chapter 4 relationships between organizations
DESCRIPTION
Outline The changing Interorganizational Framework Case ─ Foxconn. Resource Dependence Collaborative Network Population Ecology Institutionalism Case ─ Foxconn.TRANSCRIPT
Chapter 4Relationships Between
Organizations
Members:Melody, Bonnie, Vincent, Paul
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Outline
• The changing• Interorganizational Framework
Resource DependenceCollaborative NetworkPopulation EcologyInstitutionalism
• Case ─ Foxconn.
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The changing
Recent
Future
PastFocus on their own business area, and seldom make the relationships with the other companies
Increasingly dense web of relationships among organizations
A web of horizontal relationships across organizations
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Organizational ecosystem
• A system formed by the interaction of a community of organizations and their environment
Business Retailers
Non-profit OrganizationsGovernment
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Organizational ecosystemEXHIBIT 4.1
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Is Competition Dead?
• The number of corporate alliances has been increasing at a rate of 25 percent annually.
GMFord
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The Changing Role of Management
Traditional Managers
Operations Roles•Have traditional vertical authority•Accountable for business results
ModernManagers
Collaborative Roles•Be highly flexible and proactive•Achieve results through personal communication•Assertively seeking out needed information and resources
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Managers need to learn
• Learn to move beyond traditional responsibility of corporate strategy and designing hierarchical structures and control systems.
• Think about horizontal processes rather than vertical structures.
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Resource Dependence
• Organizations try To minimize the dependence on other
organizations for important resources To influence the environment to make resource
available• To adapt or alter the interdependent relationships
to lock in necessary resourcesPurchasing ownership in suppliersLong-term contractsJoint ventures
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Resource Dependence
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Resource Dependence
• Organizations try To minimize the dependence on other organizations
for important resources Ex: Nestle increases the source and can minimize the
dependence on original coffee bean supplier To influence the environment to make resource
availableEx: Nestle helps farmers plan good quality and quantity
coffee beans
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Resource Dependence
• Supply Chain Management Supply chain is a network of multiple business that
are connected through the flow of products or services.
Supply Chain Management refer to managing the sequence of supplier and purchaser
Helping use resources more efficiently and improve the performance
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A Basic Supply Chain Model
Product Flow
EXHIBIT 4.3
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
Interorganizational Framework
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Collaborative Network
• Collaborative Network is an emerging alternative to resource dependence theory
• Companies join together to become more competitive and to share scarce resources
• Why ?Sharing risk when entering new marketsCooperation is a necessary for greater innovation,
problem solving, and performance
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Changing Characteristics of Interorganizational Relationship
EXHIBIT 4.4
Traditional Orientation: Adversarial New Orientation: Partnership
Low dependence High dependence
Suspicion, competition, arm’s length Trust, addition of value to both sides, high commitment
Detailed performance measures, closely monitored
Loose performance measures; problems discussed
Price, efficacy, own profits Equity, fair dealing, both profit
Limited information and feedback Electronic linkages to share key information, problem feedback, and discussion
Legal resolution of conflict Mechanisms for close coordination; people on site
Minimal involvement and up-front investment, separate resources
Involvement in partner’s product design and production, shared resources
Short-term contracts Long-term contracts
Contract limiting the relationship Business assistance beyond the contract
Changing Characteristics of Interorganizational Relationship
EXHIBIT 4.4
Traditional Orientation: Adversarial New Orientation: Partnership
Low dependence High dependence
Suspicion, competition, arm’s length Trust, addition of value to both sides, high commitment
Detailed performance measures, closely monitored
Loose performance measures; problems discussed
Price, efficacy, own profits Equity, fair dealing, both profit
Limited information and feedback Electronic linkages to share key information, problem feedback, and discussion
Legal resolution of conflict Mechanisms for close coordination; people on site
Minimal involvement and up-front investment, separate resources
Involvement in partner’s product design and production, shared resources
Short-term contracts Long-term contracts
Contract limiting the relationship Business assistance beyond the contract
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
Interorganizational Framework
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Population Ecology
• Because it focuses on organizational diversity and adaptation within a population of organizations.
What does this theory mean in practical terms? It means that large, established organizations often become dinosaurs.
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The limitations of organizations to change
• From heavy investment in plants, equipment, and specialized personnel;
• Limited information;• The established viewpoints of decision
makers;• The organization’s own successful history that
justifies current procedures;• The difficulty of changing corporate culture.
