TERM PAPER OF MANAGEMENT PRACTICES AND ORGANISATIONAL BEHAVIOR VALUE DRIVEN ORGANIZATION

Submitted To: Ms. Kuldeep Kaur

whose constant guidance and encouragement crown all efforts with success. CONTENT .ACKNOWLEDGEMENT The satisfaction that accompanies the successful completion of the task would be incomplete without the mention of the people whose ceaseless cooperation made it possible. I am grateful to my lecturer for the inspiration and the constructive suggestions that helped us in preparation of the report on VALUE-DRIVEN ORGANIZATION.

INTRODUCTION  Objectives  Rationale LITERTAURE REVIEWS DETAILED DESCRIPTION OF REPORT  Need for value  Importance of value  Importance of Value driven management  Value Creation  Value Delivery STRATEGIES FOLLOWED BY VALUE-DRIVEN ORAGNIZATIONS VALUE-BASED STRATEGIES ADVANTAGES OF VALUE-DRIVEN ORGANIZATIONS DISADVANTAGES OF VALUE-BASED ORGANIZATIONS CONCLUSION REFERENCES INTRODUCTION .

and organization of the corporation. Value-driven organization can be defined as the social group of people making up an organization based upon the management approach that ensures the organization run consistently on value so that the goals of the organization are met. Organizational Behavior.. managing for value and measuring value. 9th Edition. Relating the concept of value to the modern business arena. services and projects that the organization delivers keeping in mind the perspectives of internal and external stakeholders. corporate governance. Pearson Education Inc.13th edition. Sanghi Seema. Organization2 is defines as a consciously coordinated social unit composed of two or more people that functions on a relatively continuous basis to achieve a common goal or set of goals. decision processes and systems. The costs include both actual and circumstantial costs. Sanghi Seema.. Judge Timothy A. value-driven commands continual assessment of the manner in which value can be increased through the optimization of products. Pearson Education Inc. Page No. we say that every business is selling value and every customer is looking for value..13 edition. So. organization3 is the deliberate arrangement of people to accomplish some specific purpose. according to the above formula is the difference of benefits and costs. Hence. It includes creating a value. 126 2 Robbins Stephen P.Value1 is the basic convictions that a specific mode of conduct or end-state of existence is personally or socially more preferable to an opposite or converse mode of conduct or end ±state of existence. Management.. Judge Timothy A. Pearson Education Inc. Value-driven organization provides consistency of the corporate strategy. . Page No... Page No. The organization must deliver value exactly when it is needed in the marketplace to those that place the highest value on it so that the organization maximizes its revenues.17 . value which is the net difference perceived both in monetary and non-monetary terms by the customers. In other words.Coutler Mary. corporate communication. 1 Robbins Stephen P. the corporate mission. Organizational th Behavior. performance management processes and systems and reward processes and systems. 07 3 Robbins Stephen P. Benefits-Cost=Value The benefits include the tangible needs and the intangible wants along with quality and other positive aspects associated with the purchase. Hence.

RATIONALE The rationale for undertaking this project is to gain an insight into this management approach which is adopted by almost all the leading organizations which spans over almost all the industries. It also focuses on the strategies adopted by such an organization to face the ever-growing competition among the organization to maintain their market share and earn substantial profits while being in sync with the social. Neuroscientist and CEO Thinking Partner. She further says that there are two mental models. It aims to focus on the various aspects of such an organization like the reason for adopting this management approach and the actual benefits perceived from this approach.youtube. That creates a major shift from being the best in the world to being the best for the world.Richard Barett4. 4 http://www. Hence she concludes that people with growth mind set are worthy leader because they have more value-orientation. People with another mental set called growth mind set does something to take challenges and face challenges and to grow their capacity and capacity of the society. leadership should be value based because soul cannot be separated from the self of leaders. to get more money. OBJECTIVES The objective of this report is to focus on the various aspects of an organization that is value-driven. the founder and Chairman of the Cultural Values Centre. environmental.youtube. founder and Chairman of the Cultural Values Centre.com/watch?v=a84YVfzo07U http://www. to make a lot of profit and people with this mental set have less perceiving options and their capacity to think diminishes. thinks that the businessmen should really operate for the best for the common world and this is the shift of the organizations from being the best in the world to be the best for the world. the organization with the current culture with a set of values which is aligned with values of the people and also with their dream culture is the one that produce high returns.com/watch?v=a84YVfzo07U 5 . Referring to the well-said statement by Richard Barett. to. high performance and is simply the best company in the planet. Referring to Dr. One mental model says that a person does a work to get that better grades. Dawna Markowa5. and legal expectations of the customers. Their capacity to think expands and they perceive more actions in the world.

