UNIVERSIDAD AUTÓNOMA DE YUCATÁN

FACULTAD DE ECONOMÍA
ORGANIZATIONAL CULTURE & LEADERSHIP
L.C.I. JOSUE OMAR VERDEJA DORANTES, M.P.A.D.O.
Value and Organizational Development – Part I

HOW DO ORGANIZATIONS CREATE VALUE?

“Now with globalization, we have different sets of rules for different regions, such as the EU,
written around entirely different philosophies. It would sure make things easier if we decided on a
single set of rules once again—whatever they are. Then we’d know how to behave and we could
plan better for the future.” Brown, D. (2014).

How do you change business inputs into business outputs in such a way that they have a greater
value than the original cost of creating those outputs?

This isn't just a dry question: it's a matter of fundamental importance to companies because it
addresses the economic logic of why the organization exists in the first place.

Manufacturing companies create value by acquiring raw materials and using them to produce
something useful. Retailers bring together a range of products and present them in a way that's
convenient to customers, sometimes supported by services such as fitting rooms or personal
shopper advice. And insurance companies offer policies to customers that are underwritten by
larger re-insurance policies. Here, they're packaging these larger policies in a customer-friendly
way, and distributing them to a mass audience.

The value that's created and captured by a company is the profit margin:

Value Created and Captured – Cost of Creating that Value = Margin

The more value an organization creates, the more profitable it is likely to be. And when you
provide more value to your customers, you build a competitive advantage.

Understanding how your company creates value, and looking for ways to add more value, are
critical elements in developing a competitive strategy. Michael Porter discussed this in his
influential 1985 book "Competitive Advantage", in which he first introduced the concept of the
value chain.

A value chain is a set of activities that an organization carries out to create value for its customers.
Porter proposed a general-purpose value chain that companies can use to examine all of their
activities and see how they're connected. The way in which value chain activities are performed
determines costs and affects profits, so this tool can help you understand the sources of value for
your organization.

Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on
systems, and how inputs are changed into the outputs purchased by consumers. Using this
viewpoint, Porter described a chain of activities common to all businesses, and he divided them
into primary and support activities, as shown below.
 UNIVERSIDAD AUTÓNOMA DE YUCATÁN
FACULTAD DE ECONOMÍA
ORGANIZATIONAL CULTURE & LEADERSHIP
L.C.I. JOSUE OMAR VERDEJA DORANTES, M.P.A.D.O.
Value and Organizational Development – Part I

Exercise 1. Value Chain (stand-alone activity)

1.1. In the remote forests of Côte d’Ivoire, a cocoa farmer named Amadou starts his day with the
break of dawn. Côte d’Ivoire, being one of the largest producers of cocoa beans, had farmers who
played a pivotal role in a massive, interconnected system, ensuring that people worldwide could
savor delicious chocolates. Little did Amadou know his beans would contribute to a vast
(__________________) network, the first step in Michael Porter’s value chain concept.

a) Service
b) Outbound Logistics
c) Marketing & Sales
d) Inbound Logistics

1.2. Amadou's day involved meticulously choosing ripe cocoa pods and harvesting them. He was
aware of the importance of selecting the right pods because the quality of beans impacted the
(__________________) stage later. Amadou’s beans, once harvested, underwent fermentation and
drying, processes that developed the beans' flavor profile, essential for premium chocolate
products.

a) Inbound Logistics
b) Operations
c) Outbound Logistics
d) Value Network
 UNIVERSIDAD AUTÓNOMA DE YUCATÁN
FACULTAD DE ECONOMÍA
ORGANIZATIONAL CULTURE & LEADERSHIP
L.C.I. JOSUE OMAR VERDEJA DORANTES, M.P.A.D.O.
Value and Organizational Development – Part I

1.3. Meanwhile, thousands of miles away, in Belgium, a renowned chocolatier named Elise awaited
Amadou’s shipment. Belgium was famous for its chocolates, and Elise’s brand stood out because
she understood the nuances of each (__________________) process, ensuring her chocolates
maintained consistent quality. When the cocoa beans reached her facility, they underwent a series
of operations that transformed them into smooth, rich chocolate. Roasting, grinding, conching, and
tempering were critical steps in ensuring the flavor, texture, and gloss of the finished product.

a) Outbound Logistics
b) Inbound Logistics
c) Firm Infrastructure
d) Marketing & Sales

1.4. The operations stage was followed by the (_____________) phase. Elise’s marketing team,
helmed by Martin, brainstormed creative campaigns to highlight the brand’s story and quality. By
emphasizing the chocolate's roots in Côte d’Ivoire, the brand built an emotional connection with
consumers, narrating a tale of authenticity and craftsmanship. In the ever-competitive world of
gourmet chocolates, this differentiation was crucial for sales.

a) Operations
b) Procurement
c) Service
d) Marketing & Sales

1.5. Sarah, a customer in New York, was a testament to the success of Elise’s marketing endeavors.
Engulfed in her daily (______________________) role at a tech firm, Sarah took solace in little
indulgences. Elise's chocolate was one of them. Having seen an evocative advertisement
showcasing the journey from bean to bar, Sarah was intrigued. A simple scan of a QR code on the
packaging allowed her to delve into the entire value chain journey, witnessing the effort, care, and
precision at every step.

