The Role Of Culture In Strategic Management Commerce Essay

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The nature of strategic management is different with other aspects of management. It is not only process of strategic decision making, it also concerned with complexity occur from different situations within organisation (Johnson 2005, p15).

Manager with strategic management skill needed to make judgements and decisions based on conceptualisation of difficult topic. Due to this the manager have to understand the three main elements of strategic management which includes understanding the strategic position of an organisation, strategic choices for the future and turning strategic into action (Johnson 2005, p16).

In strategic management, culture from inside and outside the organisation will influence the strategic development process, this is because the resources and environmental on the organisation are likely to be clarify in term of the assumptions occur in that culture (Gerry 2005).

According to Pondy (1967), organisational culture is the specific collection of norms and values that are shared by a group of people in an organisation and that organize the way they interact with each other and stakeholders.

It is hard for a leaders to define culture in an organisation, therefore, some of the significant issues relating to the role of organisation culture will discuss in this assignment. Moreover, in this assignment we will discuss the importance of culture in order to achieve high levels of organisational effectiveness.

Strategic Management

To successfully developing good strategic management, there are three main element need to understand which includes strategic position, strategic choice, and strategic in action, as shown in Figure 1. Understanding the strategic position is concerned with identifying the impact on strategy of the external environment, influence of stakeholders, and the organisation's strategic expectation and capability (Johnson 2005, p17). In this element, culture from inside and outside the organisation will influence the positioning because capability, expectation, value, and resources are based on the strength of the organisation. There are several analysis involve in this element such as SWOT analysis, PEST analysis, and etc.

Figure 1 3 main element in Strategic Management (Johnson 2005)

According to Johnson (2005), this element is important for Dell when they plan to growth their company to next phase. The decision to increase consumer electronics was influenced by a combination of strength in digital technologies, market opportunities and expectations about the company's financial situation. By understanding this element, will form a clear view of the main influences for current and future welfare of an organisation.

Next, strategic choices concern on future strategy at both the corporate levels and business unit, and the choices for developing strategy in term for both the method of development and directions in which strategy might move on (Johnson 2005). In this element, the leaders have to identify the competitive advantages base on their market, customers, and the organisation strategic capability. As mentioned on previous point, Strength of digital technologies of Dell will help them increase their competitive advantages.

Last element is strategy into action. This element is to ensure that strategies are works in practice. Managers have to structure the organisation includes organisation structures, processes and relationships. According to Johnson (2005), Dell was structured around six manufacturing units and three regional businesses units in order to successfully implement the new strategy.

However, developing strategy normally result in culture change. This includes the needs of understanding the strength of the organisational culture which will influence the approaches to change before strategy in action. Therefore, identify the role of culture is very important process on strategy position before proceed to others element.

Organisational Culture

In order to successfully developing new strategy, leaders of the organisation should identify role of the culture in strategic management. Obviously, culture has appeared on the agenda of management theorists for a long time. Different organisations form a different culture which is hard to define. In To form a powerful and successful organisation, understanding of culture is a must for the leaders of an organisation.

Handy (1993) had identified four type of organisational culture includes power culture, role culture, task culture, and person culture. Different type of culture has different important role in an organisation. According to Handy (1993):

Power culture - usually exists in a part of a larger business or small business which depends on the small numbers of individuals to make key decisions.

Role culture - usually exists in large hierarchical organisations in which everyone has their own jobs to perform and following the rules.

Task culture - usually exists when teams are formed to complete a particular tasks in which the team is empowered to make decisions.

Person culture - usually exists when individuals are empowered to make decisions for themselves.

Understanding the type of culture gives a better understanding of the role, advantages and disadvantages of that particular culture, thus helps the leaders to determine what cultural changes are necessary in order to developing new strategy into the organisation.

Besides that, Low (1997) had mentioned that an organisation in different nation will have different organisational culture. For example, China branch of Singapore base companies who must clearly define the Chinese culture and the Singapore culture are different (Shi 2001). From this, we note that the identification of national culture is important when defining an organisational culture.

Due to this, Hofstede (2001) had established 5 dimensions of national culture. These frameworks are widely used in defining national culture or multicultural organisations by the leaders.

Individualism - collectivism

In individualist sides, individuals concern on themselves and their family only. In the other hand, collectivistic mean individuals belong to groups that look after them in exchange for loyalty (Ana 2006).

Uncertainty avoidance

Refers to "The extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations" (Hofstede 1991, p113). Hence, it deals with the need for well-defined rules for prescribed behaviour.

Power distance

This dimension reflects the authority relations in society and the consequences of power inequality. It influences hierarchy and dependence relationships in the family and organisational contexts (Ana 2006).

Masculinity-femininity

Dominant values in feminine countries are caring for others and quality of life whereas in masculine countries are achievement and success (Ana 2006).

Long-term orientation

This stands for the fostering of virtues oriented towards future rewards, in particular perseverance and thrift (Hofstede 2001, p359). This dimension represents a range of Confucian-like values and was termed Confucian Dynamism (Bond 1987).

