STRATEGIC MANAGEMENT (MAY-JUNE) 2012 REG-2009 PART A 1. 2. 3. 4. Define Corporate Governance. Draft a statement of vision and mission.

. What is core competence? What is strategic group maping?

Strategic group mapping A mechanism for understanding the other players that operate in your field Strategic group mapping is a technique for looking at your position in your sector, field or market. Hunt coined the term strategic group in 1972 when he noticed sub-groups of businesses with similar characteristics in the same market. Michael Porter then expanded the concept in the 1980s. There are a number of benefits to strategic group mapping:

It can help you identify who your direct and indirect competitors (or possible partners) are It can illustrate how easy it might be to move from one strategic group to another It may help identify future opportunities or strategic problems It ensures you take your customers or beneficiaries views into account when developing or assessing your strategy

5. Give an example for vertical integration.

Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly. Nineteenth-century steel tycoon Andrew Carnegie's example in the use of vertical integration[1] led others to use the system to promote financial growth and efficiency in their businesses.

6. Define Strategic Alliance. 7. State any two ways where buyers bargaining power can create competitive pressure. 8. How can power and politics influence change?

This module addresses the question of how power and influence manifest in organizations. To be successful in getting things done in organizations, it is critical that you be able to comprehend the patterns of interdependence among organizational participants and to diagnose their relative power. Our focus will be on learning to read and diagnose the political landscape in organizations. How do power and influence dynamics work in organizations? What are the key sources of power in organizations? Why do we see political conflict in organizations? How can political conflict be handled to serve constructive ends?

9. What is a Non-Profit Organisation? 10. Define a Business Model.

The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.

PART B 11 (a). Discuss the process of crafting and executing strategy for a firm.
The managerial process of crafting and executing strategy. The managerial process of crafting and executing strategy has five phases, which includes developing a strategic vision; setting objectives; crafting a strategy to achieve the objectives and vision; implementing and executing the strategy; and monitoring developments, evaluating performance and making corrective adjustments. Phase 1 - Developing a strategic vision Thompson et al., (2010) describes a strategic vision as the route a company intends to take in developing and strengthening its business. In this step, a strategic vision of where the company needs to head and what its future is in regard to its products, customers, market and technology focus is sort and detailed. This managerial step provides long-term direction, infuses the organization with a sense of purposeful action, and communicates to stakeholders what management's aspirations for the company. Phase 2 - Setting objectives According to Johnson et al., (2005), objectives arequantifiable aims in line with a mission. Pearce and Robinson (2011) define objectives as the end results of planned activities. They should be stated as action verbs and tell what is to be accomplished by when and quantified. Pearce and Robinson (2011) says that objectives are different from goals as a goal is an operation ended statement of what one wants to accomplish with no quantification of what is to

be achieved and no time criteria for completion. Thompson et al., (2010) identifies two types of objectives required which includes the financial and the strategic objectives. Financial objectives focus on improving financial performance while strategic objectives focus on improving competitive vitality and future businessposition. Phase 3 - Crafting an strategy According to Thompson et al., (2010), crafting the Strategy is primarily a market driven activity. It involves identifying the desired competencies and capabilities to 4build into the strategy and help achieve competitive advantage. Crafting strategy is concerned principally with forming responses to changes under way in the external environment, devising competitive moves and market approaches aimed at producing sustainable competitive advantage, building competitively valuable competencies and capabilities, and uniting the strategic actions initiated in various parts of the company. Successful strategy making depends on the business vision, perceptive analysis of the situation, attracting and pleasing customers, and outcompeting rivals.An effectively formulated strategy integrates, marshals, and allocates the firms internal resources and makes appropriate use of external environmental information. The idea is to formulate a mission-consistent strategy that will lead to sustained superior performance. Poor strategy formulation can result in costly business failures. GomezMejia and Balkin (2002) and Vallabhaneni (2009) stated that the formulation includes the planning and decision making that lead to the establishment of the firms goals and the development of a specific strategic plan. Thompson et al., (2010) says that a firm's strategy is defined by six Hows: how to grow the business; how to please customers; how to outcompete rivals; how to respond to changing market conditions; how to manage each functional piece of the business (RandD, production, marketing, HR, finance, and so on); and how to achieve targeted levels of performance. Types of strategies There are different types of strategies available depending on factors like:- product life cycle, changing environment, competitors game, vision of the company. The most pronounced strategies are the Porters grand and generic strategies and red and blue ocean strategies.Different tools used to know which strategy to take includes:- the Strength, Weakness, Opportunity and Threat (SWOT) analysis, Porters five forces of competition, Political, Economical, Social, Technological, Ecological and Legal (PESTEL) analysis, McKinsey 7-S framework, portfolio analysis, Boston Consulting Group (BCG) Matrix model, Strategic Position and Action Evaluation (SPACE) matrix, Grand Matrix and Quantitative Strategic Planning Matrix (QSPM). Selection of strategies