com/practices/retail/knowledge/articles/competinginavaluedrivenworld. Treacy & Wiersema. Frank. pet food.LITERATURE REVIEWS  The Apparel Value challenge 6 written by Robert J.pdf http://www.mckinsey. to firms to buyers. Mihas. value is considered as a vertical chain of players extending from the suppliers. Elizabeth A.com/practices/retail/knowledge/articles/competinginavaluedrivenworld. This article concludes with the suggestions for traditional retailers to become value-driven organizations so that they are able to capture and retain a substantial market share in the apparels industry in the face of changing trends of customers¶preferences. Stacey Rauch. etc. Drucker's "Find a Need and Fill It" is all about creating and delivering distinct value. The value clarity should be focused intently by the 6 7 http://www. Absract: This article highlights the progresses made by some value-driven organizations in a number of apparel categories comprising basic categories like underwear. hosiery and fleece and categories like jeans.) are characterized by the organization's distinct value.  Approaches to strategic positioning (by Porter. casual pants.mckinsey. DETAILED DESCRIPTION OF REPORT NEED FOR VALUE Few management principles which focus value as the chief attribute are:  For example. Mihas. Laxman Narasimhan.pdf . This article recommends that the traditional retailers should consider the fact that customers increasingly perceive the importance of freshness and price-quality trade-offs which the value-driven organizations are very well able to manage and hence capture a sufficient market share. According to Michael Porter. paper products are going-to-value. Laxman Narasimhan. Elizabeth A. daywear and some outwear categories are on the verge of going-to-value. food storage.  And Porter's "Five Forces" help assess the probability of long-term delivery of distinct value in any given marketplace and so on. Absract: This article highlights the performance progresses of some-value driven organizations in a number of grocery categories consisting of non-food categories like baby products. Frank. Stacey Rauch.  The Grocery Value challenge 7 written by Robert J.

SOCIETY: The society expects a certain degree of environmental concern from the organization along with the social responsibility concerns. The stakeholders like society. potential employees and existing employees are affected indirectly or directly by the value the organization relies upon. The organization¶s failure to fulfill . each individual connected with the organization directly or indirectly should understand the specific requirements of the organization¶s prospective customers. IMPORTANCE OF VALUE There is a rapid change in the personal and societal context of the operation of the business due to the changing technological and other preferences of individuals. shareholders.executives of the organization so that they are able to address values from the customer¶s viewpoints and hence maximize the customer value achievements in tangible and relevant mechanisms. firm infrastructure and technology which constitute the secondary components of the supply chain along with the primary components of inbound logistics. The erosion of value should be prevented at all costs and value-driven organization accomplishes this by placing the customers at the focal point of all the activities involved in the value delivery process and business performance is chiefly driven by customer¶s value. operations. the organization should focus to stand up to the society¶s expectations. This is because sales is a short term goal which cannot ensure that the customer has experienced the value they have purchased and hence it is the marketing of the value which ultimately guarantees the value satisfaction by the customers and help build the organization¶s brand loyalty and brand equity. SHAREHOLDERS: The new variant of shareholders who are solely interested in undertaking investments in companies which aims to meet socially responsible investment criteria and which strives for quality excellence as the best organization. Hence. outbound logistics. exploring and delivering value. and the exact mechanism by which these requirements are linked to the value capabilities of their marketed solutions and the toll it takes for the company to achieve its value in sync with the customer¶s value. manufacturing and sales should be accomplished keeping in mind the preferences and tastes of the customers. For a value-driven organization to be successful. human resource management. This becomes the differentiating criteria for the organization with its competitors. Hence. All the procurement. it holds an extreme importance to recognize the identity and importance of the organization. the value should be addressed and concentrated on the customer¶s perspectives. This means that throughout all the process involved in creating.

