learning objectives appreciate the advantages and potential disadvantages of various types of...
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Learning ObjectivesLearning Objectives Appreciate the advantages and potential disadvantages Appreciate the advantages and potential disadvantages
of various types of inter-organizational relationshipsof various types of inter-organizational relationships Analyze stakeholders to determine their strategic Analyze stakeholders to determine their strategic
importanceimportance Select strategies for dealing with stakeholders based on Select strategies for dealing with stakeholders based on
their strategic importancetheir strategic importance Understand how to make partnerships effectiveUnderstand how to make partnerships effective Create plans for functional-level resources to implement Create plans for functional-level resources to implement
business strategiesbusiness strategies Determine how to effectively manage relationships with Determine how to effectively manage relationships with
external stakeholdersexternal stakeholders
Strategy ImplementationStrategy Implementation
ManagingManaging Stakeholder relationships and Stakeholder relationships and Organizational resourcesOrganizational resources
To move the organization towards the To move the organization towards the successful execution of its strategiessuccessful execution of its strategies
Consistent with strategic directionConsistent with strategic direction
Advantages of Interor-ganizational Advantages of Interor-ganizational RelationshipsRelationships
Resource AcquisitionResource Acquisition Gain access to a particular resource, such as capital, Gain access to a particular resource, such as capital,
employees with specialized skills, intimate knowledge employees with specialized skills, intimate knowledge of a market, or a modern production facility.of a market, or a modern production facility.
Speed to MarketsSpeed to Markets Firms with complementary skills partner to increase Firms with complementary skills partner to increase
speed to market with hope of capturing first-mover speed to market with hope of capturing first-mover advantages.advantages.
Advantages of Interor-ganizational Advantages of Interor-ganizational RelationshipsRelationships
Enter Foreign MarketEnter Foreign Market Often the only practical way to gain access to a Often the only practical way to gain access to a
foreign market.foreign market.
Economies of ScaleEconomies of Scale High fixed costs sometimes require firms to find High fixed costs sometimes require firms to find
partners to expand production volume.partners to expand production volume.
Advantages of Inter-organizational Advantages of Inter-organizational RelationshipsRelationships
Risk and Cost SharingRisk and Cost Sharing Allows two or more firms to share the risk and cost of a Allows two or more firms to share the risk and cost of a
particular business endeavor.particular business endeavor.
Product / service developmentProduct / service development Provides firms the opportunity to pool their skills to Provides firms the opportunity to pool their skills to
develop new products and/or servicesdevelop new products and/or services
LearningLearning Provide participants with the opportunity to “learn” from Provide participants with the opportunity to “learn” from
their partners (e.g. lean manufacturing, product their partners (e.g. lean manufacturing, product development, human resource management in an development, human resource management in an unfamiliar country)unfamiliar country)
Advantages of Inter-organizational Advantages of Inter-organizational RelationshipsRelationships
Strategic FlexibilityStrategic Flexibility A valuable alternative to acquisitions, because they do A valuable alternative to acquisitions, because they do
not have to be as permanent. They also require less of not have to be as permanent. They also require less of an internal resource commitment, which frees up an internal resource commitment, which frees up resources for other uses.resources for other uses.
Collective Political CloutCollective Political Clout Can increase collective clout and influence governments Can increase collective clout and influence governments
into adopting policies favorable to their industries or into adopting policies favorable to their industries or circumstances.circumstances.