Johnson et al., (2005) indicates that it is important to recognise that the evaluations do not by themselves determine which strategies should be or are selected for implementation. However, the evaluation process always contributes by raising the level of debate which occurs among senior managers when they are using judgments on the selection of strategy. Also, strategic choice can be a process of 'testing and learning' in which a particular strategic option is partially implemented to be continued or modified depending upon the results obtained. Ragui and Weru 278 Similarly, it is impossible to demonstrate conclusively that a particular business strategy is optimal or even to guarantee that it will work. One can, nevertheless, test it for critic cal flaws. Mintzberg et al., (2003) says that of the many tests which could be justifiably applied to a business strategy, most will fit within one of these broad criteria: Consistency: The strategy must not present mutually inconsistent goals and policies; Consonance: The strategy must represent an adaptive response to the external environment and to the critical changes occurring within it; Advantage: The strategy must provide for the creation and/or maintenance of a competitive advantage in the selected area of activity; and Feasibility:

The strategy must neither overtax available resources nor create unsolvable sub problems. The table 1 summarizes the questions that can be posed and the tools that could be used to analyse the same. Mintzberg et al., (2003) says that a strategy that fails to meet one or more of these criteria is strongly suspect. It fails to perform at least one of the key functions that are necessary for the survival of the business. Experience within a particular industry or other setting will permit the analyst to sharpen these criteria and add others that are appropriate to the situation at hand. Finally strategic choice has an ethical aspect - a fact much more dramatically illustrated in some industries than in others. Mintzberg et al., (2003) added that just as alternatives may be ordered in terms of the degree of risk that they entail, so may they be examined against the standards of responsiveness to the expectations of society that the strategist elects. Some alternatives may seem to the executive considering them more attractive than others when the public good or service to society is considered. Phase 4 - Implementing and executing the chosen strategy Thompson et al., (2010) indicates that executing the

strategy is primarily an operations-driven activity which is tougher and more time consuming than crafting the same. This is because of the variety of m anagerial activities to be performed and most importantly battling resistance to change that might occur. Good strategy execution requires putting desired competencies and capabilities in place, upgrading them as needed, and modifying them as market conditions evolve. GomezMejia and Balkin (2002) added that the best conceived strategies are of little value if they are not implemented effectively. To enable smooth implementation and execution of a strategy, Thompson et al., (2010) indicates eight actions that should be carried out. These include:- Building an organization with the competencies, capabilities and resource strengths, needed for successful strategy Phase 5 - Evaluating performance and initiating corrective adjustments Wheelen and Hunger (2010), described performance as the end result of activity. After the strategy is implemented, evaluation of performance and initiating corrective adjustments in vision, long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities is necessary. This phase of the strategy management process is the trigger point for deciding

whether to continue or change the company's vision, objectives, strategy, and/or strategy execution methods. Wheelen and Hunger (2010) indicates that controls can be established to focus on actual performance results (output), on the activities that generate the performance (behavior), or on resources that are used in performance (input). Pearce and Robinson (2011) indicates for types of strategic control which includes; premise control, implementation control, strategic surveillance and special alert control. Problems in measuring performance Following Wheelen and Hunger (2010), the measurement of performance is a crucial part of evaluation and control. The lack of quantifiable objectives or performance standards and the inability of the information system to provide timely and valid information are two obvious control problems. Nevertheless, the use of timely, quantifiable standards does not guarantee good performance. The very act of monitoring and measuring performance can cause side effects that interfere with overall corporate performance. Among the most frequent negative side effects are a short-term orientation and goal displacement.

