Organizational Culture, Productivity, Profitability, and Competitiveness

Posted on Dec 13, 2024 in Economy

**Organizational Culture**

It is a system of common meaning among members of a company and distinguishes one organization from others.

**Characteristics**

  • Individual Autonomy: The degree of responsibility, independence, and opportunities to exercise the initiative that people have in the organization.
  • Structure: The standards and rules used to control employee behavior.
  • Support: The support that managers show the employees.
  • Identity: The degree to which employees identify with the organization.
  • Performance-Reward: This is the way to distribute the prizes in relation to performance.
  • Tolerance of Conflict: It is the degree to which conflicts are presented in peer relationships and working groups and the reactions that come before them.
  • Risk Tolerance: The degree to which the employee is encouraged to be aggressive, innovative, and take risks.

**Organizational Culture Elements**

Environmental Values, Heroes, Rites and Rituals, Cultural Network

**Defining Boundaries**

  • Mechanism that guides and controls behavior, gives a sense of identity.
  • Increases system stability, creates a personal commitment.

**Factors Maintaining a Culture**

  • Selection: Check the appropriate people.
  • Senior Management: Through the actions of top executives.
  • Socialization: Upon arrival, meeting, metamorphosis.

**Organizational Change**

**Organizational Infrastructure**

Mission, Philosophy, Leadership, Policy, Vision, Principles, Grounds, Rules, Organization, Values, Integration, Strategies, Innovation, Objectives

**Change Principles**

  • Change occurs when opening spacing, participation, and creativity at all levels and has a clear direction and purpose.
  • The change is promoted in a movement systematic and progressive downward, horizontal, and upward in the organizational pyramid.
  • Any changes are going and models from the command levels that favor the change, indicate priorities, redesign the structure, and promote new goals.
  • The high-performance team leaders made by more energy vision and achieve the changes more quickly, impact, and effectiveness.
  • The transformation of a company to excellence in service and customer orientation achieve greater human commitment among staff and with business.
  • Organizational change leads to better results from an educational model that fosters the development of vision and ethics to personal and group productivity, innovation, and commitment to the company.

**Productivity**

It is the relationship between goods and services produced and the resources invested in its production.

Formula: Productivity is the quantity of goods and services between factors of production employed.

**Product Types**

  • Work or Labor: Can be set because of the number of workers and total production, or because of the amount used and the amount of work produced.
  • Capital: The relationship between total production and capital employed in a given period.
  • Business: It’s the one that takes into account all factors of production: land, labor, and capital used in an enterprise.
  • The Branch: When speaking of a branch of the economy such as the automotive industry, commerce, and livestock.
  • Marginal: The increase in total production as a consequence of the increase of production factors which can be labor or capital.
  • By Sector: When you measure productivity in any economic sector may be the agricultural, industrial, or services.
  • Or National Economy: When taking into account all sectors and branches of the national economy.
  • Investment: The annual percentage by the investor receives the assistance of its capital, i.e., the interest rate that allows you to recover your capital and to obtain a remnant.

**Factors that Determine Productivity**

Internal:

  • Organizational and technological structure
  • Communications officer of goals and expectations
  • Address human resources

External:

  • Barriers to entry
  • Competitiveness
  • Customers
  • Substitute products
  • Related searches
  • Strategic groups branch
  • Country’s production factors
  • Country’s economic policy

**Ways to Increase Productivity**

  • Improving production techniques
  • Increasing division of labor
  • Train workforce

**Factors Holding Back Productivity in the Country**

  • Obsolescence of equipment and machinery
  • Lack of training
  • Technological backwardness
  • Insufficient quantity and quality of inputs
  • Low investment

**Profitability**

Business utility is the result of the act. Combines economic inputs in order to obtain goods and services when sold generate profits for the company.

**The Profit Margin**

It is the relationship between the profits earned in one period and the investment made to obtain.

Profit margin = Earnings from investment

**Corporate Profitability Can Be Measured Through:**

Economic Profitability

It is the return on investment represented by the productive factors or assets of a company in a given period independent of the financing of such assets.

