OB Exam #3
Social Media
"Find us on Facebook"
Competitive Advantage
-A special attribute/strength that allows you to outperform your rivals
Vertical Forward Integration
-Acquiring its distributors -Businesses moving forward to customers -- one step closer to customers
Vertical Backward Integration
-Acquiring its suppliers -Example: car manufacturer acquiring tire manufacturer to produce tires instead
Implicit Bias
-An embedded and unconscious (unintentional) prejudice that results in discriminatory treatment of others -Example: tall, white males are often seen as competent and effective leaders
Three Layers of Culture
-Artifacts -Espoused Values -Shared Assumptions
Example of Three Layers of Culture - Stonehill
-Artifacts: religious symbols (cross, chapel), Stonehill gear, the color purple -Espoused Values (Stonehill Mission/Vision Statement) -Shared Assumptions: being nice and kind to one another, saying "thank you" to the professor when you leave class
Entrepreneurial Culture
-Authority goes with ideas -Flexibility and creativity rule -Change and growth valued -Emphasis on entrepreneurship
Team Culture
-Authority is shared, distributed -Teams and teamwork rule -Collaboration, trust valued -Emphasis on mutual support
Hierarchical Culture
-Authority runs the system -Traditions, clear roles -Rules, hierarchy valued -Emphasis on predictability -Government agencies are an example
Rational Culture
-Authority serves the goals -Efficiency, productivity rule -Planning, process valued -Emphasis on modest change
Strong Culture
-Clear, well-defined, and widely shared among organization members -For this to exist, there must be agreement across employees about what is valued -Comes from policies and practices, social interactions, and leadership processes
Surface-Level Diversity
observable diversity such as demographic differences such as age, race, gender, and ethnicity
Types of Organizational Cultures
Team Culture, Hierarchical Culture, Entrepreneurial Culture, Rational Culture
What are the four growth strategies and their overall purpose?
-Concentration, diversification, vertical backward integration, and vertical forward integration -To increase the size and scope of current operations
Multi-Domestic Strategy
-Customizing products and advertising to fit local cultures and needs -Example: cows are sacred in Indian religion of Hinduism, so McDonald's in India does not provide burgers with beef
Uncertainty Avoidance
-Degree to which a society tolerates risk and uncertainty -Score High: need structure and rules to minimize uncertainty -Score Low: open to ambiguity and change
Indulgence
-Degree to which individual happiness and well-being, leisure time is important -Emotion-focused -Restrained society is the opposite
Power Distance
-Degree to which society accepts unequal distribution of power -High Power Distance: high respect for authority, such as managers -Ex of High Power Distance: Russia and North Korea -- authorities are never questioned
Individualism
-Degree to which society emphasizes individuals and their self-interest -Low score: collectivist, meaning communities and society comes first and individual priority and self-interest are second -High score: individuals are the priority; community comes second
Time Orientation
-Degree to which society emphasizes short-term and long-term goals -High score: save more and plan more to prepare for the future (Education is emphasized since it is a form of long-term investment)
Diversification
-Expansion occurs by entering related or new areas -Can be risky
Espoused Values
-Explicit -Endorsed by management -Provides insight into the relative priorities
Threats
-External analysis -Questions to ask: do we have new competitors entering the industry?; has there been a change in tastes among consumers?
Three Reasons Employees Resist Change
-Fear of the unknown (do not know what change will entail and how it will affect them) -Work overload (during periods of change within an organization, employees' workload often increases) -Loss of control (nothing they can do to prevent change) -Disrupted habits (may have to change how they do things)
Business Strategy
-Focuses on a single business unit or product line -What questions do we have at this level? = how are we going to compete for customers within this specific market or industry?
Functional Stategy
-Focuses on how each functional area within the organization (e.g., finance, operations, marketing, HR) can contribute to the overall business strategy -What questions do we have at this level? = how can we use resources within the function to support the business strategy? (e.g., Starbucks & ASU - talent development)
Organizational Change Strategies
-Force-Coercion Strategy -Rational Persuasion Strategy -Share Power Strategy
Weak Culture
-High variability within an organization
Strengths
-Internally done -Questions to ask: do we have a good market share; are we the dominant player in the industry?; do we have strong financing?
