Transcript
- 1. Organizational Theory, Design, and Change Fifth Edition Gareth R. Jones Chapter 3 Managing in a Changing Global Environment
- 2. What is the Organizational Environment?
- Environment : the set of forces surrounding an organization that have the potential to affect the way it operates and its access to scarce resources
- Organizational domain : the particular range of goods and services that the organization produces, and the customers and other stakeholders whom it serves
- 3. Figure 3-1: The Organizational Environment
- 4. The Specific Environment
- The forces from outside stakeholder groups that directly affect an organizations ability to secure resources
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- Outside stakeholders include customers, distributors, unions, competitors, suppliers, and the government
- The organization must engage in transactions with all outside stakeholders to obtain resources to survive
- 5. The General Environment
- The forces that shape the specific environment and affect the ability of all organizations in a particular environment to obtain resources
- 6. The General Environment (cont.)
- Economic forces : factors, such as interest rates, the state of the economy, and the unemployment rate, determine the level of demand for products and the price of inputs
- Technological forces : the development of new production techniques and new information-processing equipment, influence many aspects of organizations operations
- 7. The General Environment (cont.)
- Political and environmental forces : influence government policy toward organizations and their stakeholders
- Demographic, cultural, and social forces : the age, education, lifestyle, norms, values, and customs of a nations people
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- Shape organizations customers, managers, and employees
- 8. Sources of Uncertainty in the Organizational Environment
- All environmental forces cause uncertainty for organizations
- Greater uncertainty makes it more difficult for managers to control the flow of resources to protect and enlarge their domains
- 9. Sources of Uncertainty in the Environment (cont.)
- Environmental complexity : the strength, number, and interconnectedness of the specific and general forces that an organization has to manage
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- Interconnectedness: increases complexity
- 10. Sources of Uncertainty in the Environment (cont.)
- Environmental dynamism : the degree to which forces in the specific and general environments change over time
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- Stable environment: forces that affect the supply of resources are predictable
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- Unstable (dynamic) environment: it is difficult to predict how forces will change that affect the supply of resources
- 11. Sources of Uncertainty in the Environment (cont.)
- Environmental richness : the amount of resources available to support an organizations domain
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- Environments may be poor because:
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- The organization is located in a poor country or in a poor region of a country
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- There is a high level of competition, and organizations are fighting over available resources
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- 12. Figure 3-2: Three Factors Causing Uncertainty
- 13. Resource Dependence Theory
- The goal of an organization is to minimize its dependence on other organizations for the supply of scare resources and to find ways of influencing them to make resources available
- 14. Resource Dependence Theory (cont.)
- An organization has to manage two aspects of its resource dependence:
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- It has to exert influence over other organizations so that it can obtain resources
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- It must respond to the needs and demands of the other organizations in its environment
- 15. Interorganizational Strategies for Managing Resource
Dependencies
- Two basic types of interdependencies cause uncertainty
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- Symbiotic interdependencies : interdependencies that exist between an organization and its suppliers and distributors
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- Competitive interdependencies : interdependencies that exist among organizations that compete for scarce inputs and outputs
- Organizations aim to choose the interorganizational strategy that offers the most reduction in uncertainty with least loss of control
- 16. Figure 3.3: Interorganizational Strategies for Managing Symbiotic Interdependencies
- 17. Strategies for Managing Symbiotic Resource
Interdependencies
- Developing a good reputation
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- 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
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- Reputation and trust are the most common linkage mechanisms for managing symbiotic interdependencies
- 18. Strategies for Managing Symbiotic Resource
Interdependencies (cont.)
- Co-optation : a strategy that manages symbiotic interdependencies by neutralizing problematic forces in the specific environment
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- Make outside stakeholders inside stakeholders
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- Interlocking directorate: a linkage that results when a director from one company sits on the board of another company
- 19. Strategies for Managing Symbiotic Resource
Interdependencies (cont.)
