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Organisational Culture AND ITS OWN Impact On Strategy Business Essay

A distinct attribute of an effective organisation is quality over what's to be achieved. A clear purpose can enthuse employees, managers and senior managers because of the similar values they may discuss (Scott & Jaff, 1993). A perspective is the desired state the company aspires to perform, values are the core principles of the organisation and the objective gives reason to why an organisation exists (Kaplan et al, 2008). They need to be clear and concise and easily comprehended by all degrees of the company.

Carpenter et al () emphasised three reasons why clearness of the perspective and mission are essential; employees who've a better understanding of the objective and vision are able to have a greater awareness of the organisations strategy and exactly how it is integrated. Secondly a conclusion is given of how strategy helps achieve the perspective and mission of the company. Finally they give assistance to strategy development as they guide the strategy which guides the organisation. Beliefs create the foundations of any organisation, what the company promotes of their working culture can greatly impact decisions on every level thus a company's strategy for the near future will be produced around these key concepts and values. They allow the formation of the organisation's purpose; the fundamental reason behind existence.

Case example; Virgin Atlantic versus Ryanair

Virgin Atlantic and Ryanair are successful air travel companies who have contrasting strategies and therefore have very different purposes.

Ryanair is a concentrated, low cost flight who offers a no frills service to customers. The strategy of Ryanair is cost efficiency and low fares partnered with fast turnaround times of plane in order to maximise profit;

Vision, Value and objective of Ryanair

Vision

To offer low fares that create increased traveler traffic while keeping a continuous concentrate on cost-containment and working efficiencies.

Values

Cost reliable = low fares & low costs.

Mission

To firmly build itself as Europe's leading low-fares slated passenger air travel through continued advancements and expanded offerings of its low-fares service.

Source: http://www. ryanair. com/doc/investor/Strategy. pdf (2013).

The purpose of Ryanair is therefore to give a cheap, no frills trip service that is profitable.

Virgin Atlantic is a leisure air travel that is able to diversify into unusual leisure routes. An alternative demographic is targeted which means their vision, ideals and objective are opposite to people of Ryanair;

Vision, Value and Mission of Virgin Atlantic

Vision

The success of our three year strategy requires us to make on these foundations by focussing on the business enterprise and leisure market segments and driving a vehicle efficiency and efficiency.

Values

Caring, genuine, value, fun, invention.

Mission

To grow a profitable flight where people want to fly and folks wish to work.

Source: http://www. virgin-atlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp (2013)

The overall purpose of Virgin Atlantic is therefore to develop a profitable flight, focussing on business and leisure marketplaces, where people wish to fly and people want to work.

The above cases show how the visions, value and mission of organisations are catered with an organisations needs allowing a technique to be molded to attain the organisations goal and vision aligning with central principles of the given company. Each company achieves there strategies in several ways which is reviewed further on in the article.

Strategy formation; Mintzbergs 10 schools

The academic institutions of thought are based on the assumption that organisations resources are homogenous and highly flexible within the marketplace (Porter 1981). Mintzberg (1988) built after this assumption and looked into the process of forming a technique where he concluded that a generic process cannot be discovered.

Mintzberg developed a framework to categorise methods to strategy based about how people think and converse illustrating the contrasting methods to strategy formation tugging all the various views of strategy into one particular view (Kippenberger, 1998). The 10 academic institutions of tactical thought may be used to explain what tactical thinking is and exactly how it could be improved.

There are two main approaches to forming a strategy; planning and learning. Planning is the oldest but more logical way where analytical tools and techniques are vital to the analysis of the resources and functions of an organisation as well as the external environment. Planning is based on the assumption an organisation can forecast and control performance by formulating and implementing logical strategies. Learning is a far more holistic approach and assumes strategy is an emergent process as no clear path is provided for an company and is also reliant on the unstable dynamics of strategy formation.

The platform is separated into three groups based on how the institution approaches strategy. Prescriptive institutions are concerned with how a strategy is made; design, planning and positioning colleges. The descriptive classes aren't focussed how strategy should be made but focus on the procedure of strategy formation where focus is on organisational learning; entrepreneurial, cognitive, learning, power, ethnic and environmental schools. The integrative group retains one school, construction, and looks at strategy as a form of transformation in one decision to some other.

As a platform it is not focussed which organisations use which university but shows how each college can be utilized. (See appendix for brief overview of each university. )

Ryanair; strategy as a position;

Ryanair made a decision to broaden its services into Southern Europe. It didn't take on competing airlines head on, instead they analysed where the secondary airports in Southern European countries were and setup business there. It located itself away from the competition where it Ryanair could still provide same value to its consumers and never have to outdo opponents. In selecting secondary international airports Ryanair offer transportation to popular areas, enough time congestion of major airports which furthermore allow Ryanair to provide a higher rate of on time departures, faster turnaround times and fewer delays so that it creates competitive benefits on being on time for flights slated to depart or arrive.

Virgin Atlanic; strategy as a visionary process;

Through the mind of Richard Branson the strategy of the Virgin group is definitely a eye-sight of the founder. He has a reputation for being a risk taker, and relies on intuition, judgement, intelligence, experience and insight drawing upon the visionary school.

Organisational culture and its own effect on strategy;

Schein (1988) described organisational culture as the pattern of basic assumptions that a given group has created with learning to cope using its problems of inner integration and external adaptation. Culture is established through actions of senior management/ directors regarding what they place focus on, how they praise or punish certain behaviours and exactly how they allocate resources. In a simple sense Scheins definition can be shortened to 'the way things are done around here' regarding to principles and beliefs. Hall (1993) suggested culture can be viewed as an intangible tool that may be classified as an asset or competency contributing to an organisations ecological competitive advantage where an organisation is able to consistently deliver products/services desired by nearly all customers in there target market.

