Explain the importance of strategy and policies in organizational functioning.

Explain the importance of strategy and policies in organizational functioning. Describe how strategy and policies are formulated in the organization you are familiar with. Highlight the strategies and policies which were successful supporting with examples. Briefly describe the organization you are referring to.


Organizational policies and strategy provide guidelines for action. Unfavorable and ambiguous policies or strategy may affect the functioning of the individuals adversely and they may experience stress. Thus, unfair and arbitrary performance evaluation, unrealistic job description, frequent reallocation of activities, rotating work shifts, ambiguous procedures, inflexible rules, inequality of incentives, etc., work as stressors. Organization wide policies designed to achieve major organizational objectives. Specifying all factors that compose the environment is a complex and perhaps unmanageable task.
• Focused Purpose
• Clearly defining short-term purpose
• Ensuring mission is realistic
• Serving the best interests of all stakeholders
• Defining a point of differentiation
• Future Perspective
• Clearly defining long-term outlook
• Appealing to the long-term interests of the company's stakeholders
• Providing a foundation for decision-making
Strategic Advantage
Competitive advantage is a key driver to forming an organizational strategy. Competitive advantage is clearly understood by all stakeholders. Employees clearly understand how their role supports the company's organizational strategy second key strategy element is External Assessment, which reflects an organization's approach to gathering and analyzing essential market data. Included in this data are developing competitive profiles, studying macro and micro economic information, identifying industry opportunities and threats, and understanding what it takes to be successful in a given market.
Strategy formulation
Strategy consists of a set of long-range decisions which establish actions to exploit opportunities or combat threats in response to environmental forces and developments. These decisions are the result of a complex decision-making process designed to establish organizational goals and long-range plans for resource allocation. Process involved in strategy formulation is the same as discussed in policy formulation; however, a major difficulty in the strategic decision process is the identifying and analysis the factors bearing on the problem.
Evaluation of a Strategy
There are, of course, many factors determining organization's success or failure. But a valid strategy can gain extraordinary results for the organization whose general level of competence is only average.
1. Internal Consistency: Internal consistency refers to the cumulative impact of individual policies on corporate goals, and in a well-worked out strategy, each policy fits into an integrated pattern. A strategy must be judged on the basis of its relationships to other policies and goals of the organization.
2. Consistency with the Environment: The strategy should be consistent with the environment, that is, this should make sense with respect to what is going on outside. Consistency with the environment has both static and dynamic aspects. In a static sense, it implies judging the strategy; with its suitability to the existing environment.
3. Appropriateness in the Light of Available Resources: The strategy should be appropriate in the light of available resources. Resources are those things that help an organization achieve its objectives. There are two basic issues which management must decide in relating strategy and resources. These are what the critical resources are? The three resources most frequently identified as critical are money, competence, and physical facilities.
4. Satisfactory Degree of Risk: Strategy and resources, taken together, determine the degree of risk which the organization is under taking. Thus, each organization must decide the degree of risk it can take. This, in turn, depends upon several factors.
5. Appropriate Time Horizon: A good strategy not only provides what objectives would be achieved, it also indicates when objective would be achieved. This is due to the fact that a significant part of every strategy is the time horizon on which it is based. In choosing an appropriate time horizon, the organization must pay careful attention to the goals being pursued. Goals have time-based utility and must be established far enough in advance to allow the organization to adjust to them.
6. Wort ability: The strategy must have enough degree of workability. The workability of a strategy can be measured in terms of results which are obtained. However, the results measure two factors: the strategy selected and the skill with which it is being executed. If the results are not up to standards, both these factors can be examined.
As an example, let us review the strategy of a medium-sized company “Apporva Electronics” involved in manufacturing and marketing electronic entertainment products. In terms of product/market scope the company has restricted itself to marketing of television sets in the Northern and Eastern regions of the country. In terms of future areas of growth, the compnay’s R&D division is involved in designing video cassette players and personal computers to be marketed in either Northern or East region markets. The company has evolved a competitive advantage in terms of an excellent after sales service not easily matched by any of its close competitors. Most of the key personnel in marketing and sales have been deployed in such a way that they contribute their maximum in various regions with high degree of autonomy and constitute the company’s distinctive competence. By seeking entry in the video cassette players and personal computers in the future the company would be using its existing distribution network thus creating marketing synergy.

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List out various dimensions and determinants of organisational climate and their relevance in organisational functioning.

List out various dimensions and determinants of organisational climate and their relevance in organisational functioning. Discuss organisational climate with reference to your organisation or an organisation you are familiar with and briefly describe the organisation you are referring to.


