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Learning Objectives
Learning Objectives
•
Appreciate the advantages and potential disadvantages
of various types of interorganizational relationships
•
Analyze stakeholders to determine their strategic
importance
•
Select strategies for dealing with stakeholders based
on their strategic importance
•
Understand how to make partnerships effective
•
Create plans for functional-level resources to
implement business strategies
•
Determine how to effectively manage relationships with
external stakeholders
•
Appreciate the advantages and potential disadvantages
of various types of interorganizational relationships
•
Analyze stakeholders to determine their strategic
importance
•
Select strategies for dealing with stakeholders based
on their strategic importance
•
Understand how to make partnerships effective
•
Create plans for functional-level resources to
implement business strategies
Strategy Implementation
Strategy Implementation
•
Managing
Stakeholder relationships and
Organizational resources
•
To move the organization towards the
successful execution of its strategies
•
Consistent with strategic direction
•
Managing
Stakeholder relationships and
Organizational resources
•
To move the organization towards the
successful execution of its strategies
Tourism Cluster in Costa Rica
Tourism Cluster in Costa Rica
ICT
Bed & Breakfast Cabins
Inns
Bed & Breakfast Cabins
Financial Communications
Immigration and customs
Financial Communications
Immigration and customs
National Parks Museums Entertainment Sport and recreation
equipment rental Sport and recreation
equipment rental Casinos
Handicraft/souvenirs
Natural and cultural Adventure
Natural and cultural Adventure
Wholesale travel agencies Government
Tour operators
Wholesale travel agencies Government
SupportOrganizationsOrganizations Support
SupportOrganizationsOrganizations
F& B
Lodging Support ServicesSupport ServicesSupport ServicesSupport Services
Motivations
Advantages of Interorganizational
Relationships
Advantages of Interorganizational
Relationships
•
Resource Acquisition
Gain access to a particular resource, such as capital,
employees with specialized skills, intimate knowledge of a market, or a modern production facility.
•
Speed to Markets
Firms with complementary skills partner to increase speed to
market with hope of capturing first-mover advantages.
•
Enter Foreign Market
Often the only practical way to gain access to a foreign
market.
•
Economies of Scale
High fixed costs sometimes require firms to find partners to
expand production volume.
•
Resource Acquisition
Gain access to a particular resource, such as capital,
employees with specialized skills, intimate knowledge of a market, or a modern production facility.
•
Speed to Markets
Firms with complementary skills partner to increase speed to
market with hope of capturing first-mover advantages.
•
Enter Foreign Market
Often the only practical way to gain access to a foreign
market.
•
Economies of Scale
High fixed costs sometimes require firms to find partners to
Advantages of Interorganizational
Relationships
Advantages of Interorganizational
Relationships
•
Risk and Cost Sharing
Allows two or more firms to share the risk and cost of a
particular business endeavor.
•
Product / service development
Provides firms the opportunity to pool their skills to
develop new products and/or services
•
Learning
Provide participants with the opportunity to “learn” from
their partners (e.g. lean manufacturing, product
development, human resource management in an
unfamiliar country)
•
Risk and Cost Sharing
Allows two or more firms to share the risk and cost of a
particular business endeavor.
•
Product / service development
Provides firms the opportunity to pool their skills to
develop new products and/or services
•
Learning
Provide participants with the opportunity to “learn” from
their partners (e.g. lean manufacturing, product
Advantages of Interorganizational
Relationships
Advantages of Interorganizational
Relationships
•
Strategic Flexibility
A valuable alternative to acquisitions, because they do
not have to be as permanent. They also require less of
an internal resource commitment, which frees up
resources for other uses.
•
Collective Political Clout
Can increase collective clout and influence governments
into adopting policies favorable to their industries or
circumstances.
•
Neutralizing or Blocking Competitors
Firms can gain the competencies and market power
needed to neutralize or block the moves of a competitor
•
Strategic Flexibility
A valuable alternative to acquisitions, because they do
not have to be as permanent. They also require less of
an internal resource commitment, which frees up
resources for other uses.
•
Collective Political Clout
Can increase collective clout and influence governments
into adopting policies favorable to their industries or
circumstances.
