ao hugh russell, inc
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AO Hugh Russell, INC
A Case Study By-: Luv Singh (027/1) Mayank Kumar (028/1) Nayan Manik Tripura (029/1) Pawan Kumar Arya (030/1) Piyusha Baghel (031/1)
The CaseAO HUGH RUSSEL,INC., a mid sized Canada
based steel distributer.Business consisted 4 groups: Core steel
distribution activities, a chain of wholesalers of hardware and sporting goods, bearings and valves distribution and a a small manufacturing business.
A well structured company with divisional hierarchies , job descriptions and extensive data processing system for progress tracking.
CrisisHostile takeover over of the company.Financial crisis created by banksFear perceived by shareholders
ChangeThe takeover and the merger.New bankers ,new business and new
environment.Wayne Mang – new presidentShift from hierarchy to task forcesCross functional teams and blurring of
organisational boundaries.Strengthening relationship with banks and
suppliers.
Resource dependenceDependence on a resource is based on two factors:
o Importance of the resource to the company.o How much monopoly power those who control a resource have over its
allocation and use.Resource strategies:
o To adopt to or alter the interdependent relationship.o To use interlocking directorship.o Join trade association .o To take political action.
Power strategies:o Large, independent companies have power over small companies.
Collaborative NetworksCollaborative network perspective is an emerging alternative
of resource dependence theory.Companies join together to become more competitive and to
share scarce resources.Why Collaboration:
o Major reasons are sharing risk, reducing cost.o Achieve greater effectiveness and better use scarce resources.
Adversaries to partners:o With the push from international competition organizations are shifting to
partnership.
Population EcologyPopulation: Set of organizations engaged in
similar activities.Diversity in Population is prone to the
changing environment.The ecological change process
Variation: appearance of new form of population
Selection: The process of survival.Retention: The preservation and
institutionalization.
InstitutionalismTransparency among the business partners.Everybody was contributing to the
institutional development.Legitimacy
Organizational Ecosystems
It is a system formed by the interaction of a community of organizations and their environment.
Hugh Russell travels in four major industries-1. Banker2. Shareholders3. Suppliers 4. Customers
A Framework of Interorganizational Relationships
ResourceDependence
CollaborativeNetwork
Institutionalism
PopulationEcology
Organization Type
OrganizationRelationship
Dissimilar Similar
Cooperative
Competitive
Changing Characteristics of Interorganizational Relationships
Traditional Orientation:Adversarial
New Orientation:Partnership
Suspicion, competition, arm’s length
Limited information and feedback
Legal resolution of conflict
Minimal involvement and up-front investment, separate resources
Short-term contracts
Contract limiting the relationship
Trust, addition of value to both sides, high commitment
Electronic linkages to share key information, problem feedback and discussion
Mechanisms for close coordination, people on-site
Involvement in partner’s product design and production, shared resources
Long-term contracts
Business assistance beyond the contract
INCREASING LEGITIMACY AND POWER. Legitimacy- General perspective that an organizations actions
are effective.
Institutionalism- Describes how it survive and succeed through congruence the expectation from its environment. Composed of Norms and Values from stakeholders.
Mimetic forces- Results from Uncertainty
Coercive-Results from Dependence, political influence
Normative-Results from common Training and Professionalism
Continued….Personal Relationship by open communication with other
companies as mechanism to increase legitimacy and power. Gained a new from of informal influencing power due to this new
relationship.DOES THIS STRATEGY MAKE SENSE FOR A POWERLESS
COMPANY-YES.REASON- Share holder dissent and non support. -So needed an increased power by this strategy. Credit crisis. -So legitimacy and power was required to influence
Banker to bring funds. To gain support from Supplier, employee and all other stake
holder. -Needed a power to coordinate, legitimate and take
the firm in a competitive position.
Thank YouAny questions….
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