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98 PART 2 • STRATEGY FORMULATION

In contrast, the culture at Procter & Gamble (P&G) is so rigid that employees jokingly call
themselves “Proctoids.” Despite this difference, the two companies are swapping employees
and participating in each other’s staff training sessions. Why? Because P&G spends more
money on advertising than any other company and Google desires more of P&G’s $8.7 billion
annual advertising expenses; P&G has come to realize that the next generation of laundry-
detergent, toilet-paper, and skin-cream customers now spend more time online than watching
TV. Consumers age 18 to 27 say they use the Internet nearly 13 hours a week, compared to
10 hours of TV, according to market-data firm Forrester Research. 7
Dimensions of organizational culture permeate all the functional areas of business. It is
something of an art to uncover the basic values and beliefs that are deeply buried in an orga-
nization’s rich collection of stories, language, heroes, and rituals, but cultural products can
represent both important strengths and weaknesses. Culture is an aspect of an organization
that can no longer be taken for granted in performing an internal strategic-management
audit because culture and strategy must work together.
Table 4-2 provides some example (possible) aspects of an organization’s culture. Note
you could ask employees/managers to rate the degree that the dimension characterizes the
firm. When one firm acquires another firm, integrating the two cultures can be important.
For example, in Table 4-2, one firm may score mostly 1’s and the other firm may score
mostly 5’s, which would present a challenging strategic problem.
The strategic-management process takes place largely within a particular organiza-
tion’s culture. Lorsch found that executives in successful companies are emotionally com-
mitted to the firm’s culture, but he concluded that culture can inhibit strategic management
in two basic ways. First, managers frequently miss the significance of changing external
conditions because they are blinded by strongly held beliefs. Second, when a particular
culture has been effective in the past, the natural response is to stick with it in the future,
8
even during times of major strategic change. An organization’s culture must support the
collective commitment of its people to a common purpose. It must foster competence and
enthusiasm among managers and employees.
Organizational culture significantly affects business decisions and thus must be evalu-
ated during an internal strategic-management audit. If strategies can capitalize on cultural
strengths, such as a strong work ethic or highly ethical beliefs, then management often can
swiftly and easily implement changes. However, if the firm’s culture is not supportive,
strategic changes may be ineffective or even counterproductive. A firm’s culture can
become antagonistic to new strategies, with the result being confusion and disorientation.

TABLE 4-2 Fifteen Example (Possible) Aspects of an Organization’s
Culture
Dimension Degree

1. Strong work ethic; arrive early and leave late 1 2 3 4 5
2. High ethical beliefs; clear code of business ethics followed 1 2 3 4 5
3. Formal dress; shirt and tie expected 1 2 3 4 5
4. Informal dress; many casual dress days 1 2 3 4 5
5. Socialize together outside of work 1 2 3 4 5
6. Do not question supervisor’s decision 1 2 3 4 5
7. Encourage whistle-blowing 1 2 3 4 5
8. Be health conscious; have a wellness program 1 2 3 4 5
9. Allow substantial “working from home” 1 2 3 4 5
10. Encourage creativity/innovation/openmindness 1 2 3 4 5
11. Support women and minorities; no glass ceiling 1 2 3 4 5
12. Be highly socially responsible; be philanthropic 1 2 3 4 5
13. Have numerous meetings 1 2 3 4 5
14. Have a participative management style 1 2 3 4 5
15. Preserve the natural environment; have a sustainability program 1 2 3 4 5