Exam 11: Endocrine Disorders and Testing

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An understanding of different national cultures is important in all aspects of strategic management. Because international trade is becoming increasingly important, knowledge of national cultures is important to environmental scanning. One must scan not only key forces in one's industry, but also different societal forces in other parts of the world where the company might do business. An understanding of national cultures is also important to the formulation of strategy. Many cultures are very ethnocentric and do not like foreigners controlling key parts of their country. In Saudi Arabia, for example, non-Saudis cannot own land, they can only rent it. Most countries have rules regarding ownership of companies in industries that are deemed important to that country's welfare (for example, the U.S. defense and airlines industries). A company must have an understanding of these differences if it is to formulate various entry strategies into different countries or regions. An understanding of different cultures is especially important in strategy implementation. Because of cultural differences, managerial style and human resource practices must be tailored to fit the particular situations in other countries. Hofstede found in his research that national culture is so influential that it tends to overwhelm even a strong corporate culture. In measuring the differences among five national dimensions from country to country, he was able to explain how a certain management practice might be successful in one nation but fail in another. Knowledge of these kinds of differences is crucial for any multinational corporation. An understanding of national cultures is also important to evaluation and control.

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MBO is a powerful implementation technique because it is a system that links plans with performance. It forces managers to communicate the objectives of the overall business unit to their subordinates so they are better able to see how they fit into the company's goal accomplishment. MBO, therefore, acts to tie together corporate, business, and functional objectives, as well as the strategies developed to achieve them. This forms a hierarchy of objectives similar to the hierarchy of strategy mentioned in Chapter 1. The mutual give and take, together with the sense of personal responsibility exemplifying a successful MBO program, serves to motivate employees to help implementation activities succeed.

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Total quality management (TQM) is an operational philosophy that stresses commitment to customer satisfaction and continuous improvement. It aims at improving quality, increasing flexibility, and reducing costs in order to better satisfy the customer. Because TQM aims to reduce costs as well as improve quality, it can be used as a program to implement either an overall low cost or a differentiation business strategy. Like MBO, TQM helps keep employees' minds on a crucial objective of strategic management: increasing sales and profits by pleasing the customer. Because the mission of most business firms is customer driven, TQM helps to clarify and fine-tune the company's mission statement. TQM makes the key point that because competitive advantage is usually only temporary, the organization must emphasize continuous improvement to improve product quality and reduce costs. According to TQM, customers can be internal as well as external to the organization. To the extent that a company is able to continually improve its service to its internal customers, it is more likely to keep internal transaction costs low and thus be in a better position to reap the benefits and avoid the disadvantages of vertical integration.