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Current Event

Open Posted By: surajrudrajnv33 Date: 18/02/2021 Graduate Research Paper Writing

I need a current event essay from the last six months based off my chapter. It is 3 paragraphs an article summary, how it ties back to the topic and a conclusion. I will provide the chapter as a PDF must have 3 APA citation (1) current event article from reliable source within 6 months, (2) Article that supports first citation and (3) the chapter book provided.

Category: Business & Management Subjects: Business Communication Deadline: 12 Hours Budget: $120 - $180 Pages: 2-3 Pages (Short Assignment)

Attachment 1

Strategic Management: Theory and Practice

Strategy Execution Strategic Change, Culture, and Leadership

Contributors: By: John A. Parnell

Book Title: Strategic Management: Theory and Practice

Chapter Title: "Strategy Execution Strategic Change, Culture, and Leadership"

Pub. Date: 2014

Access Date: March 7, 2018

Publishing Company: SAGE Publications, Ltd

City: 55 City Road

Print ISBN: 9781452234984

Online ISBN: 9781506374598

DOI: http://dx.doi.org/10.4135/9781506374598.n11

Print pages: 292-325

©2014 SAGE Publications, Ltd. All Rights Reserved.

This PDF has been generated from SAGE Knowledge. Please note that the pagination of

the online version will vary from the pagination of the print book.

Strategy Execution Strategic Change, Culture, and Leadership

Chapter Outline

Organizational Culture and Strategy Cultural Strength and Diversity

Shaping the Culture

Global Concerns

Strategic Leadership Leadership Style

Executing Strategic Change Recognize the Need for Change

Create a Shared Vision

Institutionalize the Change

Summary

Key Terms

Review Questions and Exercises

Practice Quiz

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Student Study Site

Notes

When a new strategy is executed, an old one is discarded. Managing strategic change can be a difficult task even when everyone in the organization agrees that it is needed and understands what will occur as a result. Even so, techniques to institutionalize the change must be developed. Barriers and resistance to change should be recognized so that strategies can be developed to overcome them.

Executing a strategy can become quite challenging—especially when a strategic change of great magnitude is involved. When the environment changes rapidly or abruptly, progressive firms take steps to capitalize on new opportunities and/or minimize the negative effects of the

changes.1. Change can be brought about by factors such as the need to address increased competition, improve quality or service, reduce costs, or align the firm with the practices and expectation of its partners. Strategic change can be revolutionary, such as when a firm changes its product lines, markets, or channels of distribution. Strategic change can also be less radical, such as when a firm overhauls its production system to improve quality and lower its costs of operations.

Because changing strategies is often a complex process, it may not be desirable even when changes in the macroenvironment and/or industry suggest problems for the current strategy. Shifting the strategic intent may confuse customers and employees, may require structural changes in the organization, and can result in major capital investments. In short, the costs

associated with a major strategic change are not always justified by the benefits.2.

Evaluating the appropriateness of strategic change is a complex process. Consider several examples. In 2003, McDonald's faced its first quarterly loss as a public company. Rather than increase its efforts to market inexpensive products to children, the burger giant responded with higher priced items such as the $4.50 California Cobb salad and the $3.89 grilled chicken c l u b s a n d w i c h , a l l t h e w h i l e r e t a i n i n g i t s d o l l a r m e n u w i t h i t e m s s u c h a s d o u b l e cheeseburgers, chicken sandwiches, and side salads. As a result, revenue increased 33% from 2002 to 2005, while profits more than doubled. McDonald's also responded with a more aggressive approach to new product development instead of relying on its franchises to generate ideas, a slow process that led to the Big Mac in 1968, the Egg McMuffin in 1973, and the Happy Meal in 1979. The firm hired chef Dan Coudreaut as director of culinary innovation in 2004, a decision that led to the successful Asian salad and the value-priced

snack wrap in 2006.3. The fast-food giant added premium coffee and related offerings to its product line in 2006. The results have been positive with McDonald's experiencing strong

growth in profits, market share, and stock price through the early 2010s.4. Same store sales declined in late 2012 for the first time since 2003, however, renewing the debate over how McDonald's can balance its premium and dollar menu items while its own food costs are on the rise.

