MBA-I 1st Sec I & II Lecture 7,8,9 (The Constraints Organizational Culture & Environment)

By: Farhan Mir

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Principles of Management

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Topics
Introduction
Management Overview and key components Management as a Field What are Organizations? Management Functions & Roles & Importance History and Evolution of Management Important Contributions Trends and Issues

Organizational & Environmental Constraints

Environmental Effects Important Environmental Elements Internal Vs. External Environment Global Environment & Management

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Management and Constraints task becomes more Managements

difficult in the context of open system theory (as it has to manage internal as well as external factors) The Organizational Environment is classified into two major categories
Internal (commonly known as Culture External Environment (simply called Environment) Specific General
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The Constraints
Two Perspectives on Management
Omnipotent View Vs. Symbolic View
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The Manager: How Much Control?

Omnipotent View
Managers are directly responsible for an organizations success or failure The quality of the organization is determined by the quality of its managers Managers are held most accountable for an organizations performance, yet it is difficult to attribute good or poor performance directly to their influence on the organization
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The Manager: How Much Control? (contd)

Symbolic View
Much of an organizations success or failure is due to external forces outside of managers control The ability of managers to affect outcomes is influenced and constrained by external factors: The economy, customers, governmental policies, competitors, industry conditions, technology, and the actions of previous managers Managers symbolize control and Farhan Mir influence through their action IMS
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Organizational Culture
Internal Environment (Heavily effected by the norms and values shared by members of the organization) What is Organizational Culture? The 7 Dimensions of Organizational Culture Risk, Attention to Detail, Outcome Orientation, People Orientation, Team Orientation, Aggressiveness & Stability Types (Strong Vs. Weak Culture) Sources of Culture How employees learn organizational culture Stories, Rituals, Material Symbols & Language
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The Organizations Culture Organizational Culture

A system of shared meanings and common beliefs held by organizational members that determines, in a large degree, how they act towards each other. The way we do things around here. Values, symbols, rituals, myths, and practices Implications: Culture is a perception. Culture is shared.

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Dimensions of Organizational Culture

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Visible Elements- How new employees learn culture

Symbols Language & Slogans Heroes Stories
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Rituals and ceremonies

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Strong versus Weak Cultures Strong Cultures

Are cultures in which key values are deeply held and widely held. Have a strong influence on organizational members.

Factors Influencing the Strength of Culture

Size of the organization Age of the organization Rate of employee turnover Strength of the original culture Clarity of cultural values and beliefs

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Benefits of a Strong Culture

Creates a stronger employee commitment to the organization. Aids in the recruitment and socialization of new employees. Fosters higher organizational performance by instilling and promoting employee initiative.

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Contrasting Organizational Cultures

Organization A Managers must fully document all decisions Creative decisions, change, and risks are not encouraged. Extensive rules and regulations exist for all employees. Productivity is valued over employee morale. Employees are encouraged to stay within their own department. Individual effort is encouraged. Organization B Management encourages and rewards risktaking and change. Employees are encouraged to run with ideas, and failures are treated as learning experiences. Employees have few rules and regulations to follow. Productivity is balanced with treating its people right. Team members are encouraged to interact with people at all levels and functions. Many rewards are team based.

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Organization Culture Issues

Creating an Ethical Culture
High in risk tolerance Low to moderate aggressiveness Focus on means as well as outcomes

Creating an Innovative Culture

Challenge and involvement Freedom Trust and openness Idea time Playfulness/humor Conflict resolution Debates Risk-taking
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A Case Study on Organizational Culture: Excellence at Xerox Xerox

