ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD
(Department of Business Administration)
WARNING
- PLAGIARISMOR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
- SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.
Course: Business Policy and Strategy (5015) Semester: Autumn, 2022
Level: MSc Administrative Sciences
ASSIGNMENT No. 1
Total Marks: 100 Pass Marks: 50
Note: Attempt all questions.
- 1 Why is it so important to integrate intuition and analysis in strategic management? (20)
- 2 Explain why a mission statement should not include str4ategies and objectives? (20)
- 3 Give some advantages and disadvantages of corporative versus competitive strategies? (20)
- 4 Why do you believe cultural products affect all the functions of business? (20)
- 5 Describe several reasons why conflict may occur during objective-setting activities? (20)
GUIDELINES FOR ASSIGNMENT # 1
The student should look upon the assignments as a test of knowledge,
management skills, and communication skills. When you write an assignment
answer, you are indicating your knowledge to the teacher:
- Your level of understanding of the subject;
- How clearly you think
- How well you can reflect on your knowledge & experience;
- How well you can use your knowledge in solving problems, explaining
situations, and describing organizations and management; - How professional you are, and how much care and attention you give to
what you do.
To answer a question effectively, address the question directly, bring important
related issues into the discussion, refer to sources, and indicate how principles
from the course materials apply. The student must also be able to identify
important problems and implications arising from the answer.
For citing references, writing bibliographies, and formatting the assignment, APA
format should be followed.
Assignment -01
- 1 Why is it so important to integrate intuition and analysis in strategic management?
Ans-
Intuition and Analysis in Strategic Decision Making
In the global marketplace, intuition and rational process both play a crucial role in effective strategic decision making. In various firms, intuitive process is used under the strategic management to develop effective decisions for attaining organizational goals and objectives. Intuition indicates to solve the problem with the help of using sensing and without using rational process. It can be discussed as a process to reach at the conclusion with the help of fewer information those are required for taking appropriate decisions.
It is a built-in capacity that is used by the individuals to reach at the solution of the problem effectively. At the same time, it is negatively related with the stable competitive environment. Intuition is used as a business tool in many organizations to conduct and run the business successfully
Intuition is a psychological function supports to individuals for using her/his experiences and knowledge to isolate and integrate the data for taking appropriate decision for the business. There are various roles of intuitive those are played by it under the strategic decision making process those make it necessary part of the strategic management. These can be discussed as follow:
Maintain emotions in taking strategic decisions: Emotions are related with the intuition those are base of strategic decision making. In this, from the management theories, decision making process and models, it is stated that emotions are derived through intuition. In this, conventional teaching is used by the management under intuition to maintain emotion at the workplace and develop effective strategies of the firm. Logical procedure, rules and regulations are developed by the strategist according to the emotional level of employees as well as workers. At the same time, sometime it may harm the emotions of employees in the form of using rights of strategist in negative manner. In this, firm is also not aware about intuition and its use in the strategic decision making process.
Minimize stress at the workplace: Intuition is used in adopting and developing stress free strategies at the workplace. For this, feelings and emotions are preferred and given place by the management. To develop and follow effective strategies at the workplace, arguments are faced by the management. On the other side, in the presence of infrequent intuition like, desire, feelings, attitude, etc actions are affected in negative manner under the strategic decision making that affects organizational growth and success in negative form.
Face risk effectively: Risk those are raised during running the business are solved and faced by the management of the firm with the help of intuition. In this way, intuition develops clear picture of problems or issues in the mind of strategist to solve them effectively. On the other hand, on developing wrong and confused picture of risk, it may harm organizational growth in negative manner. So, for developing effectiveness of the strategies at the workplace, it is important for the strategist to have integrative thinking and intuition for solving the problem effectively.
Time management and efficiency: To manage time and efficiency of the strategies at the workplace, intuition also plays a crucial role in strategic decision making process. In the condition of failure of any strategy, intuition supports to the adoption of effective actions and strategy for solving the problem. At the same time, efficiency of taking decision is also affected in harmful form.
Accuracy, security and transferring: Intuition and analysis are viable part of strategic decision making process in the form of developing accuracy, security and transferring the data from one level to other level of management. It develops thinking and morality among the employees of the firm that helps the strategist to take appropriate and effective strategic decisions. On the other hand, most of the firms are not able to understand as well as to use intuition under the organizational strategy. Although, these aspects support to the effectiveness and important role of intuition at the workplace, yet there are some weaknesses also those indicate towards the inefficiency of intuition at the workplace like, misuse of information, right power, etc.
