to change.
Organizations have at least four types of resources that can be used to
achieve desired objectives, namely:
- Financial resources,
- Physical resources,
- Human resources, and
- Technological resources.
It is possible to implement a strategy with the resources available but
impossible to implement a strategy which requires more resources than
can be made available. Innovative state-of-the-art support systems can
be a basis for competitive advantage if they give firm capabilities that
rivals can‘t match. Strategy implementation is also affected by how well
policies and operating procedures that aid the task are prescribed. New
or revised policies and procedures provide top-down guidance to
operating managers, supervisory personnel and employees regarding how
certain things need to be done and what behaviour is expected.
Responsibility for strategy implementation should be clearly defined.
The ―How‖ of allocating responsibility is also important. Roles played
are determined by the nature of institutional structures that are in place:
- The Board
- Top Management Team
- Middle Management
- Operational Staff
VALUES
We all know that as part of best practices, virtually all institutions
whether public, private, educational, faith-based or civil society
oriented have clearly outlined sets of values in their strategic plans
and service charters. Most of these values are usually displayed
prominently in the entrance foyers, boardrooms, waiting rooms and
literally in all the offices.
But a number of questions beg some answers:-
- Firstly, do the leaders and the persons in these institutions
appreciate these values? - Secondly, if the answer is yes, then why are the values not put in
practice? - Thirdly, what steps ought to be taken to ensure that these stated
values are institutionalized and fully practiced? - Fourthly, what measures and what reforms are required to ensure the
internalization of these values? - Finally, how can we regularly assess whether these values are being
practiced by all and whether the intended results are being achieved?
Values are important in that they exert influence on the way people
relate with each other, as well as the way people serve and engage with
other communities. Indeed, the values of a people determine how the
people are viewed and assessed by others. And finally, values define a
people‘s identity, including who they are, what they believe in, what
they stand for and how others perceive and view them.
Values are derived from a variety of sources; however, the vast majority
is derived from various culture, religions, and contact with other
societies, rules, regulations and laws. In Kenya, the case is that the
values are neither codified in a policy document or in a manner that the
citizens can clearly say what constitutes the national values.
Kenya is a multi-ethnic and multi-racial country. As a nation we may
talk of a national culture, one that unites us as one nation. In
reality, however, the multi-ethnic nature of the country means that we
have literally as many cultures as we have ethnic groups. On
the other hand, we can say that on account of western education,
urbanization and developments in communication, there is much less
distinction nowadays in the different ethnic cultures than there was at
the time of colonization.
We all know that life is a complex phenomenon and that any way of life
is made up of innumerable facets. To most anthropologists, culture
encompasses the learned behaviours, beliefs, attitudes, values and
ideals that are characteristic of a particular society or population1
Thus, all human beings are born in a complex culture which strongly
influences how they live and behave throughout their lives. From the
above definition of culture, we see that values constitute one aspect of
culture. In everyday usage, the word ―value‖ refers to the intrinsic
worth, the fair equivalent or goodness of something. In philosophy, on
the other hand, ―value‖ deals with the notion of the good in the widest
sense, embracing not only the morally good but also the beautiful and
the true.
In traditional Kenyan cultures, people valued the institution of
marriage, human life, morality, respect for people’s property, and good
leadership. This list is not exhaustive. There were many things that
different cultures valued but which may not have been
looked at in the same way by other cultures. Our interest here is with
those things that had ―universal‖ value across the different cultures.
Let us now examine each of these universal values.
Marriage
The institution of marriage was highly valued by all the traditional
cultures in Kenya. To a large extent, especially in the rural areas, it
is highly valued even today. The reason for this is that marriage is the
foundation on which families are built. On its part, the family
constitutes the basic social group that operates most widely and most
intensely in the activities of everyday life. All kinship relationships
ultimately derive their legitimacy from the family. The rights and
duties of the individual-economic, religious and political life either
exclusively or predominantly work through channels of kinship.
The individual who wishes to obtain a maximum degree of protection by
the community in which he lives and to attain influence and prestige in
it must aim at securing for himself a prominent place in the elaborate
network of kinship relations. This he can do
only through marriage and protection, for matrimony and parenthood are
necessary steps in the process of acquiring social status.