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McDonald's also faced an intriguing challenge when it introduced drive-thru serve in its Chinese restaurants in 2006. Customers there were not familiar with a drive-thru and could not figure out how to use it. The company responded with flyers illustrating the process and

had employees stationed in the parking lots to direct customers to the drive-thru lane.5.

Strategic change is more common in some industries than in others. For example, a number of strategic shifts have occurred in the airline industry since the early 2000s. Southwest Airlines has reported profits every year since its inception, fueled by a consistent reliance on low costs, no frills, and low fares. In the early 2000s, however, younger low-cost carriers such as JetBlue, Frontier, and America West experienced more rapid growth thanks in part to a greater emphasis on factors such as entertainment, food service, and first-class seating. In late 2003, Southwest announced it would begin flying into Philadelphia—a hub for U.S. Airways—in 2004, a move signaling a possible shift from the airline's historical avoidance of busy airports ruled by major carriers.

Southwest made another similar jump when it moved into Denver International Airport in January 2006, where airport fees average around $9 per passenger as opposed to the industry average of $5. Southwest had avoided such costly airports in the past and faced intense price competition there with Denver-based low-cost carrier Frontier Airlines, and some

extent from United Airlines, which controls over half of the Denver market.6. Some analysts believed that this strategic change marked the beginning of a departure from Southwest's

strict low-cost position.7. Others believe that Southwest's growth and success in the early 2000s, coupled with intense competition from low-price upstarts, has begun to erode Southwest's cost advantage. Southwest acquired low-cost rival AirTran in 2010, giving Southwest a significant presence in the Hartfield-Jackson Atlanta International Airport.

Strategic change of a great magnitude can be difficult to implement (see Strategy at Work 11.1). Employees resist change for a variety of reasons, including personal factors, lack of information about the change, and poor design of the support system. Simply stated, strategic change is easier said than done.

Strategy at Work 11.1. Decades of Strategic Change at Sears8.

Until the mid-1970s, Sears was arguably the most successful U.S. retailer. However, the retail industry began to undergo dramatic changes in the late 1970s. Sears’ private- label business was eroded by the growing popularity of specialty retailers such as Circuit City while its once low-cost structure was decimated by Wal-Mart.

Sears’ response to these changes has not always been consistent. Initially, the retailer reacted by attempting to emphasize fashion with such labels as Cheryl Tiegs sportswear. But high-fashion models were not consistent with the Sears middle-

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America image. Sears then attempted to convert its antiquated image into a financial supermarket by purchasing Dean Witter Financial Services and Coldwell Banker Real Estate. However, in-store kiosks never caught on with customers, and the expected synergy between these two subsidiaries and Sears’ Allstate Insurance and Discover Card business units failed to materialize.

Next, management modified the store's image to one that sold nationally branded merchandise along with private-label brands at “everyday low prices.” The idea was to create individual “superstores” within each of the Sears outlets to compete more effectively with powerful niche competitors. Sears departed from its traditional practice of holding weekly sales to save on advertising expenses and inventory handling while offering everyday low prices, which turned out to be, in some cases, higher than Sears’ old sale prices. By this time, customers were totally confused. In 1992 alone, Sears lost almost $4 billion, its worst performance ever.

In 1993, Sears terminated its big catalog operations, began spinning off some of its businesses unrelated to general merchandising, overhauled its clothing lines, eliminated more than 93,000 jobs, and closed 113 stores. In 1995, Sears reentered the catalog business. This time, instead of a big book Sears catalog, it set up joint ventures to provide smaller catalogs. Sears provides its name and its 24 million credit card customers. Its partners select the merchandise, mail catalogs, and fill orders.

By 1996, Sears had begun to benefit from its strategic shift to moderately priced apparel and home furnishings. In 1999, Sears branched out further, developing “The Great Indoors” to attract women to the traditionally male-dominated home improvement market. This format was in response to the fragmented nature of the home remodeling business, particularly on the higher end where services such as decorating and installation are often involved. The format targeted as its primary customers women 30 to 50 years old earning in the $50,000 range.

In late 2001, Sears announced another strategic shift designed to position the firm as a solid, even more discount-oriented retailer. The company announced the elimination of a substantial number of cashiers and other employees, the integration of centralized checkouts, and shifts in the product mix, all designed to improve efficiency in the stores. In late 2002, Sears acquired Lands’ End, a leading marketer of traditionally designed clothing and related products. By the mid-2000s, Sears had incorporated the brand into its retail outlets, but performance continued to wane. The once prosperous American icon had been unable to meet the challenges of a changing retail environment.