The Resource Based mostly View of Strategy;

Porter (1985); Value chain

The value chain was first characterised by Porter (1985) which is a string of activities that group jointly the key value adding activities of organisation and can be utilized as a strategic planning tool. Porter (2007) referred to an company as a compilation of singularly distinct, interrelated, economical activities such as both principal and supplementary activities. The worthiness chain assists as helpful information for identifying the key activities within an organisation which will make up the value chain which may have the potential to make a sustainable competitive advantage. The competitive advantage emerges from the power of the organisation to perform discovered activities in the value chain in a superior way to competition.

Source: reference

The value chain is divided into main activities and extra activities which need to linked together strategically over the company so resources can be optimised and coordinated in ways to sustain competitive advantage.

Schein (1988) : 3 degrees of culture;

Hatch (1993) described the levels of culture as a conceptual framework for intervening and analysing inside organisational culture. Schein (1988) identified culture as 3 levels categorised into Artifacts, Espoused Prices and Basic Underlying Assumptions which ultimately shows how deep the principles and beliefs are embedded into an company. The model shows the degree to which culture is noticeable to an company and results in understanding of culture and what can be done to assist change within an organisation. It is used as a examination of organisations ethnical characteristics which may then be used to develop or maintain a technique or strategic benefits. Below is a aesthetic synopsis of Scheins (1988) three degrees of culture;

Artifacts; Most observable part of culture; can be business operations, how people look or organisational constructions. All are obvious indications of culture but difficult to interpret.

Espoused Ideals; Underlie and also to some degree determine behavior but aren't directly observable; can be strategies, goals & goals or philosophies

Basic Fundamental Assumptions; Assumptions that are unconscious and frequently stem from values until they may be overlooked and be an unconscious process;

Source: reference point lecture

Value string; Ryanair

Three levels of culture; Ryanair;

The culture of Ryanair is cost efficiency which is shown in their prices, vision and quest where they create their main competitive advantage of being a low priced, frill free airline. While using the three levels of culture, a analysis can be made of the way the culture of Ryanair is created and exactly how this contributes to their competitive advantages. While using the three degrees of culture we can identify the characteristics of Ryanairs culture;

Artifacts;

Ryanair offer no complementary services which is a reflection of their cost efficient culture. They sell extra services on flight (food, entertainment, travel cover. )

Head office personnel have to provide own pens and are not allowed to impose their phones at the job in the office

Employees purchase their own training and uniforms

The subsidiaries he obtains from using local international airports so he is able to pass the personal savings onto customers.

Espoused Ideals;

The insurance policies enforced at Ryanair are a representation of the professionals thoughts. For instance, the insurance plan that hq staff have to buy their own pens can be an example of an insurance plan that encourages cost effectiveness.

Basic primary assumptions;

The espoused prices relate with the primary assumptions as they are embedded suggestions within Ryanair of how personnel and employees deliver a good, cost efficient service to passengers. Passengers also know / believe that they are literally getting a frill free journey where in fact the expectation is to obtain to pay for the extra services that are complimentary on other flights.

The three levels of culture shows how cost efficienct is inlayed into Ryanairs organisational culture which allows them to have ecological competitive gain.

Virgin atlantic: An airline where people love to work, and people love to soar;

Virgin Atlantic have focussed on building an airline with a reputation for looking after both customers and employees, being seen as both affordable, but pleasant allowing Virgin Atlantic to sell themselves predicated on their indisputable reputation.

Bradley (1997): VRIO framework

Bradley (1997) explained proper resources as; valuable, unusual, inimitable and organisable. The VRIO platform is a tool an organisation may use to examine its internal environment and views organisations as bundles of resources. If these resources are properly used then an company can gain competitive advantages over competitors depending on the four characteristics determined by Bradley (1997) and determines whether the benefits is momentary or lasting.

Four questions have to be asked when figuring out resources and their capabilities (O'riordan 2006);

How valuable is the tool?

How exceptional is the tool?

Can the learning resource be imitated?

Is the resource organised in an productive manner?

If the answer is 'yes' to these questions then your source of information offers a competitive advantage over rivals.

When analysing an organisations resources one of the next answers happen;

If an organisations source is not valuable then your firm can get to be at competitive disadvantage

If the learning resource is valuable however, not unusual competitive parity is reached

If the source of information is valuable but not exceptional a competitive advantages is come to but it may only be momentary.

If a firms resources are uncommon, valuable but not costly to imitate then temporary competitive advantage results.

If the resources of an organisation are valuable uncommon and costly then a sustained competitive benefits will effect if the resources are organised properly.

VRIO construction of Virgin Atlantic

VRIO Framework of Virgin Atlantic

Resource

Value

Rarity

Inimitability

Organised

Competitive Implications

Virgin Brand

Y

Y

Y

Y

Sustained competitive advantage

Finance

Y

Y

Y

Y

Sustained competitive advantage

Reputation

Y

Y

N

Y

Temporary Competitive Advantage

Customer Service

Y

Y

N

Y

Temporary Competitive Advantage

Geographic location

Y

Y

N

Y

Temporary Competitive Advantage

Technology

Y

Y

N

Y

Temporary Competitive Advantage

Human resources

Y

Y

N

Y

Temporary Competitive Advantage

Source:

The VRIO platform for Virgin atlantic implies that Competitive advantage is available, following that resources from the Virgin brand, and the power the name must raise finance because of its repoutation. However, it must be said that however the brand of virgin can't be copied Virgin must work to uphold the brands reputation and the way customers/ potential traders and business parnters start to see the name. Technology, the location of where they fly from also to, and the organisational structure of Virgin are resoruces that can and do create competitive gain. However, they may be imitable by competitors.

CONCLUSION.

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