PowerPoint Presentation
to Accompany Chapter 4 of
Management, 8/e
John R. Schermerhorn, Jr.
Prepared by: Michael K. McCuddy
Valparaiso University
Published by: John Wiley & Sons, Inc.
Planning Ahead — Chapter 4 Study Questions
 What is the external environment of
organizations?
 What is a customer-driven organization?
 What is a quality-driven organization?
 What is organizational culture?
 How is diversity managed in a multicultural
organization?
Management 8/e - Chapter 4
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Study Question 1: What is the external
environment of organizations?
 Competitive advantage is 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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Study Question 1: 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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Study Question 1: What is the external
environment of organizations?
 The general environment — all of the
background conditions in the external
environment of the organization including:
–
–
–
–
–
Economic
Socio-cultural
Legal-political
Technological
Natural environment
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Study Question 1: What is the external
environment of organizations?
 The specific (task) environment — actual
organizations, groups, and persons with whom an
organization interacts and conducts business.
 Includes important stakeholders such as:
– Customers
– Suppliers
– Competitors
– Regulators
– Investors/owners
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Figure 4.1 Stakeholder analysis of value
creation for key constituencies of a business
firm: an open-systems approach.
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Study Question 1: What is the external
environment of organizations?
 Environmental uncertainty is a lack of complete
information regarding what exists and what
developments may occur in the external
environment.
 Two dimensions of environmental uncertainty:
– Complexity
– Rate of change
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Figure 4.2 Dimensions of uncertainty in
organizational environments.
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Study Question 2: 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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Figure 4.3 The importance of external and
internal customers.
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Study Question 2: What is a customer-driven
organization?
 Customers want:
– High quality.
– Low price.
– On-time delivery.
 Key customer service lessons:
– Protect reputation for quality products.
– Treat customers right.
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Study Question 2: What is a customer-driven
organization?
 Customer relationship management establishes
and maintains high standards of customer service
in order to strategically build lasting relationships
with and add value to customers.
 Supply chain management is the strategic
management of all operations relating to an
organization’s resource suppliers.
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Study Question 3: 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 by doing things
right the first time.
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Study Question 3: 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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Study Question 3: What is a quality-driven
organization?
 Quality and continuous improvement
– W. Edwards Deming emphasized:
• Constant innovation.
• Use of Statistical methods.
• Training in the fundamentals of quality assurance.
– Continuous improvement
• Seeking ways to improve on current performance.
– Quality circles
• A small group of workers who meet regularly to discuss ways
of improving quality.
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Study Question 3: 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 or modifications of existing ones.
– Agile manufacturing/mass customization
• Permits quick production of individualized products.
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Study Question 3: What is a quality-driven
organization?
 Quality and product design:
– A good design has eye appeal and is easy to
manufacture with productivity.
– Design for manufacturing emphasizes lower
production costs and high-quality results.
– Design for disassembly involves taking into
account how components will be recycled.
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Study Question 4: What is 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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Figure 4.4 Levels of organizational
culture—observable culture and core culture.
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Study Question 4: What is organizational
culture?
 Diagnostic questions for assessing cultural
differences:
– How tight or loose is the structure?
– Are decisions change oriented or driven by the status
quo?
– What outcomes or results are most highly valued?
– What is the climate for risk taking, innovation?
– How widespread is empowerment, worker
involvement?
– What is the competitive style, internal and external?
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Study Question 4: What is organizational
culture?
 Strong cultures:
– Commit members to do things that are in the best
interests of the organization.
– Discourage dysfunctional work behavior.
– Encourage functional work behavior.
 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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Study Question 4: What is organizational
culture?
 What is observable culture?
– What one sees and hears when walking around an
organization.
 Elements of observable culture:
– Stories
– Heroes
– Rites and rituals
– Symbols
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Study Question 4: What is organizational
culture?
 What is the core culture?
– Underlying assumptions and beliefs that
influence behavior and contribute to the
observable culture.
 Core culture and values:
– Strong cultures have a small but enduring set of
core values.
– Commitment to core values is a key to longterm success.
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Study Question 4: What is organizational
culture?
 Important cultural values include:
– Performance excellence
– Innovation
– Social responsibility
– Integrity
– Worker involvement
– Customer service
– Teamwork
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Study Question 4: What is organizational
culture?
 Value-based management:
– Describes managers who actively help to
develop, communicate, and enact shared values.
– Criteria for evaluating core values:
• Relevance
• Integrity
• Pervasiveness
• Strength
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Study Question 4: What is organizational
culture?
 Symbolic leadership
– Symbolic leaders use symbols well to establish and
maintain a desired organizational culture.
– Symbolic leaders behave in ways that espouse
organization’s values.
– Symbolic leaders:
• Use language metaphors.
• Highlight and dramatize core values and observable culture.
• Use rites and rituals to glorify performance.
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Study Question 5: How is diversity managed
in a multicultural organization?
 Diversity:
– Describes differences among people at work.
– How diversity is handled in the workplace
reflects the organization’s culture.
• Respect and inclusion.
• Disrespect and exclusion.
– A potential source of competitive advantage.
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Study Question 5: 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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Study Question 5: 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 or national
– Racial
– Generational
– Gender
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Study Question 5: How is diversity managed
in a multicultural organization?
 Challenges faced by minorities and women:
– Glass ceiling
– Misunderstanding and lack of sensitivity
– Sexual harassment
– Pay discrimination
– Job discrimination
 Minorities may adapt by exhibiting biculturalism.
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Figure 4.5 Glass ceilings as barriers to
women and minority cultures in traditional
organizations.
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Study Question 5: How is diversity managed
in a multicultural organization?
 Diversity leadership approaches:
– Affirmative action commits the organization to hiring
and advancing minorities and women.
– Valuing diversity commits the organization to education
and training programs.
– Managing diversity commits to changing the
organizational culture.
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Figure 4.6 Leadership approaches to
diversity—from affirmative action to
managing diversity.
Source: Developed from R. Roosevelt Thomas, Jr., Beyond Race and Gender (New York:
AMACOM, 1991), p. 28.
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