CULTURE AND MANAGEMENT

Business Definition: Corporate Culture

The combined beliefs, values, ethics, procedures, and atmosphere of an organization. The culture of an organization is often expressed as "the way we do things around here" and consists of largely unspoken values, norms, and behaviors that become the natural way of doing things. An organization's culture may be more apparent to an external observer than an internal practitioner. The first person to attempt a definition of corporate culture was Edgar Schein, who said that it consisted of rules, procedures, and processes that governed how things were done, as well as the philosophy that guides the attitude of senior management toward staff and customers. The difficulty in identifying the traits of culture and changing them is borne out by the fact that culture is not merely climate, power, and politics, but all those things and more. There can be several subcultures within an organization, for example, defined by hierarchyâ€"shop floor or executiveâ€"or by functionâ€"sales, design, or production. Changing or renewing corporate culture in order to achieve the organization's strategy is considered one of the major tasks of organization leadership, as it is recognized that such a change is hard to achieve without the will of the leader.

Strategy formulation:

Strategic formulation is a combination of three main processes which are as follows:

• Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.
• Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
• These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

Marketing action plan

• Placement and execution of required resources are financial, manpower, operational support, time, technology support
• Operating with a change in methods or with alteration in structure
• Distributing the specific tasks with responsibility or moulding specific jobs to individuals or teams.
• The process should be managed by a responsible team. This is to keep direct watch on result, comparison for betterment and best practices, cultivating the effectiveness of processes, calibrating and reducing the variations and setting the process as required.
• Introducing certain programs involves acquiring the requisition of resources: a necessity for developing the process, training documentation, process testing, and imalgation with (and/or conversion from) difficult processes.

Strategy evaluation

• Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy.

• Suitability (would it work?)
• Feasibility (can it be made to work?)
• Acceptability (will they work it?)

General approaches

In general terms, there are two main approaches, which are opposite but complement each other in some ways, to strategic management:

• The Industrial Organizational Approach
• based on economic theory — deals with issues like competitive rivalry, resource allocation, economies of scale
• assumptions — rationality, self discipline behaviour, profit maximization
• The Sociological Approach
• deals primarily with human interactions
• Assumptions — bounded rationality, satisfying behaviour, profit sub-optimality. An example of a company that currently operates this way is Google

The strategy hierarchy

In most (large) corporations there are several levels of management. Strategic management is the highest of these levels in the sense that it is the broadest - applying to all parts of the firm - while also incorporating the longest time horizon. It gives direction to corporate values, corporate culture, corporate goals, and corporate missions. Under this broad corporate strategy there are typically business-level competitive strategies and functional unit strategies.

Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?"

Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or industries. Alternatively, according to W. Chan Kim and Renée Mauborgne, an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost tradeoff by simultaneously pursuing both differentiation and low cost.

Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each department’s functional responsibility.

Reasons why strategic plans fail

There are many reasons why strategic plans fail, especially:

• Failure to execute by overcoming the four key organizational hurdles
• Cognitive hurdle
• Motivational hurdle
• Resource hurdle
• Political hurdle
• Failure to understand the customer
• Why do they buy
• Is there a real need for the product
• inadequate or incorrect marketing research
• Inability to predict environmental reaction
• What will competitors do
• Fighting brands
• Price wars
• Will government intervene
• Over-estimation of resource competence
• Can the staff, equipment, and processes handle the new strategy
• Failure to develop new employee and management skills
• Failure to coordinate
• Reporting and control relationships not adequate
• Organizational structure not flexible enough
• Failure to obtain senior management commitment
• Failure to get management involved right from the start
• Failure to obtain sufficient company resources to accomplish task
• Failure to obtain employee commitment
• New strategy not well explained to employees
• No incentives given to workers to embrace the new strategy
• Under-estimation of time requirements
• No critical path analysis done
• Failure to follow the plan
• No follow through after initial planning
• No tracking of progress against plan
• No consequences for above
• Failure to manage change
• Inadequate understanding of the internal resistance to change
• Lack of vision on the relationships between processes, technology and organization
• Poor communications
• Insufficient information sharing among stakeholders
• Exclusion of stakeholders and delegates

RECONCILIATION OF CULTURAL DIFFERENCES

Cultural awareness:

• Before venturing on a global assignment, it is probably necessary to identify the cultural differences that may exist between one's home country and the country of business operation. Where the differences exist, one must decide whether and to what extent the home-country practices may be adapted to the foreign environment. Most of the times the differences are not very apparent or tangible. Certain aspects of a culture may be learned consciously (e.g. methods of greeting people), some other differences are learned subconsciously (e.g. methods of problem solving). The building of cultural awareness may not be an easy task, but once accomplished, it definitely helps a job done efficiently in a foreign environment.
• Discussions and reading about other cultures definitely helps build cultural awareness, but opinions presented must be carefully measured. Sometimes they may represent unwarranted stereotypes, an assessment of only a subgroup of a particular group of people, or a situation that has since undergone drastic changes. It is always a good idea to get varied viewpoints about the same culture.

Clustering cultures:

• Some countries may share many attributes that help mold their cultures (the modifiers may be language, religion, geographical location, etc.). Based on this data obtained from past cross-cultural studies, countries may be grouped by similarities in values and attitudes. Fewer differences may be expected when moving within a cluster than when moving from one cluster to another.

Determining the extent of global involvement:

• All enterprises operating globally need not have the same degree of cultural awareness. Figure 2 illustrates extent to which a company needs to understand global cultures at different levels of involvement. The further a company moves out from the sole role of doing domestic business, the more it needs to understand cultural differences. Moving outward on more than one axis simultaneously makes the need for building cultural awareness even more essential.

Cultural Awareness and Extent of Global Involvement