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Chapter 4:
Environment, Organizational Culture &
Diversity
BOH4MI:Business Leadership
Discussion Question
Based on your prior knowledge, what is a competitive advantage
in business?What do you believe is the competitive advantage that
BlackBerry has over Apple? And visa versa?
Day 1 - Environment & Competitive Advantage
Knowledge and speed are indispensible to success in this new economy
An organization cannot afford to rest on their past laurels
All organizations must dramatically and continuously improve – cutting costs, adding value and creating new products
What is Competitive Advantage?
_______________________ is a core competency
that clearly sets an organization apart from
competitors and gives it an advantage over
them in the marketplace
Simply put, it comes from an ability to do things
better than one’s competitors
Competitive Advantage
What is Competitive Advantage?
Companies may achieve competitive advantage in many ways, including through it’s Number/Diversity of Products Pricing Customer Service Cost Efficiency Quality
But regardless of how competitive advantage is achieved, the key result is the same – an ability to consistently do something of high value that one’s competition cannot replicate quickly or do as well
What is Competitive Advantage?
The two main strategies for creating a competitive advantage are …
1. _________________: the objective is to become the lowest-cost producer in the industry. Many industries place an emphasis on minimizing costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will enjoy the best profits. This strategy is usually associated with large-scale businesses offering "standard" products with relatively little differentiation that are perfectly acceptable to the majority of customers Examples; Dell Computers and Westjet
Cost Leadership
What is Competitive Advantage?
2. _______________: this strategy involves selecting one or more criteria used by buyers in a market, and then positioning the company uniquely to meet those criteria. This strategy is usually associated with charging a _________________ for the product, often to reflect the higher production costs and/or extra value-added features. Differentiation is about charging a premium price and giving customers clear reasons to prefer their product over other, less differentiated products
Examples; Mercedes Benz & LaCoste
Differentiation
Premium Price
What is Competitive Advantage?
Many forms of competitive advantage cannot be sustained indefinitely because given enough time, competitors can duplicate the competitive advantage held by almost any company
A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms
The General Environment
The ____________________ consists of all conditions in the external environment that form a background context for managerial decision making
There are 5 types general environment issues:1. ______________ – health of the economy in terms
of inflation, income levels, GDP, unemployment and job outlook
2. ______________ – norms, customs, and social values on such matters as human rights, trends in education and demographic patterns in society
General Environment
Economic
Socio-Cultural
The General Environment
3. ________________ – the philosophy and objectives of the political party running the government, laws and government regulations
4. ________________ – development and availability of technology, including scientific advancements
5. _____________________ – condition of the environment, including levels of public concern expressed through environmentalism
Legal-Political
Technological
Natural Environment
The General Environment
If we take the natural environment as an example, Japanese automakers Honda and Toyota seem to be finding the potential for competitive advantage. The two organizations are on the leading edge of development for hybrid cars. While North American automakers were betting that customers would stay loyal to large gas hungry vehicles. The Japanese automakers now have a competitive advantage due to the experience and reputation gained from being the first to market.
The General Environment
In respect to the socio-cultural environment, population demographics are a key feature
Managers who understand demographic profiles and trends can anticipate shifts in the customer base and labour market
External conditions vary significantly from one country and culture to the next
Diversity Trends in Canadian Demographics
Visible minority groups are an increasing percentage of the workforce
More women are working People with disabilities are gaining more access
to the workplace More workers come from non-traditional
families The average age of workers is increasing The number of different faith backgrounds is
increasing
Stakeholders and the Specific Environment
The ____________________ consists of the actual organizations, groups and persons with whom a company interacts and conducts business
The specific environment is often described in terms of ______________; persons, groups or institutions who are affected in one way or another by the organizations performance
Specific Environment
Stakeholders
Stakeholders and the Specific Environment
The diagram on the next slide shows the typical business as an open system, with the interests of several stakeholder groups linked by stages in the input-transformation-output process
This type of view helps managers focus attention on ________________, the extent to which the organization is creating value for, and satisfying the needs of important stakeholders
Value Creation
Stakeholder Analysis of Value Creation
Environmental Uncertainty
_________________________ is a lack of complete
information regarding what exists and what
developments may occur in the external
environment
The two dimensions of environmental uncertainty
are …
1. ______________ - or the number of different factors in
the environment
2. ________________ - in these factors
Environmental Uncertainty
Complexity
Rate of Change
Environmental Uncertainty
The greater the uncertainty, the more … Concentrated attention required Studying and monitoring required, to spot
emerging trends Flexibility and adaptability required in
organizational design and workplace practices
** Because of uncertainty, organizations must be able to respond quickly as new circumstances
arise and info becomes available **
Dimensions of Uncertainty in Organizational Environments
Day 1 – Assigned Work
List 3 companies that you believe have a competitive advantage and describe what that competitive advantage is.