Intuition also offers opportunity to the strategist to rethink about their strategies and answers those are selected by them for the organization. So, it supports to the positive sign of intuition in strategic decision making process in terms of developing analytical thoughts and approaches. If the decisions are repeated and harmful for the firm’s growth, these are solved by using intuition effectively.
Intuition and analysis is genuine management tool in the strategic decision making, as these are interrelated with the managerial skills and knowledge to solve the high degree of organizational issues. Although, intuition is important part of the firm’s strategies, yet there are some barriers on this those indicate to the loophole of this concept in strategic decision making process. The first barrier is related to understand the meaning of intuition and confusion about it in context of surrounding.
Second barrier is related with the use of intuition at particular time. Management employees are not aware about when it should be used and how it can be used effectively. So, these weak areas of the intuition and analysis indicate toward the uncertainty of these concepts in the strategic decision making process that impacts organizational strategies and growth in the competitive market.
Analysis of environment also plays a pivotal role in strategic decision making in terms of developing strategies according to the present environmental condition. In this, macro and micro environmental analysis is organized by the firm to take effective and suitable strategic decision for organizational growth and success. In macro environmental analysis, PESTLE analysis is focused by the firm that includes political, economical, social, technological, legal and environmental analysis. It supports to the firm to take appropriate strategic decision according to the available environment. In the political environment, different factors such as political parties and stability of political parties in the particular market are analyzed to take appropriate decision.
In the economical analysis, economic condition of particular country and market in the form of GDP, per capita income, income level, etc are observed by the firm to develop effective strategic decisions. Under the social analysis, beliefs, values and attitude of customers are analyzed with the help of environmental analysis. Technological analysis is also organized by the firms to identify the technological level of particular country or market. Under the macro environmental analysis, legal analysis is also included and conducted by the firms to develop effective and efficient strategic decisions.
In this, rules and regulations of particular country to run the business are analyzed. Regulatory body of particular country to run the business is assessed by the organizations to develop effective strategies. Under the environmental analysis, availability of resources, local issues, market condition, etc are analyzed by the organizations to prepare effective strategies by strong decision making process. Analysis of these factors helps the firms to take appropriate action for developing effective strategies to run the business successfully.
In the micro environmental analysis, different factors are analyzed by the organizations to develop and adopt effective strategic decision under the strategic decision making process. In this, organizational capabilities, internal and external stakeholders and competitors are included those are studied by the companies for taking effective and efficient strategic decisions. It helps the firms to take appropriate decisions according to the perception and requirements of its stakeholders, competitors and market.
In internal stakeholder analysis, employees and shareholders are analyzed by the firm to support effective strategic decision making process at the workplace. It helps the firm to develop strategies according to the needs and requirements of its stakeholders. Additionally, in the external analysis of stakeholders, government, suppliers, customers, etc are focused by the firms to assess the external analysis for developing effective strategies. These all affect organizational growth and performance through affecting strategies of the firm in terms of positive and negative manner.
In addition, competitor analysis is also conducted by the firm in the micro analysis to assess the market attractiveness. In this, extent of competition in particular market or country is analyzed by the companies to take appropriate and effective strategic decisions to achieve organizational goals and objectives. It also helps the firm in enhancing the criteria of strategic thought for developing strategic decision making process of the firm.
- 2 Explain why a mission statement should not include str4ategies and objectives?
Ans.
Mission, vision and strategy illustrated
Mission and vision statements can be great means to give an organization focus, coherence, and direction. But often they don’t. And if not, the time and money spent on formulating them may become a waste of time—or worse, a distraction keeping the organization’s attention away from what it really should be working on. Therefore, it is time to revisit these two strategy evergreens and see what it takes to make them work.
In the two decades of strategy research, teaching, and consulting that I’ve engaged in, I’ve seen no less than nine different reasons why mission and vision statements fail so often. I summarize them below, resulting in nine advices for improvement.