Glass Ceiling
-Invisible barrier to the advancement of women in the workplace -Causes: implicit bias and societal expectations of women
Transformational Change
-Involves making significant changes to an organizational structure, culture, strategy, or even its members -Could include massive layoffs and rehiring -Example: Netflix: was originally DVD rental service, but after a decade, it switched to online streaming
B2B: Business to Business
-Linking businesses with members of supply chain -Example: Walmart integrating suppliers' info systems with its own inventory to increase efficiency -Example: Dell computers set up with special websites that allow customers to manage devices online
Cost Leadership Strategy
-Low price to as many people as possible -Ex. Walmart - cheaper compared to Target -Ex. HTC - make electronics at lower level than competitors -- much cheaper than Apple and Samsung
Focused Low-Cost Strategy
-Low-cost product to a niche group of people (special market segment) -Ex. Dollar General: offers narrow selection of low-cost goods for customers looking for affordable necessities
Restructuring
-Making changes to cut costs and buy time to try new strategies to improve future success -Type: Downsizing: cuts the size of operating and reducing the workforce -- do this because they estimated wrong and want to try new strategies (example: layoffs)
Incremental Change
-Making incremental change to existing business model -- adjusting or tweaking existing ways to better align with emerging problems -Example: McDonald's -- incremental changes to menu to keep up with changing customer preferences and needs (McDonald's Pizza, McDonald's Salad Shaker)
Artifacts
-Observable -Surface-level -Symbolic -Easy to change (e.g., office layout to focus on innovation)
ASA (Attraction, Selection, and Attrition) Model
-Our tendency to be attracted to people that are like us -Individuals are attracted to, selected by, and retained in organizations whose members are similar to themselves in terms of demographical and psychological attributes -Similar people form a strong culture
Hofstede's Cultural Dimension
-Power distance -Uncertainty avoidance -Individualism -Time orientation -Indulgence -Masculinity
Bankruptcy
-Protects an insolvent firm from creditors during a period of reorganization to restore profitability -Insolvency: being able to pay off debt -Examples: General Motors, Marvel, Delta, Texaco
P2P: Peer to Peer
-Providing platforms for people to connect and share businesses -Linking people needing services to those willing to provide them -"Sharing economy:" people can borrow assets by other people -Example: Uber, Airbnb, Craigslist
Shared Power Strategy
-Pursuing change by engaging employees in assessing change needs, values, and goals -Time-consuming (get everyone together and listen to all opinions) -Creates high commitment amongst those involved in decision-making process
Divestiture (Restructuring)
-Selling parts of the organization to refocus on core competencies, cut costs, and improve operating efficiency -Often a result of too much diversification -If you feel like extra business lines are unnecessary, sell them -Example: PepsiCo bought Tropicana in 1998, but sold it to offer healthier brands and snacks since Tropicana products were too sugary and did not go well with new product profile focus of healthy products
Corporate Strategy
-Sets long-term direction for the organization as a whole -What questions do we ask at this level? = What business or businesses should we be in? (e.g., alphabet-google, business in life science, driverless cars, etc.)
Crowdsourcing
-Special type of social media strategy - outsourcing tasks to public instead of employees -Uses internet to allow customers to offer opinions and suggestions on productions in terms of product -Ex: Thread less (submit designs for t-shirts that are voted by people and votes determine which shirts are made)
Rational Persuasion Strategy
-Strategy that creates change through rational argument and empirical data -Compliance is most likely but need good facts, information, and communication -Best when change agent or manager has credibility -E.g., your presentations, research reports
What are the two forms of diversity?
-Surface-level -Deep-level
Shared Assumptions
-The core of culture, which is deeply embedded beliefs and values held by members of an organization as well as being formed over time through shared experiences, interactions, and communication among members -Unobservable -Rarely discussed (taken for granted) -Hard to change
What are challenges to sustaining competitive advantage?
-The world is fast-changing, shrinking the period of time competitive advantage can be maintained -Examples: first smartphone, first MOOC (massive open online courses), food delivery apps, etc.
How Is Organizational Culture Taught to New Members?