Various dimensions of climate are :-
1. Innovation and risk taking :-
The degree to which employees are encouraged to be innovative and take risks.
2. Attention to detail :-
The degree to which employees are expected to exhibit precision, analysis, and attention to detail.
3. Outcome orientation :-
The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve these outcomes.
4. People orientation :-
The degree to which management decisions take into consideration the effect of outcomes on people within the organisation.
5. Team orientation :-
The degree to which work activities are organised around teams rather than individuals.
6. Aggressiveness :-
The degree to which to people are aggressive and competitive rather than easygoing.
7. Stability :-
The degree to which organisational activities emphasize maintaining the status quo in contrast to growth.
• Climate is a descriptive term :-
Organisational climate is concerned with how employees perceive the characteristics of an organisation’s culture, not with whether or not they like them. That is, it is a descriptive term. This important because it differentiates this concept from that job satisfaction. Research on organisational climate has sought to measure how employees see their organisation. Does it encourage teamwork? Does it reward innovation? Does it stifle initiative?
In contrast, job satisfaction seeks to measure affective responses to the work environment. It is concerned with how employees feel about the organisation’s expectations, reward practices, and the like. Although the two terms undoubtedly have overlapping characteristics, keep in mind that the term organisational culture is descriptive while job satisfaction is evaluative.
• Strong Vs weak climates:-
It has become increasingly popular to differentiate between strong and weak climates. The argument here is that strong cultures have a greater impact on employee behaviour and are more directly related to reduced turnover. In a strong climate, the organisation’s values are both intensely held and widely shared. The more members who accept the core values is, the stronger the climate is. Consistent with this definition, a strong climate will have a great influence on the behaviour of its members because the high degree of sharedness and intensity creates an internal climate of high behavioural control.
• Climate Vs formalisation :-
A strong organisational climate increases behavioural consistency. In this sense, we should recognise that a strong climate can act as a substitute for formalisation. High formalisation in an organisation creates predictability, orderliness, and consistency. Our point is that a strong climate achieves the same end without the need for written documentation. Therefore, we should views formalisation and climate as two different roads to a common destination. The stronger an organisation’s climate, the less management need concerned with developing formal rules and regulations to guide employee behaviour. These guides will be internalised in employees when they accept the organisation’s climate.
• There are several basic determinants that differentiate climate :-
1. How people see themselves:-
In some countries of the world, people are viewed as basically honest and trustworthy. In others, people are regarded with suspicion and distrust. For example, reasons some people around the world regard the United States with suspicion and distrust mat result from the way these people view themselves. They assume others are like them, that id, prepared to cut corners if they can get away with it. On the other hand, many other people of these countries are just the opposite. They do not lock their doors; they are very trusting and assume that no one will break in. It is forbidden to take the property of another person, and the people adhere strictly to that cultural value.
2. People’s relationship to their world: -
In some societies people attempt to dominate their environment. In other societies they try to live in harmony with it or are subjugated by it. People from the United States and Canada, for example, attempt to dominate their environment. In agriculture they use fertilizers and insecticides to increase crop yields. Other societies, especially those in Asia, work in harmony with the environment by planting crops in the right places and at the right time. In still other societies, most notably developing countries, no action is taken regarding the subjugation of nature, so, for example, when the floods come, there are no dams or irrigation systems for dealing with the impending disaster.
3. Time :-
In some societies people are oriented toward the past. In others they tend to be more focused on the present still others are futuristic in their orientation. People from the United States and Canada most interested in the present and the near future. Business people in these countries are particularly interested in where their companies are today and where they will be in five to ten years. People who are hired and do not work out are often let go in short order. They seldom last more than one or two years. Most Europeans place more importance or the past than do North Americans.
4. Public and private space :-
Some climates promote the use of public space; others favour private space. For example, in Japan bosses often sit together with their employees in the same large room. The heads of some of the biggest Japanese firms may leave their chauffeur driven limousines at home and ride the crowded public subways to work in the morning so that they can be their workers. In the Middle East there are often many people present during important meetings. These cultures have a public orientation. In contrast, North Americans prefer private space. The more restricted or confined a manager is, the more important the individual is assumed to be. Anyone coming to see the person must first go past a secretary before being admitted to the manager’s presence.
• Climate’s functions :-
Climate performs a number of functions within an organisation.
. First, it has a boundary, defining role; that is, it creates distinctions between one organisation and others.
. Second, it conveys a sense of identity for organisation members.
. Third, facilitates the generation of commitment to something larger than one’s individual self interest.
. Fourth, it enhances social system stability, climate is the social glue that helps hold the organisation together by providing appropriate standards for what employees should say and do.
. Finally, climate serves as a sense-making and control mechanism that guides and shapes the attitudes and behaviour of employees. It is this last function that is of particular interest to us.
The role of climate is influencing employee behaviour appears to be increasingly important in the 1990s. As organisations have widened spans of control, flattered structures, introduced teams, reduced formalisation, and empowered employees, the shared meaning provided by strong culture ensures that everyone is pointed in the same direction.
• Climate as liability :-
We are treating climate in a non-judgemental manner. We haven’t said that it’s good or bad, only that exists. Many of its functions are valuable for both the organisation and the employee. Culture enhances organisational commitment and increases the consistency of employee behaviour. These are clearly benefits to an organisation. From an employee’s stand point, climate is valuable because it reduces ambiguity. It tells employees how things are done and what’s important.
• Climate is a liability when the shared values are not in agreement with those that will further the organisation’s effectiveness. This is most likely to occur when the organisation’s environment is dynamic. When the environment is undergoing rapid change, the organisation’s entrenched culture may no longer be appropriate. So consistency of behaviour is an asset to an organisation when it faces a stable environment. It may burden the organisation and make it difficult to respond to changes in the environment. This helps to explain the challenges the executives at companies like IBM, Eastman Kodak, and General Dynamics have had in recent years in adapting to upheavals in their environment.

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