Impact of Organizational Culture on Strategy Development

The ability of a firm to produce good performance depends on the strategy of an organization. The strategy of an organization, in turn, depends on the environment and culture of an organization. The environment is the sum name of all those factors and forces which not only surround an organization but also affect the way it works and its performance (external factors outside the organization and internal factors within the organization). Culture is the way an organization and its people work. Usually known as organizational culture, it includes:

• Values: Easy to identify, they are explicit, and used to be different from formal statements.
• Beliefs: Specific, discerned in how people talk about issues the organization faces.
• Behaviors: Day-to-day operations seen by people inside and outside the organization, including work routines.
• Paradigm: A set of assumptions taken for granted and how the organization responds to circumstances they face.

Organizational strategy is best described as an effort to create a fit between an organization and its environment. Organizational culture is something that needs to be understood as it affects all the activities performed in the organization. The paradigm is a set of assumptions held in common and taken for granted in an organization. The cultural web explains the mechanics of a culture, and to an extent, we can have an idea of the type of culture from the cultural web. It is based on seven factors:

1. Organizational Structure: Formal and informal relationships constitute the management structure of the organization.
2. Control Systems: Administrative systems emphasize what is important to the organization.
3. Rituals and Routines: Protocols for doing things.
4. Stories: One means through which the culture of an organization is reproduced to new members by old members.
5. Symbols: Signifiers of meaning used by the symbol.
6. Power Structure: Control of the expressive capacity of organizational members.
7. Paradigm: Assumptions managers share about the nature of the organizational experience.

Understanding Culture's Influence on Strategy

The cultural web explains the mechanics of a culture, and to an extent, we can have an idea of the type of culture from the cultural web. This concept of the cultural web can be used especially when it is important to understand how culture affects strategy and how strategy changes the culture. Janicijevic (2012) and Johnson et al (2008) have explained the process of strategy making as the sum of three main activities: strategic analysis, generation of strategic choices, selection of the most suitable one, and putting that into practice.

Relationship Between Culture and Strategy

Baird, Harrison, and Reeve (2007) have discussed that there is a relationship between culture and strategy. They have also argued that both should be aligned for the success of the organization. Gupta (2011) has confirmed this theory and found that different cultures give rise to different strategies.