Reason 1: Your Organization Is Not Mission or Vision-Driven
There is this idea that all organizations should be mission and/or vision-driven. But the reality is, they aren’t. Henry Mintzberg and James Waters already showed this in 1985 in their Strategic Management Journal article “Of Strategies, Deliberate and Emergent.” As they reveal in that article, there are eight different approaches to strategy, one of which is mission-driven (”Ideological Strategy) and one of which is vision-driven (”Entrepreneurial Strategy). This shows that a) there are six other strategies, and b) mission-driven strategy is a different strategy than vision-driven strategy.
If your organization is clearly driven by a strong mission or a strong vision, this is great. It will mean that your people know the mision or vision and live up to it—after all, that is why they probably joined the organization in the first place.
If your organization is not driven by a clear mission or vision, this is great too. Because you don’t need to. I’ve experienced this several times when clients asked me to help them formulate a mission and vision. My standard response to this question is to ask why. Mostly, the answer is that they want more focus, coherence and direction. When asking further, it often turns out that not a mission or a vision, but a clearer understanding of how to align their products and services with their capabilities and with their markets the actual problem—and the solution
Reason 2: You Think That Having Them Is Mandatory
A variation of the first reason, but worthwhile mentioning separately because the implications are different. The idea that every organization needs a mission and vision statement has turned into an almost dogmatic mission-vision-values mantra. One sees this especially often at company’s websites.
It is far from obvious, though, that organizations need this. Because, who says so? There is no evidence that organizations with such statements do better than organizations without them. There is no evidence that they do worse either, but this means that there is no compelling reason for having them. It is primarily a habit. We do it because everyone else is doing it.
Knowing that it is just a habit, not something one should have, can be a relief. Especially for those organizations who are mission or vision-driven. A good example is a health-care organization that I worked with a couple of years ago. They had spent numerous hours on crafting a mission and vision statement. The result was disappointing: a colourless compromise stating a mission and vision that no one really objected to but that was totally uninspiring.
At the same time, they already had a great 3-minute animated video reflecting their mission and vision in an engaging, clear and even funny way. The word mission or vision did not appear in the video, but it was all about the company’s mission and vision. And the best thing: their employees loved it.
Reason 3: You Can’t Tell The Difference Between Them
There are no agreed-upon definitions of missions and visions and the terms are often used interchangeably. As a result, most mission and vision statements that I have seen are not really different. They often say more or less the same, but not entirely, and at different levels of abstraction, using different words. That doesn’t really help.
To resolve this confusion, it is useful to make a clear distinction between the two—that is, if you decide to use these terms. I’ve found the distinction that De Wit and Meyer make in their strategy textbook Strategy: Process, Content, Context a useful one.
In short, they argue that a vision is oriented toward the future, to your long-term aims from which medium-term objectives and short-term targets can be derived. One might call it the “point on the horizon” toward which you want to move. A mission is more oriented towards the present. It contains the organization’s key principles and values and explains why it exists in the first place—its “raison d’être.”
Reason 4: You Make Them Too Generic And Interchangeable
A fourth reason why so many mission and vision statements fail lies in the way they are formulated. Since they reflect an organization’s strategy or direction or purpose at the highest level of abstraction, they are often extremely generic and abstract—and thereby vague.
Of course, a short statement cannot contain a lot of detail. But this doesn’t mean that it should be vague. Making it vague might make it sound inspirational (”to be a truly inspiring company, “be the number one firm,” “drive innovation,” “Excel at everything we do,” etc.). But at the bottomline, no one knows really what is meant.
Another result of the high levels of abstraction is that mission and vision statements become easily interchangeable between organizations. Just try it. Pick a random mission or vision statement that you find online, preferably from a direct competitor, and see how well it matches your organization. Do the same the other way around. Or use any of the automated mission/vision generators that you can find online (e.g. this one or this one). You can do better than that.
Reason 5: You Try To Sound Nice And Please Everyone
Another feature of many mission and vision statements that I have seen is their overly socially desirable message and tone. If we are to believe the average mission and vision statement, most commercial businesses exist purely and only to make the world a better place.
Of course, I exaggerate a bit. And of course, you want to sketch an attractive mission and vision that people will find desirable. But a good mission and vision should not try to appeal to everyone. It should be outspoken and reflect choices in what the organization finds important and what not, and where it wants to go, and where not.