11 (b). Define social responsibility. Explain the categories of socially responsible behavior.
Introduction

Social responsibility (SR) is an expression used to dene businesses that show a particularinterest to what goes beyond the immediate economic gains of their activities [e.g.,1, 2].It means that the organization and, more importantly, its employees, managers, and execu-tives are aware that business behaviors lead to expected and unexpected consequences overthe community, the natural environment, and stakeholders in general [3, 4]. These ties havealso been called business and society relationships [e.g.,5, 6] and highlight the increasingresponsibilities of organizations that exploit available and sometimes limited resources.The word social helps to limit the extent to which resources are considered. In fact, itreminds us that companies have responsibilities but that SRs are those that deal with whataffects human beings. There is a wide range of business activities that falls under this cat -egory since it is very hard to isolate something that bares no impact to individuals, bothin - and outside the organization. Hence, anything that is social (i.e., deals with human beings) and that could or should be related to any of the business activities falls under thecategory of social responsibility.With very few exceptions [e.g.,7], SR is usually analyzed at the macro-organizational levelwhile limited attention is dedicated to individuals. It may appear redundant to state thatorganizations may be legally responsible for actions but they do not make any decisions. Individualsnamely executives, managers, employees, etc.make decisions. On this soleb asis, a rst question can be asked: when a company is said to be socially responsible, whois actually being so? And what is SR for an individual?Thinking of how the concept of business (or, as usually referred to, corporate) SR can betransferred to ones personal social responsibility, the following perspectives emerge: (A)the individuals personal opinions, thinking, and perception of business -related activitiesthat fall under the category of socially responsible behaviors; and (B) the individuals so -cially responsible behavior, dened the same way it is for organizations i.e., somebodythat is aware of non-immediate and social consequences of his or her actions. Perspective(A) is that of business studies [e.g. 8] where employees perceptions of business activitiesare taken as a proxy to measure their personal SR attitudes. Rightly or wrongly, this impliesthat their judgment of what constitutes SR behavior in the company where they work is alsowhat drives their personal behavior.The second perspective (B) is usually taken by psychologists [e.g.,9,10] . I n t h e i r w o r k , they study personal attitudes towards other people in the communitywhether it is local ornationaland dene it as something promoting or related to other prosocial behaviors.The two perspectives seem quite different, but it may be of interest to analyze what theyh a v e i n c o m m o n . T h i s c h a p t e r i s a n a t t e m p t t o s h o w h o w t h e t w o p e r s p e c t i v e s c a n b e brought together and what advantages can be derived from such a comparison. The nextsection explores the con cept of social responsibility as it is understood and measured inthe business and psychological literature. A framework that brings key elements of SR to-gether is then offered. The following

section is then dedicated to bringing in a cognitive approach that reframes the construct and has potentials to provide a more precise denition.Implications and nal remarks follow. Tackling socially responsible behavior Social responsibility type A: Business The rst type of SR comes from the business literature. For business scholars, social re-s p o n s i b i l i t y r e f e r s t o w h a t ( m o s t ) c o m p a n i e s s h o u l d b e d o i n g o r do to enhance the so -cial, cultural, political, and natural environments t h a t s u r r o u n d t h e m . T h i s i s a m a c r o - organizational picture of SR [e.g.,11]. When looked from the individual perspective (i.e.,micro-organizational perspective) SR becomes ones perceptions [e.g.,12] of the organizations strategy, values, vision, behavior. Many of the existing theoretical constructs [1,2]dene SR this way, and so do studies on individual social responsibility [e.g.,8, 13]. Someof these scholars develop scales of SR that measure individual attitudes towards the com - panys economic gains vs. social performance [e.g.,14].Although very compelling and relevant to the advancement of our understanding of peo- ples attitudes towards SR, there are two major issues that these studies face. The rst is that they usually present social responsibility tied together with business ethics [e.g.,13] orto moral judgment in general. This is a crucial point in social responsibility and businessethics, since there is a ne line that separates the two[15] . A c c o r d i n g t o s o m e s c h o l a r s SR does not always need an ethical anchor to be practiced, analyzed, understood [e.g., so -cial accounting, auditing, and reporting,16] . T h i s i s a l i v i n g d e b a t e , a s w i t n e s s e d b y t h e quest for a normative stakeholder theory [ 17], for example. However, some authors[1]make a clear distinction between ethical theories of social responsibility and other theories,i.e. instrumental, political, and integrative. Therefore, measures of SR that emphasize itsethical component do not capture the complexity and multifaceted nature of the constructproviding, at best, only a partial account of it.The second issue emerging from the published scales of SR is that they remain totally un -aware of cognition. As of today, I am not aware of studies on the cognitive side of socialresponsibility, with two exceptions [7, 18]. Boal and Peerys study [7] provides a ground-breaking perspective on SR because it uses the stakeholder approach and integrates it withthe ethical structure of decision making. Once again, the preference of the stakeholder overo t h e r a p p r o a c h e s t o S R a n d t h e u s e o f e t h i c s s e e m t o n a r r o w t h e s c o p e o f t h e s t u d y . A n attempt to cover some of the limitations of that study is found in a much later work [ 18],where the author provides a model to frame the cognition of social responsibility drawn onthe late Herbert Simon [19, 20]. Social responsibility type B: Psychology The psychology and the business literature on SR look at the two sides of the same coin.The former provides hints on two different aspects. The rst is the literature on responsi-bility [e.g.,21] where the word

