learning objectives appreciate the advantages and potential disadvantages of various types of...

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



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)



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



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



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



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



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



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



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

learning objectives appreciate the advantages and potential disadvantages of various types of...

Documents

particular resource

stakeholder relationships

foreign market

advantages of interor

markets firms

mover advantages

specialized skills

strategic direction