The Importance of the Strategy and Culture Mix.

A good mix between strategy and culture is vital to a company’s success when implementing new strategies for a company. If they conflict, research shows that failure rates are high.

Strategies that conflict with strong cultures are likely to experience resistance. A company’s culture is its identity. It states who they are and what they do. “Because an organizations culture can exert a powerful influence on the behavior of all employees, it can strongly affect a company’s ability to shift its strategic direction. A problem for a strong culture is that a change in mission, objectives, strategies, or policies is not likely to be successful if it is in opposition to the accepted culture of a company.” (Hunger and Wheelen. 2008. pg. 248).

However, in the case of a weak culture, strategic changes may be welcome, even if they change the current culture. This was the case when Maytag purchased Admiral, formerly known as Magic Chef. Admiral employees, out of respect for Maytag’s success and leadership in quality, gladly accepted a new culture, based on a strategy they anticipated would develop success for their future.

“An optimal culture is one that best supports the mission and strategy of the company of which it is a part. This means that, like structure and staffing, corporate culture should support the strategy. Unless strategy is in complete agreement with the culture, any significant change in strategy should be followed by a modification on the organization’s culture.” (Hunger and Wheelen. 2008. pg. 248).

Therefore, strategy must fit with culture to be successful for a company. However, to succeed in a competitive market, companies must develop strategies that align a company with success. Properly formulated and implemented strategies result in success within an industry. A company’s culture does not drive this success. It definitely can play a significant role in the ultimate achievement of desired results and the effort, timing and implementation of strategies. Culture does not provide a “roadmap” for a company’s planning to success. It is a considerable factor in the planning implementation, but a company’s ability to reach its goals is a result of the direction provided through strategy.

As such, the strategy-culture compatibility assessment is based on strategy as the dominant driving factor. However, this may vary in different unique situations. The ultimate goal of the compatibility assessment is to evaluate the current correlation between the company culture and the affects of implementing a new strategy. If a possible conflict occurs, it can be addressed in a manner that evaluates possible ways to gradually evolve the culture to match the new strategy. Since strategy is the driving force of a company’s efforts, the assessment also focuses on the current culture effect on its outcome. The assessment can prove that if a culture is too strong, a new strategy may not work. As a result, in some circumstances, culture may actually shape a strategy.

In most circumstances, culture can be gradually adjusted to mesh with a new strategy. It is management’s responsibility to evaluate this connection and try to develop a new strategy that is most inline with the current culture. However, the strategy remains the driving factor in a company’s effort to reach its goal. Only after all attempts to adjust culture have been determined unobtainable, should a company decide to change its strategy.

In evaluating the effects of culture on new strategies, management should follow a process of evaluation based on the strategy-culture compatibility assessment. They should first consider if the planned strategy is compatible with the company culture. If it is, the new strategy is likely to be accepted by the workforce. If they are not inline with each other, management must determine if the culture can be easily modified to make it more compatible with the new strategy.

Once a company determines that the culture can be easily modified to make it more compatible with the new strategy, management must proceed with caution, introducing new culture characteristics. This can be achieved through modifying structures, training and development and establishing new management personnel compatible with the new strategy. If management determines that the culture can not be easily modified consistent with the new strategy, they need to determine if they are willing to make organizational changes, accept delays and increases in cost associated with the new strategy that conflicts with the current culture.

If these factors are acceptable to management, they can implement the new strategy working around the culture. They will need to develop and implement a new organizational structure to move forward with the new strategy. If they are unwilling to accept these factors, they must evaluate their commitment to the new strategy. If they are still convinced that implementing the new strategy is the correct course of action, they should consider finding a “joint venture partner or contract with another company to carry out the new strategy.” (Hunger and Wheelen. 2008. pg. 250). Once management has determined that they are not committed to the new strategy due to the challenges it faces within the culture, they should find a different strategy.

Since numerous efforts are made to modify the culture to work with the strategy, one would conclude that culture follows strategy according to the strategy-culture compatibility assessment.

