Environment and Competitive Advantage The Environment Of

Environment and Competitive Advantage • The Environment Of Organizations The degree to which the Environment is supportive of the organization can have a significant impact on its operations and performance outcomes, and. . . Effective Managers understand this and deal with it. • Competitive Advantage A distinctive competency that clearly set an organization apart from competitors and gives it an advantage over them in a competitive marketplace. 1

The Environment of Organizations • The General Environment The background conditions in the external environment that can substantially influence the operations of and organization. • The Specific Environment The actual organizations, groups, and persons with whom an organization must interact in order to survive and prosper. 2

The General Environment • Economic Conditions General state of the economy in terms of inflation, income levels, gross domestic product, unemployment, and related indicators of economic health. • Sociocultural Conditions General state of the prevailing social values on such matters as human rights and environment, trends in education and related social institutions as well as demographic patterns. 3

The General Environment • Legal-Political Conditions General state of the prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations. • Technological Conditions General state of the development and availability of technology in the environment, including scientific advancements. 4

The General Environment • Natural Environment Conditions General state of nature and conditions of the natural or physical environment, including levels of environmentalism. 5

The Specific Environment Competitors Unions Suppliers Business Firm Educational Inst . Stockholders Banks Employees Regulators Customers 6

Environment Uncertainty • This means that there is a lack of complete information regarding what developments will occur in the external environment. • The greater the uncertainty the more need there is for flexibility and adaptability in organizational designs and work practices. 7

Customer Driven View of Organizations Customers Drive Organizations Products Operations Objectives People • High quality products • Low-cost production • On-time delivery What do they want? Where do they want it? When do they want it? Technology Structures External and Internal Customers 8

Competitive Advantage Through Quality • ISO 9000 Certification Indicates that a company meets the quality standards set by the International Standards Organization in Geneva, Switzerland. It is viewed as a necessity in international business. 9

Competitive Advantage Through Quality • Total Quality Management Involves the process of making Quality principles part of the organization's strategic objectives, applying them to all aspects of operations, committing to Continuous Improvement, and striving to meet customers' needs by doing things right the first time. 10

Competitive Advantage Through Quality • M. Baldridge National Quality Award A formal evaluation of an organization's success in achieving productivity with quality. • Crosby's "Four Absolutes" Of Management For Total Quality Conformance to standards Defect prevention not defect correction Defect-free work Quality saves money 11

Competitive Advantage Through Quality • Deming's Path To Quality Ideas based on the notion of Statistical Quality Control, which is a mathematics and scientific method of quality control. 12

Deming's 14 Points to Quality • • • Establish Constancy of Purpose Constantly Improve Every System Eliminate Financial Goals and Quotas Drive Out Fear Institute Leadership Stop Awarding Business Solely on the Basis of Price • Break Down Barriers Between Departments 13

• • • Deming's 14 Points to Quality(cont) Institute Training on the Job Eliminate Annual Ratings Promote Education and Self-Improvement Abandon Slogans Cease Dependence on Mass Inspection Adopt the New Philosophy of Quality in its Entirety • Structure Management to Accomplish the Transformation 14

Competitive Advantage Through Quality • Continuous Improvement The attempt to maintain the quality advantage over time by always looking for new ways to incrementally improve upon current performance. Quality Circles Benchmarking Customer Service 15

Competitive Advantage Through Operations Management • OM is a branch of management theory specifically concerned with the activities and decisions through which organizations transform resource inputs into product outputs. • The transformation process is the actual set of operations or activities through which various resources are utilized to produce finished goods or services of value to customers or clients. 16

Competitive Advantage Through Operations Management • Product Design Customer appeal Robust - production proof Design for Manufacturing Design for Disassembly • Technology Utilization Lean Production Flexible Manufacturing Agile Manufacturing Mass Customization. 17

Competitive Advantage Through Operations Management • Organization Design Blending the best of technology with the full potential of people. Cross-functional task forces Job enrichment Self-managing teams Autonomous work groups It is about Organizational Flexibility, Adaptability, and Worker Empowerment. 18

The Nature of Organizational Culture • Organizational Culture Is the system of shared beliefs and values that develops within an organization and guides the behavior of its members. There are two levels of culture in organizations: “observable” - what you see…. . “core” - the underlying shared beliefs. . . 19

The Nature of Organizational Culture • Core Values Essential to strong culture organizations, and are often widely publicized in formal corporate statements. • Core Culture Consists of the values or underlying beliefs that influence behavior and actually give rise to the aspects observable culture. 20

The Nature of Organizational Culture • Observable Culture What one sees and hears when walking around an organization as a visitor, customer, or employee. Elements of Observable Culture • • Stories - Oral histories and tales. Hero’s - Who they admire. Rites and Rituals - What they celebrate Symbols - How they express themselves. 21

Leadership and Organizational Culture Criteria for Evaluating Core Values • Relevance Do they support the key organizational objectives. • Pervasiveness Are they known by organization members. • Strength Are they accepted by the organization members. 22

Leadership and Organizational Culture Symbolic Manager Someone who uses symbols well to establish and maintain a desired organizational culture. They use Language Metaphors, tell Stories, celebrate Heros, and use Rites and Rituals to glorify the performance of the organization and it members. 23

Directions in Organizational Cultures • Worker Empowerment Managers are finding that the best way to seek the advantages of a strong culture is with an underlying commitment to employees. Participation - Involvement Empowerment 24

Directions in Organizational Cultures • Multiculturalism Involves pluralism and respect for diversity in the workplace. Pluralism: Members of both minority cultures and majority cultures are influential in setting key values and policies. Structural Integration: Minority culture members are well-respected in jobs at all levels and in all functional responsibilities. 25

Directions in Organizational Cultures Informal Network Integration: Various forms of mentoring and support groups assist in the career development of minority culture members. Absence of Prejudice and Discrimination: A variety of training and task force activities continually address the need to eliminate culture group bias. Minimum of Intergroup Conflict: Diversity does not lead to destructive conflicts between members of majoity cultures and minority 26

Directions in Organizational Cultures • Organizational Subcultures Not unlike society, organizations contain subcultures. These are the cultures common to groups of people with similar values and beliefs based upon shared personal characteristics. Occupation - Ethnic - Generational Gender 27

Directions in Organizational Cultures • Ethical Cultures A shared set of understanding about what is considered ethically correct behavior in an organization. Organizations with strong and positive ethical climates set clear expectations for their members regarding what should be done when ethical dilemmas occur. 28