If you were the CEO of Dell Computers, what specific kinds of general environment issues might your company face in today’s world? Give at least one example for each of the 5 issues outlined.
Discussion Question
Do you agree or disagree with the statement, “the
customer is always right”? Why or why not?
Day 2 - Customer-Driven Organizations
Question: What do you do at your job?Answer: I run the cash register and stock
shelves. Question: But isn’t your job to serve the
customer?Answer: I guess, but it’s not in my job
description. This conversation illustrates what often becomes
the missing link in the quest for competitive advantage; __________________Customer Service
Who are the Customers?
____________________ purchase the organization’s
goods or utilize its services May be industrial customers, B2B, or retail customers, who
buy a company's product or service directly
____________________ are the persons and groups
within an organization who depend on the results of
others' work to do their own jobs well
The notion of customer service applies to both
external and internal customers
External Customers
Internal Customers
External and Internal Customers
What Customers Want
Primarily customers want at least 1 of 4 things in the goods/services they purchase; 1. High Quality2. Reasonable Price3. On-Time Delivery4. Excellent Service
Organizations that can’t meet customer expectations suffer the market consequence of losing their competitive advantage
What Customers Want
Two key customer service lessons; 1. Protect reputation for quality
products A reputation is hard to build but easy to lose
2. Treat your customers well Customers too are hard to get and easy to
lose
Customer Relationship Management
A Harvard Business survey found that North
American business leaders ranked customer
service and product quality as the first and
second most important goals in the success of
their organization
Conversely, poor service and product
dissatisfaction were the first and second reasons
customers gave for abandoning an organization
Customer Relationship Management
Progressive managers use the principals of
__________________________________ to establish
and maintain high standards of customer service
in order to strategically build lasting
relationships with and add value for customers The CRM approach uses the latest info technologies to
maintain intense communication as well as to gather
and utilize data regarding their needs and desires
Customer Relationship Management
Customer Relationship Management
__________________________ is the strategic management of
all operations relating to an organization’s resource
suppliers The goal of SCM is straightforward: achieve efficiency in all
aspects of the supply chain while ensuring on-time availability
of quality resources for customer driven operations
E.g. As retail sales are made at Wal-Mart an information system
updates inventory records and sales forecasts. Suppliers access
this info electronically, allowing them to adjust their operations
and rapidly ship replacement products to meet the retailer’s
needs
Supply Chain Management
Quality Driven Organizations
Customers want quality whether they are buying a consumer
product or receiving a service
Quality organizations understand and respond to customer
expectations of quality
__________________ indicates conformance with a rigorous set of
international quality standards
Issued by the International Organization for Standardization in
Switzerland
Adopted by many countries as a quality benchmark
Businesses that want to complete on the world stage are
increasingly expected to have ISO certification
ISO Certification
Total Quality Management
Total Quality Management (TQM) is
managing with an organization wide
commitment to …
1. Continuous Improvement
2. Product Quality
3. Customer Needs By doing things right the first time
Total Quality Management
Philip Crosby developed the following Four Absolutes of management for total quality control:
1. Quality means Conformance to Standards Workers must know exactly what performance
standards they are expected to meet
2. Quality comes from Defect Prevention, not Defect Correction
Leadership, training and discipline must prevent defects in the first place
Total Quality Management
Crosby’s Four Absolutes continued:3. Quality as a Performance Standard must
mean Defect-Free Work The only acceptable performance standard is
