2. What is Org culture ?
The set of shared values and norms that controls organizational
members’ interactions with each other and with people outside the
organization
Can be a source of competitive advantage
Can be used to increase organizational effectiveness
The set of shared values
3. Values:
General criteria, standards, or guiding principles that people use to
determine which types of behaviors, events, situations, and outcomes are
desirable or undesirable
Terminal value: A desired end state or outcome that people seek to achieve
Instrumental value: A desired mode of behavior
4. • A country’s culture can affect the values and norms of a company
• A company’s culture Differences in communication styles, attitude toward competing
tasks, and different approaches to decision making can impact a company’s culture
• Executives working abroad need to be sensitive to both the country’s culture and the
company’s culture
• Many mergers between companies have failed because of differences in their
organizational cultures
• Merger teams now exist to help smooth the transition between the two cultures
5. How is an Organization’s Culture Transmitted to its Members?
• Socialization: Members learn and internalize the values and norms of
an organization’s culture
• Role orientation: The characteristic way in which newcomers respond
to a situationInstitutionalized role orientation
• Individualized role orientations
6. Where Does Organizational Culture Come From?
• Organizational structureMechanistic vs. OrganicMechanistic
– Predictability and stability are desired goals
Organic – Innovation and flexibility are desired end states
Centralized vs. DecentralizedDecentralized – Encourages and rewards
creativity and innovation
Centralized – Reinforces obedience and accountability
7. Social Responsibility
A manager’s duty or obligation to make decisions that nurture, protect,
enhance, and promote the welfare and well-being of stakeholders and
society as a whole
8. Organizational Design & Strategy in a Changing Global Environment
• An organization’s strategy is to use core competences to achieve a competitive
advantage
• It can it can increase its share of scarce resources in its environment and
outperform competitors.
• An organization develops a strategy to increase the value it can create for its
stakeholders.
• Value is anything that satisfies the needs and desires of organizational
stakeholders.
• Competences are skills and abilities in value-creation activities, such as
manufacturing, marketing, or R&D, that allow a company to achieve superior
efficiency, quality, innovation, or customer responsiveness.
9. SOURCES OF CORE COMPETENCES
• An organization gains a competitive advantage:
• Functional resources are the skills possessed by an organization’s functional personnel. To be a
source of competitive advantage, a function’s core competence must be unique or special and
difficult to imitate.
• Organizational resources are the attributes that give an organization a competitive advantage. They
include the skills of a company’s top management team, the vision of its founder or CEO, and the
possession of valuable and scarce resources such land, capital reserves, and plant equipment.
They also include intangibles such a company’s brand name and its corporate reputation.
To provide a competitive advantage, organizational resources must be unique or difficult to
imitate.
•
10. GLOBAL EXPANSION AND CORE COMPETENCES
Expanding globally into overseas markets can be an important facilitator of the development of an organization’s core
competences.
Transferring Core Competences Abroad
• Value creation at the global level begins when an organization transfers a core competence in one or more of its
functions to an overseas market to produce cheaper or improved products that give the organization a low-cost or
differentiation advantage over its competitors in that market.
Establishing a Global Network
• When an organization decides to transfer its competences abroad, it locates its value-creation activities in
countries where economic, political, and cultural conditions are likely to enhance its low-cost or differentiation
advantage.
Gaining Access to Global Resources and Skills
• An organization with a global network has access to resources and skills through-out the world. Because each
country has unique economic, political, and cultural conditions, different countries have different resources and
skills that give them a competitive advantages.
11. Using Global Learning to Enhance Core Competences
Organizations set up their global activities to gain access to knowledge that will
allow them to improve their core competences.
• The access to global resources and skills that a global network provides exposes
an organization to new ways of improving itself.
• After an organization masters these new skills, it can transfer them to its
domestic base to enhance its core competences and then transfer its enhanced
competences back to its overseas operations to increase its competitive
advantage abroad.
12. Core competences
• Skills and abilities unique to an organisation that give it a competitive
advantage
The core competences of below Org :
• McDonald : Production process
• Apple : Innovation / user’s experience
• Tesla : Innovation / Sustainability
• Southwest Airline : Customer service / competitive airfare
16. Challenge # 1 : Managing Differentiation
• Why differentiate ?
• >>> Control
• >>> Develop core competencies
• When employees :
• >>> Understand role / responsibilities
• >>> Are coordinated
• >>> Are motivated enough
24. Differentiation
Horizontal Vertical
> The way an org groups tasks into roles & roles
into functions
> The way an org designs hierarchy of authority
& creates reporting relationships to link roles &
Function
> Establishes division of labour Establishes distribution of authority
25. Challenge # 2 ( Balancing differentiation &
Integration)
• Problem : Specialization ( horizontal differentiation ) limits
communication resulting in loss of coordination & cooperation.
• Solution : Integration >> Increase coordination, communication &
cooperation between subunits.
26. Challenge # 3 ( Balancing centralization &
Decentralization)
Problem : Too much vertical differentiation can mean :
> inability to make decisions
Shrinking responsibility
Slowed decision making
Inflexible organisation
Solution :
Decentralize authority
How much decision – making authority to delegate to each level of hierarchy
27. Challenge # 4 ( Balancing standardization &
mutual adjustment )
Problem : Too much reliance on written rules, policies and SOPs:
> inability to adapt to a new
Unpredectable situation
No room for creativity in response to customer demand
Solution :
• Mutual adjustment
• > Thinking, using judgement, creativity to solve problems.
33. • We design an organistaion structure to control uncertainty in
environment
• Rapidly changing environment > More uncertainty > Requires higher
levels of differentiation > Requires higher level of integration
• > demands organic structure
• >>> Junior level employees need to be empowered to make on the spot
decisions
• >>> Rapid communication & information sharing necessary to
coordinate activities to meet changing customer demand & develop
new products
