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….