a) Firm Infrastructure
b) Marketing & Sales
c) Service
d) Value Network

1.6. Beyond these direct steps of the value chain, the (___________________) supporting Elise’s
enterprise was robust. The HR team ensured that every employee, from those at the production
facility to the creative minds in marketing, was aligned with the brand's mission. Their Information
Systems team maintained an intricate network, enabling smooth communication, real-time
updates, and streamlined supply chain management.

a) Value Network
b) Firm Infrastructure
c) Outbound Logistics
 UNIVERSIDAD AUTÓNOMA DE YUCATÁN
FACULTAD DE ECONOMÍA
ORGANIZATIONAL CULTURE & LEADERSHIP
L.C.I. JOSUE OMAR VERDEJA DORANTES, M.P.A.D.O.
Value and Organizational Development – Part I

d) Operations

1.7. Critical to the chocolate's superior quality was the (_______________) wing. By continually
training employees and fostering a culture of innovation, the brand ensured it was ahead in the
ever-evolving world of gourmet chocolates. Moreover, the (Technology Development) team
innovated with new flavors, textures, and even sustainable packaging solutions. The push towards
sustainable sourcing and packaging mirrored the growing global emphasis on sustainability,
ensuring that the brand resonated with the eco-conscious consumers of the modern era.

a) Human Resource Management

b) Procurement
c) Marketing & Sales
d) Inbound Logistics

1.8. Lastly, the (_______________________) department played an unsung yet essential role. By
building relationships with farmers like Amadou, ensuring they received fair prices, and facilitating
sustainable farming practices, the brand not only ensured the quality but also built a socially
responsible image.

a) Inbound Logistics
b) Procurement
c) Value Network
d) Firm Infrastructure

1.9. Sarah, while savoring her chocolate, was oblivious to the intricate (___________) interplaying
behind her simple indulgence. This network, consisting of suppliers, distributors, service providers,
and consumers, was in constant interaction, creating a robust ecosystem that thrived on mutual
growth and shared value. Amadou, in Côte d’Ivoire, and Sarah, in New York, were two nodes of this
vast network, connected by the shared value of a chocolate bar.

a) Value Network
b) Inbound Logistics
c) Marketing & Sales
d) Firm Infrastructure

Exercise 2. Case Study: Re-imagining Organizational Culture and Leadership through the Lens of
Porter's Value Chain Model

TechWorld Inc., a leading technology firm, had always prided itself on its innovation-driven culture.
Established in Silicon Valley in the early 2000s, it quickly expanded its global footprint, thanks to its
cutting-edge products. As time went on, however, the competition grew fierce, and TechWorld
began to experience a decline in its market position.

Despite investing heavily in R&D, TechWorld's products lacked the unique edge they once
possessed. The CEO, Alex Stone, suspected that the issue wasn’t just about product development
 UNIVERSIDAD AUTÓNOMA DE YUCATÁN
FACULTAD DE ECONOMÍA
ORGANIZATIONAL CULTURE & LEADERSHIP
L.C.I. JOSUE OMAR VERDEJA DORANTES, M.P.A.D.O.
Value and Organizational Development – Part I

but encompassed the entire value chain of the organization. Stone believed that to regain their
edge, they needed to reassess the company’s organizational culture, leadership style, and
approach to change.

Stone commissioned a team to review each part of Porter's Value Chain, from inbound logistics to
services, examining how organizational culture, leadership, and change could be leveraged to gain
competitive advantage.

a) Inbound Logistics: The procurement team was stuck in old ways, and resistant to adopting
newer, tech-driven solutions. This rigidity was traced back to the department’s leadership. By
introducing a transformational leadership style and fostering a culture of continuous learning,
the department embraced automation, improving efficiency.
b) Operations: The operations team had a strict, top-down leadership approach. By introducing a
more inclusive and collaborative leadership style, employees began sharing innovative ideas
and improving operational processes.
c) Outbound Logistics: A culture of 'this is how we've always done it' prevailed. Stone encouraged
a culture of adaptability, leading the department to introduce AI-driven solutions to predict
demand more accurately.
d) Marketing and Sales: The team was hesitant to embrace digital marketing fully. Stone initiated
leadership workshops emphasizing the importance of staying ahead of market trends. As a
result, the team started using advanced analytics and personalization, gaining an edge over
competitors.
e) Services: Instead of waiting for feedback, the department adopted a proactive approach. By
fostering a culture of customer-centricity and forward-thinking leadership, they started
predicting potential issues and addressing them in advance.

Post the intervention, TechWorld started to regain its market position. The integration of
organizational culture, leadership styles, and change throughout the value chain made them more
adaptable, innovative, and customer-centric.

Reflection questions (Teams max. 3 people)

2.1. Is it possible for one leadership style to be effective across all aspects of the value chain?

2.2. Can an entire organization’s culture be changed by simply adjusting one component of the
value chain?

2.3. Does a culture of innovation always guarantee success in product development?

2.4. Is a top-down leadership approach always detrimental to an organization's culture?

2.5. Can organizations maintain a consistent culture across global operations?

2.6. Is resistance to change always a negative aspect of organizational culture?