Marriage, therefore, had the specific purpose of perpetuating one’s
lineage and–in the process– bestowing social status on man. Thus, in
general pre-marital sex was discouraged since it did not serve the
purpose of matrimony and parenthood. Stiff fines were meted out to
people who committed adultery, as we shall see later on.
Human Life
Human life is highly valued in the modern world. This was no different
among the traditional Kenyan communities. However, it was permissible to
kill an enemy, just as is the case today. In all other cases, no one was
allowed to take away another person’s life.
In fact, no distinction was made between murder and manslaughter; both
were considered murder. Murder was punished according to the principle
of compensation.
Morality
Morality is a quality that was highly valued by all traditional cultures
in Kenya. Indeed, moral values formed the bedrock of the education that
was given to children as they grew up. Moral values were also impressed
on people who were about to wed or who were
going through one rite of passage to another. Leaders were also expected
to be people of upright character.
Respect for Other People’s Property
Children were traditionally socialized to respect other people’s
property. Through rewards and punishments, the children grew up
distinguishing between legitimately acquired goods and stolen ones. Each
family endeavoured to ensure that their children respected
their neighbours‘ properties. The idea was to inculcate in the minds of
the young the virtue of honesty.
Good Leadership
In any culture leadership is considered a very important institution.
This is because leadership tends to influence, if not to dictate, all
the activities and affairs of that culture. Thus, traditional cultures
in Kenya attached great importance to the qualities of good
leadership. This is in spite of the fact that almost all these cultures
did not have centralized systems of government. At whatever level of
leadership, whether as individuals or members of councils of elders, the
leaders had to possess certain qualities that were acceptable to the
people as characteristics of good leadership. These qualities included
seniority in age, wealth, reputation as a warrior and other
characteristics of leadership.
Some of the values an institution can embrace are:-
- Punctuality – Speed and respect for time; a country in hurry
- Spirit of Service – Customer service mentality; constant improvement
and anticipation - Quality of Delivery – High standards, spirit of excellence, efficiency
- Result Oriented – completion towards results; we finish what we start
- Self Respect – National pride
CORPORATE CULTURE
Change in any institution starts with leadership of an institution. We
shall therefore look at leadership and Hofstede‘s cultural dimensions.
Hofstede’s Cultural Dimensions
Power Distance Index (PDI) focuses on the degree of equality, or
inequality, between people in the country’s society. A High Power
Distance ranking indicates that inequalities of power and wealth have
been allowed to grow within the society. These societies are more likely
to follow a caste system that does not allow significant upward mobility
of its citizens. A Low Power Distance ranking indicates the society
de-emphasizes the differences between citizen’s power and wealth. In
these societies equality and opportunity for everyone is stressed.
Individualism (IDV) focuses on the degree the society reinforces
individual or collective achievement and interpersonal relationships. A
High Individualism ranking indicates that individuality and individual
rights are paramount within the society. Individuals in these societies
may tend to form a larger number of looser relationships. A Low
Individualism ranking typifies societies of a more collectivist nature
with close ties between individuals.
These cultures reinforce extended families and collectives where
everyone takes responsibility for fellow members of their group.
Masculinity (MAS) focuses on the degree the society reinforces, or does
not reinforce, the traditional masculine work role model of male
achievement, control, and power. A High Masculinity ranking indicates
the country experiences a high degree of gender
differentiation. In these cultures, males dominate a significant portion
of the society and power structure, with females being controlled by
male domination. A Low Masculinity ranking indicates the country has a
low level of differentiation and discrimination
between genders. In these cultures, females are treated equally to males
in all aspects of the society.
Uncertainty Avoidance Index (UAI) focuses on the level of tolerance for
uncertainty and ambiguity within the society – i.e. unstructured
situations. A High Uncertainty Avoidance ranking indicates the country
has a low tolerance for uncertainty and
ambiguity. This creates a rule-oriented society that institutes laws,
rules, regulations, and controls in order to reduce the amount of
uncertainty. A Low Uncertainty Avoidance ranking indicates the country
has less concern about ambiguity and uncertainty and has
more tolerance for a variety of opinions. This is reflected in a society
that is less ruleoriented, more readily accepts change, and takes more
and greater risks.
