Schermerhorn - Chapter 21 Management, 7e Schermerhorn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc

Schermerhorn - Chapter 22 Chapter 2 Environment and Diversity  Planning ahead—study questions –What is the external environment of organizations? –What is a customer-driven organization? –What is a quality-driven organization? –What is the internal environment and organizational culture? –How is diversity managed in a multicultural organization?

Schermerhorn - Chapter 23 What is the external environment of organizations?  Competitive advantage involves utilization of a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace.

Schermerhorn - Chapter 24 What is the external environment of organizations?  Companies may achieve competitive advantage in many ways, including: Products Pricing Customer service Cost efficiency Quality

Schermerhorn - Chapter 25 What is the external environment of organizations?  The general environment—all of the background conditions in the external environment of the organization including: –Economic –Social-cultural –Legal-political –Technological –Natural environment

Schermerhorn - Chapter 26 What is the external environment of organizations?  The specific environment (a.k.a task env.) —actual organizations, groups, and persons with whom an organization must interact in order to survive and prosper.

Schermerhorn - Chapter 27 What is the external environment of organizations?  Stakeholders in the specific environment broadly include: Customers Suppliers Competitors Regulators

Schermerhorn - Chapter 28 What is the external environment of organizations?  Environmental uncertainty is a lack of complete information regarding what developments will occur in the external environment.  Two dimensions of environmental uncertainty: –Complexity –Rate of change 4 The greater the uncertainty, the greater the need for monitoring, flexibility, and adaptability. “In today’s business world, the only constant, is change”

Schermerhorn - Chapter 29 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.

Schermerhorn - Chapter 210 What is a customer-driven organization?  Customer service lessons: – Protect reputation for quality products. – Treat customers right.  Assessing customer needs—what, where, and when.  In the upside-down pyramid, customers are at the top. They want three things when purchasing goods and services -high quality, low cost, and on-time delivery.

Schermerhorn - Chapter 211 What is a customer-driven organization?  Customer relationship management involves taking a strategic customer-centered focus in building relationships and adding value.  Marriott International uses special CRM software to record and track information regarding customer preferences ie: floor level, bed size, special requests, newspapers, etc  Supply chain management involves strategic management of all operations relating to suppliers of resources – including purchasing, manufacturing, transportation and distribution.  “The customer is Captain of the supply chain” – Michael Dell”

Schermerhorn - Chapter 212 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 correctly the first time

Schermerhorn - Chapter 213 What is a quality-driven organization?  Quality and continuous improvement – Continuous improvement Always looking for new ways to improve upon current performance - must become a way of life  Quality circles - In Search of Excellence 1982 –A group of workers who meet regularly to discuss ways of improving quality of their products or services. –Can result in cost savings from improved quality, increased customer satisfaction, and employee empowerment.

Schermerhorn - Chapter 214 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 –Agile manufacturing/mass customization Permits quick production of individualized products –Nike iD Lab –Bagdaddy –Levi’s –M&M’s –Porsche before, now everyone

Schermerhorn - Chapter 215 What is the internal environment and organizational culture?  Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members.

Schermerhorn - Chapter 216 What is the internal environment and organizational culture?  Corporate Culture examples  Nike – internal branding/heritage  Southwest Airlines – liberty and freedom  Westjet airlines – a passion to serve  Royal Bank – personal accountability  Google – the challenge should be fun  Starbucks – sense of community

Schermerhorn - Chapter 217 What is the internal environment and organizational culture?  Strong cultures – Commit members to do things that are in the best interests of the organization – and ultimately the customer. –Reinforce these habits.  The best organizations have strong cultures that: –Are performance-oriented –Emphasize teamwork –Allow for risk taking –Encourage innovation –Value the well being of people

Schermerhorn - Chapter 218 What is the internal environment and organizational culture?  Levels of Organizational Culture –Observable culture What one sees and hears when walking around an organization. – Core culture Core values that influence behavior and give rise to observable culture.

Schermerhorn - Chapter 219 What is the internal environment and organizational culture?  Leadership and organizational culture: –Leaders should establish and maintain appropriate core values. –Criteria for evaluating core values: Relevance Pervasiveness Strength –Symbolic leaders use symbols to establish and maintain a desired culture – Nike heritage stories

Schermerhorn - Chapter 220 How is diversity managed in a multicultural organization?  Characteristics of multicultural organizations: –Pluralism – minority AND majority cultures are influential in setting policies –Structural integration – minority cultures are well represented in all types of positions in the organization –Informal network integration – mentoring and support groups assist in minority career development –Absence of prejudice and discrimination – task force and sensitivity training –Minimum intergroup (subculture) conflict

Schermerhorn - Chapter 221 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 –Racial –Generational –Gender

Schermerhorn - Chapter 222 How is diversity managed in a multicultural organization?  Diversity can be a source of competitive advantage.  Diversity leadership approaches: –Affirmative action –Valuing diversity –Managing diversity

Schermerhorn - Chapter 223 How is diversity managed in a multicultural organization?  Organizational challenge of managing diversity: –Changing organizational culture –Changing organizational mission and practices