Neutralizing or Blocking CompetitorsNeutralizing or Blocking Competitors Firms can gain the competencies and market power Firms can gain the competencies and market power
needed to neutralize or block the moves of a competitorneeded to neutralize or block the moves of a competitor
Strategic Importance of Stakeholders Strategic Importance of Stakeholders and Decision to Partnerand Decision to Partner
Formal PowerFormal Power
Strategic Strategic Importance Importance of External of External
StakeholderStakeholder
Economic Economic PowerPower
Political PowerPolitical Power
Influence on Influence on Environmental Environmental
Uncertainty Uncertainty Facing the Facing the
FirmFirm
Possession of Possession of Knowledge or Knowledge or Resources not Resources not Found in FirmFound in Firm
Partnering and Partnering and Inclusion in the Inclusion in the Firm’s ActivitiesFirm’s Activities
Monitoring and Monitoring and Traditional Traditional
Management Management TechniquesTechniques
HighHighImportanceImportance
LowLowImportanceImportance
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
CustomersCustomers Customer service Customer service
departmentsdepartments Marketing and Marketing and
marketing researchmarketing research On-site visitsOn-site visits 800 numbers800 numbers Long-term contractsLong-term contracts
CustomersCustomers Involvement on design Involvement on design
teams or product teams or product testingtesting
Joint planning sessionsJoint planning sessions Joint training/service Joint training/service
programsprograms Financial investmentsFinancial investments Interlocking directorateInterlocking directorate
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
SuppliersSuppliers Purchasing Purchasing
departmentsdepartments Encourage Encourage
competition among competition among supplierssuppliers
Sponsor new suppliersSponsor new suppliers Threat ofThreat of Long-term contractsLong-term contracts
SuppliersSuppliers Involvement on design Involvement on design
teams for new teams for new productsproducts
Integration of ordering Integration of ordering system with system with manufacturingmanufacturing
Shared information Shared information systemssystems
Interlocking directorateInterlocking directorate
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
CompetitorsCompetitors Direct competition Direct competition
based on based on differentiationdifferentiation
Intelligence systemsIntelligence systems Corporate spying and Corporate spying and
espionage (ethical espionage (ethical problems)problems)
CompetitorsCompetitors Joint venturesJoint ventures Consortia or AlliancesConsortia or Alliances Trade associations for Trade associations for
information sharing and information sharing and collective lobbyingcollective lobbying
Informal price Informal price leadershipleadership
Collusion (may be Collusion (may be illegal)illegal)
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
GovernmentGovernment Legal, tax or government Legal, tax or government
relations officesrelations offices Lobbying and political Lobbying and political
action committeesaction committees Campaign contributionsCampaign contributions Personal gifts to Personal gifts to
politicians (ethical politicians (ethical problems)problems)
GovernmentGovernment Jointly or government Jointly or government
sponsored researchsponsored research Joint foreign Joint foreign
development projectsdevelopment projects Problem solving task Problem solving task
forces on sensitive forces on sensitive issuesissues
Appoint retired Appoint retired government officials to government officials to boardboard
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
Local CommunitiesLocal Communities
Community Community relations officesrelations offices
Public relations Public relations advertisingadvertising
Involvement in Involvement in community servicecommunity service
Donations to local Donations to local causescauses
Local CommunitiesLocal Communities Task forces to work on Task forces to work on
special community special community needsneeds
Cooperative training Cooperative training and educational and educational programsprograms
Development Development committees/boardscommittees/boards
Joint employment Joint employment programsprograms
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
Activist GroupsActivist Groups Organizational Organizational
decisions to satisfy decisions to satisfy demandsdemands
Public/political Public/political relations effortsrelations efforts
Financial Financial donationsdonations
Activist GroupsActivist Groups Consultation with Consultation with
representatives on representatives on sensitive issuessensitive issues
Joint research and Joint research and development development programsprograms
Appointments to Appointments to the boardthe board
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
The MediaThe Media Public/political Public/political
relations effortsrelations efforts Media Media
experts/press experts/press releasesreleases
The MediaThe Media Exclusive Exclusive
interviews or early interviews or early release of release of informationinformation
Inclusion in social Inclusion in social events and other events and other special treatmentspecial treatment
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
UnionsUnions Union avoidance Union avoidance
through excellent through excellent treatment of employeestreatment of employees
Hiring professional Hiring professional negotiatorsnegotiators
Mutually satisfactory Mutually satisfactory labor contractslabor contracts