Kmart acquired Sears in 2005 for $11 billion (see Strategy at Work 6.1 in Chapter 6),

but sales for the combined firm have declined every year since through 2011.9.

The decision to institute a strategic change or not can be a difficult one. This chapter discusses two key areas associated with executing strategic change: (1) organizational culture and (2) leadership. Both dimensions must be aligned with the strategy and managed properly if a strategy is to be implemented effectively.

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Organizational Culture and Strategy

Organizational culture refers to the shared values and patterns of belief and behavior that are

accepted and practiced by the members of a particular organization.10. It includes work practices, traditions, and accepted work practices and also defines how managers and workers treat each other and can expect to be treated. It fosters peer pressure that encourages members of the organization to behave in certain ways. Ideally, the strategic decisions rendered by top management should be consistent with the culture of the organization. Strategies that contradict cultural norms are more difficult to execute. An emphasis on cost leadership, for example, is not easy to implement when members of an organization are conditioned to spend company time and resources on new products and ideas.

Because each organization develops its own unique culture, even organizations within the same industry and city will exhibit distinctly different ways of functioning. The organizational culture enables a firm to adapt to environmental changes and to coordinate and integrate its

internal operations.11. Ideally, the values that define a firm's culture should be clear, easy to understand by all employees, embodied at the top of the organization, and reinforced over time.

Cultures not only form at the organizational level but within the organizational culture as well. These organizational subcultures can develop around such factors as location, functional responsibility, or managerial level. Cultural similarities among sales representatives at an organization may differ from those among production workers.

The first and most important influence on an organization's culture is its founder(s). Some founders have strong beliefs about business practice or have strict procedures for transacting affairs. Their assumptions about success—as well as those of other early top managers—

form the foundation of the firm's culture.12. For instance, the primary influence on McDonald's culture was the fast-food company's founder, Ray Kroc. Although he passed away in 1984, his philosophy of fast service, assembly line food preparation, wholesome image, cleanliness, and devotion to quality are still central facets of the organization's

culture.13. Likewise, Steve Job's influence on Apple will remain long past his untimely death in 2011.

Views and assumptions concerning an organization's distinctive competence comprise one of the most important elements of culture, particularly in new organizations. For example, historically innovative firms are likely to respond to a sales decline with new product introductions whereas companies whose success is based on low prices may respond with

attempts to lower costs even further.14. However, it is possible to modify the culture over time as the environment changes, rendering some of the firm's culture obsolete and even dysfunctional. New elements of the culture must be added as the old elements are discarded.

Stories are also an important component of culture. Whether true or fabricated, accounts and legends of organizational members can have a great influence on present-day actions of managers and workers alike. UPS employees tell stories of drivers who go the extra mile through adverse weather to deliver packages on time. Microsoft employees retell stories of programmers who work long hours to meet demanding production schedules. These stories create expectations and can inspire workers to perform similar feats in their daily jobs.

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Organizational culture can facilitate or hinder the firm's strategic actions. Studies have shown that firms with “strategically appropriate cultures”— such as PepsiCo, Apple, and Google— tend to outperform other corporations whose cultures do not fit as well with their strategies. A strategy-culture fit can support strategy execution because the activities required from middle managers and others in the organization are consistent with what is already taking place. When the strategy does not fit with the culture, it is necessary to change one or both. For example, a firm caught in a changing environment may craft a new strategy that makes sense from financial, product, and marketing points of view. Yet the strategy may not be implemented because it requires significant changes in assumptions, values, and ways of

working.15. All things considered, changing a strategy is easier than changing culture, and

both are often required for organizations to be successful.16.

For many firms, achieving a strategy-culture fit means an adaptive culture whereby members

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of an organization are willing and eager to embrace any change that is consistent with the

core values.17. Such a culture values taking initiative and risk, exhibiting creativity, trust and employee involvement, and a desire for continuous, positive organizational change. Adaptive cultures are especially important for firms that emphasize high growth or innovation (e.g., prospectors), as well as those operating in turbulent environments. Adaptive cultures emphasize innovation—developing something new—and encourage initiative whereas inert cultures are conservative and encourage maintenance of existing resources. For companies like Google and eBay, an adaptive culture is an essential part of their success.