- Strategic alliances : an agreement that commits two or more companies to share their resources to develop joint new business opportunities
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- An increasingly common mechanism for managing symbiotic (and competitive) interdependencies
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- The more formal the alliance, the stronger and more prescribed the linkage and tighter control of joint activities
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- Greater formality preferred with uncertainty
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- 20. 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
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- Keiretsu: a group of organizations, each of which owns shares in the other organizations in the group, that work together to further the groups interests
- 21. Figure 3-4: Types of Strategic Alliances
- 22. Figure 3-5: The Fuyo Keiretsu
- 23. Types of Strategic Alliances (cont.)
- Joint venture : a strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business
- 24. Figure 3.6: Joint Venture Formation
- 25. Strategies for Managing Symbiotic Resource
Interdependencies (cont.)
- Merger and takeover : results in resource exchanges taking place within one organization rather than between organizations
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- New organization better able to resist powerful suppliers and customers
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- Normally involves great expense and problems managing the new business
- 26. Strategies for Managing Competitive Resource
Interdependencies
- Collusion and cartels
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- Collusion : a secret agreement among competitors to share information for a deceitful or illegal purpose
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- May influence industry standards
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- Cartel : an association of firms that explicitly agrees to coordinate their activities
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- May influence price structure of market
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- 27. Et fiyatlar Rekabet Kurulu'na ikayet edildi Tketiciler Birlii Bakan Vekili Mehmet Muta ahin ''Et fiyatlar zerinden haksz kazan elde etmeye alan firmalar Rekabet Kuruluna ikayet ettik'' dedi.
- 28. Strategies for Managing Competitive Resource
Interdependencies (cont.)
- 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
- 29. Figure 3-7: Interorganizational Strategies for Managing Competitive Interdependencies
- 30. Transaction Cost Theory
- Transaction costs : the costs of negotiating, monitoring, and governing exchanges between people
- Transaction cost theory : a 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
- 31. 2009 Nobel Prize in Economics: Economic governance
- 32. Sources of Transaction Costs
- Environmental uncertainty and bounded rationality
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- Bounded rationality: refers to the limited ability people have to process information
- Opportunism and small numbers
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- Attempt to exploit forces or stakeholders
- Risk and specific assets
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- Specific assets: investments that create value in one particular exchange relationship but have no value in any other exchange relationship
- 33. Figure 3-8: Sources of Transaction Costs
- 34. Cooperation vs. opportunism: The prisoners dilemma Each serves 5 years Prisoner A: goes free Prisoner B: 10 years Prisoner A Betrays Prisoner A: 10 years Prisoner B: goes free Each serves 6 months Prisoner A Stays Silent Prisoner B Betrays Prisoner B Stays Silent
- 35. Transaction Costs and Linkage Mechanisms
- Transaction costs are low when:
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- Organizations are exchanging nonspecific goods and services
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- Uncertainty is low
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- There are many possible exchange partners
- 36. Transaction Costs and Linkage Mechanisms (cont.)
- Transaction costs are high when:
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- Organizations begin to exchange more specific goods and services
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- Uncertainty increases
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- The number of possible exchange partners falls
- 37. Transaction Costs and Linkage Mechanisms (cont.)
- Bureaucratic costs: internal transaction costs
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- Bringing transactions inside the organization minimizes but does not eliminate the costs of managing transactions
- 38. Using Transaction Cost Theory to Choose an
Interorganizational Strategy
- Transaction cost theory can be used to choose an interorganizational strategy
- Managers can weigh the savings in transaction costs of particular linkage mechanisms against the bureaucratic costs
- 39. Using Transaction Cost Theory to Choose an
Interorganizational Strategy (cont.)
- Managers deciding which strategy to pursue must take the following steps:
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- Locate the sources of transaction costs that may affect an exchange relationship and decide how high the transaction costs are likely to be
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- Estimate the transaction cost savings from using different linkage mechanisms
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- Estimate the bureaucratic costs of operating the linkage mechanism
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- Choose the linkage mechanism that gives the most transaction cost savings at the lowest bureaucratic cost
- 40. Keiretsu
- Japanese system for achieving the benefits of formal linkages without incurring its costs
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- Example: Toyota has a minority ownership in its suppliers
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- Affords substantial control over the exchange relationship
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- Avoids bureaucratic cost of ownership and opportunism
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- 41. Franchising
- A franchise is a business that is authorized to sell a companys 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
- 42. 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
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- Increasingly, organizations are turning to specialized companies to manage their information processing needs