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Managerial Question
• The success or failure of a start-up is largely determined by the smarts and management ability of the entrepreneur?
Disagree. Luck is often as important as smarts because larger forces in the environment, typically unseen by managers, allow some firms to succeed and others to fail. If a start-up happens to be in the right place at the right time, chances for success are much higher, regardless of management ability.
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The processes of population change
Variation Selection Retention
Large number of variations appear in the population of organization
Some organizations
find a successful niche and
survive
A few organizations
grow large and become
institutionalized in the
environment
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Strategies for Survival• Generalist
Organizations with a wide niche or domain--- that is , those that offer a broad range of products or services or that serve a broad market--- are generalists.
• Specialist Organizations that provide a narrower range of goods or
services or that serve a narrower market are specialists.Ex: Amazon
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Interorganizational Framework
Resource Dependence
PopulationEcology
CollaborativeNetwork Institutionalism
Dissimilar Similar
Competitive
Cooperative
Organization Type
Orga
niza
tion
Rela
tions
hip EXHIBIT 4.2
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Institutionalism
• Describes how organizations survive and succeed through congruence between an organization and the expectations from its environment.
• The institutional environment is composed of norms and values from stakeholders.
• The institutional view believes that organizations adopt structures and processes to please outsiders, and these activities come to take on rule-like status in organizations.
Three Mechanisms for institutional Adaptation
Mimetic Coercive NormativeReason to become similar
Uncertainly Dependence Duty, obligation
Events Innovation visibility
Political law, rules, sanctions
Professionalism─certification, accreditation
Social basis
Culturally supported
Legal Moral
Example Reengineering, benchmarking
Pollution controls, school regulations
Accounting standards, consultant training
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• Mimetic Forces– Ex: McDonald adds healthier menu items and new
types of beverages.
Three Mechanisms for institutional adaptation
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• Coercive Forces– Ex: Walmart is requiring its suppliers to calculate
the “full environmental costs’ of making their products (such as water use, carbon-dioxide emissions, and waste) and provide this information for the company to distill into a rating system that shoppers will see alongside the price of the item.
Three Mechanisms for institutional adaptation
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• Normative Forces– Normative forces are pressures to achieve
standards of professionalism and to adopt techniques that are considered by the professional community to be up to date and effective.
– Changes may be in any area, such as information technology, accounting requirements, marketing techniques, or collaborative relationships with other organizations.
Three Mechanisms for institutional adaptation
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Managerial Question
• Managers should quickly copy or borrow techniques being used by other successful companies to make their own organization more effective and to keep pace with changing times.
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Managerial Question
• Answer:Agree. Managers frequently copy techniques used by other, successful organizations as a way to appear legitimate and up to date. Copying other firms is one reason organizations may begin to look and act similar in their structures, processes, and management systems.
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Case Study
FoxconnThe rise of Foxconn with its relationships among corporations as a flexible and notorious corporate model.
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• Company Name: Foxconn (Hon Hai Precision Industry Co., Ltd.)
• Chairman and President: Terry Guo• Industry: Electronics• Founded: 1974
Case Study
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• Employees: Approximately 1.2 million (2011)• Services: Electronics Manufacturing Services (OEM,
ODM)• Revenues: US$ 102.74 billion (2011)• Net Income: US$ 2.64 billion (2011)
Case Study
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Related Organizations:Apple, Intel, Amazon.com, Kindle, Sony, Playstation 3, Microsoft, Xbox 360, etc …
Case Study
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Case Study
Supply Chain Relationships of Foxconn:
Supplier Distributor
Manufacturer Retailer
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Resource DependencePower implication: Large and independent
companies have power over small suppliers.
Case Study
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Evolution of Foxconn:
Case Study
eCMMS
OEM ODM CEM EMS
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Population EcologyAdaptation and Selection: In a rapidly shifting
environment, organization, that fails to struggle for existence, dies.
Case Study
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InstitutionalismCoercive Forces: All organizations are subject to
pressure from other important organizations, especially those on which an organization is dependent.
Case Study
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Collaborative NetworksWhy Collaboration: Organizations join together to
become more competitive and to share scarce resources.
Case Study
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Frenemy & CoopetitismNo friends are forever, nor enemies eternal.
Conclusion
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The End. Thank you !