Introduction Digital solution provider and worlds top computer hardware manufacturer (Especially Copiers) and helps develop smarter document management Helps Analyzing how employees can most efficiently share documents and knowledge in the office Among the Fortune 500 with 55,200 employees worldwide, including 29,700 in the United States (December 31, 2005) The company's operations are guided by customerfocused and employee-centered core values such as social responsibility, diversity and quality passion for innovation, speed and adaptability
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Excellence at Xerox
Xerox Strategy They are committed towards quality products for their customers and for providing a worldclass working environment for their employees To do so they need to attract and retain worldclass people Xerox Employment Trademark eXpress yourself yields for them innovation and leading working environment due to: Passion Diversity Ideas Contribution from everyone
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Xerox: Excellence
The Problem Era
Just few years back the company was fighting for its survival and no focus on improving its HR practices In year 2000 the company was facing $17 billion in debt and its stock price dropped from $63 to about $4 Company suffered loses for 7 consecutive quarters and investigations were called against the accounting matters

The Comeback
Shifted its product mix and offered desktop copiers for offices and quality printers for publishers Company had an increased income to $222 million from just $19 million The reasons behind this turnaround Focus on Customers Thinking about employees as a core

Orientation)

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With strong values of social responsibility, diversity, quality Farhan Mir and innovation
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Diversity for Success: Case Study on UPS

UPS
Introduction Founded in 1907 as a messenger company in the United States the world's largest package delivery company and a leading global provider of specialized transportation and logistics services Manage the flow of goods, funds, and information in more than 200 countries and territories worldwide. The Company has got a global posture UPSs workforce is multicultural, multidimensional, and reflective of the broad attributes of our global communities FORTUNEmagazine as one of the "50 Best Farhan Mir Companies for Minorities IMS 2011 2011

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UPS and Diversity

Views about workforce It is not about race or gender or background rather the focus is about how much employees care about the company or good at their jobs 1/3 of the employees are from minorities Representation of minorities is also at each level of the organization Has a supplier diversity Program encouraging small and minority group suppliers Diversity driving UPS towards success (may be other factors but diversified workforce with new ideas and flavors is a strong contributing factor
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UPS and Diversity

African-Americans, Hispanics, Asian-Pacific Americans and other minorities make up 35 percent of the companys 348,400 employees in the United States. Minorities accounted for half of UPSs newemployees in 2005. Women represent 28 percent ofthe U.S. management team and 20 percent ofthe overall workforce, holding jobs from package handlers, to drivers, to senior management and to the UPS Board of Directors. Among the companys 63,000 U.S. managers, minorities hold nearly 30 percent of those executive positions. Positions held include district managers, the UPS Management Committee, and UPSs Board of Directors.
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The External Environmen t

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Task Environment
Task Environment: forces from suppliers, distributors, customers, and competitors. Suppliers: provide organization with inputs
Managers need to secure reliable input sources. Suppliers provide raw materials, components, and even labor. Working with suppliers can be hard due to shortages, unions, and lack of substitutes. Suppliers with scarce items can raise the price and are in a good bargaining position. Farhan Mir Managers often prefer to have many, similar IMS
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Task Environment
Distributors: organizations that help others to sell goods.
Compaq Computer first used special computer stores to sell their computers but later sold through discount stores to reduce costs. Some distributors like Wal-Mart have strong bargaining power. They can threaten not to carry your product.

Customers: people who buy the goods.

Usually, there are several groups of customers. For Compaq, there are business, home, & Farhan Mir government buyers. IMS
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Task Environment
Competitors: other organizations that produce similar goods.
Rivalry between competitors is usually the most serious force facing managers. High levels of rivalry often means lower prices. Profits become hard to find. Barriers to entry keep new competitors out and result from: Economies of scale: cost advantages due to large scale production. Brand loyalty: customers prefer a given product.
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Organizational Environment

Organizational Environment: those forces outside its boundaries that can impact it. Opportunities: openings for managers to enhance revenues or open markets.
New technologies, new markets and ideas. Forces can change over time and are made up of Opportunities and Threats.

Threats: issues that can harm an organization.

economic recessions, oil shortages.

Managers must seek opportunities and avoid threats.

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The General Environment

Consists of the wide economic, technological, demographic and similar issues.
Managers usually cannot impact or control these. Forces have profound impact on the firm.

Economic forces: affect the national economy and the organization.

