Welcome to Class 14
Research:
Qualitative Domain
Part 1
Chapter 7
Qualitative Performance
Qualitative performance data is information
associated with an organization's:
1. Tactical and Strategic planning processes
2. Decision-making
3. Behaviors
4. Interaction with each of its stakeholders
Qualitative performance data is a window
into a firm's personality and character.
Generally, it is NOT POSSIBLE to measure the
impact of qualitative performance in quantifiable terms –
BUT …
– this should not be mistaken as a zero-influence factor.
The consequences of qualitative
performance are at least as significant in
determining a firm's long-term viability as its
financial performance.
Resources
Quantitative & Qualitative
Resources
Corporations have two major classes of crucial valuables:
(1) Quantitative resources
(2) Qualitative resources
The techniques and competence with which TMTs corral,
coalesce, and utilize these can determine whether a corporation
achieves its goals and objectives.
The focus of this lecture is on qualitative resources however
quantitative resources are highlighted for comparison purposes.
1. Quantitative Resources
$$$
Also known as Financial Resources
Quantitative resources = tangible and intangible assets
These resources can be measured and managed in numerical terms.
Tangible assets = facilities, equipment, inventories, receivables,
investments, financial resources, etc.
Intangible assets = patents, copyrights, goodwill, etc.
(Intangibles lack physical substance and are classified as
– noncurrent – items on the firm's balance sheet)
2. Qualitative Resources
Qualitative resources are sometimes referred to as
intangible resources.
These resources offer great value to an organization but
their precise worth cannot be measured or managed in the same
way as quantitative resources.
Although it is impossible to establish a precise value for
qualitative resources, they contribute significantly to a firm’s
long-term viability.
Qualitative resources coalesce to form
a company’s core capabilities
Qualitative resources include such things as:
 The Knowledge, Skills, and Abilities of all of its employees
 The Reputation of the firm
 The Positive Relationships the firm has established
 Its record of positive and productive –
 Decision-making,
 Actions, and
 Behaviors
 Its Infrastructure –
 Communication Networks,
 Operational systems and procedures, etc.
 Scenario and strategic planning expertise
Action = what you do
Behavior = how you do it
Performance
Qualitative Performance
Sustainable success by any corporation is
correlated to its qualitative performance
There are two primary areas of qualitative performance:
(1) Organizational Citizenship (OC)
(2) Strategic Positioning (SP)
Both OC and SP are propelled by unique performance drivers
and among these drivers none is more significant than
"culture."
Organizational Citizenship
Organizational Citizenship (OC) = a category of
specific corporate behaviors and relationships.
OC reveals the firms
PERSONALITY and CHARACTER.
A significant influence on OC is the firm’s
corporate culture.
Assessing Organizational Citizenship = investigating a series
of behaviors, actions, and decisions that reflect a firm’s:
1. Core personality –
(how key personnel act and react to situations, conditions, and people)
2. Core character –
(how they are likely to act and react to changing situations and conditions)
Create a database for Organizational Citizenship by:
1. Identifying strategic and tactical decisions by TMTs
2. Examining the associated actions and behaviors
Investigating Corporate Relationships
 Requires patience and perseverance.
 Do not expect to discover clear, unbiased, definitive information.
 Information related to relationships is, by its very nature,
subjective (It is dependent upon perspective).
 It is important to filter data collected. Search for collaborating
information to validate the initial finding.
Strengthening the "Researcher-created" Database
Two-pronged approach – for Reliability and Comparability
1) Collect qualitative information on the target company from a
variety of sources –
Filter the information – compare the opinions of different sources
and look for irrational biases within sources. Eliminate the
conclusions of sites that reflect these biases.
2) Collect similar data on other organizations –
Cross-company comparisons help determine whether the target
company is behaving within industry norms
Create a list of questions to guide the investigation
 Does the company seem to be sensitive to local communities?
 Is it responsive to local concerns?
 Does it have publicized or well-known difficulties with governmental
agencies, customers, competitors, or its own board of directors?
 Does the firm encourage its employees to be culturally sensitive?
 Does the firm appear to appreciate and respect its employees?
