Managing diversity for a sustainable competitive advantage in the changing European business environment

Van Zyl, Tobey Zanelda (2004-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2004.

Thesis

ENGLISH ABSTRACT: The purpose of this study project is to investigate how organisations operating in the European Union (EU) can sustain a competitive advantage amidst the changing European business environment. Due to stiff global competition, organisations are searching for new markets to gain access to lower cost or higher quality inputs and pre-empt competitors that may seek similar advantages. No global competitor can afford not to operate in the EU. The EU is the largest trade bloc in the world with 463,7 million inhabitants as opposed to 282 million inhabitants in the United States of America (USA). The strategic management model described by Thompson and Strickland is adapted and used as a framework for the analysis of the external European business environment. A PESTE analysis reveals that European integration has resulted in momentous political, economic, societal, technological and environmental developments. These have in turn dramatically altered the competitive dynamics on the external European environment. In a competitive analysis of the impact of the major driving forces on Porter's Five Forces the profit making attractiveness of the European environment will be identified. Generic key success factors are identified from the PESTE analysis, driving forces and Porter's Five Forces. Operational effectiveness, the ability to innovate and the European management skill in the management of diversity will provide a sustainable competitive advantage in the European environment. The management of international diversity is an essential element of the European management model. The ability of the European manager in the successful management of a diverse range of consumers, business environments, communications and behavioural styles across different states, is considered Europe's strong suit. A sustainable competitive advantage for organisations in the complex European environment lies in the ability to integrate the inherent diversity. Firstly, the ability to integrate diversity inherent in the fragmented operating structures throughout the various countries will maximize the key success factor of operational effectiveness. Secondly, the ability to integrate the workforce diversity by capturing the inherent value of diverse pockets of knowledge and experiences will achieve synergies. It will also improve the ability to innovate. The latter is the second generic key success factor. The standardized USA approach in managing of international diversity appears to be detrimental to the USA MNCs' competitiveness in developing countries with consumer bases of millions of people. They will have to develop a new mindset and adopt new business models to achieve global competitiveness. It would further appear that the lack of experience in management of international diversity in USA organisations has minimized the ability to innovate. Multinational organisations in the USA are therefore starting to outsource components of their innovative value chain to tap ideas from external sources. European organisations exercise a global strategy approach that reflects the aspirations of a global approach, while the necessity for local adaptations of business activities is at the same time acknowledged. A literature review clearly indicates that the experience of EU organisations in international markets creates a competitive advantage. European integration opens up unexploited opportunities for EU organisations to streamline value chain efficiencies and increase operational effectiveness. The practical research project performed at the Henkel Group in Dusseldorf, Germany, has revealed a strategic fit of the Henkel Group with the changing external environment. Recommendations have been made to align the fragmented Henkel Travel Management processes with the strategic Henkel goal. Increasing operational efficiencies in line with best practices shall contribute significantly to improved operating margins. USA organisations have on average already achieved optimal levels of efficiencies through their global approach in streamlining their value chain activities. They are now focused on increasing innovation to sustain their growth. Organisations in Europe should invest in improving their innovation ability. This major opportunity to obtain a competitive advantage is highly unexploited. Market leadership can be achieved when managers stimulate innovation by accessing diverse pockets of workforce knowledge from different cultural contexts within the EU.