perfect work
4. Quality Saves Money Doing things right the first time saves the cost of
correcting poor work
Quality & Continuous Improvement
W. Edwards Deming developed the 14 Points of Quality which emphasized: Constant innovation Use of statistical methods Training in the fundamentals of quality assurance
The search for quality is closely tied to an emphasis on __________________________; always looking for new ways to improve on current work quality and performance
The notion is that one can never be satisfied; something always can and always should be improved
Continuous Improvement
Quality & Continuous Improvement
Another important aspect of total quality operations is ____________ - the elapsed time between receipt of an order and delivery of the finished product
One way to combine employee involvement and continuous improvement is through _____________ - a small group of workers who meet regularly to discuss ways of improving the quality of their product/service Such worker empowerment can result in cost savings
from improved quality and greater customer satisfaction
It can also improve employee morale and commitment
Cycle Time
Quality Circles
Quality Circle Video
Quality, Technology & Design
Technology is improving the quality of manufacturing by allowing operations to better meet customer preferences, and allowing production changes to be made quickly and at a low cost. For example;
_________________ - uses new technologies to streamline systems; allowing work to be performed with fewer worker and smaller inventories
______________________ - processes can be changed quickly to produce different products or to make modifications to existing ones
_______________________________________ - permits quick production of individualized products
Lean Production
Flexible Manufacturing
Agile Manufacturing/Mass Customization
Quality, Technology & Design
Another important contribution to quality management is ________________;
A good design has eye appeal and is easy to manufacture with regards to productivity
________________________ emphasizes lower production costs and high-quality results
______________________ shows respect for the natural environment and takes into account how components parts will be recycled at the end of their lives
Product Design
Design for Manufacturing
Design for Disassembly
Day 2 Assigned Work
Which of the 4 primary things that customers want most affects your decision when purchasing a product? Why?
Would your primary concern change if you were purchasing a service instead of a product? Why or why not?
In your opinion, how does the use of Quality Circles lead to improved quality and customer satisfaction?
Discussion Question
How would you describe the culture at your place of employment?
Note: culture is the system of shared beliefs, values, customs, behaviours, and artifacts that the members of a group use to cope with their world and with one another, and that are shared from
generation to generation through learning.
Day 3 - What is Organizational Culture?
________________________ is the system of shared
beliefs and values that develops within an
organization and guides the behavior of its
members
Whenever someone, for example, speaks of “the
way we do things here”, they are talking about
culture
Organizational Culture
What Strong Cultures Do
Culture is not the clear determinant of what happens in organizations, however it is an important influence on what they accomplish and how
Internal culture has the potential to shape attitudes, reinforce beliefs, direct behaviour and establish performance expectations
________________, ones that are clear, well defined and widely shared among members, discourage dysfunctional work behaviours and encourage positive ones
Strong Cultures
What Strong Cultures Do
The best organizations are likely to have cultures that are …
Performance oriented Emphasize teamwork Allow for risk taking Encourage innovation Make the well-being of people a top
management priority
SCORES – How to Read an Organization’s Culture
S - How tight or loose is the structure?C - Are decisions change oriented or driven by the
status quo?O - What outcomes or results are most highly
valued?R - What is the climate for risk-taking and
innovation?E - How widespread is empowerment and worker
involvement?S - What is the competitive style, internal and
external?
