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 … _________________: 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? _______________: 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: ______________ – health of the economy in terms of inflation, income levels, GDP, unemployment and job outlook ______________ – 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 Legal-Political ________________ – the philosophy and objectives of the political party running the government, laws and government regulations ________________ – development and availability of technology, including scientific advancements _____________________ – condition of the environment, including levels of public concern expressed through environmentalism 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 … ______________ - or the number of different factors in the environment ________________ - 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; High Quality Reasonable Price On-Time Delivery 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; Protect reputation for quality products A reputation is hard to build but easy to lose 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 … Continuous Improvement Product Quality 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: Quality means Conformance to Standards Workers must know exactly what performance standards they are expected to meet 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: Quality as a Performance Standard must mean Defect-Free Work The only acceptable performance standard is perfect work 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?

How would you describe the culture at your place of employment? 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; 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 Culture 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 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 Generational ________________ – 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 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