-Through socialization -- new members learn the culture of team and organization through other employees
Focused Differentiation Strategy
-Trying to sell products to a niche group of people -Ex. Ferrari: not interested in selling to average people, but top 1% -Ex. Wholefoods: interested in selling organic food to those willing to pay more
Differentiation Strategy
-Trying to sell to as many people as possible with a unique product -Can charge more by convincing goods are special and of higher quality -Marketing is very important for these companies -Example: Apple -- making products unique with IOS system (different design); people are willing to pay more because of its unique nature
Porter's Five-Forces Model
-Understanding the nature of competition within an industry -Elements: competitors, new entrants, suppliers (do we have alternative sources of supply?), customers (do they have many choices?), substitutes -If all these elements are high, it's an "unfavorable or unattractive" industry for strategy formulation
Lewin's Three-Step Model
-Unfreeze -Change -Refreeze
What are the e-business strategies?
-Use of digital technologies and internet to conduct business activities -B2C: Business to Customers -B2B: Business to Business -C2B: Customers to Business -P2P: Peer to Peer -Social Media (Crowdsourcing and Crowdfunding)
B2C: Business to Customers
-Using web and apps to link businesses to customers -Ex. Amazon
Globalization
-Viewing the world as one large market -Companies try to advertise and sell standardized products for use everywhere (one product and wouldn't customize product for each market) -Example: Gillette -- same razors in Italy and South Korea as America
What is the criticism of Hofstede's Cultural Dimension?
-Within-country variance - subcultures within one cultures are ignored (differences between east coast and west coast) -Ecological Fallacy: assumes that a generalized cultural value applies equally to all members of the culture
Opportunities
-external analysis -questions to ask: do we have a strong economy at this time?; is our industry growing or shrinking?
Weaknesses
-internally done -questions to ask: do we have a good market share?; are we the dominant player in the industry?; do we have strong financing?
SWOT Analysis
-the first step in how managers choose the right strategy for their company -Strengths, weaknesses, opportunities, threats
Organizational Culture
-the set of shared, taken-for-granted implicit assumptions that a group holds -gives "correct" ways to behave, essentially say this is "the way we do things here" -taught to new members -influences behavior at work
Force-Coercion Strategy
-using authority, rewards, and punishments to push change forward -temporary compliance is likely because once a punishment or reward is gone, employees stop complying -very useful in the unfreeze phase (first step in Lewin's model), so that people break out of hold habits
Vertical Integration
Acquiring suppliers or distributors
Liquidation
Business closes down and sells its assets to pay its creditors
Cultural Intelligence
The ability to adapt to new cultures and work well in situations of cultural diversity
Ethnocentrism
Belief that one's membership group or culture is superior to all others
Levels of Strategy
Corporate, business, functional
Porter's Competitive Strategies
Cost leadership, differentiation, focused low cost, and focused differentiation
Masculinity
Degree to which society values assertiveness, materialism compared to degrees of quality of life
Diversity
Describes attributes such as national origin, age, race, gender, sexual orientation, and other individual differences
Concentration
Expansion within an existing business area
Mission Statement
Formal summary of the aims and values of a company, organization, or individual
Unrelated Diversification
GE expanding into the finance industry in 80s-90s
What are the two types of global strategies?
Globalization and multi-domestic strategy
What are the two retrenchment strategies?
Liquidation and Restructuring
What makes an attractive market?
One that has buyer and supplier power, but does not have a threat from substitutes, competition, and new entrants
Related Diversification
PepsiCo buying Tropicana
Crowdfunding
Raising funds for a project or venture from a large number of people through an online platform
What are the three restructuring and divestiture strategies?
Retrenchment, bankruptcy (Chapter 11), and divestiture
Think about Class Discussions!
Review them!
Retrenchment
Seeks to correct weaknesses by making radical changes to an organization's current ways of operating
Sustainable Competitive Advantage
The unique and enduring strengths of a company that allow it to outperform its competitors consistently over a long period of time
Types of Change
Transformational or Incremental
C2B: Customers to Business
Using app and web to link customers to businesses to provide products or services (opposite of B2C)
When does trouble arise in organizational culture?
When espoused values don't align with shared assumptions
Deep-Level Diversity
differences in values, personality, and work preferences that are more difficult to observe
Inclusion
how open the organization is to anyone who can perform a job, regardless of race, sexual preference, gender, or other diversity attributes
Change
making actual changes in the system
Unfreeze
preparing the organization for change
Refreeze
stabilizing the system after the change
Culture Shock
the confusion and discomfort that a person experiences when they are in an unfamiliar culture
Strategic Management
the process of formulating and implementing strategies to accomplish