Business Strategy and Organizational Culture

Introduction

Culture Web

Organizations are able to adapt to change as well as implement their strategies depending on the organizational culture and leadership style. Culture can be defined as the systems, structures and practices, which are, define regular processes of an organization. Culture also encompasses things taken for granted such as assumptions but which affect the daily operations of an organization in a significant manner. A resilient organizational culture persists despite of changes both in internal and external environments. A culture web for a Surveying department of a municipal council is illustrated as follows:

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ST
  • Leadership style
  • Characters
  • How things used to be
  • “Narrow Squeaks:
  • “Its their fault”
SY
  • Reserved parking
  • Management suite
  • Secretaries as “domestic support”
  • Back-door entry for staff
  • Dress code
R
  • Committees
  • Formal induction
  • Post/email
  • Do your job
  • Overload
  • Deference
  • Blame someone
PAR
  • Good service
  • Professional standing
  • Problem solvers
P
  • Chief officer
  • Triumvirate
  • Committees
  • Members
C
  • Budgets
  • Service plan
  • Complaints
  • Emergencies
O
  • Functional
  • Hierarchical
  • Branches/devolved
  • Patriarchal/autocratic

The culture web illustrates the extent to which culture is associated with organizational heritage, the duration of a particular culture, degree of uniformity and the challenges, which could undermine it (Graham, 2005). In this case, the main cultural feature is high quality service, which is a major objective of the surveyors’ department and the entire local government. Professional standards are identified as the fundamental pillar of services rendered to customers. Each departmental structure is linked to specific professional standards, which determine its legitimate objectives and purposes. Qualified and talented professionals who ensured that services are effectively delivered and conventions reserved headed departments. They took charge of departmental operations in order to translate various elements of organizational strategy in an appropriate departmental response.

Management structure across all departments including the surveyors section was characterized by a hierarchal leadership style that was also structured and bureaucratic. Budgeting and devolved governance defined the procedures for managing such a complex organization. Proactive managers in the surveying department cherished a democratic and rational approach in solving problems. Complaints and challenges were processed in accordance with professional guidelines and organizational culture (Graham, 2005).

Relationship between culture and strategy

The mayor of the municipal council applied a different paradigm where an appropriate organizational strategy defined a comprehensive culture, which ensured that organizational objectives and goals were achieved across all departments including the surveyors’ docket. This demanded the cooperation of different departments in a teamwork approach. Departmental heads were powerful figures of managerial hierarchy who subscribed to defined professional standards that justified activities and operations. Departmental functions were therefore largely preserved and conservative (Graham, 2005).

Essentially, organizational strategy was designed through a decentralized approach, which ensured that views of the entire workforce were collected. However, departmental heads filtered this information in order top ensure that professional ethos and quality standards were preserved (Graham, 2005). Established procedures and professional standards were the fingerprint of organizational strategies. Dedicated departmental heads also preserved the organizational culture.

Difficulty in transforming organizational culture

Linkages

Powerful persons in leadership positions ensure that organizational structures and routines are preserved despite of changes, which emerge. In addition, power bases are conserved where hierarchies in authority are sustained through formal structures for decision-making, budgeting process and benefits provided to senior managers. In this case, the top management was privileged to executive offices, secretarial services and elegant reserved parking areas (Graham, 2005). Subordinate workers were separated from their managers in terms of office area, entrances and even parking. Surveyors associated with other surveyors in neighboring councils and this type of linkages extended to other workers such as teachers and counselors. Professional associations linked people having similar working portfolios together. Professional networks formed the platform for designing professional guidelines, ethics and regulations.

Reality of change

Surveyors adhered to the defined routines at work on a daily basis as the underlying concept of organizational strategy. The surveying department was therefore characterized by institutionalized professional guidelines and standards which were translated into structure and culture of the organization. Individual surveyors concentrated on their working schedules and routines. However, change is inevitable in the modern globalized and dynamic world. Organizations, which ensure that culture is preserved and subsequently shapes trends in designing organizational strategy, are vulnerable to changes in society (Graham, 2005). The intersections of these change processes and organizational structures and processes create challenges, which could threaten their differential advantage in the market and relevance in society. Adapting to change is central to proper positioning of policies and strategies in a dynamic and competitive market. As much as, the surveying department was technical in nature, organizational outcomes are reliant on professional standards and a bureaucratic management alone.