social is used to describe what happens when one is heldaccountable to a community or any group of people one may belong to and that includes family, organizations, teams, etc. [e.g.,22].The second branch of the psychology literature presents social responsibility as it falls intothe category of prosocial behavior [e.g.,23], whether it relates to children [e.g.,24, 25] orto adults [e.g.,26,27]. These studies analyze individual behavior when it is positive andsocially acceptable; from here the word responsible. This may turn into what many reli- gions dene as the golden ru le, i.e. dont do to others what you dont want done to you. Or,from a more utilitarian point of view, it may be seen as the do ut des , meaning that for anygiven there should be something that is received [e.g.,28,2]. Or, again, it can be denedas the altruistic mechanism of reciprocation [e.g.,2 9 , 3 0 ], that is the implicit give back feeling that people receiving altruism may feel (and altruists may expect, depending on culture and social habits).Many of the studies that look at SR from the angle of the psychologist present different re sults divided by the age of participant (e.g., childhood, adulthood, adolescence). Althoughthis is particularly helpful to understand social responsibility as part of ones personal andsocio -psychological development at different stages of intellectual evolution, it is not of my knowledge of any comprehensive or longitudinal study that reports measures of SR asindividuals move from childhood to adulthood. This may account for a limitation found inthe literature.Another one may be found in the attempt [starting from 31] to link SR to political conser-vatism and to the so-called traditional American values. Indeed, it is interesting to try toconnect individual attitudes with political choices or with traditional values. However, whatseems to relate to social responsibility in todays world points at the opposite direction. Al-though this critic has no empirical evidence to back it up, the attitude of individuals to carefor the social environment, including the natural environment and its scarce resources; tohave a strong sense of social justice and fairness; and to promote fair trade, for example,seems to be more a characteristic of liberal and progressive (if not socialist) thinking. Thisaspect probably needs to be developed further.Among the issues that arise from this literature on the psychology of SR, there also seem tobe a confusion on what the concept really is about. One of the examples of what constitutesSR for psychologists [e.g.,23,10] can be summarized as follows:Rat her than giving benets to others only to the degree that fairly immediaterewards from others have been received or are anticipated, this kind of personwill tend to help people even when there is nothing to be gained from others [31, p. 170].They add, a few lines later, that this happens because of strong internal moral and ethical s t a n d a r d s of the individual. It can be argued that what they are reall y pointing at is n o t social responsibility but altruism in one of its basic forms [ 32]. Also, the type of behaviordescribed above is close to what Simon [20] may refer to as unintelligent altruism. Isthis truly socially responsible behavior or is it altruism? What is the difference betweenthe two? When does SR fall under altruism? Is there a continuous line that connects SR toaltruism? And how can we draw that line? What appears