In fact, while they should inspire one group of people, they should put off another. Because that is what making choices does. It is one of the basic lessons in strategy and marketing: choose your niche, appeal to them, and forget about others. This works the same for mission and vision statements. Dare to be outspoken.
Reason 6: You Lose Touch With Reality
A sixth reason why mission and statements often don’t work as well as they could is that they sometimes lose touch with reality. I don’t mean in terms of abstraction (Reason 4) or trying to be overly nice (Reason 5), but in terms of how realistic the mission and vision are given where an organization currently is.
Good mission and vision statements create movement. This means they don’t merely reflect an organization’s status quo, because that would make them uninspiring and not very useful. However, the same applies to mission and vision statements that are so far from reality that people rather start laughing than that they feel energized. They are too far off.
Therefore, good mission and vision statements have a clear relationship with the organization’s line of business and status quo, but trigger a “creative tension” between what is and what should be. This creative tension happens when the mission or vision is sufficiently different from the status quo, but within reach—with effort.
Reason 7: You Create Them For The Outside World
What applies to every form of communication applies to mission and vision statements as well: know your audience. Know for whom you are developing them. What I’ve seen in many cases, is that mission and vision statements tend to be written for a general audience, or “the public”—anyone visiting the organization’s website.
But that is a very broad and often irrelevant target audience. Because what kind of behaviors should the general public show after seeing the organization’s mission and vision statement?
Mission and vision statements may be important for (prospective) customers, suppliers, or strategic partners to see whether there is a good match. However, the most important target audience is mostly employees—current and prospective. The primary purpose of missions and visions is to give an organization focus, coherence and direction. To achieve this, it is the organization’s people who you primarily write them for.
Reason 8: You Don’t Live And Enact Them
A mission statement is not the mission, and a vision statement is not the vision. Like the title of a book, they are not the book, but the short textual version of it—the summary—not the actual content.
Furthermore, missions and visions that are only written down are plainly texts, phrases, words. They only become true missions and visions when they are also felt, lived, acted upon. This is a crucial difference, and it relates back to Reason 1 above. If your organization is not mission or vision driven, then the statements don’t reflect a mission or a vision.
This means that missions and visions are more about people’s attitudes and behaviors than about words. And this means that for effective mission and vision statements, your emphasis should be on enacting them, on putting them into practice—on turning words into deeds.
Reason 9: You Formulate Rather Than Form Them
The final reason why so many missions and visions fail stems from the way they are developed. Not rarely is this a word exercise where a group of people is sitting in a room, watching a slide with a draft version and discussing the particular words they don’t like.
There are two problems with this approach. First, it doesn’t sufficiently differentiate between formulating a mission or vision and forming it. Formulating is about the words. Forming, though, is much more about the ideas behind the words, about their meaning.
The second problem is the number of people involved. Although many people may or should be involved during the forming step—to embrace their viewpoints and to engage them—formulating works best if done by one or few people. The reason is that having too many people involved in that stage, leads to the colourless compromise referred to earlier.
In short, summarizing the nine advices in one overall advice: do it well and craft your mission and vision along the lines of these advices, or stop worrying about them and spend your precious time on other strategy-related topics.
- 3 Give some advantages and disadvantages of corporative versus competitive strategies?
Ans.
Cooperative Strategy Advantages and Disadvantages; with Types
1
The philosophy behind the cooperative strategy is that a company cannot always stand or go alone. Reasonably, it can make stronger its effectiveness through bring into being partnerships with other companies. In recent years, the need for cooperative strategy advantages and disadvantages heights. Because of the following:
- Intensified competition in the domestic market.
- Opening up a vast market in different parts of the world.
- Advanced in telecommunication and information technology.
- Globalization of business.
Trade liberalization in many countries since the emergence of the World Trade Organization (WTO) is.
Collaborative partnerships contemplate an obligation in hostile against the rivals to build a stable existence in international and domestic markets. They have turn out to be so essential to the attractiveness of companies in numerous trades. That they are a core element of today’s business strategies. Let us cite some examples of cooperative strategy partnerships of a few giant business conglomerates. There is a table. Such as:-
| Companies | Collaborative Partnerships |
| General Electric | 100+ |
| IBM | 400+ |
| Oracle | 15,000+ |
A vast network of partnerships with all of its suppliers of parts and components is the Toyota Motor Company of Japan. Microsoft Corporation has strategic alliances with numerous software developers.
