Management, 7e
Schermerhorn
Prepared by
Michael K. McCuddy
Valparaiso University
John Wiley & Sons, Inc
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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?
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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.
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What is the external environment of
organizations?
 Companies may achieve competitive
advantage in many ways, including:
• Products
• Pricing
• Customer service
• Cost efficiency
• Quality
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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
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What is the external environment of
organizations?
 The specific (task) environment—actual
organizations, groups, and persons with
whom an organization must interact in order
to survive and prosper.
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What is the external environment of
organizations?
 Stakeholders in the specific environment
broadly include:
• Customers
• Suppliers
• Competitors
• Regulators
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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
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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.
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What is a customer-driven organization?
 Customer service lessons:
– Protect reputation for quality products.
– Treat customers right.
 Assessing customer needs—what, where,
and when.
 Adding value—high quality, low cost, and
on-time delivery.
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What is a customer-driven organization?
 Customer relationship management
involves taking a strategic customercentered focus in building relationships and
adding value.
 Supply chain management involves
strategic management of all operations
relating to suppliers of resources.
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What is a quality-driven organization?
 International Standards Organizations (ISO)
certification
– Indicates that a company meets a rigorous set of
quality standards
 ISO 9000
– Indicates that a company has met rigorous
quality standards in all operations
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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
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What is a quality-driven organization?
 Crosby’s “four absolutes” of management
for total quality control:
– Quality means conformance to standards.
– Quality comes from defect prevention, not
defect correction.
– Quality as a performance standard must mean
defect-free work.
– Quality saves money.
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What is a quality-driven organization?
 Quality and continuous improvement
– Deming’s basic proposition is that the cause of
quality problems may be:
• Some component of the production/operations
process.
• Internal to the production/operations system itself.
– Continuous improvement
• Always looking for new ways to improve upon
current performance.
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What is a quality-driven organization?
 Quality circles
– 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 and increased customer satisfaction.
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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
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What is a quality-driven organization?
 Quality and product design:
– A good design has eye appeal and is easy to
manufacture with productivity.
– A robust design can withstand manufacturing
fluctuations.
– Design for manufacturing emphasizes lower
production costs and high-quality products.
– Design for disassembly involves taking into
account how components will be recycled.
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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.
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What is the internal environment and
organizational culture?
 Strong cultures
– Commit members to do things that are in the best
interests of the organization.
– 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
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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.
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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.
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How is diversity managed in a
multicultural organization?
 Characteristics of multicultural
organizations:
– Pluralism
– Structural integration
– Informal network integration
– Absence of prejudice and discrimination
– Minimum intergroup conflict
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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
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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
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How is diversity managed in a
multicultural organization?
 Personal challenge of managing diversity:
– Accepting the goal of diversity maturity
 Organizational challenge of managing
diversity:
– Changing organizational culture
– Changing organizational mission and practices
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