AFRIKAANSE OPSOMMING: Die doel van hierdie werkstuk is om ondersoek in te stel op welke wyse organisasies wat in die Europese Unie opereer 'n kompeterende voordeel kan behou te midde van die veranderende Europese besigheidomgewing. Weens stewige globale kompetisie soek organisasies na nuwe markte vir toegang tot laer koste of hoër kwaliteit insette en die voorspring van kompetisie wat soortgelyke voordele inhou. Geen globale mededinger kan bekostig om nie in die Europese Unie te kompeteer nie. Die Europese Unie is die grootste handelsblok ter wêreld met 463,7 miljoen inwoners teenoor 282 miljoen inwoners in die Verenigde State van Amerika (VSA). Die strategiese bestuursmodel soos beskryf deur Thompson en Strickland is gewysig om as 'n raamwerk vir die analisering van die eksteme Europese besigheidsomgewing te dien. 'n PESTE analise openbaar dat Europese integrasie drastiese politieke, ekonomiese, sosiale, tegnologiese en omgewingsveranderinge teweegbring. Dit het op sy beurt weer gelei tot n dramatiese impak op die kompeterende faktore in die eksteme Europese omgewing. In 'n mededingingsontleding van die impak van die belangrikste dryfkragte op Porter se Vyf Kragte sal die winsgewindheid van die Europese omgewing ook hieruit aangedui word. Generiese sleutelsuksesfaktore word afgelei uit die PESTE analise, dryfkragte en Porter se Vyf Kragte. Operasionele doeltreffendheid, die vermoë om te innoveer en die Europese vaardigheid in die bestuur van internasionale diversiteit sal 'n volgehoue mededingingsvoordeel in die Europese omgewing verseker. Die bestuur van internasionale diversiteit is 'n kern element van die Europese bestuursmodel. Die vermoë van die Europese bestuurder om 'n diverse groep van verbruikers, besigheidsomgewings, kommunikasie en gedragstyle oor verskillende lande heen suksesvol te hanteer, word beskou as Europa se sterkpunt. Die volgehoue kompeterende voordeel van organisasies in die komplekse Europese omgewing is opgesluit in die vermoë om diversiteit inherent daarin te kan integreer. Eerstens sal die vermoë om die diversiteit inherent in die gefragmenteerde operasionele strukture regoor die verskillende lande heen te integreer, lei lot optimisering van operasionele doeltreffendheid as 'n generiese sleutelsuksesfaktor. Tweedens sal die vermoë om die diversiteit van die werkers te integreer deur die inherente waarde van diverse kennis en ondervindinge vas te vang, sinergiee bewerkstellig. Dit sal ook die vermoë om te innoveer bevorder. Laasgenoemde is die tweede sleutelsuksesfaktor. Hul standaard benadering in die hantering van internasionale diversiteit blyk nadelig te wees vir die VSA se multinasionale organisasies wat in ontwikkelende lande meeding om verbruikersmarkte van miljoene. 'n Paradigmaskuif word benodig om 'n wêreldwye mededingingsvoordeel te bereik. Dit blyk voorts dat die gebrek aan ondervinding in die hantering van internasionale diversiteit ook die innoverende vermoë benadeel het. Multinasionale organisasies in die VSA het begin om komponente van die innoverende waardeketting uit te kontrakteer om innovasie van eksterne bronne af te verkry. Europese multinasionale organisasies pas 'n globale benadering toe wat die aspirasies van 'n globale strategie kombineer met die aanpassing van besigheidsaktiwiteite uniek tot die plaaslike omstandighede. 'n Literatuurstudie wys duidelik uit dat die ondervinding van Europese Unie organisasies in internasonale markte tot 'n mededingingsvoordeel lei. Europese integrasie skep geleenthede vir organisasles in die Europese Unie om waardekettings regoor Europa te kannoniseer en om operasionele doeltreffendheid te veseker. Die praktiese navorsingsprojek wat by die Henkel Groep in Dusseldorf, Duitsland afgelê is, het 'n strategiese passing met die eksterne omgewing aangetoon. Aanbevelings is gemaak om die gefragmenteerde prosesse van Henkel Travel Management met die strategiese doelwit van die Henkel Groep te vereenselwig. Verbetering van operasionele doeltreffendheid ooreenkomstig beste standaarde sal bedryfswins aansienlik verbeter. Organisasies in die VSA het gemiddeld reeds optimale doeltreffendheid bereik deur die globale benadering in die rasionalisering van waardeketting aktiwiteite. Hulle fokus nou op die verbetering van innovasie om groei te verseker. Organisasies in Europa behoort te investeer in die verbetering van hul innoverende bevoegdheid. Hierdie kritiese geleentheid om 'n mededingingsvoordeel te verkry is hoogs onbenut. Markleierskap kan verkry word deur stimulasie van innovering met die inkorporering van diverse kundigheid uit die verskillende kulturele agtergronde van werknemers in die Europese omgewing.

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