later in the chapter may contributeto this line of inquiry and constitutes an attempt to answer some of these questions. Another interesting point that is worth mentioning is that the two streams of literaturei.e., psychology and business-orientedremain separate, with very little cross-referencing.Going further with the analogy of the coin, they remain separate but intertwined. The issuethen becomes, how can we merge the two perspectives? Does the merger lead to a richerframework? An inter-disciplinary comparative framework Table 1 presents a framework to compare and integrate the business and psychology per-spectives. The rst column shows elements found in the literature and used to dene SR.The second and the fourth columns show whether that element has received any coverage[1] or not [0] according to studies on SR Type A (business) and/or Type B (psychology).An extremely limited or implicit coverage of the element is also indicated in the table [0.5].Columns three and ve (Ref) provide references, taken respectively from Type A and TypeB, that treat or deal with the element listed in the rst column.Both types of SR emphasize the idea that social responsibility is about behavior that posit i v e l ya f f e c t s t h e s u r r o u n d i n g e n v i r o n m e n t . T h e r e a r e s o m e d i f f e r e n c e s , t h o u g h . F r o m T a b l e 1 it is apparent that SR Type B emphasizes personal characteristics (esp. personality) andaltruism as correlates, elements, and/or effects of socially responsible behavior. Instead, SRType A focuses almost exclusively on ethics and moral standards to dene social respon -sibility. One of the reasons for this may be that the business literature usually deals with Cognitive underpinnings What is the cognitive mechanism t h a t s u p p o r t s s o c i a l l y r e s p o n s i b l e b e h a v i o r ? I s i t t h e same that triggers prosocial behavior in general? The answer to both questions is positive.A few notes on some of the recent advancements in cognitive science show potential tohelp us in the analysis. A cognitive approach to SR Individual social responsibility appears to be one of the most intriguing concepts in bothapplied social psychology and organizational studies. Of course, there are many reasonst h a t c o u l d s u p p o r t t h i s s t a t e m e n t , a n d t h e o b j e c t i v e s o f t h i s c h a p t e r d o n o t a l l o w m e t o spend too many words on this topic. However, one of the reasons why SR covers a verypeculiar role can be traced back to its cognitive underpinnings.The starting point for this cognitive approach to SR is the concept of docility. This is thetendency to make decisions on the basis of information, recommendations, persuasion, andadvice coming from social channels[19,20]. The word docile has different meaningsdepending on the eld that brings it in [meaning submissive in psychology; e.g.,5 5 , 5 6 ].From a cognitive angle, the docile individual exploits social channels, i.e. makes the

12 (a). Describe the concept of environment in the context of strategic management.

Assessing or scanning the environment of an organization is a necessity in order tomake appropriate decisions and adapting strategies to a context in constant evolution.Therefore,

organizations are compelled to scan their environment to understand the external forces of change that may affect their future position so that they can develop effective responses [1]. The importance of obtaining a thorough perception of the environment has been advocated by numerous prominent authors in strategic management [2-5]. They see the co-alignment between the organization and its environment as essential for performance and strategy as the key means to achieve this goal. In this respect, environmental analysis is considered an important preliminary activity of the strategy formulation process.

12 (b). Explain the manner in which strategic and competitive advantage is developed.
Competitive advantage seeks to address some of the criticisms of comparative advantage. Michael Porter proposed the theory in 1985. Porter emphasizes productivity growth as the focus of national strategies. Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy. The other theory, comparative advantage, can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to correct for this issue by stressing [1] maximizing scale economies in goods and services that garner premium prices (Stutz and Warf 2009).

Competitive Strategies/advantages[edit source | editbeta]

Cost Leadership Strategy[edit source | editbeta]
The goal of Cost Leadership Strategy is to offer products or services at the lowest cost in the industry. The challenge of this strategy is to earn a suitable profit for the company, rather than operating at a loss and draining profitability from all market players. Companies such as Walmart succeed with this strategy by featuring low prices on key items on which customers are price-aware, while selling other merchandise at less aggressive discounts. Products are to be created at the lowest cost in the industry. An example is to use space in stores for sales and not for storing excess product.

Differentiation Strategy[edit source | editbeta]

The goal of Differentiation Strategy is to provide a variety of products, services, or features to consumers that competitors are not yet offering or are unable to offer. This gives a direct advantage to the company which is able to provide a unique product or service that none of its competitors is able to offer. An example is Dell which launched mass-customizations on computers to fit consumers' needs. This allows the company to make its first product to be the star of its sales.

Innovation Strategy[edit source | editbeta]

The goal of Innovation Strategy is to leapfrog other market players by the introduction of completely new or notably better products or services. This strategy is typical of technology start-up companies which often intend to "disrupt" the existing marketplace, obsoleting the current market entries with a breakthrough product offering. It is harder for more established companies to pursue this strategy because their product offering has achieved market acceptance. Apple has been a notable example of using this strategy with its introduction of iPod personal music players, and iPad tablets. Many companies invest heavily in their research and development department to achieve such statuses with their innovations.