adding value for the sake of the life of future generations by trading as lightly as possible on the planet. adding value to the life of community. clients.\  Only the active participation of all members of the organization will ensure a truly organization-wide. EXISTING EMPLOYEES: The organizational culture should be such that it supports the existing employees in determining their personal satisfaction from the work and meets their needs. make money and have fun.the society¶s expectation can cost it to suffer from high degree of effect on its financial performance. value-based. but also add value to the lives of employees.com/watch?v=xMK6SH9HuOw&feature=related . the co-authors of Values-driven business published by Berhett-Koehler Publishers. According to Mal Warwick & Ben Cohen8.youtube. the community and environment are equally important. it is the absolutely necessity of the organization to improve its culture capital. 8 http://www. Hence. contribution. Inc.  Rewards and recognition within the organization must be such that they recognize those people whose work embodies the values the organization embraced  Values should be able to guide every decision that is made once the organization has cooperatively created the values and the value statements. POTENTIAL EMPLOYEES: The organization must aim at aligning the personal values of the individual prospective employees with the organization¶s culture. the organization should build a value-driven culture where employees feel the alignment of their personal values and the organizational values. decision making. and interpersonal interaction. value driven approach is all about how to change the world. For the values to be effective. This would aid the organization to attract and retain the best people of the industry into itself. This book directs people who are running or starring small and medium sized businesses about how they could incorporate their values into the way they make core business decisions in their businesses and achieve great benefits by taking the broad based stakeholders view as responsibility of the business owner where employees. to strengthen human capital. following conditions must be considered:  People must demonstrate and model the values in action in their personal work behaviors. The true purpose of the business is to not just to transform raw materials into goods and provide services. shared culture. In other words.

etc. . Although the leaders try to the core of their efforts to choose the values they perceive important on the basis of the organization and their subjective beliefs.  Organizational values must be ensured to help each person establish priorities in their daily work life.)\  The capital markets(competing for the investors¶ favor)  The employees and manager markets(competing for the company¶s image and attracting top talents towards itself) The survival chances of an organization may be jeopardized by its failure to compete in any of the above four markets and hence the concept of value-driven organizations stand at par with these problems and enable an organization to excel in each of the above four markets. The leaders believe that the values they choose will resonate with both the organization and the employees. In the case when the values are conscious and discussed. The possibility of alignment of the organizational values with the individual employee¶s values is decreased to a great extent unless the leader is very effective. IMPORTANCE OF VALUE-DRIVEN MANAGEMENT A company operates and competes in a number of markets:  The market for its products and services. In case the value is undiscussed and unconscious.  Adoption of the values is consistently recognized in regular performance feedback. competition on determining the exact in-charge of the organization. employees¶ . Since the leaders seldom have the time to measure the employees¶ personal values. The values may be conscious. VALUE CREATION In today¶s context all the organizations are value-driven. This is because the organization develops a set of values that are selected by the leaders of the organization. People hire and promote individuals whose outlook and actions are in sync with the values  Organizational goals are grounded in the identified values. the culture of the organization is reflected by the personality of the leader.  The market for corporate management and control (threat of takeover. shares and lived or may be undiscussed and unconscious. Hence. it implies a stronger chance of the alignment of the organizational values with each employee¶s personal values. then there is a maximum probability of them being shared and lived.

alignment.Opportunity Cost VALUE DELIVERY For delivering value. The portfolio and needs analysis. should be complemented with value analysis comprising of both the customer value analysis(which includes the appraisal and prioritization by the customers) and the internal value analysis(which includes the needs from the organization¶s perspectives). . accessibility. agility and accountability. The scope of the defined products or services must remain in sync with the most valuable qualities for the target customers. Hence. value creation by the chain of players may be defined as: Buyers Products/Services Firms Resources Suppliers Value created = Willingness to pay. The amount of money that leads the supplier to gauge the new situation (money minus resources) as equivalent to the original status quo defines the supplier¶s opportunity cost. the leader usually meet with the failure to design a set of values for the organization which is in alignment with the employees¶ personal interests. carried out to determine the market¶s pleasure and pain details. achievability. The amount of money that leads the buyer to gauge the new situation(money minus products/services) as equivalent to the original status quo defines the buyer¶s willingness to pay.perceptions of the organizational values and the desired organizational values in a structured and organized manner and to account for the needs of stakeholders. The organizations must focus on the governance initiatives to protect the shareholders views. Assessment involves gaining an assessment of what the market values today and what it is going to market in future so that the organization can meet the current and latent needs at the time when they arrive. the organization may use six key constructs comprising assessment.

