Welcome to Class 14 Research: Qualitative Domain Parts 1 & 2 Chapter 7

Qualitative Performance

Qualitative Performance (QP) Qualitative Performance (QP) information is associated with: 1. Tactical and Strategic planning processes 2. Decision-making 3. Behaviors 4. Interaction with each of its stakeholders QP data is a window into a firm's personality and character. crucial The consequences of QP are crucial to a firm's long-term viability.

Resources Quantitative & Qualitative

Resources Corporations have two major classes of crucial valuables: (1) Quantitative resources (2) Qualitative resources The techniques and competence with which TMTs corral, coalesce, and utilize these can determine whether a corporation achieves its goals and objectives. The focus of this lecture is on qualitative resources however quantitative resources are highlighted for comparison purposes.

1. Quantitative Resources $$$ Quantitative resources are the tangible and intangible assets of a corporation. numerical These resources can be measured and managed in numerical terms. Tangible assets = Tangible assets = facilities, equipment, inventories, receivables, investments, financial resources, etc. Intangible assets = Intangible assets = patents, copyrights, goodwill, etc. and (Intangibles lack physical substance and are classified as –noncurrent – – noncurrent – items on the firm's balance sheet)

2. Qualitative Resources resources Qualitative resources are sometimes referred to as intangible resources. These resources offer great value but their precise worth cannot be measured in $$$. Qualitative resources include such things as: KSA The Knowledge, Skills, and Abilities of all of its employees The Reputation of the firm The Positive Relationships the firm has established Its record of positive and productive – Decision-making, Decision-making, Actions, and Actions, and Behaviors Behaviors Its Infrastructure – Communication Networks, Operational systems and procedures, etc. Scenario and strategic planning expertise Action = what you do Behavior = how you do it

QP Performance

Qualitative Performance (QP) Sustainable success by any corporation is correlated to its QP There are two primary areas of QP: Both OC and SP are propelled by unique performance drivers and among these drivers none is more significant than (1) Organizational Citizenship (OC) (2) Strategic Positioning (SP) "culture."

Organizational Citizenship (OC) = Organizational Citizenship (OC) = a category of specific corporate behaviors and relationships. OC reveals the firms PERSONALITY and CHARACTER. Has a significant influence on OC is the firm’s Corporate Culture

To assess Organizational Citizenship… Investigate a series of behaviors, actions, and decisions that reflect a firm’s: OC Create a database for Organizational Citizenship by: 1.Identifying strategic and tactical decisions by TMTs 2.Examining the associated actions and behaviors 1.Core personality – (how key personnel act and react to situations, conditions, and people) 2.Core character – (how they are likely to act and react to changing situations and conditions)

Create a list of questions to guide your investigation Does the company seem to be sensitive to local communities? Is it responsive to local concerns? Does it have well-known difficulties with governmental agencies, customers, competitors, or its own board of directors? Does the firm encourage its employees to be culturally sensitive? Does the firm appear to respect its employees? Does the firm have a war-type relationship with its competitors? (Competitors do not have to be enemies.) See your textbook for an extensive list of questions

Organizational Citizenship Employees Customers Competitors Directors Government Environment Community/ Culture Stockholders Communication Public Persona Vendors (Suppliers)

Strategic Positioning Strategic Positioning (SP) = the ability to prepare for the future. This reveals the firm's commitment to: (1) Being innovative, creative, and visionary (2) Predicting and adapting to environmental changes (3) Recruiting, developing, and retaining talented employees (4) Executing strategic and tactical plans effectively

Competitive viability is dependent upon TMTs who can craft strategically sound plans. There are two types of TMTs: (1) strategically incompetent (2) strategically competent It is important to identify which type is leading your target company Strategic Incompetence = (1) Strategic Incompetence = Consistently fail to plan effectively and then blame “situations” for failures. They are the (talkers and pointers) Strategic Competence = (2) Strategic Competence = Consistently plan effectively and experience success (the doers)

Strategic Competence Competent TMTs: Recognize their strategic and tactical errors. Do not repeat mistakes. Think out of the box. Think big. Think – INTERNATIONAL TRADE International trade = The exchange of products and services between countries. Large companies NEED to think International Trade to sustain growth. (See your textbook for an extensive list of questions)

Performance Grading Scale 1 to 5 Directions for Grading PLEASE see your PSC for complete details. Hold cursor on RED triangle in grading cells

Grading Scale 1 to 5 1 = Really Bad 2 = Bad 3 = Do not know 4 = Good 5 = Excellent

2. Looking Outward – National Culture

National culture is: 1.The mental programming of a group of people 2.Comprised of the values, customs, and belief systems shared by a group of people National cultures National cultures occasionally clash with Corporate cultures Clashes usually occur when employees of one nation work in another nation.