Operational Effectiveness Strategy[edit source | editbeta]

The goal of Operational Effectiveness as a strategy is to perform internal business activities better than competitors, making the company easier or more pleasurable to do business with than other market choices. It improves the characteristics of the company while lowering the time it takes to get the products on the market with a great start. State Farm Insurance pursues this strategy by promoting their agents as "good neighbors" who actively help customers.

13 (a). Discuss the diversification strategies in the Indian context. 13 (b). Explain the five Genric business strategies. 14 (a). Write a note on the most suitable forms of organization structure for a highly innovative technology based firm. 14 (b). Describe how an organizational design evolves and subsequently how organizational change takes place in response to changing requirements of strategies being implemented. 15 (a). How can corporate politics and use of power be made in strategic management of an organizaion?

Power and Politics

REWARD POWER The power motive is defined as the need to manipulate others and have superiority over them. Extrapolating from this definition of the need for power, power itself can be defined as the ability to get an individual or group to do somethingto get the person or group to change in some way. The individual who possesses power has the ability to manipulate or change others. Such a definition of power distinguishes it from authority and influence. THE CLASSICATIONS OF POWER Most discussions of power often begin and sometimes even end with a review of the widely recognized five categories of the sources of social power identified many years ago by social psychologists John French and Bertram Raven. Describing and analyzing these five classic Types of Power (reward, coercive, legitimate, referent, and expert) serve as a necessary

foundation and point of departure for the entire chapter. Most of the examples and applications to organizational behavior derive from the following five types of power.
Reward Power This source of power is based on a persons ability to control resources and reward others. In addition, the target of this power must value these rewards. In an organizational context, managers have many potential rewards, such as pay increases, promotions, valuable information, favorable work assignments, more responsibility, new equipment, praise, feedback, and recognition available to them. In operant learning terms, this means that the manager has the power to administer positive reinforcers. In expectancy motivation terms, this means that the person has the power to provide positive valences and that the other person perceives this ability. Coercive Power This source of power depends on fear. The person with coercive power has the ability to inflict punishment or aversive consequences on another person or, at least, to make threats that the other person believes will result in punishment or undesirable outcomes. This form of power has contributed greatly to the negative connotation that power has for most people. In an organizational context, managers frequently have coercive power in that they can fire or demote people who work for them, or dock their pay, although the legal climate and unions have stripped away some of this power. A manager can also directly or indirectly threaten an employee with these punishing consequences. In operant learning terms, this means that the person has the power to administer punishment or negatively reinforce (terminate punishing consequences, which is a form of negative control). In expectancy motivation terms, this means that power comes from the expectation on the part of the other person that they will be punished for not conforming to the powerful persons desires. For example, there is fear of punishment when the rules, directives, or policies of the organization are not carefully followed. It is probably this fear that gets most people to arrive at work on time and to look busy when the boss walks through the area. In other words, much of organizational behavior may be explained in terms of coercive power rather than reward power. Legitimate Power This power source, identified by French and Raven, stems from the internalized values of the other persons that give the legitimate right to the agent to influence them. The others feel they have the obligation to accept this power. It is almost identical to what is usually called authority and is closely aligned with both reward and coercive power because the person with legitimacy is also in a position to reward and punish. However, legitimate power is unlike reward and coercive power in that it does not depend on the relationships with others but rather on the position or role that the person holds. For example, people obtain legitimacy because of their titles (captain or executive vice president) or position (oldest in the family or officer of a corporation) rather than their personalities or how they affect others. A recent study found that CEOs are perceived to have more power when they also chair the board. Referent Power This type of power comes from the desire on the part of the other persons to identify with the agent wielding power. They want to identify with the powerful person, regardless of the

outcomes. The others grant the person power because he or she is attractive and has desirable resources or personal characteristics. Advertisers take advantage of this type of power when they use celebrities, such as movie stars or sports figures, to provide testimonial advertising. The buying public identifies with (finds attractive) certain famous people and grants them power to tell them what product to buy. For example, a review of research has found that arguments, especially emotional ones, are more influential when they come from beautiful people. Expert power The last source of power identified by French and Raven is based on the extent to which others attribute knowledge and expertise to the power holder. Experts are perceived to have knowledge or understanding only in certain well-defined areas. All the Sources of Power depend on an individuals perceptions, but expert power may be even more dependent on this than the others. In particular, the target must perceive the agent to be credible, trustworthy, and relevant before expert power is granted. CONTINGENCY APPROACHES TO POWER