and understanding the competitive markets so that the organization is more responsive which enables it to be value-driven.youtube. 9 http://www.Alignment ensures that the product plan points in the direction which delivers the product and the organization in the right direction as intended. Achievability represents a high level estimate of the time. costs and benefits to determine the degree of its alignment with the strategic goals. Agility encompasses conducting intelligence gathering in the market by visiting the customers and speaking with them about the prospects of products. The goals and objectives of individual product line must be aligned with the larger context that is the organization. collecting details about the products failure or successes. Accountability focuses on delivering values through the organization¶s activities and discarding those things which do not add value to the products and services and hence explores on the ways to deliver values in the future in a better way. For instance. according to Jeff Dunn9. which is recognized as an industry leader in quality management. Thus he prioritized the social obligation of an organization more than its financial achievements and concentrated on the long term goals of uplifting the quality of the life of public in Brazil who could subsequently afford Coke in years to come. he should not think about the long way. There is a substantial number of organizations who have adopted value-driven strategies to implement quality programmes and pursue manufacturing excellence and also to adopt environmentally and socially responsible solutions. when he was in Brazil thinking about the 250 million people who live in poverty to launch the products of Coca Cola in that region and discussing about the different packages of small sizes to make it affordable for the poor people.com/watch?v=a84YVfzo07U . Another instance can be sited by considering a joint car making venture created by Toyota and General Motors. Accessibility includes making all the information related to the product life cycle available to the person making a decision so that he understand the value of the product portfolio along with the product and product requirements so that the value is properly communicated and delivered. he decided that the residents of Brazil require their fundamental needs to be met more than coke because it did not seem right to Jeff Dunn that to have influence in power and distribution in marketing. the former President of Coca Cola. and has the goal of building high quality products while ensuring that costs are the most competitive of any manufacturer so that it is able to render maximum value to the customers and the organization.

activation and training the customers and how to ensure the maintenance of the value. etc. package. This value creation must be followed by ensuring that the value is realized by the customer. what is the exact distinct value and what is the ultimate impact of all the activities. They are the specialized strategies and disciplines that reside within the business. delivering it into the customer's hands and assisting the customer to use it in such a way that the value is realized. getting a commitment from the customer to purchase it. and  Support Strategies Value Creation Strategies are based upon the understanding of the needs and opportunities in the marketplace and synchronizing them with the capabilities and core competencies of the business. Support Strategies are the strategies that deal with information technology. Value Delivery Strategies are concerned all about producing the offering. assemble.  Value Delivery Strategies. There are three types of strategy for value-driven organizations:  Value Creation Strategies. They focus upon things like whom to serve. organization. VALUE BASED STRATEGIES The four value-based business strategies are shown below. buy.STRATEGIES FOLLOWED BY VALUE-DRIVEN ORGANIZATIONS Once when an organization is committed to the position that a successful business has to create and deliver distinct values. These strategies deal with the queries like what is the mode of offering in terms of build. financing. facilities. how to receive commitment to value. how to communicate the value. how to reach to the customer with the offering. and what is the price of offering. Willingness-To-Pay Opportunity Cost Firm 1 2 Competitors 3 4 . how to enable the value in terms of installation. They can be critical to the creation and delivery of value. what to offer. a logical but simple approach to strategic management must be planned and implemented.