Long-Term Orientation (LTO) focuses on the degree the society embraces,
or does not embrace, long-term devotion to traditional, forward thinking
values. High Long-Term Orientation ranking indicates the country
prescribes to the values of long-term
commitments and respect for tradition. This is thought to support a
strong work ethic where long-term rewards are expected as a result of
today’s hard work. However, business may take longer to develop in this
society, particularly for an “outsider”. A Low Long-Term Orientation
ranking indicates the country does not reinforce the concept of
long-term, traditional orientation. In this culture, change can occur
more rapidly as longterm traditions and commitments do not become
impediments to change.
The Nature of Leadership
What is Leadership?
The process by which a person exerts influence over others and inspires,
motivates and directs their activities to achieve group or
organizational goals.
Effective leadership increases the firm‘s ability to meet new challenges.
Leader
An individual who is able to exert influence over other people to help
achieve group or organizational goals.
Personal Leadership Style
The specific ways in which a manager chooses to influence others shapes
the way that manager approaches the other tasks of management. Leaders
may delegate and support subordinates, while others are very
authoritarian. The challenge is for managers at all
levels to develop an effective personal management style.
Leadership Across Cultures
Leadership styles may vary among different countries or cultures.
European managers tend to be more people-oriented than American or
Japanese managers. Japanese managers are group-oriented, while U.S
managers focus more on profitability. Time horizons also are affected by
cultures.
• U.S. firms often focus on short-run efforts and results.
• Japanese firms have a longer-run perspective.
• European firms fall somewhere between the U.S. and Japanese orientations.
Contingency Models of Leadership
Fiedler’s Model
Effective leadership is contingent on both the characteristics of the
leader and of the situation. Leader style is the enduring,
characteristic approach to leadership that a manager uses and does not
readily change.
• Relationship-oriented style: leaders concerned with developing good
relations with their subordinates and to be liked by them.
• Task-oriented style: leaders whose primary concern is to ensure that
subordinates perform at a high level so the job gets done.
Situation Characteristics
- How favorable a situation is for leading to occur.
- Leader-member relations—determines how much workers like and trust
their leader. - Task structure—the extent to which workers tasks are clear-cut;
clear issues make a situation favorable for leadership. - Position Power—the amount of legitimate, reward, and coercive power
leaders have due to their position. When positional power is strong,
leadership opportunity becomes more favorable.
House’s Path-Goal Theory
• A contingency model of leadership proposing the effective leaders can
motivate subordinates by:
- Clearly identifying the outcomes workers are trying to obtain from
their jobs. - Rewarding workers for high-performance and goal attainment with the
outcomes they desire - Clarifying the paths to the attainment of the goals, remove obstacles
to performance, and express confidence in worker‘s ability.
Motivating with Path-Goal
• Path-Goal identifies four leadership behaviors:
- Directive behaviors: set goals, assign tasks, show how to do things.
- Supportive behavior: look out for the worker‘s best interest.
- Participative behavior: give subordinates a say in matters that
affect them. - Achievement-oriented behavior: Setting very challenging goals,
believing in worker‘s abilities.
• Which behavior to be used depends on the nature of the subordinates
and the tasks.
The Leader Substitutes Model
• Leadership Substitute - Acts in the place of a leader and makes leadership unnecessary.
Possible substitutes can be found in:
• Characteristics of the subordinates: their skills, experience,
motivation. • Characteristics of context: the extent to which work is
interesting and fun. - Worker empowerment or self-managed work teams reduce leadership
needs. - Managers should be aware that they do not always need to directly
exert influence over workers.
Define Transformational Leadership
• Leadership that:
- Makes subordinates aware of the importance of their jobs and
performance to the organization by providing feedback to the worker. - Makes subordinates aware of their own needs for personal growth and
development. - Motivates workers to work for the good of the organization, not just
themselves.
Being a Charismatic Leader
Charismatic Leader is an enthusiastic, self-confident transformational
leader able to clearly communicate his or her vision of how good things
could be by:
• Being excited and clearly communicating excitement to subordinates.
• Openly sharing information with employees so that everyone is aware of
problems and the need for change.
• Empowering workers to help with solutions.
• Engaging in the development of employees by working hard to help them
build skills.
Transactional Leadership
Transactional Leaders
- Use their reward and coercive powers to encourage high performance—
they exchange rewards for performance and punish failure. - Push subordinates to change but do not seem to change themselves.
- Do not have the ―vision‖ of the transformational leader.