Hofstede's framework is widely use around the world, however it have several drawbacks need to concerned by the users. The users should aware that not all region and individuals with subcultures fit into the model although when this model applied to general population it show quite accurate results. Moreover, the experimental work of the first four dimensions was done in 1967-1973, hence the finding might outdated. However, Sivakumar (2001) believe that culture change in very slow rate and relative cultural differences should be extremely persistent.

In the other hand, Johnson (2005, p119) stated that organisational culture consist of four layers includes values, beliefs, behaviours and taken-for-granted.

According to Mintzberg (1988) while developing strategy elements mentioned above, it is important to follow the process which takes place within a context of taken-for-granted and tacit beliefs and assumption about the organisation and its environment - the organisational paradigm which also known as culture web, as shown in Figure 2.

Figure 2 Culture Web (Johnson 2005, p202)

Understanding the culture web helps the organisation leaders to understand the norms and based of the culture in the organisation before making any changes and new strategy implementations.

However, culture change means restructure the organisation image, philosophy, values and new way of understanding organisational life. Therefore, it is important to understand the present culture before restructure it to help in developing new strategy. Deal and Kennedy (1982) argue that culture is the single most important factor accounting for success or failure in organisations.

This theory was supported by Hampden-Turner (1992) definition of culture which culture comes from within people and is put together by them to reward the capabilities that they have in common, gives continuity and identify to the group. Refer to the Fairborn Fire Department case study (Harlow 1994), Chief Duggan found that fire service leaders must recognise the importance of organisational culture when desiring to make changes successfully and refrain from making rapid and radical changes which may cause culture chock.

The theories discussed above, majority are from the perspective of managers, rather than workers, and usually emphasis the leader's role in creating, maintaining or transforming culture.

According to Bate (1994), anthropological stance people think that culture is not readily changed or manipulated, and is not created or maintained primarily by leaders. This is because the early leaders' beliefs and behaviours had been translated into assumption operate at sub-conscious level which shared by all organisation members, there are hard to replace by new organisational values and beliefs expressed by new leaders.

Moreover, Schein (1992) also argue that leadership today is essentially the creation, and at the times the destruction and reconstruction of culture. In fact, he stated leaders should have the ability to understand and work within the culture. Therefore, leaderships and management competency is very important.

Strong VS Weak Culture

Apparently, some organisational show that their culture strength are higher than others. Many researchers assume that all organisations with strong, pervasive culture will gain benefits because it fostered commitment, motivation, identity solidarity which in turn, facilitated internal coordination and integration. Seeing culture as important for developing new organisational strategy, different view of organisational culture is required so that the worker can adapt to new ideas and perspective.

Organisation with strong culture will increase their competitive advantages over their rivals. Beside this, they also enjoy many others benefits such as better working environment, worker morale increased, openness to new ideas and sharing of information results in better team work,.

One of the Wal-Mart case studies shows the benefit from strong culture. Founder Sam Walton's concern and respect for staff from the foundation of the company creates an environment of trust that persists to this day. Walton met staff, calling them by their first name and encouraged change to maintain the competitive edge (Sadri G 2001).

However, some noted potential dysfunctions of a strong culture, which mean strong culture, may not always be desirable. Schein (1992) supported argues that stable strong organisational culture does not mean that they will be reluctant to change. He suggests that modern organisational culture have to be strong but less pervasive in term of behaviour and norms patterns.

Morgan (SHU 2010) case study supported Kathryn theory which there facing problem with their customers orders backlogs and long waiting lists over ten years. In 1989, Morgan only produces 18 cars per week and due to order backlog, the manager wish to increase the production per week. But because of the strong culture build in the past, the workers are resisting to make any strategy changes. It took 10 years for Morgan to change the production line and increase their production to reduce waiting lists problem but there are still some bad practice found within the work space. They should make more suitable changes to cope with the environment in order to maintain a long term success.

For a weak organisational culture, it could be the one that is loosely joined. It does not mean that it can't support the organisation. In a company that needs to grow through innovation, weak culture may encourage individual contribution and thought; hence, it becomes a valuable asset. Besides that, if this group of people having the same goal then this can make for a vibrant, forward thinking work force that assist management in developing strategy for the future.

However, if this group of people are too individual, weak culture might lead to conflict among each others. In this situation, the group culture had been taken over by the culture of those individuals which mean only they are right. Although, weak organisational culture is innovative but this situation will influence the developing of new strategy and result in stopping the company from growing.

Conclusion

In strategic management, the defining the role of organisational culture is essential for the leaders before developing new strategy. Culture measure the range of management thinking, hence, it is unique and strongly appeals to management's concern with projecting an image of the organisation as a community of interests. Moreover, organisational culture influences the decision making of the leaders in the 3 main element of strategic management especially during strategy position process.

Different type of culture in an organisation identified by Handy, playing different role in strategic management. The organisation leaders should merge the strategy with the type of culture identified so that it helps in growing the company and increase the competitive advantages. However, changes is required if the new strategy developed having different norms and value compare with the present culture.

Therefore, leaders should aware when analysing the culture of the organisation using method such as Hofstede's frameworks, the culture web and etc.

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