Chapter XI protection to Chapter XI protection to re-negotiate contractre-negotiate contract
UnionsUnions Contract clauses that link Contract clauses that link
pay to performancepay to performance Joint committees on safety Joint committees on safety
and other issuesand other issues Joint industry/labor panelsJoint industry/labor panels Inclusion on management Inclusion on management
committeescommittees Appointments to the boardAppointments to the board
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
Financial Financial IntermediariesIntermediaries Financial reportsFinancial reports Close correspondenceClose correspondence Finance and accounting Finance and accounting
departmentsdepartments High-level financial High-level financial
officerofficer AuditsAudits
Financial IntermediariesFinancial Intermediaries Inclusion in management Inclusion in management
decisions requiring decisions requiring financingfinancing
Contracts and linkages Contracts and linkages with other clients of with other clients of financierfinancier
Shared ownership of Shared ownership of projectsprojects
Appointments to the Appointments to the boardboard
Tactics for Managing and Partnering with Tactics for Managing and Partnering with External StakeholdersExternal Stakeholders
Traditional ManagementTraditional Management Partnering / InclusionPartnering / Inclusion
Actions that Increase the Likelihood Actions that Increase the Likelihood of Successful Partnershipsof Successful Partnerships
Carefully study and select a partnerCarefully study and select a partner Define roles of partnersDefine roles of partners Develop a strategic planDevelop a strategic plan Keep top managers involvedKeep top managers involved Meet often, informally, at all managerial levelsMeet often, informally, at all managerial levels Appoint someone to monitor partnershipAppoint someone to monitor partnership Maintain enough independence to develop your own Maintain enough independence to develop your own
expertiseexpertise Anticipate and plan for cultural differencesAnticipate and plan for cultural differences
Functional-Level Resource ManagementFunctional-Level Resource Management Functional-level strategy is the collective pattern of day-to-day Functional-level strategy is the collective pattern of day-to-day
decisions made and actions taken by managers and employees who decisions made and actions taken by managers and employees who are responsible for value-creating activities within a functional areaare responsible for value-creating activities within a functional area Paying attention to the detailsPaying attention to the details Many companies are successful because of excellence at the functional levelMany companies are successful because of excellence at the functional level
The following characteristics are essential:The following characteristics are essential: Decisions made within each function are consistentDecisions made within each function are consistent Decisions made within one function are consistent with decisions made within Decisions made within one function are consistent with decisions made within
other functionsother functions Decisions made in all functional areas are consistent with and support the Decisions made in all functional areas are consistent with and support the
strategies of the businessstrategies of the business
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit
Marketing StrategyMarketing Strategy Target Customers—few vs. many, what groups, what regionsTarget Customers—few vs. many, what groups, what regions Product Positioning—premium commodity, multi-use, specialty useProduct Positioning—premium commodity, multi-use, specialty use Product Line Mix—a mix of complementary productsProduct Line Mix—a mix of complementary products Product Line Breadth—a full-line offering of productsProduct Line Breadth—a full-line offering of products Pricing Strategies—discount, moderate, premium pricesPricing Strategies—discount, moderate, premium prices Promotion Practices—direct sales, advertising, direct mail, InternetPromotion Practices—direct sales, advertising, direct mail, Internet Distribution Channels—few or many, sole contract responsibilitiesDistribution Channels—few or many, sole contract responsibilities Customer Service Policies—flexibility, responsiveness, qualityCustomer Service Policies—flexibility, responsiveness, quality Product/Service Image –premium quality, good price, reliableProduct/Service Image –premium quality, good price, reliable Market Research—accuracy, frequency and methods for obtaining Market Research—accuracy, frequency and methods for obtaining
marketing informationmarketing information
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit Operations StrategyOperations Strategy
Capacity Planning—lead demand to ensure availability or lag Capacity Planning—lead demand to ensure availability or lag demand to achieve capacity utilizationdemand to achieve capacity utilization
Facility Location—near suppliers, customers, labor, natural Facility Location—near suppliers, customers, labor, natural resources or transportationresources or transportation
Facility Layout—continuous or intermittent flowFacility Layout—continuous or intermittent flow Technology and Equipment Choices—degree of automation, use of Technology and Equipment Choices—degree of automation, use of
computers and information technologycomputers and information technology Sourcing Arrangements—cooperative arrangements with a few vs. Sourcing Arrangements—cooperative arrangements with a few vs.