References
---------------------------
Hunger, David J. & Wheelen, Thomas L. (2008). Concepts on Strategic Management and Business Policy. New Jersey: Pearson Prentice Hall.

According to Porter’s discussion of industry analysis, is Pepsi Cola a substitute for Coca Cola?

According to Porter’s views on industry analysis, Pepsi Cola would not be considered a substitute for Coca Cola. They are both cola. Porter’s view of a substitute product is one that appears different but can satisfy the same need, like coffee and tea as described in the text. In the case of cola, bottled water or juice could be viewed as a substitute product, according to Porter.

In today’s health conscious environment, a new company might be able to capitalize on an organic, or natural soft drink. Although Snapple is a competitor of Coca Cola and Pepsi, it promotes natural teas, waters and juices. If a company could utilize a similar theme of Snapple (made from the best stuff on earth), but apply it to a soft drink, they may be able to grab a solid portion of the diet cola (health conscious) market.

What is the impact of globalization and the internet on corporations?

Internet
The impact of the Internet on business is dramatic. It has revolutionized our lifestyle and most everything related to it. It has created the term "global community" where everything and everybody is only a click away.

A 2007 study by Nielsen/NetRatings shows that there are almost 334 million (333,841,523) active internet home users from only 10 countries! Most users are utilizing the Internet to make purchases and/or conduct businesses.

The way business was conducted prior to the internet has completely changed. Web sites, emails and search engines have created, if not demanded, new strategies for businesses. Organizations can advertise aggressively to a much larger, global market. Products and services are marketed virtually to people throughout the world. Almost anything can be bought and sold with the help of an internet connection. This has created new challenges for strategic planning.

“Companies wanting a multinational Internet presence must now try to balance a region's disparate cultural dimensions with the need to present a unified corporate image. A true global web site should relay a message that is clear and comprehensible to all users, regardless of nationalities, yet a successful Internet site must be tailored to match the language, monetary units, and culture of each country.” (The Journal of Computer Information Systems, Stylianou, January 2001 – A1)

The internet has been an enormous asset to business in several ways. Two key characteristics as related to strategy involve information and time. Companies have vast amounts of data more readily available to them than ever before, providing competitive advantages when used for strategic planning and management. Trends in a changing environment can be recognized much more efficiently, providing corporations the ability to implement adjusted strategies in a timely fashion. The internet has allowed corporations to create competitive advantages by establishing knowledge as a key asset.

Evaluating this information can be a big task, but companies like IBM have created programs to gather, analyze and clean available data for useful, related results. The internet has also established a sprinters approach to communication. The internet provides instant communication opportunities with email, data transfers, video conferencing and meetings. Business network sites provide a great opportunity for information sharing. This is very important in today’s fast paced environment which requires efficiency in order to compete in any industry.

In today’s web centered society, we have immediate access to virtually unlimited resources. In the days prior to the internet, people adjusted life around their work related activities. Work days were typically a set time so people could manage their daily responsibilities outside of work. We can pay bills, make reservations, attend college, trade stocks, conduct research, seek entertainment, communicate with family and friends, hold video conferences (and the list goes on) with the use of an internet connection, directly in ones home. In addition, the internet provides cost cutting measures for businesses. For example, companies now have the ability to video conference sales presentations or company meetings, saving on travel expenses.

The Internet has minimized distance and time restraints on people and business. It has given individuals the freedom to be their own boss, work remotely, run a home based business, or simply have a virtual garage sale with the use of sites such as ebay or Amazon. Prior to the internet, stores would service more local markets, have set times of operation and require staff to be present for the stores operation. In today’s market, you can have an e-commerce store that is open 24 hours a day, seven days a week, and have a virtual employee available to handle sales around the world. As a result, stores require less operating expenses (staff salaries), expand their markets (nationally and globally vs. locally) and positively impact customer service.

The internet has also shifted the balance of power towards the consumer. It has decreased the need for distributors as demonstrated by Dell’s business plan, selling custom tailored computers directly to the consumer. Without the internet, this option would hardly be possible without the just in time inventory process.