Levels of Organizational Culture
Culture is usually described from the perspective of 2 levels;
1. The _____________________ is visible; it is what one sees and hears when walking around an organization as a visitor, a customer or an employee The observable culture is apparent in the way people dress
at work, how they arrange their offices, how they speak to and behave toward one another, the nature of their conversations and how they talk about and treat their customers
E.g. eBay Canada – as an organizational ritual has all employees voting on the “Hat Trick Award” - given quarterly to a person who has achieved great performance
Observable Culture
Levels of Organizational Culture
Observable Culture is also found through the elements of daily organizational life including;
___________ – oral histories and tales, told and retold among members about events and incidents in the life of the organization
___________ – the people singled out for special attention and whose accomplishments are recognized with praise and admiration among members
_______________ – the ceremonies and meetings, planned and spontaneous, that celebrate important occasions and performance accomplishments
__________ – the special use of language and other non-verbal expressions to communicate important themes of organizational life
Stories
Heroes
Rites & Rituals
Symbols
Levels of Organizational Culture2. The second and deeper level of organizational culture is
the _______________, which consists of the core values• ______________ are underlying assumptions and beliefs that
shape and guide people’s behavior, and actually contribute to the aspects observable culture
Strong culture organizations operate with a small but enduring set of core values
Commitment to core values is a key to long-term success
Highly successful companies typically emphasize the values of performance excellence, innovation, social responsibility, integrity, worker involvement, customer service and teamwork
E.g. “Fanatical attention to consistency and detail” - Disney
Core Culture
Core Values
Levels of Organizational Culture - Observable Culture & Core Culture
Value Based Management
Core values held by organizations are widely publicized in corporate mission statements and on their websites
But testimonies to values are not enough to create a strong core culture, the values MUST BE PRACTICED They must be real, they must be shared, and
they must be modeled and reinforced by managers from top to bottom
Value Based Management
________________________ actively develops, communicates, and enacts shared values Has a major impact in respect to ethics and social
responsibility The responsibility of value based management
extends to all managers and team leaders Like the organization, any work team or group will
have its own culture How well this culture operates to support the
group and its performance objectives will depend in part on the strength of the core values and the manager’s role as a values champion
Value Based Management
Value Based Management
Value Based Management should meet the following criteria;
______________ – core values should support key performance objectives
______________ – core values should provide clear, consistent ethical anchors
________________ – core values should be understood by all members
______________ – core values should be accepted by everyone involved
Relevance
Integrity
Pervasiveness
Strength
Symbolic Leadership
A ____________________ is someone who use symbols to establish and maintain a desired organizational culture
Symbolic leaders both act and talk the “language” of the organization and behave in ways that support the organization’s values
Symbolic Leader
Symbolic Leadership Symbolic leaders use Language Metaphors; the use
of positive examples from another context E.g. workers at Disney World are counseled to always
think of themselves as more than employees; they are “members of the cast” and they work “on stage”
Symbolic leaders use rites and rituals to glorify performance E.g. Arbonne Cosmetics holds celebration events at
which top consultants (sale people) are promoted. They share their tales of success and are given lavish incentives (a white Mercedes Benz car)
Arbonne Car Presentation Video
Day 3 Assigned Work
Exercise 8: Which Organizational Culture Fits You? On page W61. Which of the listed organizational cultures would you feel most comfortable working in and why?
In your own words, explain the importance of having a strong culture in an organization.
In your opinion, why are symbolic leaders able to build high performance organizational cultures?
Discussion Question
In your opinion, how does having a diverse
workforce benefit an organization?
Day 4 – Multicultural Organizations & Diversity
Organizations are made up of many individuals, each of them unique
An important key to competitive advantage is respecting the diversity and allowing everyone’s talents to be fully utilized
_____________ basically means the presence of differences
The primary dimensions of diversity includes differences in age, race, ethnicity, gender, physical ability, sexual orientation, religious beliefs, etc
How diversity is handled in the workplace reflects the organization’s culture; are all people treated with ____________________ or ______________________
Diversity
Respect & Inclusion Disrespect & Exclusion
What is a Multicultural Organization?
A key issue in the culture of any organization is ____________ - the degree to which the organization is open to anyone who can perform the job, regardless of race, sexual preference gender or other diversity attribute
The term _________________ refers to inclusivity, pluralism and respect for diversity
A __________________________ is based on pluralism and operates with inclusivity and respect for diversity
Inclusivity
Multiculturalism
Multicultural Organization
What is a Multicultural Organization?