 What type of relationship does the firm maintain with its competitors?
(Competitors do not have to be enemies.)
See your textbook for an extensive list of questions
Organizational Citizenship
Employees
Environment
Customers
Community/
Culture
Competitors
Stockholders
Directors
Communication
Government
Public Persona
Vendors
(Suppliers)
Strategic Positioning
Strategic Positioning (SP) = a category of a firm’s creative and
planning processes.
This area of examination sheds light on the firm's commitment to:
(1) Being innovative, creative, and visionary
(2) Predicting and adapting to environmental changes
(3) Recruiting, developing, and retaining talented employees
(4) Executing strategic and tactical plans effectively
Competitive viability is dependent upon TMTs
who can craft strategically sound plans.
There are two types of TMTs:
(1) strategically incompetent
(2) strategically competent
It is important to identify which type is leading your target company
(1) Strategic Incompetence = Those who simply point out strategic
alternatives but fail to pursue these or do so erratically and
inconsistently (talkers and pointers)
(2) Strategic Competence = Those who actually take the appropriate actions
to strategically position the firm as it moves continuously closer to its
primary goals and objectives (the doers)
Strategic Incompetence
Incompetent TMTs can easily be identified. They will:
 Continuously find excuses for their failures
 Continuously pursue the same strategy and expect different
results
 Attempt to justify the validity of their failed strategies by
blaming the business environment (recession, inflation,
hyper-competition, etc.) for unfulfilled goals and objectives
Strategic Competence
Competent TMTs can be easily identified.
 They are willing to acknowledge their strategic and tactical
errors and use these as a spring board for future
improvements.
 They do not repeat their mistakes.
 They think out of the box. They think big, they think on
a global
scale.
 They think – INTERNATIONAL TRADE
What is international trade?
Why is it important to strategic positioning?
International trade = The exchange of
products and services between countries.
International trade = The potential for
unimaginable opportunities that can ensure
corporate growth and prosperity.
Create a list of questions to guide data collection
related to a firm’s Strategic Positioning
 Does the company's TMT think GLOBALLY?
 Has it taken any actions toward participating in the global market?
 If so, have these been effective?
 What plans have been announced for diversification or
divestitures? Do these seem realistic?
 Do Strategies appear to suggest growth in revenue and profits?
 Is there a clear plan for growth in appropriate areas?
 Is the Human Resource Management Department part of upper
management or is it simply a service department? Respect for
the value of human resources is an important ticket on the
train to strategic success.
(See your textbook for an extensive list of questions)
Performance Grading
Scale 1 to 5
Directions for Grading Follow
PLEASE study these carefully
End: Research: Qualitative Domain – Part 1
Assignment:
1. Study the following slides
2. Re-Read “Carefully” Chapter 7
Grading Scale 1 to 5
1 = Really Bad
2 = Bad
3 = Do not know
4 = Good
5 = Excellent
Organizational Citizenship – Looking for Outliers
Grading Extremes – 1 and 5
Employee Relations
[1] Strikes, discontent, class action lawsuits, violence
[5] Employee satisfaction, widely acknowledged as a good place to work, awards and
recognitions for employee sensitivity
Customer Relations
[1] Product recalls, misleading advertising, class action lawsuits, customer service
department is considered more like a customer insult department
[5] Customer satisfaction, reputation for quality products and/or services, strong, friendly,
and helpful customer service department
Competitor Relations
[1] Price wars, name calling in advertising, lawsuits
[5] Apparent mutual respect, does not sue or attack competitor in advertising campaign, has
strategic partnerships
Relationship with Directors
[1] Publicized discontent, public criticism of management by directors, rated as Board of
Shame by Fortune 500 Magazine
[5] Large number of external directors, maintain excellent relationship with those
directors, rated as the Board of Fame by Fortune 500 Magazine
Government Relations
[1] Attorney general lawsuits, SEC or IRS investigations, other governmental problems
[5] Received awards and highly recognized for good business practices, no record of
governmental problems, awarded government contracts
Environmental Record
[1] Apparent total lack of concern for the aesthetic and general physical environment
[5] Received awards for environmental sensitivity, consistently known as an
environmentally concerned corporate citizen
Community/Cultural Sensitivity
[1] Careless decisions that impact a community with no input from citizens, opens facilities