The cooperative alliance is prevalent in those industries where there are rapid changes in the different sectors. For instance:- technology, business environment, customer needs, etc. An example of such an industry is the computer industry. A large number of companies produce computer components and software. Producers are mostly different for microprocessors, motherboards, monitors, disk drives, memory, etc. Therefore, there is a requirement for close collaboration among the manufacturers of all these assorted products.
Types of Cooperative Strategy:
The types of cooperative strategies are two. Such as:-
- Strategic Alliance
- Joint Venture
Strategic Alliance:
Also known as a strategic partnership, a strategic alliance is a collaborative arrangement between two or more organizations. The strategic alliance is the first cooperative strategy. It is a non-equity cooperation agreement between two or more firms for promoting their joint competitive advantage. The strategic alliance is formed to help each other in organizational or business functions for mutual benefits. It doesn’t entail creating a new organizational entity. The partners in strategic alliances have no formal ownership ties like a joint venture. The partners instead work cooperatively under an agreement.
The collaborative arrangement must outcome in win-win consequences for all partners to confirm ultimate achievement. None of the parties lose; instead, all gain. Strategic alliances form good earth for the allies to execute joint research, improve products, and share technology. In sharing R & D information, they cooperate on technological development, develop new products that complement each other in the marketplace, and build networks of dealers and distributors to handle their products. Examples of strategic alliances include HP and Intel, Microsoft, AT&T, and UPS; Merck and J&J; IBM and Dell; Pfizer. And also have Warner-Lambert, Grameen Phone and five mobile phone operators; and Dutch-Bangla Bank and few other commercial banks.
Japan’s Toyota has developed a network of over 34,000 alliances with its suppliers of parts and components. In the USA, General Electric Company has formed over 100, IBM over 400, and Oracle over 15,000 Strategic alliances. On average, each big company in the USA involves in around thirty alliances. The monsters in mobile phone technology such as Motorola, Erickson, and Nokia. They have industrialized strategic alliances to sustain worldwide marketplace leadership. Here includes the joint venture of cooperative strategy advantages and disadvantages. Such as:-
Significant Reasons for Strategic Alliances:
Firms enter into strategic alliances for many reasons. They can achieve various benefits if they do cooperate within the national boundary or outside the national border. The main motives for strategic alliances, outside and inside the country, are as follows:-
Within National Boundary:
The following within the national boundary for the strategic alliances:
- Avoiding a more costly process of building its capabilities by a company to access new opportunities.
- Collaborating on technology or development of a new product.
- Substantially improve competitiveness.
- Improving supply chain efficiency.
- Acquiring new competencies altogether.
- To open up expanded opportunities in the industry through collaboration with partners.
- Lastly, improving market access through joint marketing agreements.
Outside the National Boundary:
The following outside the national boundary for the strategic alliances:
Assembling more diverse skills, resources, technological expertise, and competitive capabilities, a company can assemble alone.
Capitalizing on the technological and information age revolution through collaborative partnerships with other sound companies.
Acquiring valuable resources or capabilities through alliances that a company could not otherwise obtain on its own.
Bundling competencies and resources across the countries that are more valuable in a joint effort than when dept. Separate.
Accessing valuable skills that concentrate in particular countries.
Finally, gaining inside knowledge about unfamiliar markets and cultures in foreign countries.
Causes for Failure of Strategic Alliances:
A study in the USA revealed that about two-thirds of the strategic alliances were not successful. The most critical reasons for uneasy alliances are as follows:
Failure or delay in responding and adapting to changes in the internal and external environment.
The inability of the partners to work together.
The rivalry between partners in the marketplace happens.
If circumstances require, the partner’s failure or unwillingness negotiate.
Lastly, the inability of the partners to ensure win-win outcomes from the cooperative agreements.
The above discussions unveil the fact that strategic alliances. Strategic alliances will sustain if the partners become serious in ongoing commitment, mutual learning, and close collaboration continuingly. Also, high dependence on the alliance for essential skills and capabilities may prove fatal for a company. Every single company must improve its expertise in getting market leadership.
- 4 Why do you believe cultural products affect all the functions of business?
