Corporate Culture as Competitive Advantage

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SCHILLER INTERNATIONAL UNIVERSITY

‘Corporate Culture as a Competitive Advantage’

A closer look at different types of corporate cultures and how they affect the global market place.

Annette Glatzel

13.04.2008

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Table of Contents

Abstract
In This paper I have looked at what a competitive advantage is and why a strong corporate culture can be seen as a strategic competitive advantage. The Corporate culture theories developed by Hofstede, Deal and Kennedy and Handy have been listed and briefly discussed. I have looked at two real life examples of successful corporate cultures, namely Southwest Airlines and Hewlett Packard. I have also briefly looked at the negative sides of corporate culture to avoid bias. Furthermore I have looked at how corporate culture affects (International) mergers and acquisitions of companie. I have given an analysis of the failure of the DaimlerChrysler Merger in view of their clashing corporate cultures. Subsequently I have listed what a company could possible do if they enter in a merger to avoid clashes in culture.  


Corporate culture as a competitive advantage
Introduction
In order to stay ahead in business in today’s rapidly changing world it is of great value to have a competitive advantage in order to differentiate from and keep your company or product ahead of your competitors. A competitive advantage can be described as The possession of various assets and attributes which gives a competitive edge over rival companies. A solid point of competitive advantage provides economic benefits. An advantage is something that is not readily produced and the more sustainable the competitive advantage, the more difficult it is for competitors to neutralize or copy the advantage A competitive advantage can be amongst other things having a superior product, a strong brand image, or a well developed logistics department. In this paper I will discuss why corporate culture can be seen as one of the most valuable assets and why it serves as a competitive advantage. Corporate culture is directly related to the workforce of the company. The workforce can be considered being one of the greatest assets the company has, and should therefore be seen as a point of competitive advantages. Reasons for this are as follows : First of all they are the ones who actually implement the business plans. They are the force that puts words into action and without a labor force to back your businesses it is highly likely that there is no business. Secondly, the employees are the ones who interact with the customers and thus represent an outward image of the corporate identity and brand image. Thirdly their ideas are often the most innovative and useful because they are most in touch with customer needs or directly involved in the production process which is often not the case with top management where typically decisions are made. The workforce should be seen as a strategic advantage and not a cost. The truth is however that the workforces are usually underutilized. What is ‘Corporate Culture’?

Edgar Schein a professor at the MIT Sloan School of Management is often credited for inventing the term ‘corporate culture’ . Corporate culture can be defined as the workplace environment, formulated from the interaction of the employees in the workplace. It generally represents the norms, assumptions, shared values, and artifacts within a firm. Although top management is often responsible for creating and sustaining organizational culture by their actions and leadership, all employees contribute to the organizational culture. Corporate culture should be tailored to the workforce. It should take into consideration their cultural and religious backgrounds and level...
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