competitive bidcompetitive bid Planning and Scheduling—make to stock, make to order, flexibility Planning and Scheduling—make to stock, make to order, flexibility
to customer requeststo customer requests Quality Assurance—acceptance sampling, process control, Quality Assurance—acceptance sampling, process control,
standardsstandards Workforce Policies—training levels, cross-training, rewards, use of Workforce Policies—training levels, cross-training, rewards, use of
teamsteams
Areas of Interdependency and Areas of Interdependency and Potential Conflict Between Marketing Potential Conflict Between Marketing
and Operationsand Operations
Facility Size and Process Choice vs. Market Facility Size and Process Choice vs. Market ForecastsForecasts
Facility Location vs. Market PlanningFacility Location vs. Market Planning Production Schedules vs. Forecasts, Orders Production Schedules vs. Forecasts, Orders
and Promotionsand Promotions Operating PoliciesOperating Policies
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit Information Systems StrategyInformation Systems Strategy
Hardware—local area network (LAN), mainframe, minicomputer, Hardware—local area network (LAN), mainframe, minicomputer, internal systems, links to Internetinternal systems, links to Internet
Software—data processing, decision support, Web management, Software—data processing, decision support, Web management, computer automated design (CAD), computer integrated computer automated design (CAD), computer integrated manufacturing (CIM), just-in-time inventorymanufacturing (CIM), just-in-time inventory
Personnel—in-house experts, subcontracting or alliancesPersonnel—in-house experts, subcontracting or alliances Information Security—hardware, software, physical location and Information Security—hardware, software, physical location and
layoutlayout Disaster Recovery—off-site processing, backup procedures, virus Disaster Recovery—off-site processing, backup procedures, virus
protection and treatmentprotection and treatment Business Intelligence—management support, marketing, accounting, Business Intelligence—management support, marketing, accounting,
operations, R&D, human resources, financeoperations, R&D, human resources, finance Internet—uses of Internet in communications, marketing, resource Internet—uses of Internet in communications, marketing, resource
acquisition, research or managementacquisition, research or management
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit
R&D/Technology StrategyR&D/Technology Strategy Research Focus—product, process, applicationsResearch Focus—product, process, applications Research Orientation—leader, early follower, late Research Orientation—leader, early follower, late
followerfollower Project Priorities—budget, quality, creativity, timeProject Priorities—budget, quality, creativity, time Knowledge Creation—training, alliances and ventures, Knowledge Creation—training, alliances and ventures,
acquisitions, cross-functional teamsacquisitions, cross-functional teams Corporate Entrepreneurship—“seed money” grants, Corporate Entrepreneurship—“seed money” grants,
time off to develop a venture, management support, time off to develop a venture, management support, rewards for entrepreneurs, ideas come from everyonerewards for entrepreneurs, ideas come from everyone
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit Human Resources StrategyHuman Resources Strategy
Recruitment—entry level vs. experienced employees, colleges, technical Recruitment—entry level vs. experienced employees, colleges, technical schools, job servicesschools, job services
Selection—selection criteria and methodsSelection—selection criteria and methods Nature of Work—part-time, full-time, or a combination, on site or off site, Nature of Work—part-time, full-time, or a combination, on site or off site,
domestic or foreigndomestic or foreign Performance Appraisal—appraisal methods and frequency, link to Performance Appraisal—appraisal methods and frequency, link to
rewardsrewards Salary and Wages—hourly, piece rate, commission, fixed, relationship to Salary and Wages—hourly, piece rate, commission, fixed, relationship to
performance, competitivenessperformance, competitiveness Other Compensation—stock ownership programs, bonusesOther Compensation—stock ownership programs, bonuses Management Compensation—stock awards, stock options, bonuses Management Compensation—stock awards, stock options, bonuses