Ans- Culture Impacts Local Business Practices
Professionals err when thinking that, in today’s shrinking world, cultural differences are no longer significant. It’s a common mistake to assume that people think alike just because they dress alike; it’s also a mistake to assume that people think alike just because they are similar in their word choices in a business setting. Even in today’s global world, there are wide cultural differences, and these differences influence how people do business. Culture impacts many things in business, including
The pace of business;
- Business protocol—how to physically and verbally meet and interact;
- Decision making and negotiating;
- Managing employees and projects;
- Propensity for risk taking; and
- Marketing, sales, and distribution.
There are still many people around the world who think that business is just about core business principles and making money. They assume that issues like culture don’t really matter. These issues do matter—in many ways. Even though people are focused on the bottom line, people do business with people they like, trust, and understand. Culture determines all of these key issues.
The opening case shows how a simple issue, such as local flavor preferences, can impact a billion-dollar company. The influence of cultural factors on business is extensive. Culture impacts how employees are best managed based on their values and priorities. It also impacts the functional areas of marketing, sales, and distribution.
It can affect a company’s analysis and decision on how best to enter a new market. Do they prefer a partner (tending toward uncertainty avoidance) so they do not have to worry about local practices or government relations? Or are they willing to set up a wholly owned unit to recoup the best financial prospects?
When you’re dealing with people from another culture, you may find that their business practices, communication, and management styles are different from those to which you are accustomed. Understanding the culture of the people with whom you are dealing is important to successful business interactions and to accomplishing business objectives. For example, you’ll need to understand
- How people communicate;
- How culture impacts how people view time and deadlines;
- How they are likely to ask questions or highlight problems;
- How people respond to management and authority;
- How people perceive verbal and physical communications; and
- How people make decisions.
To conduct business with people from other cultures, you must put aside preconceived notions and strive to learn about the culture of your counterpart. Often the greatest challenge is learning not to apply your own value system when judging people from other cultures. It is important to remember that there are no right or wrong ways to deal with other people—just different ways. Concepts like time and ethics are viewed differently from place to place, and the smart business professional will seek to understand the rationale underlying another culture’s concepts.
For younger and smaller companies, there’s no room for errors or delays—both of which may result from cultural misunderstandings and miscommunications. These miscues can and often do impact the bottom line.
Spotlight on Cultures and Entrepreneurship
With global media reaching the corners of the earth, entrepreneurship has become increasingly popular as more people seek a way to exponentially increase their chances for success. Nevertheless, entrepreneurs can face challenges in starting to do business in nations whose cultures require introductions or place more value on large, prestigious, brand-name firms.
Conversely, entrepreneurs are often well equipped to negotiate global contracts or ventures. They are more likely to be flexible and creative in their approach and have less rigid constraints than their counterparts from more established companies. Each country has different constraints, including the terms of payment and regulations, and you will need to keep an open mind about how to achieve your objectives.
In reality, understanding cultural differences is important whether you’re selling to ethnic markets in your own home country or selling to new markets in different countries. Culture also impacts you if you’re sourcing from different countries, because culture impacts communications.
Your understanding of culture will affect your ability to enter a local market, develop and maintain business relationships, negotiate successful deals, conduct sales, conduct marketing and advertising campaigns, and engage in manufacturing and distribution. Too often, people send the wrong signals or receive the wrong messages; as a result, people get tangled in the cultural web. In fact, there are numerous instances in which deals would have been successfully completed if finalizing them had been based on business issues alone, but cultural miscommunications interfered. Just as you would conduct a technical or market analysis, you should also conduct a cultural analysis.
It’s critical to understand the history and politics of any country or region in which you work or with which you intend to deal. It is important to remember that each person considers his or her “sphere” or “world” the most important and that this attitude forms the basis of his or her individual perspective. We often forget that cultures are shaped by decades and centuries of experience and that ignoring cultural differences puts us at a disadvantage.
- 5 Describe several reasons why conflict may occur during objective-setting activities?
Ans-There are a number of different ways of managing organizational conflict, which are highlighted in this section. Conflict management refers to resolving disagreements effectively.