As in other areas of organizational behavior and management, contingency approaches to power have emerged. For example, Pfeffer simply says that power comes from being in the right place. He describes the right place or position in the organization as one where the manager has: 1. Control over resources such as budgets, physical facilities, and positions that can be used to cultivate allies and supporters 2. Control over or extensive access to informationabout the organizations activities, about the preferences and judgments of others, about what is going on, and about who is doing it 3. Formal authority There is some research support for such insightful observations, and there are also research findings that lead to contingency conclusions such as the following: 1. The greater the professional orientation of group members, the greater relative strength referent power has in influencing them. 2. The less effort and interest high-ranking participants are willing to allocate to a task, the more likely lower-ranking participants are to obtain power relevant to this task. Besides these overall contingency observations, there is increasing recognition of the moderating impact of the control of strategic contingencies such as organizational

interdependence and the extent to which a department controls critical operations of other departments or the role of influence behaviors in the perception of power. Also, the characteristics of influence targets (that is, their influenceability) have an important moderating impact on the types of power that can be successfully used. Influenceability of the Targets of Power Most discussions of power imply a unilateral process of influence from the agent to the target. It is becoming increasingly clear, however, that power involves a reciprocal relationship between the agent and the target, which is in accordance with the overall social cognitive perspective taken in this text. The power relationship can be better understood by examining some of the characteristics of the target. The following characteristics have been identified as being especially important to the influenceability of targets: 1. Dependency. The greater the targets dependency on their relationship to agents (for example, when a target cannot escape a relationship, perceives no alternatives, or values the agents rewards as unique), the more targets are influenced. 2. Uncertainty. Experiments have shown that the more uncertain people are about the appropriateness or correctness of a behavior, the more likely they are to be influenced to change that behavior. 3. Personality. There have been a number of research studies showing the relationship between personality characteristics and influenceability. Some of these findings are obvious (for example, people who cannot tolerate ambiguity or who are highly anxious are more susceptible to influence, and those with high needs for affiliation are more susceptible to group influence), but some are not (for example, both positive and negative relationships have been found between self-esteem and influenceability). 4. Intelligence. There is no simple relationship between intelligence and influenceability. For example, highly intelligent people may be more willing to listen, but, because they also tend to be held in high esteem, they also may be more resistant to influence. 5. Gender. Although traditionally it was generally thought that women were more likely to conform to influence attempts than men because of the way they were raised, there is now evidence that this is changing. As womens and societys views of the role of women are changing, there is less of a distinction of influenceability by gender. 6. Age. Social psychologists have generally concluded that susceptibility to influence increases in young children up to about the age of eight or nine and then decreases with age until adolescence, when it levels off. 7. Culture. Obviously, the cultural values of a society have a tremendous impact on the influenceability of its people. For example, some cultures, such as Western cultures, emphasize individuality, dissent, and diversity, which would tend to decrease influenceability, whereas

others, such as many in Asia, emphasize cohesiveness, agreement, and uniformity, which would tend to promote influenceability.

15 (b). Discuss the strategic issues for Non Profit organization.

Four Strategic Issues for Nonprofit Organizations When one thinks of creating a high performance culture within a nonprofit agency, what steps should come to mind? How can the individuals, teams, and the agency itself be organized for ongoing, reliable high performance? Though there are many ways in which an institution can create a high performance culture, there are four foundational issues that often serve as a baseline in providing answers to this question: 1. Everyone in the pool. More than fifty years ago management theorist Peter Drucker in his The Practice of Management (New York: Harper and Row, 1954, p. 39) noted that rather than view marketing as a specialized function, one needed to look at, the whole business seen from the point of view of its final result, that is, from the customers point of view. Nonprofit organizations can no longer afford to ignore this point of view in their philosophy of business. With virtually every cause becoming a tightly contested race for donations and market position, organizations must first decide they are going to gather market intelligence in order to know what their constituents are thinking and in so doing, have a company-wide orientation that uses the information wisely and puts the stakeholder first. Organizations must practice double listening to both those they serve and those that enable them to serve. In this process management must eliminate departmental silos that do not allow information to be disseminated across departments and must mandate that appropriate responsiveness occurs at an organization-wide level. This may mean for some organizations that they have to create agency-wide recognition for the importance of marketing (and development) in dealing appropriately with an agencys stakeholders. Likewise the strategies and tactics an organization employs must create value for their target audiences and be successful. 2. Create a community of humans. Paul Postma suggests in The New Marketing Era (New York: McGraw-Hill, 1999, p. 8), The emphasis shifts from what passes the checkout counter to who takes what past the checkout counter. It is a safe bet to suggest that most institutions have not taken the time to understand their stakeholders. Some simply dont want to. When you find institutions that do routinely interact with their customers, volunteers and donors, the values and expectations these individuals express and the personal way they want to collaborate and interact with the agency are amongst the most important marketing and fund development pieces of information a development or marketing director can have. Unfortunately, the great bulk of nonprofit institutions interact with their stakeholders from a distance. Arie de Geus (The Living Company, Boston: Harvard Business School Press, 1997, p. 3) who worked for Royal Dutch/Shell notes: Companies die because their managers focus on the economic activity of producing goods and services and they forget their organizations true nature is that of a community of humans. For many organizations and their leaders, it is easier not focusing upon or

