PowerPoint Presentation to Accompany Chapter 4 of Management, 8/e John R. Schermerhorn, Jr. Prepared by:Michael K. McCuddy Valparaiso University Published by: John Wiley & Sons, Inc.

Management 8/e - Chapter 42 Planning Ahead — Chapter 4 Study Questions  What is the external environment of organizations?  What is a customer-driven organization?  What is a quality-driven organization?  What is organizational culture?  How is diversity managed in a multicultural organization?

Management 8/e - Chapter 43 Study Question 1: What is the external environment of organizations?  Competitive advantage is a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace.

Management 8/e - Chapter 44 Study Question 1: What is the external environment of organizations?  Companies may achieve competitive advantage in many ways, including: Products Pricing Customer service Cost efficiency Quality

Management 8/e - Chapter 45 Study Question 1: What is the external environment of organizations?  The general environment — all of the background conditions in the external environment of the organization including: –Economic –Socio-cultural –Legal-political –Technological –Natural environment

Management 8/e - Chapter 46 Study Question 1: What is the external environment of organizations?  The specific (task) environment — actual organizations, groups, and persons with whom an organization interacts and conducts business.  Includes important stakeholders such as: –Customers –Suppliers –Competitors –Regulators –Investors/owners

Management 8/e - Chapter 47 Figure 4.1 Stakeholder analysis of value creation for key constituencies of a business firm: an open-systems approach.

Management 8/e - Chapter 48 Study Question 1: What is the external environment of organizations?  Environmental uncertainty is a lack of complete information regarding what exists and what developments may occur in the external environment.  Two dimensions of environmental uncertainty: –Complexity –Rate of change

Management 8/e - Chapter 49 Figure 4.2 Dimensions of uncertainty in organizational environments.

Management 8/e - Chapter 410 Study Question 2: 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.

Management 8/e - Chapter 411 Figure 4.3 The importance of external and internal customers.

Management 8/e - Chapter 412 Study Question 2: What is a customer-driven organization?  Customers want: – High quality. – Low price. – On-time delivery.  Key customer service lessons: – Protect reputation for quality products. – Treat customers right.

Management 8/e - Chapter 413 Study Question 2: What is a customer-driven organization?  Customer relationship management establishes and maintains high standards of customer service in order to strategically build lasting relationships with and add value to customers.  Supply chain management is the strategic management of all operations relating to an organization’s resource suppliers.

Management 8/e - Chapter 414 Study Question 3: 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 by doing things right the first time.

Management 8/e - Chapter 415 Study Question 3: What is a quality-driven organization?  Crosby’s “four absolutes” of management for total quality control: –Quality means conformance to standards. –Quality comes from defect prevention, not defect correction. –Quality as a performance standard must mean defect-free work. –Quality saves money.

Management 8/e - Chapter 416 Study Question 3: What is a quality-driven organization?  Quality and continuous improvement –W. Edwards Deming emphasized: Constant innovation. Use of Statistical methods. Training in the fundamentals of quality assurance. – Continuous improvement Seeking ways to improve on current performance. –Quality circles A small group of workers who meet regularly to discuss ways of improving quality.

Management 8/e - Chapter 417 Study Question 3: 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 or modifications of existing ones. –Agile manufacturing/mass customization Permits quick production of individualized products.

Management 8/e - Chapter 418 Study Question 3: What is a quality-driven organization?  Quality and product design: – A good design has eye appeal and is easy to manufacture with productivity. –Design for manufacturing emphasizes lower production costs and high-quality results. –Design for disassembly involves taking into account how components will be recycled.

Management 8/e - Chapter 419 Study Question 4: What is organizational culture?  Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members.

Management 8/e - Chapter 420 Figure 4.4 Levels of organizational culture—observable culture and core culture.

Management 8/e - Chapter 421 Study Question 4: What is organizational culture?  Diagnostic questions for assessing cultural differences: – How tight or loose is the structure? –Are decisions change oriented or driven by the status quo? –What outcomes or results are most highly valued? –What is the climate for risk taking, innovation? –How widespread is empowerment, worker involvement? –What is the competitive style, internal and external?

Management 8/e - Chapter 422 Study Question 4: What is organizational culture?  Strong cultures: – Commit members to do things that are in the best interests of the organization. –Discourage dysfunctional work behavior. –Encourage functional work behavior.  The best organizations have strong cultures that: –Are performance-oriented. –Emphasize teamwork. –Allow for risk taking. –Encourage innovation. –Value the well being of people.

Management 8/e - Chapter 423 Study Question 4: What is organizational culture?  What is observable culture? –What one sees and hears when walking around an organization.  Elements of observable culture: –Stories –Heroes –Rites and rituals –Symbols

Management 8/e - Chapter 424 Study Question 4: What is organizational culture?  What is the core culture? –Underlying assumptions and beliefs that influence behavior and contribute to the observable culture.  Core culture and values: –Strong cultures have a small but enduring set of core values. –Commitment to core values is a key to long- term success.

Management 8/e - Chapter 425 Study Question 4: What is organizational culture?  Important cultural values include: –Performance excellence –Innovation –Social responsibility –Integrity –Worker involvement –Customer service –Teamwork

Management 8/e - Chapter 426 Study Question 4: What is organizational culture?  Value-based management: –Describes managers who actively help to develop, communicate, and enact shared values. –Criteria for evaluating core values: Relevance Integrity Pervasiveness Strength

Management 8/e - Chapter 427 Study Question 4: What is organizational culture?  Symbolic leadership –Symbolic leaders use symbols well to establish and maintain a desired organizational culture. –Symbolic leaders behave in ways that espouse organization’s values. –Symbolic leaders: Use language metaphors. Highlight and dramatize core values and observable culture. Use rites and rituals to glorify performance.

Management 8/e - Chapter 428 Study Question 5: How is diversity managed in a multicultural organization?  Diversity: –Describes differences among people at work. –How diversity is handled in the workplace reflects the organization’s culture. Respect and inclusion. Disrespect and exclusion. –A potential source of competitive advantage.

Management 8/e - Chapter 429 Study Question 5: 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

Management 8/e - Chapter 430 Study Question 5: 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 or national –Racial –Generational –Gender

Management 8/e - Chapter 431 Study Question 5: How is diversity managed in a multicultural organization?  Challenges faced by minorities and women: –Glass ceiling –Misunderstanding and lack of sensitivity –Sexual harassment –Pay discrimination –Job discrimination  Minorities may adapt by exhibiting biculturalism.

Management 8/e - Chapter 432 Figure 4.5 Glass ceilings as barriers to women and minority cultures in traditional organizations.

Management 8/e - Chapter 433 Study Question 5: How is diversity managed in a multicultural organization?  Diversity leadership approaches: –Affirmative action commits the organization to hiring and advancing minorities and women. –Valuing diversity commits the organization to education and training programs. –Managing diversity commits to changing the organizational culture.

Management 8/e - Chapter 434 Figure 4.6 Leadership approaches to diversity—from affirmative action to managing diversity. Source: Developed from R. Roosevelt Thomas, Jr., Beyond Race and Gender (New York: AMACOM, 1991), p. 28.

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