Lecture 25 Electronic Business MGT485 Recap Lecture 24

Lecture 25 Electronic Business (MGT-485)

Recap – Lecture 24 • E-Business Strategy: Formulation – External Assessment • Competitive Strategies for e-business (Michael Porter’s Generic Strategies) • E-Business Strategy: Implementation – Strategic Control – Organizational Learning

Contents to Cover Today • E-Business Strategy: Implementation – Organizational Culture and e-Business – Organizational Structure and e-Business

Organizational Culture and e-Business • Organizational culture is the set of beliefs, values, norms of behavior, and attitudes shared by members of a firm that influences individual employee preferences and behavior. • Culture plays an important role in determining performance by providing a guide to employee behavior that is not governed by contractual duties but that, nonetheless, constrains and informs the managers and employees.

Organizational Culture and e-Business • Some prominent factors that determine organizational culture include: – The vision of the person or people who established the organizations; – The historical precedence set by previous generations of managers and workers; – The type and range of activities a particular firm undertakes; – The nature of interpersonal relationships within the organization; – The management style: autocratic, consensual, participative; – The control mechanisms: freedom of association and movement, monitoring; – The reward structure: financial, promotion, status, freedom, peer acceptance; – The level of technological dependence; – The geographical location: national and regional characteristics.

Organizational Culture and e-Business • Very often it is difficult to pinpoint exactly what determines the organizational culture because of the complexities involved in the combined effects of all the key elements that influence the culture. • Organizational culture influences: – The ability to recruit staff with key skills and experience; – The motivation and morale of workers; – The level of output; – The quality of work and output; – Industrial relations; – Attitudes, beliefs and values of managers and workers; – Innovation, creativity and the sharing of knowledge.

Organizational Culture and e-Business • Managers in e-business are concerned as to whether the organization's culture affects its performance. • Linking the two can be problematic since, although culture may be associated with high performance, it may not necessarily cause high performance. • A firm may be seen as having a strong culture, combining customer service, employee development and professional standards that contribute to its success. • However, if it has strong competitive practices that result in high earnings, then this may have created an environment where a strong culture could develop and persist. • It remains ambiguous as to whether the culture caused the firm’s high performance or vice versa.

Organizational Culture and e-Business • Conditions under which culture can be a source of sustained competitive advantage include: – Be valuable to the firm; – Be particular to the firm as most rivals will share the same cultural attributes; – Be inimitable as if a culture is easy to imitate, other firms will begin to emulate it, thereby undermining any competitive advantage gained by the firm that first developed it. • More complex the set of factors that determine culture the more difficult it is for rivals to imitate it.

Organizational Culture and e-Business • One of the key determinants of creating a competitive advantage based on organizational culture in e-businesses is the way in which knowledge is shared among workers. • Traditionally, businesses have operated on the basis of rewarding individual performance rather than around principles of collaboration and sharing. • Knowledge-based advantages provide strategic advantage and are protected rather than shared. • The task facing managers in modern knowledge-based industries is to create an environment where the organizational culture is built around employee recognition that shared knowledge rewards the group as well as the individual.

Organizational Culture and e-Business • Managers can rate performance based on each employee’s co-operation and participation in the knowledge sharing working environment. • Rewards, whether financial, status orientated or peer acceptance, can be linked to the level of participation observed. • Managers need to be constantly emphasizing the benefits of knowledge sharing.

Organizational Culture and e-Business • Practical measures that managers can take to shift the culture of a firm towards knowledge sharing include: – Setting aside specific time slots for learning; practicing knowledge management and knowledge sharing such that employees witness the real benefits that can be gained; – Committing to developing and implementing the culture throughout the organization and not just in some well-chosen, isolated departments. – The ultimate goal is for collaboration and the sharing of knowledge to become the dominant culture within the organization, so that it becomes a naturally occurring process.

Organizational Structure & e-Business • Successful implementation of strategies requires an appropriate organizational structure to determine how activities and tasks are divided, supervised and coordinated. • An organizational structure acts as a controlling mechanism by formally detailing lines of authority, span of control, responsibilities and duties, the allocation of tasks and the different levels of management within the organization. • Traditionally, large complex organizations were characterized by tall, hierarchical structures with an emphasis on rules, regulations, procedures and clearly defined levels of authority.

Organizational Structure & e-Business: Teamwork • Traditional structures have largely been superseded by a trend towards adopting flatter structures where more people are involved in the decision-making process and communications are more fluid. • Modern organizations are typically characterized by multi-skilled staff, teamwork, geographical dispersion of functions, and fewer layers of management. • The organizational structure has to reflect these changes and facilitate the co-ordination of activities within the new working environment.

Organizational Structure & e-Business: Teamwork • One of the key trends in recent years has been for organizations to increase employee involvement through the creation of teams. • Since the development of the internet in the mid 1990 s employees have gained greater autonomy in managing their own work. • Some have evolved into problem-solving teams where employees from the same department meet regularly to discuss and solve problems and seek to improve the quality and efficiency of their activities. • Problem solving teams can further evolve into selfdirected teams.

Organizational Structure & e-Business: Virtual Teams • Information technology has opened up opportunities to expand the concept of teamwork to that of virtual teams. • A virtual team uses information technology and telecommunications to facilitate collaboration between geographically dispersed members who work on the same project. • Virtual teams are usually made up of employees from the same organization but can consist of other workers from partner organizations such as consultancies or suppliers. • Virtual team members access a wide range of communications technologies including e-mail, videoconferencing, internet, intranets, extranets, mobile wireless technologies and collaboration software for generating cross-functional information.

Organizational Structure & e-Business: Virtual Teams • Virtual teams can be brought together either permanently or for a specific project then disbanded. • One of the key characteristics of virtual teams is the flexibility it offers. • A virtual team is a dynamic arrangement designed to maximize efficiency in the use of resources. • The critical success factors in virtual teams include the: – Ability to quickly assemble the correct mix of skills for each stage of the project; – Building of trust between all members; – Creation of a knowledge sharing culture; – Ability to apply technology to optimize communications.

Organizational Structure & e-Business: Global Teams • Virtual teams can be comprised of workers from around the globe. • A global team brings together people from many different countries and cultures and their activities span many different countries. • Virtual global teams comprise members from many different countries who remain geographically dispersed and who communicate electronically. • The biggest challenge for managers who organize virtual global teams is to co-ordinate activities around significant time, language and cultural differences.

Organizational Structure & e-Business: Global Teams • Different countries may use different technological standards and there are likely to be considerable differences in work-based culture regarding authority, decision-making, timeliness and etiquette. • The critical success factors for virtual global teams include the: – Recruitment of skilled and culturally sensitive staff; – Communication of organizational objectives; – Communication of roles and responsibilities to each team member; – Provision of training and education; – Implementation of a robust and reliable integrated communications system.

Summary • E-Business Strategy: Implementation – Organizational Culture and e-Business – Organizational Structure and e-Business