The power of the internet can also be recognized in its global effect on commerce. This medium is so strong worldwide that it has required a new global commerce for business exchanges known as PayPal. PayPal is recognized as an actual commerce with value around the world, and has provided a system of international monetary exchange. Someone in Europe can purchase a product from the United States and neither party has to struggle with exchange rates or the transfer of money options. It’s amazing. The internet has unwittingly created a global commerce exchange system at a local consumer level.

The internet has earned the reputation to be one of the most significant developments of our lifetime. However, where the internet has tried to level the playing field for small business, it has created some challenges for larger corporations, who must consider cultural issues consistent in their branding approach.

Globalization
The World Bank Group defines globalization as the growing integration of economies and societies around the world. It is a process of interaction and integration among the people, companies, and governments of different nations. This process is driven by international trade and investment and is aided by information technology.

“Since 1950 . . . the volume of world trade has increased by 20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion. Distinguishing this current wave of globalization from earlier ones, author Thomas Friedman has said that today globalization is farther, faster, cheaper, and deeper.” (The Levin Institute 2008 – A1)

Globalization has created environmental uncertainty for many corporations.

“As more and more markets become global, the number of factors a company must consider in any decision become huge and much more complex. Environment uncertainty is a threat to strategic management because it hampers their ability to develop long-range plans and to make strategic decisions to keep the corporation in equilibrium with its external environment.” (Concepts in Strategic Management and Business Policy, Wheelen & Hunger, 2008, p. 72-73)

According to Porter, world industries vary from multidomestic to global. Multidomestic corporations are specific to a certain country or set of countries, whereas multinational corporations, or global, industries are worldwide. The difference between these two styles is very challenging for a strategic plan, and each offers new challenges specific to its environments. As such, conducting business in a global market requires international societal considerations.

“Each country or group of countries in which a company operates presents a unique societal environment with a different set of economic, technological, political-legal, and sociocultural variables for the company to face.” (Concepts in Strategic Management and Business Policy, Wheelen & Hunger, 2008, p. 78)

Consider the political and social cultures and risks of each country. What may be acceptable in one country may be appalling in another. What might be illegal in one country may simply be a way of doing business in another. An example of this is conducting business in a less developed country or one that focuses on relationships for doing business, which increases the chance for corruption. Many aspects of business demand a heightened level of focus in a global environment. The use of child labor or sweatshops in other countries, used to produce your product, may create enormous social issues in countries where your product is sold.

Globalization has also created trends in sales for many companies based on the monetary value levels of the world. In addition, globalization is responsible for the development of the European Union (EU), the North American Free Trade Agreement (NAFTA), Mercousur, the Central American Free Trade Agreement (CAFTA) and the Association of Southeast Asian Nations (ASEAN).

A good example of this is based on my personal experience of selling products on ebay. Whenever the dollar weakens in value, international sales increase dramatically. Recently, with the lower Euro values, my international sales have dropped. This adjustment of monetary values creates a challenge for strategic planning, and the consideration for adjusting levels is a key factor that must be addresses in any astute plan.

Move Over Tradition - it's Time for the Modern Customer-Oriented Organization Chart

With the advancements in Technology, companies are being forced to reconsider and adjust traditional ways of doing business. Marketing Information Systems have created efficiencies in marketing, streamlining the process for a concentrated and powerful customer focus.

Companies have the ability to focus directly on more isolated, concentrated and relevant profitable customers. As a result, the flow and responsibilities associated with a traditional organizational chart have evolved into a customer centric focal design, referred to as the modern customer-oriented organizational chart. Although both organizational charts involve the same or similar features, it is the manner and layout of these features that differentiates these 2 styles.

Traditionally, an organizational chart was designed from the top down, according to management. The upper management resided at the top of the pyramid as the critical point of decision making, driving the organizational leadership. In tier 3, middle management worked closely with upper management in addition to the frontline personnel, located in tier 2. The frontline personnel worked directly with the customers, located at the bottom of the pyramid in tier 1. Frontline personnel serviced the customers as well as mediated customer information to middle management.