working with a community of humans. This can be equally true of marketing and development teams. It is much easier pretending that the leader of an agency is allknowing, trusting that change will be predictable so that it is easily controllable, and rolling out marketing and development programs from the top down. In this way equilibrium, balance, and stability are theoretically assured. Many senior marketing and development directors occupy this cultural space in their day-to-day attitudes. These same individuals however, may soon find themselves in trouble as traditional solutions simply dont work as they once did, organizational balance becomes disrupted, and an agency find itself in disequilibrium. 3. Dont let the unexpected manage you; learn to manage the unexpected. What happens to some agencies when things do not go smoothly and they encounter the unexpected? The hardest clients I work with are those that have not had to face severe competitive or economic threats from the outside. In particular threats that require an agency response that in some way jars its orthodox beliefs about itself and destroys some social norms the leadership holds dear, often leave an agency scarred. Problems in situations like this become further exacerbated when the agency tries to apply a traditional solution to the situation (which ultimately requires a solution that is nontraditional). The institutions leadership culture often doesnt allow this to happen, even if the organization is responding to changes in the competitive environment. The upheaval is too severe. Marketing and development directors like to re-engage systems and strategies that have worked in the past. They like to benchmark the familiar and in this, they are no different than many others. In Surfing the Edge of Chaos (New York: Crown Business, 2000, p.22) writers Richard T. Pascale, Mark Millemann, and Linda Gioja note, For anyone immersed in equilibrium, it is not easy to recognize it as a threat because it often wears the disguise of an advantage. Disturbing equilibrium tends to fly in the face of tradition-bound smooth operations. Said another way, successfully managing threats can help an organization grow and change. This type of evolutionary change is needed as an organizations context changes. Even though leaders may be resistant to it (and try to return to the balance they once knew) instead they need to constantly update their understanding of the situation, make continuous adjustments that limit the number of errors that could occur, and apply new interpretations to handling the situation. It is not always a comfortable thing to do as this example suggests: A client on the east coast introduced a new program in the summer of 2009 that had a mediocre performance and seemed destined to fail as a long-term venture. Not wanting to disrupt the apple cart the program director and institution director made some half-hearted changes to the 2010 version. The changes were greeted by 27% program growth, strong approval ratings, and funding that came from unexpected sources. Dismayed that they had a successful program liked by the community but not by themselves, they wondered aloud in a conversation with me if there was anyway to talk to supportive constituents of the new program and get them to choose differently. 4. Successful people blind easily. There are obvious strengths and some weaknesses tied to success. The weaknesses include making assumptions about an organizations infallibility and the enduring strength of its market leadership. Says Karl E. Weick and Kathleen M. Sutcliffe in their book Managing the Unexpected (San Francisco: Jossey-Bass, 2001, p. 55), In effect, success narrows perceptions, changes attitudes, feeds confidence in a single way of doing business, breeds overconfidence in the efficacy of current abilities and practices, and makes leaders and others tolerant of opposing points of view. In the center of this

upheaval of doing things one way vs. another are typically an agencys marketing or development officers and their teams. Not only is connecting and reconnecting with the supporters, volunteers, and customers of nonprofit organizations critical to overcoming the arrogance that can be associated with previous successes, but it is also key in transforming the marketing and fund development cultures inside institutions as well.