From a global perspective, in Singapore leaders built capacity in the
people through:-
- Human Resource Investments
- Strategic Educational Subsidies & Grants
- Generous Merit Scholarships
- Strategic Housing Subsidies
- Skills Development Fund (SKF)
- Strategic Health Subsidies: A,B,C wards
- Infra-Structure Investments: supply chain
- Low Personal Income Taxes & No Death Tax
- Re-distribution of Wealth: No Capital Gain Tax
- Scouting for next generation Leaders
- Sympathetic Social Welfare Department
How to inculcate values and an ethical culture of integrity
- National leaders‘ commitment to national core values
- societal change-agents & leaders mobilized
- government leaders
- business leaders
- educational leaders (teachers)
- media leaders
- sports & performing arts leaders
- religious leaders
- family (parents)
Definition: Corporate culture is an idea in the field of organizational
studies and management which describes the psychology, attitudes,
experiences, beliefs and values (personal and cultural values) of an
organization. It has been defined as “the specific collection of values
and norms that are shared by people and groups in an organization and
that control the way they interact with each other and with stakeholders
outside the organization.”
Definition: Corporate values, also known as “beliefs and ideas about
what kinds of goals members of an organization should pursue and ideas
about the appropriate kinds or standards of behavior organizational
members should use to achieve these goals. From
organizational values develop organizational norms, guidelines, or
expectations that prescribe appropriate kinds of behavior by employees
in particular situations and control the behavior of organizational
members towards one another. The three structural levels of any culture
from Alan Price (2007) Human Resource Management in a Business Context
(3rd Edition)
Value
The value acts as the roots of all culture which provides the
organisation with both stability and solidity. It also helps in
sustaining the organisation the values are put as the roots of tree.
Institutions
The institution includes formal or informal where the values and the
beliefs take shape in a diverse area of experience, structuring the
behavior and the ways of acting of the members of the society in
question. This is achieved by offering a frame work in which the values
take shape in different area of experience. The institutions are the
trunk of a tree.
Practices
This is formal by particular practices which provide physical and
evident dimensions from the outside of the culture in question. The
practices act as the branches of a tree which can experience very
important changes which help the culture to be maintained.
For us to be able to maintain culture we need to have strong roots
(myths, beliefs and values) which need to be developed in whole
(structure and strong practices). For any organisation to survive
globally, it needs to be visible by looking at the different elements
that shapes all the culture, practices together with institution.
Types of organizational culture
Organizational culture can vary in a number of ways. It is these
variances that differentiate one organisation from the others. Some of
the bases of the differentiation are presented below :
Strong vs weak culture:
Organizational culture can be labeled as strong or weak based on
sharedness of the core values among organizational members and the
degree of commitment the members have to these core values. The higher
the sharedness and commitment, the stronger the
culture increases the possibility of behaviour consistency amongst its
members, while a weak culture opens avenues for each one of the members
showing concerns unique to themselves. Strong culture is said to exist
where staff respond to stimulus because of their
alignment to organizational values. In such environments, strong
cultures help firms operate like well-oiled machines, cruising along
with outstanding execution and perhaps minor tweaking of existing
procedures here and there.
Soft vs hard culture:
Soft work culture can emerge in an organisation where the organisation
pursues multiple and conflicting goals. In a soft culture the employees
choose to pursue a few objectives which serve personal or sectional
interests. A typical example of soft culture can be found in a number of
public sector organizations in India where the management feels
constrained to take action against employees to maintain high
productivity. The culture is welfare oriented; people are held
accountable for their mistakes but are not rewarded for good performance.
Consequently, the employees consider work to be less important than
personal and social obligations. Sinha (1990) has presented a case study
of a public sector fertilizer company which was established in an
industrially backward rural area to promote
employment generation and industrial activity. Under pressure from local
communities and the government, the company succumbed to overstaffing,
converting mechanized operations into manual operations, payment of
overtime, and poor discipline. This resulted in huge financial losses
(up to 60 percent of the capital) to the company.
Formal vs informal culture :
The work culture of an organisation, to a large extent, is influenced by
the formal components of organizational culture. Roles,
responsibilities, accountability, rules and regulations are components
of formal culture. They set the expectations that the organisation has
from every member and indicates the consequences if these expectations
are not fulfilled
Elements of Organizational Culture
These elements may overlap. Power structures may depend on control
systems, which may exploit the very rituals that generate stories which
may not be true.