linked to performance, perquisites, low interest loanslinked to performance, perquisites, low interest loans Benefits—medical, dental and life insurance, paid leave, vacations, child Benefits—medical, dental and life insurance, paid leave, vacations, child
care, health clubcare, health club Personnel Actions—disciplinary plans, outplacement, early retirementsPersonnel Actions—disciplinary plans, outplacement, early retirements Training—types of training, availability of training to employees, tuition Training—types of training, availability of training to employees, tuition
reimbursementreimbursement
Conducting a Functional Strategy AuditConducting a Functional Strategy Audit Financial StrategyFinancial Strategy
Sources of Capital—debt, equity, or internal financingSources of Capital—debt, equity, or internal financing Financial Reporting—frequency, type, government, shareholders, Financial Reporting—frequency, type, government, shareholders,
other stakeholdersother stakeholders Capital Budgeting—system for distributing capital, minimum ROI for Capital Budgeting—system for distributing capital, minimum ROI for
investments, paybackinvestments, payback Overhead Costs—allocation of overhead costs based on direct Overhead Costs—allocation of overhead costs based on direct
labor, machine use, sales volume, activitylabor, machine use, sales volume, activity Financial Control—system to ensure accuracy of internal and Financial Control—system to ensure accuracy of internal and
external financial information, auditsexternal financial information, audits Returns to Shareholders—dividends policy, re-purchase of stock, Returns to Shareholders—dividends policy, re-purchase of stock,
treasury stock, stock splitstreasury stock, stock splits Financial Targets—establishment of financial targets for functional Financial Targets—establishment of financial targets for functional
areas and business units, method of reporting on progressareas and business units, method of reporting on progress
Problems with Capital Problems with Capital Budgeting SystemsBudgeting Systems Inaccurate Cost DataInaccurate Cost Data Base ComparisonsBase Comparisons Hurdle RateHurdle Rate Qualitative FactorsQualitative Factors
Strategy implementation involves managing Strategy implementation involves managing relationships with internal and external stakeholders relationships with internal and external stakeholders as well as managing other organizational resources. as well as managing other organizational resources. These processes overlap. These processes overlap.
One of the most important reasons for One of the most important reasons for interorganizational relationships is to acquire need interorganizational relationships is to acquire need resources, especially knowledgeresources, especially knowledge
Stakeholders that are high priority for partnerships Stakeholders that are high priority for partnerships possess a large amount of formal, political or possess a large amount of formal, political or economic power, have a large impact on the economic power, have a large impact on the uncertainty facing the firm or possess needed uncertainty facing the firm or possess needed resourcesresources
Major Concepts in Chapter 8Major Concepts in Chapter 8Major Concepts in Chapter 8Major Concepts in Chapter 8
A set of traditional monitoring and management A set of traditional monitoring and management techniques apply to stakeholders that are not techniques apply to stakeholders that are not high priority for partnershipshigh priority for partnerships
Strategies are implemented through day-to-day Strategies are implemented through day-to-day decisions. The challenge is to create a pattern decisions. The challenge is to create a pattern of integrated, coordinated functional-level of integrated, coordinated functional-level decisions that meets the needs of stakeholders decisions that meets the needs of stakeholders and fulfills the planned strategies of the and fulfills the planned strategies of the organizationorganization
Major Concepts in Chapter 8Major Concepts in Chapter 8Major Concepts in Chapter 8Major Concepts in Chapter 8
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