National Culture Cultural CLASHES can cause irreparable damage to a firm’s reputation. Potential Clash!  Corporate Culture: & National cultures alien to the corporation can present formidable challenges. They require flexibility and creative management thinking. Challenges include understanding the value systems of: 1. Newcustomers; and 2. New employees from the local culture.

Understanding a nation’s culture can mean the difference between success and failure to a firm engaging in International Trade. Dr. Geert Hofstede. A technique for corralling the characteristics and subtleties of national cultures was developed by Dr. Geert Hofstede. He organized national cultures into “dimensions” or categories of predispositions.

Hofstede’s Cultural Dimensions Five dimensions: Power DistancePower Distance IndividualismIndividualism Uncertainty AvoidanceUncertainty Avoidance MasculinityMasculinity Short and long-term orientationShort and long-term orientation The following slides are directly from Hofstede’s data

Power Distance Index (PDI)… Degree of equality or inequality between people High Power Distance Low Power Distance Power Distance Index (PDI)… Degree of equality or inequality between people No significant mobility, poor stay poor 1. High Power Distance Imbalances of power and wealth that have been allowed to grow within the society. (Rich are powerful)  These are more likely to follow a caste system that does not allow significant upward mobility of its citizens. 2. Low Power Distance Society de-emphasizes the differences between citizen’s power and wealth.  In these societies equality and opportunity for everyone is stressed.

Uncertainty Avoidance Index (UA)… High Uncertainty Avoidance Low Uncertainty Avoidance Uncertainty Avoidance Index (UAI)… Level of tolerance for uncertainty and ambiguity within the society – i.e. unstructured situations. Uncomfortable vs. comfortable with taking risks. 1. High Uncertainty Avoidance The country has a low tolerance for uncertainty and ambiguity  A rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. 2. Low Uncertainty Avoidance The country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions.  A society that is less rule-oriented, more readily accepts change, and takes more and greater risks.

Individualism (IDV)… High Individualism Low Individualism Individualism (IDV)… Degree society reinforces individual or collective achievement and interpersonal relationships. Individual effort vs. Group effort 1. High Individualism Indicates that individuality in these societies may tend to form a larger number of looser relationships. 2. Low Individualism Typifies societies of a more collectivist nature with close ties between individuals.  Reinforced extended families and collectives where everyone takes responsibility for group members

Masculinity (MAS)… High Masculinity Low Masculinity Masculinity (MAS)… The degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power. Male power vs. Gender power balance 1. High Masculinity Indicates the country experiences a high degree of gender differentiation.  Males dominate a significant portion of the society and power structure, with females being controlled by male domination. 2. Low Masculinity Indicates the country has a low level of differentiation and discrimination between genders.  Females are treated equally to males in all aspects of the society.

Long-term Orientation (LTO)… High Long-Term Orientation Low Long-Term Orientation Long-term Orientation (LTO)… The degree to which a society respects cultural traditions and the value it places on long-term commitments. Long-term rewards vs. Short-term gratification 1. High Long-Term Orientation Indicates the country prescribes to the values of long-term commitments and respect for tradition.  Supportive of a strong work ethic where long-term rewards are expected as a result of hard work. Business may take longer to develop in this society, particularly for an “outsider.” 2. Low Long-Term Orientation Indicates the country does not reinforce the concept of long-term traditional orientation.  Change can occur more rapidly as long-term traditions and commitments do not become impediments to change.

Summary… Culture, both corporate and national, play a significant role in a firm’s qualitative performance. Culture, both corporate and national, play a significant role in a firm’s qualitative performance. Qualitative Performance (QP) should be the everyday concern of every manager. Qualitative Performance (QP) should be the everyday concern of every manager. The global nature of business increases the risk of clashes between corporate cultures and national cultures. The global nature of business increases the risk of clashes between corporate cultures and national cultures.

End Research: Qualitative Domain Assignment: Read Chapter 8 Very Important: Review Appendix B of your text (pages 170 – 172) “Hofstede’s Cultural Dimensions.” You are responsible for this information and IT WILL BE ON THE TEST! Secretary’s Report Due…………….