Description
This is a ppt to explains on Strategies to manage Inter-organisational linkages.
Strategies to manage Inter organisational linkages
OTPR 5-6 vv
Interorganizational Interdependencies
Symbiotic interdependencies • Reputation • Cooptation • Strategic alliances • Mergers & Takeovers
Competitive Interdependencies
• Collusions & Cartels • Third party linkage mechanisms • Strategic alliances • Mergers & Takeovers
Interorganizational Strategies for Managing Symbiotic Interdependencies
Copyright 2007 Prentice Hall
3
Strategies for Managing Symbiotic Resource Interdependencies
• Developing a good reputation
– Reputation: a state in which an organization is held in high regard and trusted by other parties because of its fair and honest business practices – Reputation and trust are the most common linkage mechanisms for managing symbiotic interdependencies – For eg- Johnson & Johnson in the baby care segment, Diamond merchants cartels..
Strategies for Managing Symbiotic Resource Interdependencies
• Co-optation: a strategy that manages symbiotic interdependencies by neutralizing problematic forces in the specific environment – Make outside stakeholders inside stakeholders – Interlocking directorate: a linkage that results when a director from one company sits on the board of another company – Eg- Pharmaceutical industry with medical practiioners, colgate and free dental camps
5
Strategies for Managing Symbiotic Resource Interdependencies
• Strategic alliances: an agreement that commits two or more companies to share their resources to develop joint new business opportunities
– An increasingly common mechanism for managing symbiotic (and competitive) interdependencies – The more formal the alliance, the stronger and more prescribed the linkage and tighter control of joint activities
• Greater formality preferred with uncertainty
6
Types of Strategic Alliances
Copyright 2007 Prentice Hall
7
Types of Strategic Alliances
• • Long-term contracts Networks: a cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority • Minority ownership..the Japanese example – Keiretsu: a group of organizations, each of which owns shares in the other organizations in the group, that work together to further the group’s interests • Joint venture: a strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business
8
Keiretsu
• Japanese system for achieving the benefits of formal linkages without incurring its costs
– Example: Toyota has a minority ownership in its suppliers
• Affords substantial control over the exchange relationship • Avoids bureaucratic cost of ownership and opportunism
9
Strategies for Managing Symbiotic Resource Interdependencies • Merger and takeover: results in resource exchanges taking place within one organization rather than between organizations
– New organization better able to resist powerful suppliers and customers – Normally involves great expense and problems managing the new business
10
Strategies for Managing Competitive Resource Interdependencies
• Collusion and cartels
– Collusion: a secret agreement among competitors to share information for a deceitful or illegal purpose • May influence industry standards – Cartel: an association of firms that explicitly agrees to coordinate their activities • May influence price structure of market
11
Strategies for Managing Competitive Resource Interdependencies
• Third-party linkage mechanism: a regulatory body that allows organizations to share information and regulate the way they compete Strategic alliances: can be used to manage both symbiotic and competitive interdependencies Merger and takeover: the ultimate method for managing problematic interdependencies
12
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•
Interorganizational Strategies for Managing Competitive Interdependencies
Transaction Cost Theory
• Transaction costs: The costs of negotiating, monitoring, and governing exchanges between people. • Transaction cost theory: The theory that states that the goal of an organization is to minimize the costs of exchanging resources in the environment and the costs of managing exchanges inside the organization
14
Sources of Transaction Costs
15
Sources of Transaction Costs
• Environmental uncertainty and bounded rationality
– Bounded rationality: refers to the limited ability people have to process information
• Opportunism and small numbers
– Attempt to exploit forces or stakeholders
• Risk and specific assets
– Specific assets: investments that create value in one particular exchange relationship but have no value in any other exchange relationship
16
Transaction Costs and Linkage Mechanisms
• Transaction costs are low when: – Organizations are exchanging nonspecific goods and services – Uncertainty is low – There are many possible exchange partners • Transaction costs are high when: – Organizations begin to exchange more specific goods and services – Uncertainty increases – The number of possible exchange partners falls
17
Transaction Costs and Linkage Mechanisms • Bureaucratic costs: internal transaction costs
– Bringing transactions inside the organization minimizes but does not eliminate the costs of managing transactions
18
Franchising
• A franchise is a business that is authorized to sell a company’s products in a certain area • The franchiser sells the right to use its resources (name or operating system) in return for a flat fee or share of profits
19
Outsourcing
• Moving a value creation that was performed inside the organization to outside companies • Decision is prompted by the weighing the bureaucratic costs of doing the activity against the benefits
– Increasingly, organizations are turning to specialized companies to manage their information processing needs
20
doc_889360387.pptx
This is a ppt to explains on Strategies to manage Inter-organisational linkages.