Ways to Manage Conflict
Change the Structure
When structure is a cause of dysfunctional conflict, structural change can be the solution to resolving the conflict. Consider this situation. Vanessa, the lead engineer in charge of new product development, has submitted her components list to Tom, the procurement officer, for purchasing. Tom, as usual, has rejected two of the key components, refusing the expenditure on the purchase. Vanessa is furious, saying, “Every time I give you a request to buy a new part, you fight me on it. Why can’t you ever trust my judgment and honor my request?”
Tom counters, “You’re always choosing the newest, leading-edge parts—they’re hard to find and expensive to purchase. I’m supposed to keep costs down, and your requests always break my budget.”
“But when you don’t order the parts we need for a new product, you delay the whole project,” Vanessa says.
Sharon, the business unit’s vice president, hits upon a structural solution by stating, “From now on, both of you will be evaluated on the total cost and the overall performance of the product. You need to work together to keep component costs low while minimizing quality issues later on.” If the conflict is at an intergroup level, such as between two departments, a structural solution could be to have those two departments report to the same executive, who could align their previously incompatible goals.
Change the Composition of the Team
If the conflict is between team members, the easiest solution may be to change the composition of the team, separating the personalities that were at odds. In instances in which conflict is attributed to the widely different styles, values, and preferences of a small number of members, replacing some of these members may resolve the problem. If that’s not possible because everyone’s skills are needed on the team and substitutes aren’t available, consider a physical layout solution. Research has shown that when known antagonists are seated directly across from each other, the amount of conflict increases. However, when they are seated side by side, the conflict tends to decrease.
Create a Common Opposing Force
Group conflict within an organization can be mitigated by focusing attention on a common enemy such as the competition. For example, two software groups may be vying against each other for marketing dollars, each wanting to maximize advertising money devoted to their product. But, by focusing attention on a competitor company, the groups may decide to work together to enhance the marketing effectiveness for the company as a whole. The “enemy” need not be another company—it could be a concept, such as a recession, that unites previously warring departments to save jobs during a downturn.
Consider Majority Rule
Sometimes a group conflict can be resolved through majority rule. That is, group members take a vote, and the idea with the most votes is the one that gets implemented. The majority rule approach can work if the participants feel that the procedure is fair. It is important to keep in mind that this strategy will become ineffective if used repeatedly with the same members typically winning. Moreover, the approach should be used sparingly. It should follow a healthy discussion of the issues and points of contention, not be a substitute for that discussion.
Problem Solve
Problem solving is a common approach to resolving conflict. In problem-solving mode, the individuals or groups in conflict are asked to focus on the problem, not on each other, and to uncover the root cause of the problem. This approach recognizes the rarity of one side being completely right and the other being completely wrong.
Conflict-Handling Styles
Individuals vary in the way that they handle conflicts. There are five common styles of handling conflicts. These styles can be mapped onto a grid that shows the varying degree of cooperation and assertiveness each style entails. Let us look at each in turn.
Figure 10.6 Conflict-Handling Styles
Avoidance
The avoiding style is uncooperative and unassertive. People exhibiting this style seek to avoid conflict altogether by denying that it is there. They are prone to postponing any decisions in which a conflict may arise. People using this style may say things such as, “I don’t really care if we work this out,” or “I don’t think there’s any problem. I feel fine about how things are.” Conflict avoidance may be habitual to some people because of personality traits such as the need for affiliation. While conflict avoidance may not be a significant problem if the issue at hand is trivial, it becomes a problem when individuals avoid confronting important issues because of a dislike for conflict or a perceived inability to handle the other party’s reactions.
Accommodation
The accommodating style is cooperative and unassertive. In this style, the person gives in to what the other side wants, even if it means giving up one’s personal goals. People who use this style may fear speaking up for themselves or they may place a higher value on the relationship, believing that disagreeing with an idea might be hurtful to the other person. They will say things such as, “Let’s do it your way” or “If it’s important to you, I can go along with it.” Accommodation may be an effective strategy if the issue at hand is more important to others compared to oneself. However, if a person perpetually uses this style, that individual may start to see that personal interests and well-being are neglected.