Characteristics of a multicultural organization include; _____________ – members of both minority and majority cultures
are influential in setting key values and policies ______________________ – minority culture members are well
represented in jobs at all levels and in all functional areas ________________________________ – mentoring and support
groups assist in the career development of minority culture members
____________________________________ – training and task force activities address the need to eliminate culture group biases
_____________________________ – diversity does not lead to destructive conflicts between members majority and minority cultures
Pluralism
Structural Integration
Informal Network Integration
Absence of Prejudice & Discrimination
Minimum Intergroup Conflict
Organizational Subcultures
___________________________ exist among people with similar values and beliefs based on shared work responsibilities and/or personal characteristics
Just as with life in general, _________________ - the belief that one’s membership group or subculture is superior to all other – can creep into the workplace
Ethnocentrism
Organizational Subcultures
Organizational Subcultures
Common subcultures that exist include: _________________ – salaried professionals, such as lawyers
and accountants, have been described as having a special need for autonomy and empowerment, which may conflict with traditional management practices such as top-down direction and control
________________ – people from different functional areas often have difficulty understanding and working with one another. When identities (“marketing people”, “manufacturing people”, etc) within the organization are over emphasized, employees may view their role in the organization as more important then other functions
________________ – although most recognize that people from different countries of the world have different cultures, it is far harder to turn this awareness into the ability to work well with persons whose background differs from our own
Occupational
Functional
Ethnic or Racial
Organizational Subcultures
________________ – generation gaps often exist between Baby Boomers (50’s), Gen Xers (30’s and early 40’s), Nexters (20’s) and the Millennial Generation (in high school). Members of these generations grew up in very different worlds and were influenced by different values and opportunities
____________ – research shows that when men work together, a group culture forms around a competitive atmosphere; sports metaphors are common and games/stories often deal with winning and losing. When women work together, there is more emphasis on personal relationships and collaboration
Generational
Gender
Challenges Faced by Minorities and Women
Even though organizations are changing, most senior executives in
large organizations are older, white and male
Even today, there is still likely to be more workforce diversity at
lower and middle levels of most organizations than at the top
Daily work challenges facing minorities and women can include the
following;
Glass Ceiling
Misunderstanding and Lack of Sensitivity
Sexual Harassment
Pay Discrimination
Job Discrimination (See Microsoft example on pg 107)
Challenges Faced by Minorities and Women
Sometimes the adaptation of minorities to organizations
dominated by a majority culture takes the form of
Biculturalism; when minority members adopt characteristics
of majority cultures in order to succeed in the work
environment E.g. gays and lesbians may hide their sexual orientation from
co-workers out of fear of prejudice or discrimination
Over a recent period of economic expansion, most North
Americans benefited from a growth in jobs and employment
opportunities, but at the same time the employment rate for
the disabled fell 10% over men and 5% over women
The Glass Ceiling Effect
Managing Diversity
Minority workers want the same thing that everyone else wants; respect for their talents and a work setting that allows them to achieve their full potential
____________________ involves building an inclusive organizational culture that allows all members, minorities and women, to reach their full potential
Managing Diversity
Managing Diversity
Common Leadership Approaches to Diversity:
___________________ - commits the organization to hiring
and advancing minorities and women
___________________ - commits the organization to
education and training programs designed to help people
better understand and respect individual differences
___________________ - leadership commits to changing the
organizational culture to empower and include all people
Advancing Action
Valuing Diversity
Managing Diversity
Managing Diversity
An organization that is rich in diversity is likely to have a competitive advantage
A diverse workforce offers a rich pool of talents, ideas and viewpoints for solving complex problems in often uncertain environments
A diverse workforce is best aligned with the needs and expectations of a diverse customer and stakeholder
Leadership Approaches to Diversity
Day 4 Assigned Work
Take Self Assessment #7: Diversity Awareness on page W86 (be prepared to discuss your answers)
Read the UPS Case on pages W13 – W15 and answer the 3 Review Questions
MC Questions #1-15 on page 112