Strategies to manage Inter organisational linkages
OTPR 5-6 vv
Interorganizational Interdependencies
Symbiotic interdependencies • Reputation • Cooptation • Strategic alliances • Mergers & Takeovers
Competitive Interdependencies
• Collusions & Cartels • Third party linkage mechanisms • Strategic alliances • Mergers & Takeovers
Interorganizational Strategies for Managing Symbiotic Interdependencies
Copyright 2007 Prentice Hall
3
Strategies for Managing Symbiotic Resource Interdependencies
• Developing a good reputation
– Reputation: a state in which an organization is held in high regard and trusted by other parties because of its fair and honest business practices – Reputation and trust are the most common linkage mechanisms for managing symbiotic interdependencies – For eg- Johnson & Johnson in the baby care segment, Diamond merchants cartels..
Strategies for Managing Symbiotic Resource Interdependencies
• Co-optation: a strategy that manages symbiotic interdependencies by neutralizing problematic forces in the specific environment – Make outside stakeholders inside stakeholders – Interlocking directorate: a linkage that results when a director from one company sits on the board of another company – Eg- Pharmaceutical industry with medical practiioners, colgate and free dental camps
5
Strategies for Managing Symbiotic Resource Interdependencies
• Strategic alliances: an agreement that commits two or more companies to share their resources to develop joint new business opportunities
– An increasingly common mechanism for managing symbiotic (and competitive) interdependencies – The more formal the alliance, the stronger and more prescribed the linkage and tighter control of joint activities
• Greater formality preferred with uncertainty
6
Types of Strategic Alliances
Copyright 2007 Prentice Hall
7
Types of Strategic Alliances
• • Long-term contracts Networks: a cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority • Minority ownership..the Japanese example – Keiretsu: a group of organizations, each of which owns shares in the other organizations in the group, that work together to further the group’s interests • Joint venture: a strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business
8
Keiretsu
• Japanese system for achieving the benefits of formal linkages without incurring its costs
– Example: Toyota has a minority ownership in its suppliers
• Affords substantial control over the exchange relationship • Avoids bureaucratic cost of ownership and opportunism
9
Strategies for Managing Symbiotic Resource Interdependencies • Merger and takeover: results in resource exchanges taking place within one organization rather than between organizations
– New organization better able to resist powerful suppliers and customers – Normally involves great expense and problems managing the new business
10
Strategies for Managing Competitive Resource Interdependencies
• Collusion and cartels
– Collusion: a secret agreement among competitors to share information for a deceitful or illegal purpose • May influence industry standards – Cartel: an association of firms that explicitly agrees to coordinate their activities • May influence price structure of market
11
Strategies for Managing Competitive Resource Interdependencies
• Third-party linkage mechanism: a regulatory body that allows organizations to share information and regulate the way they compete Strategic alliances: can be used to manage both symbiotic and competitive interdependencies Merger and takeover: the ultimate method for managing problematic interdependencies
12
•
•
Interorganizational Strategies for Managing Competitive Interdependencies
Transaction Cost Theory
• Transaction costs: The costs of negotiating, monitoring, and governing exchanges between people. • Transaction cost theory: The theory that states that the goal of an organization is to minimize the costs of exchanging resources in the environment and the costs of managing exchanges inside the organization
14
Sources of Transaction Costs
15
Sources of Transaction Costs
• Environmental uncertainty and bounded rationality
– Bounded rationality: refers to the limited ability people have to process information
• Opportunism and small numbers
– Attempt to exploit forces or stakeholders
• Risk and specific assets
– Specific assets: investments that create value in one particular exchange relationship but have no value in any other exchange relationship
16
Transaction Costs and Linkage Mechanisms
• Transaction costs are low when: – Organizations are exchanging nonspecific goods and services – Uncertainty is low – There are many possible exchange partners • Transaction costs are high when: – Organizations begin to exchange more specific goods and services – Uncertainty increases – The number of possible exchange partners falls
17
Transaction Costs and Linkage Mechanisms • Bureaucratic costs: internal transaction costs
– Bringing transactions inside the organization minimizes but does not eliminate the costs of managing transactions
18
Franchising
• A franchise is a business that is authorized to sell a company’s products in a certain area • The franchiser sells the right to use its resources (name or operating system) in return for a flat fee or share of profits
19
Outsourcing
• Moving a value creation that was performed inside the organization to outside companies • Decision is prompted by the weighing the bureaucratic costs of doing the activity against the benefits
– Increasingly, organizations are turning to specialized companies to manage their information processing needs
20
doc_889360387.pptx