 The targets set by such organizations are effective and realistic for compensation.  Value-driven organizations are able to deal with globalised and deregulated capital markets with greater ease. Box no.  Such organizations have a streamlined planning and budgeting.  Such organizations have proper communication with the investors.driven organizations facilities improved decision making. analysts and stakeholders.  Value.driven organizations have an implied alignment of the interests of the top managers with the interests of the stakeholders.  Value.  Value.Box no.driven organizations have an enhanced communication on strategies.  Value.driven organizations have clearly defined management priorities.  Value.driven organizations have a clearly set management priorities.driven organizations are able to balance the trade-offs between the short term.  Value. Box no.  Such organizations have enhanced transparency.driven organizations normally have lesser chances of under evaluation of stocks.  Value. 4 represents the strategy of raising the opportunity cost of suppliers of providing resources to competitors firms through the creation of switching costs for suppliers. .  Such organizations have an improved and optimal allocation of resources.1 represents the strategy of raising the willingness-to-pay of the buyers so that the buyer¶s needs are well understood and this is the differentiation strategy of the firm.  Value.  Such organizations encourage investments that are value-creating. medium term and long term. 3 represents the strategy of lowering the willingness-to-pay of the buyers for other firms¶ products by negative advertising about the competitors and creation of switching costs for buyers(retaining costs associated with switching costs of competitors products and hence the lower willingness to pay for competitors products).driven organizations have a greater degree of comfort while dealing with uncertainties and risks. Box no. ADVANTAGES OF VALUE-DRIVEN ORGANIZATIONS  Value-driven organizations can maximize value creation consistently. 2 represents the strategy of lowering the opportunity cost of suppliers of providing resources to the firm by establishing value-based partnerships with the suppliers and by offering non-salary benefits to the employees which is difficult for other firms to imitate.

or to exist. for long term success. In addition to conformance to individual¶s personal values. CONCLUSION It is absolutely necessary for a successful organization to provide distinct value to its customers. .  Extreme caution is needed to concentrate only on the most important factors so that it does not lead to value destruction. there is absolutely no reason to buy .  Measurement of value through the use of tools and processes like performance management and balanced scorecard is effective but these tools and processes have a high cost of their own which bounds the organization from going into its deep details. It builds trust and relationships with all the stakeholders. Then in that case. which are the keys to growth and profitability and almost all the leading organizations around the globe are value-driven organizations. resources and patience for the organizations to become value-driven.  Value creation is just as complex as corporate strategies and requires equal efforts for its implementation. there will be no competitive advantage. it is necessary for an organization to be driven by the desire to provide value to the customer. In case of failure to provide distinct value. which is critical to long term success. Such organizations are usually prevented from any acquisitions or takeovers. DISADVANTAGES OF VALUE-DRIVEN ORGANIZATIONS  Value-driven management is an all-embracing. Hence. the outcome is that the value-driven organization can maintain a substantial competitive advantage and pursue value-based pricing. no positioning and no message communication. having an organization that is based on a sound moral and ethical footing is good for business.  Comprehensive training and consulting support is an absolute necessity which may be very costly for the organization. holistic marketing philosophy which often command cultural change and hence it takes considerable time. It also paves the path for a more fulfilling working environment.  This management concept commands high degree of support from the top level of management. increasing the level of employee satisfaction and motivation If pursued successfully.

Timothy A.com/watch?v=xMK6SH9HuOw&feature=related BOOKS  Organisation Behavior by Stephen P.valuebasedmanagement.softwaremag.com/pdfs/whitepapers/Telelogic_WP3.  Values-driven business by Mal Warwick & Ben Cohen published by BerhettKoehler Publishers.pdf?CFID=29252352&CFTOKEN=47507 440 http://www.  Management by Stephen P.softwaremag.htm http://www.valuebasedmanagement.pdf http://www.stern. 13th Edition published by Pearson Education. Inc.Robbins.com/pdfs/whitepapers/Telelogic_WP3.interactiveinsights.edu/~abranden/ValueBasedStrategy2.youtube.9th Edition published by Pearson Education.valuebasedmanagement.about.com/od/strategicplanning1/a/organizvalues_2. Judge and Seema Sanghi.12manage.REFERENCES http://www.net/faq_what_is_value_based_management.html http://www.com/ http://pages.com/methods_value_based_management.nyu.html http://humanresources.pdf http://www. Inc. .com/watch?v=a84YVfzo07U http://www.mckinsey.net/faq_disadvantages_of_vbm.pdf?CFID=29252352&CFTOKEN=47507 440 http://www.html VIDEOS http://www.com/practices/retail/knowledge/articles/competinginavaluedrivenworld.Robbins and Mary Coutler.net/faq_why_value_based_management. Inc.html http://www.youtube.

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.