Compromise
The compromising style is a middle-ground style, in which individuals have some desire to express their own concerns and get their way but still respect the other person’s goals. The compromiser may say things such as, “Perhaps I ought to reconsider my initial position” or “Maybe we can both agree to give in a little.” In a compromise, each person sacrifices something valuable to them. For example, in 2005 the luxurious Lanesborough Hotel in London advertised incorrect nightly rates for £35, as opposed to £350. When the hotel received a large number of online bookings at this rate, the initial reaction was to insist that customers cancel their reservations and book at the correct rate. The situation was about to lead to a public relations crisis. As a result, they agreed to book the rooms at the advertised price for a maximum of three nights, thereby limiting the damage to the hotel’s bottom line as well as its reputation.
Competition
People exhibiting a competing style want to reach their goal or get their solution adopted regardless of what others say or how they feel. They are more interested in getting the outcome they want as opposed to keeping the other party happy, and they push for the deal they are interested in making. Competition may lead to poor relationships with others if one is always seeking to maximize their own outcomes at the expense of others’ well-being. This approach may be effective if one has strong moral objections to the alternatives or if the alternatives one is opposing are unethical or harmful.
Collaboration
The collaborating style is high on both assertiveness and cooperation. This is a strategy to use for achieving the best outcome from conflict—both sides argue for their position, supporting it with facts and rationale while listening attentively to the other side. The objective is to find a win–win solution to the problem in which both parties get what they want. They’ll challenge points but not each other. They’ll emphasize problem solving and integration of each other’s goals. For example, an employee who wants to complete an MBA program may have a conflict with management when he wants to reduce his work hours. Instead of taking opposing positions in which the employee defends his need to pursue his career goals while the manager emphasizes the company’s need for the employee, both parties may review alternatives to find an integrative solution. In the end, the employee may decide to pursue the degree while taking online classes, and the company may realize that paying for the employee’s tuition is a worthwhile investment. This may be a win–win solution to the problem in which no one gives up what is personally important, and every party gains something from the exchange.
Which Style Is Best?
Like much of organizational behavior, there is no one “right way” to deal with conflict. Much of the time it will depend on the situation. However, the collaborative style has the potential to be highly effective in many different situations.
We do know that most individuals have a dominant style that they tend to use most frequently. Think of your friend who is always looking for a fight or your coworker who always backs down from a disagreement. Successful individuals are able to match their style to the situation. There are times when avoiding a conflict can be a great choice. For example, if a driver cuts you off in traffic, ignoring it and going on with your day is a good alternative to “road rage.” However, if a colleague keeps claiming ownership of your ideas, it may be time for a confrontation. Allowing such intellectual plagiarism to continue could easily be more destructive to your career than confronting the individual. Research also shows that when it comes to dealing with conflict, managers prefer forcing, while their subordinates are more likely to engage in avoiding, accommodating, or compromising. It is also likely that individuals will respond similarly to the person engaging in conflict. For example, if one person is forcing, others are likely to respond with a forcing tactic as well.
What If You Don’t Have Enough Conflict Over Ideas?
Part of effective conflict management is knowing when proper stimulation is necessary. Many people think that conflict is inherently bad—that it undermines goals or shows that a group or meeting is not running smoothly. In fact, if there is no conflict, it may mean that people are silencing themselves and withholding their opinions. The reality is that within meaningful group discussions there are usually varying opinions about the best course of action. If people are suppressing their opinions, the final result may not be the best solution. During healthy debates, people point out difficulties or weaknesses in a proposed alternative and can work together to solve them. The key to keeping the disagreement healthy is to keep the discussion focused on the task, not the personalities. For example, a comment such as “Jack’s ideas have never worked before. I doubt his current idea will be any better” is not constructive. Instead, a comment such as “This production step uses a degreaser that’s considered a hazardous material. Can we think of an alternative degreaser that’s nontoxic?” is more productive. It challenges the group to improve upon the existing idea.
Traditionally, Hewlett-Packard Development Company LP was known as a “nice” organization. Throughout its history, HP viewed itself as a scientific organization, and their culture valued teamwork and respect. But over time, HP learned that you can be “nice to death.” In fact, in the 1990s, HP found it difficult to partner with other organizations because of their culture differences. During role plays created to help HP managers be more dynamic, the trainers had to modify several role-plays, because participants simply said, “That would never happen at HP,” over the smallest conflict. All this probably played a role in the discomfort many felt with Carly Fiorina’s style as CEO and the merge she orchestrated with Compaq Computer Corporation, which ultimately caused the board of directors to fire Fiorina. On the other hand, no one is calling HP “too nice” anymore.