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Threat of Entry- Competitor entry into the market is determined by several factors which include “economies of scale, economics of scope, and capital requirement for entry, access to distribution channels, learning curve, and expected retaliation as well as differentiation” (Graham, 2005). New entrant experiences small volumes of sales coupled to substantial costs of setting up the business as compared to established rivals. Large firms with a huge capital base and consolidated production units are better placed to benefit from economies of scale than small firms combined. Operation and running costs are equally high for entrants. Access to distribution and marketing channels is also a challenge faced by entrants.

The power of buyers

High power of buyers is witnessed if the products and services in the market are undifferentiated while purchasing volumes are significantly high and fewer buyers are present.

Power of suppliers

Few market suppliers lead to high suppliers’ power while the bargaining power of customers is reduced. The cost of switching from one supplier to another is also high since prospects of supplier integration in the future are feasible.

Threat of substitutes

The market price for a company’s products and services is determined by threat of substitutes. Introduction of product substitutes could render existing products obsolete or superfluous. The probability of customers switching from a traditional product to a substitute is determined by their perceptions on quality and value issues with either product (Graham, 2005). A perceived high value from products substitutes makes it easy for customers to switch.

Competitive rivalry

Competition in the market increases under conditions where threat of entry is probable, either power of suppliers or buyers are high and threat of substitutes is likely to challenge market position of existing company products (Graham, 2005). Competition also increases as companies strive for market leadership. Presence of many competitors creates oversupply of products and services. Extra competition is witnessed in markets where global customers are present.

Markets that have a particular market leader are more established than those where different companies are engaged in rivalry over the leadership position. A new entrant in the market is therefore likely to experience challenges ranging from substantial initial capital outlay, operational costs and stiff competition from existing brands (Graham, 2005). However, threat of entry becomes manageable if customers perceive the new products and services to be of higher quality and value than existing commodities in the same market. A supplier network, which limits the number of suppliers in the market effectively, takes over different market segments due to consolidation of production, distribution and maintenance services, which meet customers’ needs and demands.

Fewer buyers in a highly fragmented market are privileged to have many alternative sources increasing their bargaining power. Purchasing volumes are subsequently high. The hydraulic hose market in Finland is divided into maintenance, over-the-counter and OEM segments. A multinational firm, Junipoly Hefley, possess elaborate production processes which supply mass production of raw materials in the hydraulic hose market. Products in this industry are undifferentiated and are manufactured in accordance with SAE standards (Graham, 2005). All the major suppliers in Finland ensure accurate deliveries are possible and customers’ demand for affordable prices is met. The maintenance segment of the market demands for instant deliveries of spare parts price notwithstanding.

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Customers in the OTC market segment are equally sensitive to lower prices. The hydraulic hose market is undifferentiated where branded products are limited in supply. Suppliers’ power is high since the supply chain markets are concentrated with manufacturers also taking charge of distribution companies (Graham, 2005). Few suppliers are therefore in this market with defined market leaders. Companies which engage in selling supportive commodities play a subordinate role in the market. Threat of product substitution is unlikely due to the exorbitant cost of production materials. Customers find it expensive and inconvenient to switch from one supplier to another.

Essentially, hydraulic substitutes are unavailable in the Finland market. Barriers for entry are significantly high in the hydraulic hose markets in Finland. Maintenance markets experience a high power of buyers since no new market entrants are expected in the near future. Hefley Finland is currently a market leader in the hydraulic hose market. Markets for hydraulic hose are therefore considered stable since unnecessary rivalry is absent. Junipoly Hefley has a widespread geographic diversity having a significant presence across all continentals. Environmental conditions and manufacturing processes are simplified and stable (Graham, 2005). Market trends are predictable due to their typical oligopolistic nature. Cost efficiency and quick deliveries have rendered Junipoly Hefley a monopoly in the industry. The maintenance segment of the market is currently competitive with rival maintenance service companies making entry with strong brands. OTC segment is low price sensitive and brand-loyal. In order for Junipoly Hefley to safeguard its position as a market leader, it is important that it works out a comprehensive strategy to introduce established brands in addition to training its maintenance personnel on marketing skills.

Reference list

Graham, T., 2005. Business Strategy. London: Butterworth-Heinemann.

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