Cultural Strength and Diversity

Some cultures influence firm activities more than others. A strong culture is characterized by deeply rooted values and ways of thinking that regulate firm behavior. Top managers model that behavior and create peer pressure that reinforces the notion that others in the organization should behave likewise. Strong cultures develop over an extended period of time —generally a decade or longer.

When a strong culture embodies appropriate values, it can be a valuable resource for a firm when it reinforces values inherent in the organization's strategies. Effective strategy execution occurs when all facets of the organization—including the culture—are “on the same page.” When this occurs, effectiveness is likely to increase when a firm's strategy and culture

reinforce each other.18. J. C. Penney's strong culture grounded in its key principles on ethics and customer orientation has contributed to its success and survival as a leading U.S. retailer

for over 100 years.19.

When a strong culture is unhealthy and embodies destructive characteristics, it can strain firm performance. For example, such characteristics include a strong emphasis on politics to get things done, a disregard for ethical standards, territorialism among departments, and strong resistance to change. Of course, strong dysfunctional cultures can hinder organizational

performance.20.

Unlike a strong culture, a weak culture lacks values and ways of thinking that are widely accepted by members of the organization. There is no clear, widely accepted business philosophy, and managers approach their responsibilities in different ways. In general, this lack of cultural consensus does not support strategy execution. There are exceptions, however, such as colleges and universities where disparate perspectives may be deliberately fostered across campus to expose students to different view and ideas during their educational experience. Such institutions emphasize diversity, the extent to which individuals across the organization are different.

It is common today to speak of the need to pursue diversity as a means of competitive advantage. The term can be defined in a number of ways, however. Some use it to reference differences over which individuals clearly have no choice, such as age, race, ethnicity, gender, and physical disability. Others extend this definition to include behaviors over which

individuals exert control, such as marital status, religion, and sexual preference.21. Still others use the term simply to reference differences in ways of thinking.

Research linking diversity and firm performance is largely inconclusive, however, in part because of competing conceptualizations of what it means for an organization's membership

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to be diverse.22. Diversity's link to cultural strength is an interesting one. The latter, simpler notion of diversity—differences in ways of thinking—is strikingly similar to the concept of a weak culture. In this respect, greater diversity can hinder firm performance. A number of research studies focusing on diverse top management teams, however, have found that diverse ways of thinking among top managers lead to more creative, comprehensive, and

effective strategies.23.

The value of diverse ways of thinking appears to be most critical when a strategy is being formulated. A diverse top management team can pool its vast backgrounds and perspectives to create innovative strategies without blind spots. For those responsible for executing a strategy, typically middle- and lower-level managers, less diversity is required. In this stage, processes for implementation may be clearly defined, and managers are simply charged with following them. Hence, a strong culture—one with less diversity of thought—is likely preferable in this regard.

Shaping the Culture

Cultural change is a complex process. Just as cultures do not develop overnight, they are rarely changed in a short period of time. Culture change is possible, but efforts often fail due primarily to a lack of understanding about how a culture can be changed and how long it is

likely to take.24.

Top executives can influence and shape the organization's culture in at least five ways25.— the first of which is to systematically pay attention to areas of the business believed to be of key importance to the strategy's success. The top executive may take steps to accomplish this goal formally by measuring and controlling the activities of those areas or less formally by making specific comments or questions at meetings. These specific areas should be ones identified as critical to the firm's long-term performance and survival, and may include such areas as customer service, new product development, or quality control.

The second means involves the leader's reactions to critical incidents and organizational crises. The way a chief executive officer (CEO) deals with a crisis, such as declining sales or technological obsolescence, can emphasize norms, values, and working procedures or even create new ones. Organizational members often take their behavioral cues from their leaders.

The third means is to serve as a deliberate role model, teacher, or coach. When a CEO models certain behavior, others in the organization are likely to adopt it as well. For example, CEOs who give up their reserved parking places and park among the line workers send a message about the importance of status in the organization.

The fourth means is the process through which top management allocates rewards and status. Leaders communicate their priorities by consistently linking pay raises and promotions, or the lack thereof, to particular behaviors. Simply stated, rewarded behavior tends to continue and become ingrained in the fabric of the organization. This not only applies to middle and lower-level managers but can apply at top levels of the organization as well.

