BOH4M – Grade 12 Business Leadership – Environment, Organizational Culture & Diversity

Chapter 4: Environment, Organizational Culture & Diversity


Environment and Competitive Advantage


  • Competitive advantage involves utilization of a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace
  • Companies may achieve competitive advantage in many ways, including through

its products, pricing, customer service, cost efficiency, and quality


  • Business leaders need to understand the interdependencies between their organization and the external environments
  • The general environment: All of the background conditions in the external environments of an organization including:
    1. Economic conditions
    2. Social-cultural conditions
    3. Legal-political conditions
    4. Technological conditions
    5. Natural environment conditions
  • The specific (task) environment: Actual organizations, groups, and persons with whom an organization must interact in order to survive and prosper
  • Stakeholders are the persons, groups, and institutions directly affected by the organization’s performance (such as customers, suppliers, competitors)
  • Value creation is creating value for, and satisfying needs of important stakeholders that have a stake in organization’s performance, are influenced on how it operates, and can influence it in return


  • Environmental uncertainty is a lack of complete information regarding what developments will occur in the external environment
  • The two dimensions of uncertainty in organizational environments are:
  1. complexity, or number of different factors in the environment
  2. rate of change in these factors




Customer-Driven Organizations


  • External customers purchase the organization’s goods or utilize its services
  • Internal customers are the persons and groups within an organization who depend on the results of others’ work to do their own jobs 
  • External customers primarily want four things: high quality, reasonable price, on-time delivery, and excellent service
  • Successful businesses protect their reputation for quality products and always treat their customers well

Customer Relationship Management (CRM) strategically tries to build lasting relationships with, and add value for, customers

Organizations are also customers of their suppliers. Supply Chain Management (SCM) involves strategic management of all operations relating to suppliers of resources


Quality-Driven Organizations


  • Quality principles are an integral part of organization’s strategic objectives
  • International Standards Organizations (ISO) certification: Quality benchmark that indicates that a company conforms with a rigorous set of international quality standards


  • Competitive demands of a global economy are an important force in an organization’s race toward Total Quality Management (TQM): Managing with an organization-wide commitment to continuous improvement, product quality and customer needs
  • Crosby’s four absolutes of management for total quality control:
    • Quality means conformance to standards
    • Quality comes from defect prevention, not defect correction
    • Quality as a performance standard must mean defect-free work
    • Quality saves money





  • Deming’s quality principles: Tally deficits, analyze and trace them to the source, make corrections, keep a record of what happens afterward

Commitment to quality is closely tied to continuous improvement: Always searching for new ways to improve quality and performance in all aspects of operations

  • A way to combine continuous improvement and employee involvement is through the concept of quality circles: A group of workers who meet regularly to discuss ways of improving quality of their products or services
  • Can result in cost savings from improved quality and increased customer satisfaction


  • Quality, Technology and Design:
    • Technology utilization is improving the nature of manufacturing quality today
      • Lean production: Uses new technologies to streamline systems
      • Flexible manufacturing: Processes can be changed quickly to produce different products or modify existing ones
      • Agile manufacturing and mass customization: Permits quick production of individualized products
  • Another timely and important contribution to quality is found in product design 
  • Progressive manufacturers emphasize:
    • Design for manufacturing – Products styled to lower production costs and high-quality results
  • Design for disassembly – Involves taking into account how components will be recycled at the end of their lives













Organizational Culture


  • Organizational culture is the system of shared beliefs and values that develops within an organization and guides member behavior
  • Strong cultures, ones that are clear and well-defined and widely shared among members, discourage dysfunctional work behaviours and encourage positive ones
  • Commit members to doing things that are in the best interests of the organization
  • The best organizations have cultures that are performance-oriented, emphasize teamwork, allow for risk taking, encourage innovation, and value the well being of people


  • Levels of Organizational Culture:
    • Observable culture – What one sees and hears when walking around an organization (stories, heroes, rites and rituals, symbols)
    • Core culture – Core values or underlying beliefs shared by members and give rise to observable culture


  • Value-based Management:
  • Actively develops, communicates, and enacts shared values
  • Has a major impact with respect to ethics and social responsibility
  • Leaders at all levels should establish and maintain appropriate core values
  • Criteria for evaluating core values include relevance, integrity, pervasiveness, and strength


  • Symbolic leadersuse symbols to establish and maintain a desired organizational culture
    • Act and talk the “language” of the organization
    • Role models for others to emulate and follow
    • Highlight and dramatize core values and observable culture








Multicultural Organizations and Diversity


  • Key issue in the culture of any organization is inclusivity: The degree to which the organization is open to anyone who can perform a job regardless of any diversity attribute (race, gender, age, ethnicity, physical ability, sexual orientation)


  • Multicultural organizationsoperate with respect for diversity and  possess the following characteristics:
    • Pluralism – Both minority and majority members influential in setting values and policies
    • Structural integration – Minority members well represented at all levels and functional responsibilities
    • Informal network integration – Mentoring and support groups to assist minority members in career development
    • Absence of prejudice and discrimination – Training activities to address need to eliminate culture group biases
    • Minimum inter-group conflict – Diversity does not lead to destructive conflicts between majority and minority members


  • Organizations contain a mixture of subcultures: groups of people with similar vales and beliefs based on shared work responsibilities or personal characteristics
  • Common subcultures include occupational, functional, ethnic or national, racial, generational, and gender
  • Sometimes ethnocentrism: the belief that one’s subculture is superior to all others, can creep into the workplace and adversely affect the way people relate to one another


  • Most senior executives in large organizations are older, white and male
  • More workforce diversity at lower and middle levels than on top
  • Challenges faced by minorities and women include glass ceilings (hidden barriers to advancement), sexual harassment, pay discrimination, job discrimination, and biculturalism (when minority members adopt characteristics of the majority cultures in order to succeed)


  • Managing diversityis building an inclusive work environment that allows everyone to reach their full potential. Continuum of leadership approaches to diversity:
    • Advancing action – create upward mobility for minorities and women
    • Valuing differences – build quality relationships with respect for diversity
    • Managing diversity – achieve full utilization of diverse human resources


  • Inclusivity counts. By valuing diversity and building multicultural organizations that include everyone, organizations of all types can strengthen their capacity for high performance and sustainable competitive advantage