The cultural web contains 6 inter-related elements:
Rituals and routines – are concerned with the day-to-day behavior of
people in the organisation e.g. the way customers are dealt with or the
existence of privileges for certain staff. They are things that are
taken for granted by existing staff but have to be
learned by new people. They often present significant barriers to
change, if people are protective of their ‘customs’. Rituals such as
training programmes or personnel procedures can reinforce the perception
of how things are done, and demonstrate to staff
what behavior is desirable and valued by senior management.
Stories – within the company focus upon past events in the
organisation and are told to people both outside and inside the
organisation. They communicate something of the organization‘s culture.
Company ‘heroes’, such as charismatic leaders of the past, and mavericks
can be perceptions of ‘normal’ behavior.
Symbols. – Logos, language, status symbols e.g. company cars; office
carpets etc can all provide a visible reflection of company culture.
Power structures. – Directors and senior managers, or groups of
directors and senior managers with the most power, are likely to have
the most influence.
Organizational structure. – Both the formal structure (as found on the
organisation chart) and the informal structure are likely to reflect
power structures and play an important part in influencing the core
values of an organisation.
Control systems – the measurement and reward systems used in the
organisation There are a number of behaviorally focused tools, such as
Corporate culture Inventory, which look at the culture through the
behaviors‘ of the managers and leaders. These can
provide a platform for identifying what development is required to move
towards a positive, performance culture. However, it does not
necessarily focus on business oriented outcomes, but more on the
personal criteria.
Importance of Organizational Subculture
Sub cultures are minicultures within an organisation. These minicultures
operate within the larger, dominant culture. Subcultures are usually an
outcome of occupational, professional, functional differences or
geographical distance.
Types of organizational Sub culture.
- Academy
Organizations with this kind of a culture hire new college graduates
and train them in a wide variety of jobs. Such an organisation
culture provides the employees with opportunities to master
different jobs. - Club
Organizations that are highly concerned with getting people to fit
in and be loyal are referred to as a club the organisation promotes
form within and highly value seniority. - Baseball teams
In such cultures employees tend to be entrepreneurs who are willing
to take risks and are handsomely rewarded for their success. This
type of culture exists in fast paced high risk organizations such as
an investment banking, advertising. - Fortress
The fortress type of culture exists in organisations that are facing
a hard time in fighting for the survival. Employees who enjoy the
challenges of fighting with their backs against the wall and do not
mind the lack of job security enjoy working in this kind of culture.
Categories of artifacts through which corporate culture is communicated.
Artifacts are the observable symbols and signs of an organization‘s
culture, such as the way visitors are greeted, the physical layout, and
how employees are rewarded. ―You show your corporate culture in
everything—the way the building looks, the way people act, the names of
the conference rooms,‖ said Joe Kraus, a cofounder of Excite, an
Internet gateway
We look at four broad categories of artifacts: organizational stories
and legends, rituals and ceremonies, language, and physical structures
and symbols.
Organizational stories and legends
Many years ago, so the story goes, a security guard stopped IBM CEO
Thomas Watson, Jr., as he was about to enter an area without his
identification badge. Watson explained who he was, but the guard
insisted that a badge must be worn in secured areas of the
building. Rather than discipline the guard, Watson praised him and used
this experience to tell others about performing their job well. Stories
and legends like this about past corporate incidents serve as powerful
social prescriptions of the way things should (or
should not) be done. They provide human realism to individual
performance standards and use role models to demonstrate that
organizational objectives are attainable. This IBM‘s story advises
employees to obey rules
Rituals and ceremonies
Rituals are the programmed routines of daily organizational life that
dramatize the organization‘s culture. Rituals include how visitors are
greeted, how often senior executives visit subordinates, how people
communicate with each other, how much time employees take for lunch, and
so on. Ceremonies are more formal artifacts than rituals. Ceremonies are
planned activities conducted specifically for the benefit of an
audience. This would include publicly rewarding (or punishing)
employees, or celebrating the launch of a new product or newly won contract.
Language
The language of the workplace speaks volumes about the company‘s
culture. Language also highlights values held by organizational
subcultures. Corporate culture might also be represented in the phrases,
metaphors, and other special vocabularies used by
organizational leaders.
Physical structures and symbols
Physical structures and spaces, such as British Airways‘ the Red Cross,
often symbolize the company‘s underlying values and beliefs.28 The size,
shape, location, and age of buildings might suggest the organization‘s
emphasis on teamwork, risk aversion, flexibility, or any other set of
values.