The fifth means of shaping the culture is to modify the procedures through which an organization recruits, selects, promotes, and terminates employees. An organization's culture can be perpetuated by hiring and promoting individuals whose values are similar to those of the firm and whose beliefs and behaviors more closely fit the organization's changing value

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1.

2.

system. Firms should spend the time necessary to properly screen candidates and evaluate them on their fit with the desired organizational culture. The easiest way to affect culture over the long term is to hire individuals who possess the desired cultural attributes.

Global Concerns

A number of global concerns can also complicate the role of organizational culture. In many respects, an organization's culture can be viewed as a subset of the national culture in which the firm operates. As such, operating outside one's own country can create special challenges in areas such as leadership and maintaining a strong organizational culture. For example, leaders of some nations resist innovation and radical new approaches to conducting business whereas others welcome such change. Such national tendencies often become a part of the culture of the organization in those countries.

The self-reference criterion—the unconscious reference to one's own cultural values as a standard of judgment—also presents a potential problem. Managers often believe that the leadership styles and organizational culture that work in their home country should work elsewhere. However, each nation—like each organization—has its own unique culture, traditions, values, and beliefs. Hence, organizational values and norms must be tailored to fit the unique culture of each country in which the organization operates—at least to some extent. The need to customize values and norms can create special challenges when firms from different countries become partners or even merge their organizations.

Strategic Leadership

Announcing a strategic change usually does little to inspire those responsible for implementing the change. The top management team has several means at its disposal to encourage managers and other employees to implement the strategy, one of which is leadership. The CEO is recognized as the organization's principal leader, one who sets the tone for its activities. A manager exhibits (managerial) leadership when he or she secures the cooperation of others in accomplishing a goal (see Strategy at Work 11.2).

Strategy at Work 11.2. Planning for CEO Succession26.

CEO succession is an important consideration, especially when an executive departs a large, successful firm. Wal-Mart's legendary CEO Sam Walton handed over the reigns of power to David Glass in early 1998, followed by Lee Scott and Mike Duke in 2009. Following Steve Job's illness and subsequent death in 2011, the reigns at Apple were passed to Tim Cook. How do icons like Wal-Mart and Apple execute these changes in leadership-and leadership styles—without negative consequences? Five lessons for a successful CEO transition have been suggested from the Wal-Mart experience:

Firms should cross-train high-level executives to broaden their exposure as much as possible. Doing so prevents the learning curve for the new CEO from being too steep.

Firms should expose the heir apparent and other top executives to board

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3.

4.

5.

members so they know what the board expects from top management.

Firms should discuss potential conflicts associated with the new roles for both the incoming and the outgoing CEOs. Plan to address any potential problems. Like Walton, Glass stayed on in an advisory capacity after he stepped down as CEO.

The new CEO should conduct meetings in conference rooms to facilitate open participation, not from the executive desk.

Everyone involved should stay humble and not overestimate the new CEO's ability to institute rapid change.

Strategic leaders articulate the firm's vision. Whereas the mission describes what you strive to do best every day, the vision is a view of the future when your mission is achieved in the present. For example, a relatively small car producer's mission may be to produce reliable, economical vehicles for value-conscious consumers. Its CEO might articulate a vision of the firm as a leader in providing reliable transportation throughout the world. Such a vision stretches the firm's ability to grow and develop but looks to the future and is realistic because it is attainable if the company continues to fulfill its mission.

Broadly speaking, the vision sets the stage for the firm's strategy by focusing members of the organization on key capabilities, offering a sense of direction, and even providing a mental picture of what the firm should look like in the future. Of course, vision statements have little impact on organizations if they are not sufficiently focused and articulated clearly. In this respect, the notion of a vision is the linchpin between the CEO and the components of the strategy. Diffusing the vision—and ultimately the

strategy—throughout the organization is a key top executive function.27.

Strategic leadership is more than managerial leadership. In addition to creating the vision and mission for the firm, it also includes developing strategies and empowering individuals throughout the organization to put those strategies into action. It includes determining the firm's strategic direction, aligning the firm's strategy with its culture, modeling and communicating high ethical standards, and initiating changes in the firm's strategy when necessary. Strategic leadership establishes the firm's direction by developing and communicating a vision of the future and inspires organization

members to move in that direction.28. Unlike strategic leadership, managerial

leadership is generally …