Discuss the positives and negatives of corporate culture in the competitiveness of a firm. Relate how firms should deal with different corporate cultures in mergers and acquisitions.
According to Wheelen and Hunger (2015), "corporate culture fulfills several important functions in an organization. It conveys a sense of identity for employees and helps generate employee commitment to something greater than them. It adds to the stability of the organization as a social system and serves as a frame of reference for employees to use to make sense of organizational activities as well as a guide for appropriate behavior." One of the key positive in a corporate culture is when a culture is open, and welcoming towards its employees in a manner that and change or impact that the employee may bring is also welcome. With this attitude, the employees become comfortable with the culture and employee retention in the long run is enhanced leading to chances of competitive advantage in the future. A corporate culture boosts the morale and confidence of the employees which becomes the reason for their better productivity and so, leads to better profitability of the firm (Irtyshcheva, 2015). Furthermore, employees are the asset of a firm and retaining/developing the employees lead to better competitiveness of the firm; employee development and retention is very closely linked to the corporate culture. Similar to positive influence, a culture can also have adverse impact on the firm competitiveness. The biggest negativity of a corporate culture is high costs for the firms as employee retention is very low; nobody feels like working in a firm that does not approve of change and inclusive culture. When firms undergo the decision for mergers and acquisitions, it is important to recognize that they will be exposed to different corporate cultures. There is usually a cultural clash among the organizations and so the acquiring company has a duty to develop a new and mutual culture in a way that the elements of both organizations are carefully integrated (Irtyshcheva, 2015). In case of merger or acquisition, the firms need to understand that culture is rooted deeply and so, to create a shared culture, careful identification, invention, reseeding and most significantly, letting go of some aspects is required (Wheelen & Hunger, 2015).
Explain how value chain analysis can be used to make a firm more competitive.
One of the most reliable and valuable business tools for any business to gain an edge over its competitors is the value chain analysis. It relies on the basic economic concept of advantage: "companies are best served by operating in sectors where they have a relative productive advantage compared to their competitors" (Arline, 2015). A firm can use the value chain analysis to identify its competitive edge in three key steps. In the first step, the firm identifies the chain lines of each and every product/service and after analyzing it decides whether this chain line strengthens the firm or is a weakness. Next, the firm inspects the connection as well as the link between the value chains of the line. To do so practically, the firms may employ strict quality control checks in between the manufacturing steps so that the time and cost is not wasted at the end of the production line. Once this step is complete, potential synergies are identified and examined present in the value chains of different products (Cardeal, 2012). Through this step, the firms tend to identify if it separating the production lines is worth the required total output and the cost saving or not. Through these steps, if firm identifies that two or more items have a fairly low level of combined output, then mixing the production lines for the items could lower the cost of the firm (Arline, 2015). By following these steps, the company identifies which steps can be eliminated and where improvements need to be made so that the productive capacity is enhanced and costs are saved. The value chain analysis helps the firm become more competitive by identifying the areas that could be focused on for maximum optimization of both profitability and efficiency (Cardeal, 2012).
Identify core competencies, resources, and capabilities found in Alaska Airlines Strategic Audit firm. Explain how they make Alaska Airlines Strategic Audit firm competitive.
The success of Alaska Airlines depends on the ability of the company to manage its customer relationships through low fares and an exceptional customer service; provision of safe air transportations and most importantly by maintaining cost effective structure of competitiveness. Another core competency of the firm is the corporate social responsibility through which it values the people, community and the general environment (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2016). The happy, content and satisfied employees are the key resources of the firm who help to maintain and strengthen the customer relationships which is yet another core competence; Alaska Airlines was among the Top 100 Employers of America according to the Forbes Magazine in 2015 (Alaska Air Group, 2015). The exceptional customer service depends on the capabilities of the human resource and for this; the employees are constantly trained and developed. Alaska Airlines was positioned by J. D. Power as the "Highest in Customer Satisfaction among Traditional Network Carriers" in 2015 which was the eighth title in a row. The company focuses on employee development; an incentive pay of $120 million was given in 2015 to the employees as a reward for achieving goals of customer service, safety, operations and profitability. Alaska Airlines has received the "Diamond Certificate of Excellence" award by FAA for the 14th consecutive year by completing the requirements of the award for the aircraft technicians for safety (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2016).
Discuss in detail how the VRIO Framework can be used to evaluate a business' competencies. Explain which of the VRIO factors would allow a firm to achieve a sustainable advantage over its competitors, and why?
Firm makes use of VRIO framework to identify the source through which it can achieve a sustained competitive advantage; the internal resources and capabilities of the firm are analyzed by this tool. Firms already apply numerous tools that help in examining the micro as well as the macro-environment of the firm so that the source of competitive advantage could be identified from within the environmental factors (Knott, 2015). VRIO framework is among the very significant tools that examines the internal resources of the firm. VRIO is an acronym that stands for value, rare, imitability and organization; these are the four dimensions on which the resources of the company are evaluated. Jay B. Barney developed this framework for resource evaluation; by considering the resources of both your own company as well as that of the competitors on the VRIO dimensions, the firm can identify whether its resources are a weakness or can help in achieving a competitive advantage (Grigorescu, 2015). The past performance of the firm would depict how well it had performed against its competitors and so, makes it easier to modify its weaknesses and build on its strengths to gain a competitive advantage. Any resource or capability that fulfills all the dimensions of the VRIO framework becomes the source of achieving a sustainable competitive advantage for the firm.
References
Alaska Air Group,. (2015). Alaska Air Group makes list of Top 100 'best employers'. Retrieved from http://www.prnewswire.com/news-releases/alaska-air-group-makes-list-of-top-100-best-employers-300060113.html
UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (2016) (pp. 4-10). Washington, DC.
Arline, K. (2015). What is a Value Chain Analysis?. Business News Daily. Retrieved from http://www.businessnewsdaily.com/5678-value-chain-analysis.html
Cardeal, N. (2012). Valuable, rare, inimitable resources and organization (VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to competitive advantage?. AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 6(37). http://dx.doi.org/10.5897/ajbm12.295
Grigorescu, I. (2015). Value Chain Analysis – Basic Element Of An Organization’s Competitive Advantage. International Conference KNOWLEDGE-BASED ORGANIZATION, 21(2). http://dx.doi.org/10.1515/kbo-2015-0053
Irtyshcheva, I. (2015). Corporate culture as an important factor in the organization competitiveness. Collection Of Scientific Publications NUS, 0(1). http://dx.doi.org/10.15589/jnn20150112
Knott, P. (2015). Does VRIO help managers evaluate a firm’s resources?. Management Decision, 53(8), 1806-1822. http://dx.doi.org/10.1108/md-08-2014-0525
Wheelen, T. & Hunger, J. (2015). Strategic management and business policy (1st ed.). Boston: Pearson.