Culture supplements rational management:
Creation of an appropriate work culture is a time – consuming process.
Therefore, organisation culture cannot suddenly change the behaviour of
people in an organisation. A number of management tools are used to
channelize the behaviour of people in a
desired way. No change can be effectively brought about without
involving people. Culture communicates to people through symbols,
values, physical settings, and language, and hereby supplementing the
rational management tools such as technology and structure.
Culture facilities induction and socialization:
Induction is a process through which new entrants to an organisation are
socialized and indoctrinated in the expectation of the organisation; its
cultural norms, and undefined conduct. The newcomer imbibes the culture
of the organisation which may involve changing his/her attitudes and
beliefs to achieving an internalized commitment to the organisation.
Different organizations follow different practices for induction.
Gillette India has a system of online induction which enables an IT –
savvy newcomer to pick and
choose the areas where he/she needs more detailed information.
Bureaucratic organizations, however, spend considerable time explaining
rules and procedures during induction as following rules is one of the
major requirements of such organizations. Central government
organizations in India have a one – year probation training – cum –
induction involving cultural training. On the other hand, younger and
entrepreneurial organizations are less formal in their induction
process. Here, the established senior members share with the newcomers
stories of heroes, founders, and charismatic team leaders with vision.
Culture promotes code of conduct:
A strong in an organisation explicitly communicates accepted modes of
behaviour are accepted and others would never be visible. The presence
of a strong culture would be evident where members share a set of
beliefs, values, and assumptions which would influence their behaviour
in an invisible way. Where culture has been fully assimilated by people
they persistently indulge in a typical bahaviour in a spontaneous way.
Promotion of the culture of quality can help achieve good business
results. Rohmetra (2000) conducted a study of cultural diversity and
ethical behaviour. She collected data from 30 managers of Dogra culture
and 35 managers of Laddakhi
culture. Her results showed that Dogra managers had highest consistency
between what they believe and what they do at work, while the situation
was the reverse for Laddaakhi managers.
Subcultures contribute to organisational diversity:
Sub – cultures, and sub -systems of values and assumptions which may be
based on departmentalization, activity centers, or geographical
locations, provide meaning to the interests of localized, specific
groups of people within the macro organisation. Sub –
cultures can affect the organisation in many ways:
- they may perpetuate and strengthen the existing culture;
- They may promote something very different from those existing;
- They may promote a totally opposite sub – culture (beliefs and
values) or counter culture when in a difficult situation.
Care needs to be exercised when promoting a counter culture as it
may be detrimental to the larger organizational interest.
Gives members an organisational identity, in other words, attracts
develop and keep talented people. Serve as a magnet. A feeling of
belonging exists among employers.
Facilitates collective commitment. People own the company, are prepared
to give of themselves. Salaries are high, dividends are
high productivity is high.
Promote social system stability, strict standards – tight controls more
than just discipline – a mystique. Low turnover. Passionate
commitment to work hard – strong identification with the company.
Shapes behavior by helping members to make sense of their surroundings.
(Corporate culture– social glue).
Conditions under which cultural strength improves corporate performance
Does corporate culture affect corporate performance? Ken Iverson, CEO of
Nucor Steel is a stunning success story, thinks so. Many writers on this
subject generally, argue that culture serves three important functions.
First, social control Second, corporate culture is the ―social glue‖
that bonds people together and makes them feel part of the
organizational experience. Finally, corporate culture assists the
sense-making process. It helps employees understand organizational events.
A strong culture thus is better than a weak one. A strong Corporate
culture exists when most employees across all subunits hold the dominant
values. The values are also institutionalized through well-established
artifacts, thereby making it difficult for those
values to change. Strong cultures are long lasting. In many cases, they
can be traced back to the beliefs and values established by the
company‘s founder. This makes the company more successful than the one
with a weak culture.
Companies have weak cultures when the dominant values are short lived,
poorly communicated, and held mainly by a few people at the top of the
organization. However strong culture increases organizational
performance only when the cultural content is appropriate for the
organization‘s environment Companies that operate in a highly
competitive environment might be better served with a culture that
engenders efficiency. Companies in environments that require dedicated
employees will be more successful with an employee-oriented culture. A
second concern is that a company‘s culture might be so strong that
employees focus blindly on the mental model shaped by that culture.
