LECTURE 4

Course: Strategic Management (CUEB 406)

Level: 4.2

Topic: Corporate Culture and strategy

Lecturer: Dr T Mufudza
INTRODUCTION
 Lecturer to ask students to comment on the
picture below and after that declare today’s
lecture.
TODAY’S LECTURE

Corporate Culture and strategy

PRESENTATION LAYOUT
 Lecture Objectives
 Introduction
 Definition of culture in general
 Definition of corporate culture
 Characteristics of organisational culture
 Aligning Corporate Culture with Strategy
 Why Corporate Culture and Strategies constantly change
 Conclusion
 References
 Lecture Evaluation
 LECTURE OBJECTIVES

 By the end of the lecture, students should be

able to:
1) Define the term organisational culture.
2) Explain the importance of aligning
organisational culture with strategy.
3) Give examples of organisational cultures
prevailing in companies and how they
match with strategies pursued by these
companies.
4) Give reasons why corporate culture and
strategies constantly change.
 DEFINITION OF CULTURE IN
GENERAL
 Culture refers to the sum of attitudes,
customs, and beliefs that distinguishes one
group of people from another.
 It is transmitted, through language, material
objects, ritual, institutions, and art, from
one generation to the next.
 DEFINITION OF CORPORATE
CULTURE
 Organisational culture in an organisation’s
personality.
 It is the way of thinking and doing things in it
which is shared by most or all of its members
and which must be learned by new members
if they are to survive and progress in the
organisation.
 CHARACTERISTICS OF
ORGANISATIONAL CULTURE
 Thus organisational culture
 1) Is learned
 2)Is shared
 3)Is transmitted
 It is cultivated by management, learned by
employees and passed on to new employees.
 CHARACTERISTICS OF ORG
CULTURE CTD
 Organisational culture spells:
 1) How people behave with each other.
 2) How people treat customers.
 3) How people view their relationships with
stakeholders
 4) People’s response to energy use,
community involvement, absence at work etc
 5) Attitude towards employee training,
professional development etc
 CHARACTERISTICS OF ORG
CULTURE CTD
 Where a well developed organisational
culture exists, there is much less distinction
between formal and informal norms,
activities, sentiments and interactions.
 However not all organisations have a single
strong culture.
 Others have several strong differing
subcultures leading to political power
struggles.
ORG CULTURE
 Organisational culture may be driven by:
1) Vision – Where the organisation wants to go
in the future.
2) Mission statement – summary of the beliefs
of the organisation and where it is now.
Organisational culture may be reflected in the
1) Attitude and behaviour of the leadership
ORG CULTURE
2) Attitude to the role of individuals in the
workplace eg open plan offices
3) Logo of the organisation
4)The image it presents to the outside world
5)Its attitude to change
 TYPES OF CULTURE
 Quinn and McGrath (1985) developed their own four types of
culture namely the market, adhocracy, clan and hierarchy
culture.
1. The Market culture – characterised by rational decision making
and goal-oriented employees.
 It focuses on competition, achievement and “getting the job
done”
 It is a results based organisation that emphasises on getting
things done.
 Leaders are tough and have high expectations.
 Management Is very particular about the reporting system, and
reports have to be sent by day end.
 The emphasis on winning keeps the organisation together.
(Simbisa Brands)
ADHOCRACY CULTURE
 It is characterised by risk oriented and
charismatic leaders and value driven
organisations eg Apple, Microsoft.
 It is characterised by a dynamic and creative
working environment.
 Employees take risks and leaders are seen as
innovators and risk takers.
 Experiments and innovation are the bonding
materials within the organisation.
THE CLAN CULTURE
 The clan is characterised by participation,
consensus and concern for others, friendly
working environment, and it is similar to a
large family.
 Family like, with focus on mentoring,
nurturing and ‘doing things together’
 New employees also try their level best to fit
in the clan oriented culture and make the
organization a better working place
 Most NGOs and family owned businesses
adopt this culture
THE HIERARCHY CULTURE
 This culture is characterised by hierarchical,
rule based authority that values stability and
risk avoidance eg govt bureaucracies.
 It is a formalised and structured work
environment and procedures decide what
people do.
 Long term goals are stability and results.
 Trustful delivery, smooth planning and low
costs define success.
ALIGNING CORPORATE CULTURE
WITH STRATEGY
 Getting corporate culture right is important,
which is why organisations invest heavily in
shaping their cultures and influencing the
behaviours of their workforces.
 Organisations need to create cultures aligned
with their business strategy.
 There must be a right mix of strategy and
culture in order to have business success.
ALIGNING CORPORATE CULTURE
WITH STRATEGY CONTINUED
For example:1) Pursuing a strategy of
innovation in a dynamic market
(differentiation) can only succeed with an
inquisitive culture where the workforce
pushes boundaries and management
encourages new ideas and constructive risk
taking.(Adhocracy is most suitable here).
2) Pursuing a strategy of high volume, low cost
processes can only succeed within a
disciplined culture where the workforce
operates in an efficient manner with a
mindset for continual cost improvement.
ALIGNING CORPORATE CULTURE
WITH STRATEGY CONTINUED
 Culture may fail to shift with strategy
resulting in a culture lag.
 Performance risk arises.
 Given that cultures cannot change
immediately, keeping cultures aligned with
strategy is a significant challenge due to the
constantly changing dynamics of markets.
 WHY CORPORATE CULTURE AND
STRATEGIES CONSTANTLY CHANGE
 Cultures must be adjusted to help realise
new strategies.
 The triggers that make strategic change and
therefore cultural change necessary can be
external or internal.
 External- price controls, competition, change
of consumer needs etc
 Internal – Mergers, new product
development, new market entries etc
 CONCLUSION
1) What do you understand by the term
organisational culture.
2) Why is it important to align organisational
culture with strategy?
3) Give examples of organisational cultures
prevailing in companies and how they match
with strategies pursued by these companies.
4) Give reasons why corporate culture and
strategies constantly change.
Evaluate how organizational culture has affected
strategies pursued by your organization in the past
10 years (25 marks)
 REFERENCES
 Cole G.A, (2000) Strategic Management, Ashford Colour
Press
 Dwyer L , Teal G & Kemp S (1998) Organisational culture &
strategic management in a resort hotel, Asia Pacific Journal
of Tourism Research, 3:1, 27-36,
 Johnson G. and Scholes K. (1997) Exploring Corporate
Strategy, Prentice Hall International.
 Modern T. (1997) Business Strategy and Planning, McGraw
Hill Book Company.
 Norton D.P. and Kaplan S.R (1996) Translate Strategy into
Action – The Balanced Scorecard, Havard Business School
Press, Boston Massachesettes.
 Porter M.E. (1980) Competitive Strategy, The Free Press
 Stoner A.F. and Freeman E.R. (1992) Management Prentice
Hall International