in spite of massive public protest, shows defiance and distain for those with
differing opinions, closes facilities with no apparent concern for workers
[5] Received awards and highly recognized as a good corporate citizen, supports
community and social/cultural activities
Stockholder Satisfaction
[1] Publicized discontent, calls for resignation of officers, class action suits, losses,
restatement of earnings
[5] Stockholders appear very satisfied (market price of stock rising), corporate earnings are
solid, dividends appear appropriate, market position increasing, assets and earned
capital increasing
Communication with the Public
[1] Secretive, closed to public comment, condescending in comments, refuses to
acknowledge or accept any responsibility for bad results
[5] Openness, honesty, comfortable with probing questions, no attempt to hide information
from the public
Public Persona
[1] Poor public image, profit more important than any other factor, facilities uninviting,
company considered to be a bully
[5] Solid public image, consider a good guy company, in all respects is viewed highly by
customers and non-customers, considered by a wide range of constituents as
committed to doing the right things
Vendor Relations
[1] Notoriously late in paying debts, lawsuits by suppliers, bankers, and/or other creditors
[5] Apparent solid respect by suppliers and other creditors, possesses exclusive licensing
agreements
Grading Scale 1 to 5
1 = Really Bad
2 = Bad
3 = Do not know
4 = Good
5 = Excellent
Strategic Positioning – Looking for Outliers
Grading Extremes – 1 and 5
Vision and Mission
[1] Vision and Mission statements hard to find, unclear and
confusing, or not readily available
[5] They are prominently displayed on the company website and/or
in other obviously visible places and they appear to be
focused, clear, and logical
Competitive Advantage
[1] The market share of the target company appears to be diminishing. The
company appears to be behind the eight ball, getting caught off
guard by competition. For the corporate-level strategy
consideration, the corporation has not yet established synergies
between the companies within its portfolio and there is no evidence
that this will happen soon. The company is in a weak position to
deal with competitive threats.
[5] The target company appears to have a solid rapport with its primary
customer base. Strong customer loyalty is obvious. Its products
and services are widely recognized. Its name is widely recognized.
Its market share is expanding. Its line of products and/or services is
expanding and they appear innovative. For corporate-level
strategies, synergies have been created between companies within
the portfolio and the corporation is in a strong position to deal with
competitive threats and to capitalize upon new opportunities.
General Environment
(Competing companies have little or no control over the general
environment. It includes such things as demographic, sociocultural,
political/legal, economic, and technological changes.)
[1] The target company is frequently caught off guard by general
environmental changes. The Management Discussion and
Analysis section of the target’s annual report indicates that
executives blame general environmental changes for all of
the company problems. (It was not our fault; we simply
could do nothing about the environment.
[5] Company anticipates changes and exhibits the ability to adapt
so that it can capitalize on new opportunities that may
evolve from a changing general environment.
Innovation
[1] The Company is continually caught off guard by competitive
development of new ideas, products, and/or services. The
target company does not innovate and does not support
KSA development by employees.
[5] The Company has a long tradition of promoting new thoughts
and ideas. It is innovative and has a reputation for new
discoveries and/or acquisition of new technologies,
systems, copyrights, patents and/or the development of
new types of services. The Company encourages KSA
development of employees at all levels of the organization.
Plans and Progress
[1] The Company’s is significantly less than stellar. The company’s
strategy is confused and unsuccessful. The Company’s
financial health is not strong and does not show systemic
improvement. The Company has formed no strategic
partnerships or if it has, they appear lacking in synergy or
diversions from the Company’s core competencies.
Company shows no significant interest in expansion.
Management does not have a global mentality.
[5] The Company has a history of successful expansion and
acquisitions. Its plans are announced every year, often in the
annual report and they seem well conceived and logical.
Progress is admirable and progress reports are publicly
announced. The Company continues to experience internal
growth as well as growth related to acquisitions and/or new
acquisitions.
End Class 14
Research:
Qualitative Domain
Part 1
Chapter 7