Reference no: EM132822528

Gray Electric is a company with a long tradition of innovation. In 1973, they invented the world's first cellular phone and spent many years trying to understand how this new technology would impact their existing business. Gray Electric was in a position to become the first company in the world to develop and market a cell phone, but the upper management of Gray Electric had become complacent with making corded phones and could not imagine a world without landline phones. Because they had been the industry leader for decades and had faced very little competition along the way, the culture of Gray Electric had become rule-oriented and placed a high value on stability. Upper management decided that producing cell phones would only hurt their landline phone sales and quickly abandoned their cell phone endeavour. In 1987, they realized what a bad mistake they had made. Sales of their landline phones were decreasing drastically every year, and Gray Electric was losing money and cutting jobs in all departments. They began to frantically attempt to produce a marketable cell phone. In 1989, Gray Electric introduced their first cell phone, but their rule-oriented culture did not fit this rapidly changing industry, and their product development process took much longer than the other cell phone manufacturers. By the time their first cell phone was introduced, it was two or three generations behind the competition.

Q1) Reflect on the case above

Q2) What is the importance of culture in an organization? What is the nature of cultural shift that is required by Gray Electric and why do you think it was so difficult to make the shift?