**The Economic Returns to:**

  • Measure the company’s ability to generate value.
  • Compare profitability between companies without taking into account the payment of interest by financing.
  • Measuring the efficiency of business management.
  • Determine if the company is profitable or not depending on their funding.

Financial Returns

It is the return on capital that are specific to the firm within a specified period.

**Financial Returns to:**

  • Provide accurate information to the owners or shareholders of the company.
  • Knowing the company’s potential to generate income.
  • Make financial decisions:
    • Resort to domestic financing.
    • Resort to external financing.
    • Increase the share capital.

**Determinants of Profitability**

  • Investment intensity
  • Productivity
  • Market share
  • Market growth rate
  • Product quality
  • New product development
  • Differentiation from competitors
  • Vertical integration
  • Operating costs
  • Stress on such factors

**Ways to Increase Profitability**

  • Increase income
  • Improve sales and customer mix
  • Reduce resource costs
  • Improve processes
  • Eliminate activities that do not add value.

**Competitiveness**

It is the ability to compete, competition to achieve an end.

**Companies Establish Rivalries with Each Other to:**

  • Higher productivity
  • Increased profitability
  • Increase exports
  • Launching new products
  • Participate in other markets

Companies Need to Be Competitive by:

  • Global hyper-local markets
  • Economic globalization
  • Rapid change in uncertain economic phenomena, social, political, cultural, and financial.
  • The knowledge.

**Measuring Competitiveness**

Competitiveness is measured using a comparative or indices or indicators of competitiveness.

Indices or Indicators of Competitiveness

These are aspects that are measured to see if that is competitive in that area or not.

**Determinants of Competitiveness**

Business Efficiency:

  • Productivity
  • Labor market
  • Finance
  • Management practices
  • Attitudes and values

**Ways to Increase Competitiveness**

  • Improve the capacity of the organization to increase yields of the factors.
  • To establish or promote economies in production.
  • Work hard on reducing costs with good administration.
  • Having a total quality system.
  • Establishing innovation as strategies for creating new products, services, processes, systems, equipment.

**Control**

Is the measurement of current and past performance in relation to expected to correct, improve, and formulate new plans.

**Principles of Control**

  • Principle of Administrative Control: We must distinguish control operations control function. Control operations are technical, and administrative functions are.
  • Principles of Standards: Control would be impossible if there were no preset standards and better the more accurate and quantitative standards are those.
  • Top of Medial Control Character: A control should be used only if the work and expense it imposes are justified by the benefits expected from it.
  • Principles of Exception: Administrative control is much more effective and faster when it focuses on cases in which achievement is not expected.

**Control Stages:**

  • Establish standards.
  • Measuring the performance standards.
  • Correct deviations from standards.

**Control Features**

  • Controls should report promptly deviations.
  • Checks should face forward.
  • Checks should be objective.
  • Be flexible.
  • Reflecting the nature of the acts.
  • Economic.
  • Understandable.
  • Lead to corrective action.

**Traditional Mechanisms of Control**

Budget: is an estimate in advance and in terms of numbers of a target to be achieved.

**Types of Budgets:**

  • Forecast Income and Expenditure: Determining how much money to go and how much you can spend.
  • Budget Time, Space, Material, and Products.
  • Cash Budget: Only determines the amount of cash we require.
  • Budget Balance: It determines the profits and losses of the company.

**Hazards in Budgeting**

  • Budgets should be used only as a tool for planning and control, but never make them too complex or costly.
  • Allowing budget targets impede the goals of the company.
  • The budget can hide inefficiency.
  • The budget is sometimes inflexible.

**Non-traditional Mechanisms of Control**

  • Statistics: Presents information in graphic or tabular form.
  • Internal Review: The regular assessment or independent accounting or financial operations, conducted by a consultant.
  • The Balance Point: Where exactly cover revenue expenditure.
  • Personal Observation: See firsthand what employees are doing, and make sure they are doing to plan.