RESOURCE DEPENDENCE THEORY

MINIMIZE Dependence on other org

MAXIMIZE Influence to make resource available

Resource Dependence Theory

Symbiotic interdependencies Competitive interdependencies

Resource Dependence Theory

Symbiotic interdependencies Competitive interdependencies

Inter-organizational Strategies for Managing Symbiotic interdependencies

REPUTATION

How do they build reputation ???

Resulting in good & relationships

With suppliers / distributers

De Beers - Assorted diamonds – but high quality

Strategy 1

CO-OPTATION

Bringing opponents to its side by giving them stake or claim in what it does

EXAMPLE Pharma companies & Doctors

Corporates & Top Executives of Banks(Interlocking Directorate)

Strategy 2

STRATEGIC ALLIANCE

2 or more organizations come together to share resources

PURPOSE: To develop new business opportunities Jointly

EXAMPLE: Microsoft & MTV2005 Microsoft & MTV to integrated

MTV entertainment offering into Windows media platform to compete with I Pod Apple

BMW & INTEL

Strategy 3

STRATEGIC ALLIANCE

LONG TERM CONTRACT

EXAMPLES2 Construction companies- 850 million pipeline project

Truck company (less cost, trailer) & railroad company (revenue)

Kellogg & farmers (same price always)

Agreement between 2 or more companies (mostly Projects)Reduce cost by sharing resources & also reduce financial risk

POOLED RESOURCES SHARING(No bench time)

Under SA 1

NETWORKS

Contracts between core company and stakeholders/partners

Sharing resources with partner companies, so that they also become efficient

SEE DIAGRAM

EXAMPLESAT&T created network organization and linked its partners so that it

could produce digital answering machine

Under SA 2

CORE ORGANIZA

TIONDISTRIBUTERS

CUSTOMERS

SUPPLIERSCUSTOMER AWARENESS PROGRAM

FARMER TRAININGOr SHARING Co. WAREHOUSE

PRODUCT TRAININGHELPING IMROVE SERVICE DELIVERY

MINORITY OWNERSHIP

KEIRETSU

Will have minority stake in each otherImprove interdependencies leading to

strong co-operative bonds

Also know as Keiretsu

Capital Keiretsu Financial Keiretsu

Under SA 3

Used to manage input output linkage

Capital Keiretsu

Used to manage linkages among diverse companies and usually have a

bank at their centre

Financial Keiretsu

1)

2)

KEI R

ET S

U

In CK all companies in the network benefitsMainly the dominant ones

Capital Keiretsu

EXAMPLETOYOTA

Car reliability depends upon quality of inputManaging critical linkage (input output) is vital for success

To control input (price and quality)Toyota took 49% stake in most of the supplier companies

Toyota not afraid of sharing proprietary information because of its ownership stake

Cross share holding

Financial Keiretsu

Dominated by a large bank functioning as a interlocking directorate

Dominant member selected from diverse company and made the directors of the bank

And also on each other company

Sharing of trade proprietary information possible

JOINT VENTURE

Gas Authority of India Limited (GAIL),

Oil and Natural Gas Corporation Limited (ONGC),

Indian Oil Corporation Limited (IOC) and

Bharat Petroleum Corporation Limited (BPCL)

IDBI & FEDRAL BANK

A BHARATHI GROUP WALMART VENTURE

Under SA 4

MERGER & TAKEOVER

Now resource exchanges occur within not between organisation

Take over a supplier or Distributer

EXAMPLE

McDonalds’s own vast ranches in Brazil (rears low cost cattle)

Strategy 1

Resource Dependence Theory

Symbiotic interdependencies Competitive interdependencies

Resource Dependence Theory

Symbiotic interdependencies Competitive interdependencies

Inter-organizational Strategies for Managing Competitive interdependencies

COLLUSION

a secret agreement among competitors to share information for a deceitful or illegal purpose

CARTELS

an association of firms that explicitly agrees to coordinate their activities

cartels restrict competition and result in higher prices for consumers

COLLUSION

a secret agreement among competitors to share information for a deceitful or illegal purpose

Competitors collude & sets industry standards“What price ? What product Specification ?

Or profit markup ? ”

CARTEL

Through collusion they form cartel

Without formal written agreement by signaling their intension

Public announcement are one medium

Dell always ready to match up theprice decrease announced by HP

Airline announces price hike and wait for others to respond

THIRD-PARTY LINKAGE MECHANISMS

Regulatory body that allows organizations to share information and regulate the way they compete

EXAMPLETrade association , An organization that rep other Co

Enables them to competitor to meet, share info & informally allow them to monitor one another

Helps in reducing the fear of one organization may deceive or outwit other

STRATEGIC ALLIANCE