Includes interest rate changes, unemployment rates, economic growth. Farhan Mir When there is a strong economy, people IMS
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Technological forces: skills & equipment used in design, production and distribution.
Result in new opportunities or threats to managers. Often make products obsolete very quickly. Can change how we manage.

Socialcultural forces: result from changes in the social or national culture of society.
Social structure refers to the relationships between people and groups. Different societies have vastly different social structures. National culture includes the values that characterize a society. Values and norms differ widely throughout the world. These forces differ between cultures and over time. Farhan Mir
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Demographic forces: result from changes in the nature, composition and diversity of a population.
These include gender, age, ethnic origin, etc. For example, during the past 20 years, women have entered the workforce in increasing numbers. Currently, most industrial countries are aging. This will change the opportunities for firms competing in these areas. New demand for health care, assisting living can be forecast. Farhan Mir
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Political-legal forces: result from changes in the political arena.

These are often seen in the laws of a society. Today, there is increasing deregulation of many staterun firms.

Global forces: result from changes in international relationships between countries.

Perhaps the most important is the increase in economic integration of countries. Free-trade agreements (GATT, NAFTA, EU) decreases former barriers to trade. Provide new opportunities and threats to managers.
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How the Environment Affects Managers

Environmental Uncertainty
The extent to which managers have knowledge of and are able to predict change their organizations external environment is affected by: Complexity of the environment: the number of components in an organizations external environment. Degree of change in environmental components: how dynamic or stable the external Farhan Mir IMS environment is.
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Reducing Environmental Impact

Managers can counter environmental threats by reducing the number of forces.
Many firms have sought to reduce the number of suppliers it deals with which reduces uncertainty.

All levels of managers should work to minimize the potential impact of environmental forces.
Examples include reduction of waste by first line managers, determining competitors moves by middle managers, or the creation of a new strategy by top managers.

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Environmental Uncertainty Matrix

Exhibit 3.10 Farhan Mir

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Responding To The Environment Adapting to the environment

company adjusts its structures and work processes in uncertain environment caused by complexity, companies tend to decentralize decision making empowerment - process of sharing power with employees enhances their confidence in their ability to perform their jobs engenders beliefs that they are influential contributors to the firm in uncertain environments caused by dynamism, companies tend to establish more flexible structures bureaucracy - suited for stable environments (low dynamism) organic - provides flexibility required for changing environments (high dynamism)

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Boundary Spanning
Managers must gain access to information needed to forecast future issues.
Boundary spanning is the practice of relating to people outside the organization.
Seek ways to respond and influence stakeholder perception. By gaining information outside, managers can make better decisions about change.

More management levels involved in spanning, yields better overall decision making.
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Boundary Spanning Roles

Managers in boundary spanning roles feedback information to other managers

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Scanning and Monitoring

Environmental scanning is an important boundary spanning activity.
Includes reading trade journals, attending trade shows, and the like.

Gatekeeping: the boundary spanner decides what information to allow into organization and what to keep out.
Must be careful not to let bias decide what comes in.

Interorganizational Relations: firms need alliances globally to best utilize resources.

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Stakeholder Relationships Stakeholders

Any constituencies in the organizations external environment that are affected by the organizations decisions and actions

Why Manage Stakeholder Relationships?

It can lead to improved organizational performance. Its the right thing to do given the interdependence of the organization Farhan Mir
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Managing Stakeholder Relationships

1. Identify the organizations external

stakeholders.

2. Determine the particular interests

and concerns of the external stakeholders.

3. Decide how critical each external 4. Determine how to manage each

stakeholder is to the organization. individual external stakeholder relationship.

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Organizational Stakeholders

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Managers Must
Remain alert to internal and external

environments. Must forecast and plan for the changes they suspect will come. Must cultivate a sensible and controlled reactive behavior toward changes. Provide an imaginative program to manage and capitalize on changes.
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Influencing Environments
Influence legislation. Use the power of the media to influence public opinion and public policy. Build alliances and raise funds to push their agendas.

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