In a traditional organizational chart, the structure is established in a way that relies on tier hierarchy, where critical consumer information is forced to flow upwards. As the flow of information progresses further up the pyramid, the accuracy and aspects of the information can become diluted. This type of organizational flow can be compared to the childhood game, “telephone.” The goal is to have a number of children share information. Starting from the first person in line, a message is transferred from one child to another until it reaches the last child in line. The desired result is to have the message relayed at the end of the line, exactly as initiated with the first child. Typically, as the message travels along the line of children, it changes in meaning, relevancy and impact.

The traditional organizational chart structure has a similar shortfall in design. The decision makers in top management don’t have an accurate pulse of the customer. Upper management makes decisions that affect the products and services offered by the company. If the message from the consumer becomes distorted as it moves along the chain of command, management’s current and future decisions are unlikely to address consumer concerns. “Managers who believe the customer is the company’s only true “profit center” consider the traditional organizational chart, a pyramid with the president at the top and, management in the middle, and frontline people and customers at the bottom, obsolete.” (Kotler and Keller. 2009. pg. 120)

The traditional organizational chart focuses attention on the decisions and responsibilities of upper management. Customers, located at the bottom of the pyramid, are typically unseen and unintentionally considered irrelevant in the decisions made by management. Although management may intend to use customer related information passed up the pyramid in making decisions, many times the consumer factor is minimized and decisions regarding the company operations overshadow any consumer input. As a result, a large number of decisions are made in the interest of the company, as opposed to the consumer, who ultimately makes the purchase. This can be critical to a company’s success because if the company doesn’t address consumer issues, frustrations, needs, opportunities and desires, they will experience substantial losses in market share as numerous consumers defect to other market opportunities.

In contrast, the modern customer-oriented organizational chart inverts the traditional chart, focusing the importance on the consumer. “At the top are customers; next in importance are frontline people who meet, serve, and satisfy customers; under them are the middle managers, whose job is to support the frontline people so they can serve customers well; and at the base is top management, whose job is to hire and support good middle managers.” (Kotler and Keller. 2009. pg. 120) Customers are also extending along side the entire length of the pyramid. As such, “managers at every level must be personally involved in knowing, meeting, and serving customers.” (Kotler and Keller. 2009. pg. 120)

This new style of information flow is much more precise. It allows upper management to make decisions that are inline and directly related to consumers as they now can relate to their input. “Some companies have created an ongoing mechanism that keeps senior managers permanently plugged in to frontline customer feedback.” (Kotler and Keller. 2009. pg. 138) This new approach places all focus, at whatever level, on the needs of the consumer. Decisions are now made on optimal operational factors that will ultimately serve the consumer in the most efficient and profitable manner.

The traditional organizational chart and the new modern customer-oriented organizational chart are similar in that they share the relational dependency among the 3 company tiers (top management, middle management and frontline people). In both styles, business units and personnel must work together in assigned roles, reporting structures and job responsibilities. The roles in frontline people and middle management are relatively similar among the 2 styles. However, the biggest difference is that the new modern customer-oriented organizational chart demonstrates the recognized importance of all levels to be available to service and support the consumer.

In the traditional style, frontline people were the only directly connected group to the consumer. In the new modern style, all levels of management as well as employees are focused on being available to directly service the consumer. A perfect example of upper management’s involvement in daily operations and interactions with customers is the CEO of Dominos. “As a continuation of Domino's Big Taste Bailout campaign, Domino's CEO Dave Brandon, made the first of two surprise deliveries in Killeen, Texas to Angela Waldrep, the first lucky winner.” (Trading Markets. 2009. para. 1) In the past, top executives would never have considered being part of the front line service. However, in today’s ultra competitive business environment, an expanding number of top executives recognize the incredible insight that can be gained through such frontline experiences.

References
Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: Pearson Prentice Hall.

Trading Markets. Domino's Pizza CEO Delivers Pizza for a Year Prize to Killeen Resident. 2009. Retrieved June 15, 2009 from Trading Markets. Website: http://www.tradingmarkets.com/.site/news/Stock%20News/2254713/