Management, 7e Schermerhorn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc Schermerhorn - Chapter 4

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Chapter 4 Environment and Diversity Planning ahead—study questions What is the external environment of organizations? What is a customer-driven organization? What is a quality-driven organization? What is the internal environment and organizational culture? How is diversity managed in a multicultural organization? Schermerhorn - Chapter 4

What is the external environment of organizations? Competitive advantage involves utilization of a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace. Schermerhorn - Chapter 4

What is the external environment of organizations? Companies may achieve competitive advantage in many ways, including: Products Pricing Customer service Cost efficiency Quality Schermerhorn - Chapter 4

What is the external environment of organizations? The general environment—all of the background conditions in the external environment of the organization including: Economic Social-cultural Legal-political Technological Natural environment Schermerhorn - Chapter 4

What is the external environment of organizations? The specific (task) environment—actual organizations, groups, and persons with whom an organization must interact in order to survive and prosper. Schermerhorn - Chapter 4

What is the external environment of organizations? Stakeholders in the specific environment broadly include: Customers Suppliers Competitors Regulators Schermerhorn - Chapter 4

What is the external environment of organizations? Environmental uncertainty is a lack of complete information regarding what developments will occur in the external environment. Two dimensions of environmental uncertainty: Complexity Rate of change Schermerhorn - Chapter 4

What is a customer-driven organization? External customers purchase the organization’s goods or utilize its services. Internal customers are the persons and groups within an organization who depend on the results of others' work to do their own jobs. Schermerhorn - Chapter 4

What is a customer-driven organization? Customer service lessons: Protect reputation for quality products. Treat customers right. Assessing customer needs—what, where, and when. Adding value—high quality, low cost, and on-time delivery. Schermerhorn - Chapter 4

What is a customer-driven organization? Customer relationship management involves taking a strategic customer-centered focus in building relationships and adding value. Supply chain management involves strategic management of all operations relating to suppliers of resources. Schermerhorn - Chapter 4

What is a quality-driven organization? Total quality management (TQM) Quality principles are an integral part of organization's strategic objectives. Applying them to all aspects of operations Committing to continuous improvement Striving to meet customers’ needs correctly the first time Schermerhorn - Chapter 4

What is a quality-driven organization? Crosby’s “four absolutes” of management for total quality control: Quality means conforming to standards. Quality comes from defect prevention, not defect correction. Quality as a performance standard must mean defect-free work. Quality saves money. Schermerhorn - Chapter 4

What is a quality-driven organization? Quality and continuous improvement Deming: the cause of quality problems may be: Some component of the production/operations process. Internal to the production/operations system itself. Continuous improvement Always looking for new ways to improve upon current performance. Schermerhorn - Chapter 4

What is a quality-driven organization? Quality circles A group of workers who meet regularly to discuss ways of improving quality of their products or services. Can result in cost savings from improved quality and increased customer satisfaction. Schermerhorn - Chapter 4

What is a quality-driven organization? Quality and manufacturing technology: Lean production Uses new technologies to streamline systems Flexible manufacturing Processes can be changed quickly to produce different products Agile manufacturing/mass customization Permits quick production of individualized products Schermerhorn - Chapter 4

What is the internal environment and organizational culture? Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members. Schermerhorn - Chapter 4

What is the internal environment and organizational culture? Strong cultures Commit members to do things that are in the best interests of the organization. Reinforce these habits. The best organizations have strong cultures that: Are performance-oriented Emphasize teamwork Allow for risk taking Encourage innovation Value the well being of people Schermerhorn - Chapter 4

What is the internal environment and organizational culture? Levels of Organizational Culture Observable culture What one sees and hears when walking around an organization. Core culture Core values that influence behavior and give rise to observable culture. Schermerhorn - Chapter 4

What is the internal environment and organizational culture? Leadership and organizational culture: Leaders should establish and maintain appropriate core values. Criteria for evaluating core values: Relevance Pervasiveness Strength Symbolic leaders use symbols to establish and maintain a desired culture. Schermerhorn - Chapter 4

How is diversity managed in a multicultural organization? Characteristics of multicultural organizations: Pluralism Structural integration Informal network integration Absence of prejudice and discrimination Minimum intergroup conflict Schermerhorn - Chapter 4

How is diversity managed in a multicultural organization? Organizational subcultures Cultures based on shared work responsibilities and/or personal characteristics. Common subcultures include: Occupational Functional Ethnic Racial Generational Gender Schermerhorn - Chapter 4

How is diversity managed in a multicultural organization? Diversity can be a source of competitive advantage. Diversity leadership approaches: Affirmative action Valuing diversity Managing diversity Schermerhorn - Chapter 4

How is diversity managed in a multicultural organization? Personal challenge of managing diversity: Accepting the goal of diversity maturity Organizational challenge of managing diversity: Changing organizational culture Changing organizational mission and practices Schermerhorn - Chapter 4