•
Neutralizing or Blocking Competitors
Firms can gain the competencies and market power
needed to neutralize or block the moves of a competitor
Strategic Importance of Stakeholders
and Decision to Partner
Strategic Importance of Stakeholders
and Decision to Partner
Formal Power
of External
of External
Stakeholder
Influence on Influence on Environmental Environmental
Uncertainty Uncertainty Facing the Facing the
Firm Firm
Possession of Possession of Knowledge or Knowledge or Resources not Resources not Found in Firm Found in Firm
Partnering and Partnering and Inclusion in the Inclusion in the Firm’s Activities Firm’s Activities
Monitoring and Monitoring and
Tactics for Managing and Partnering
with External Stakeholders
Tactics for Managing and Partnering
with External Stakeholders
•
Customers
Customer service departments
Marketing and marketing research
On-site visits 800 numbers
Long-term contracts
•
Suppliers
Purchasing departments Encourage competition
among suppliers
Sponsor new suppliers Threat of
Long-term contracts
•
Customers
Customer service
departments
Marketing and marketing
research
On-site visits
800 numbers
Long-term contracts
•
Suppliers
Purchasing departments Encourage competition
among suppliers
Sponsor new suppliers Threat of
Long-term contracts
•
Customers
Involvement on design teams or product testing Joint planning sessions Joint training/service
programs
Financial investments Interlocking directorate
•
Suppliers
Involvement on design teams for new products Integration of ordering
system with manufacturing Shared information systems Interlocking directorate
•
Customers
Involvement on design teams or product testing
Joint planning sessions Joint training/service
programs
Financial investments
Interlocking directorate
•
Suppliers
Involvement on design
teams for new products
Integration of ordering
system with manufacturing
Shared information systems Interlocking directorate
Traditional Management
Tactics for Managing and Partnering
with External Stakeholders
Tactics for Managing and Partnering
with External Stakeholders
•
Competitors
Direct competition based
on differentiation
Intelligence systems
Corporate spying and
espionage (ethical problems)
•
Government
Legal, tax or government
relations offices
Lobbying and political
action committees
Campaign contributions
Personal gifts to politicians
(ethical problems)
•
Competitors
Direct competition based
on differentiation
Intelligence systems Corporate spying and
espionage (ethical problems)
•
Government
Legal, tax or government
relations offices
Lobbying and political
action committees
Campaign contributions Personal gifts to politicians
(ethical problems)
•
Competitors
Joint ventures Consortia or Alliances
Trade associations for information
sharing and collective lobbying
Informal price leadership Collusion (may be illegal)
•
Government
Jointly or government sponsored
research
Joint foreign development
projects
Problem solving task forces on
sensitive issues
Appoint retired government
officials to board
•
Competitors
Joint ventures
Consortia or Alliances
Trade associations for information
sharing and collective lobbying
Informal price leadership Collusion (may be illegal)
•
Government
Jointly or government sponsored
research
Joint foreign development
projects
Problem solving task forces on
sensitive issues
Appoint retired government
officials to board
Traditional Management
Tactics for Managing and Partnering
with External Stakeholders
Tactics for Managing and Partnering
with External Stakeholders
•
Local Communities
Community relations offices
Public relations advertising
Involvement in community service
Donations to local causes
•
Activist Groups
Organizational decisions to satisfy demands
Public/political relations efforts
Financial donations
•
Local Communities
Community relationsoffices
Public relations
advertising
Involvement in community
service
Donations to local causes
•
Activist Groups
Organizational decisions
to satisfy demands
Public/political relations
efforts
Financial donations
•
Local Communities
Task forces to work on
special community needs
Cooperative training and
educational programs
Development committees/
boards
Joint employment programs
•
Activist Groups
Consultation with
representatives on sensitive issues
Joint research and
development programs
Appointments to the board
•
Local Communities
Task forces to work on
special community needs
Cooperative training and
educational programs
Development committees/
boards
Joint employment programs
•
Activist Groups
Consultation with
representatives on sensitive issues
Joint research and
development programs
Appointments to the board
Traditional Management
Tactics for Managing and Partnering
with External Stakeholders
Tactics for Managing and Partnering
with External Stakeholders
•
The Media
Public/political relations efforts
Media experts/press releases
•
Unions
Union avoidance through excellent treatment of employees
Hiring professional negotiators
Mutually satisfactory labor contracts
Chapter XI protection to re-negotiate contract
•
The Media
Public/political relations
efforts
Media experts/press
releases
•
Unions
Union avoidance through
excellent treatment of employees
Hiring professional
negotiators
Mutually satisfactory labor
contracts
Chapter XI protection to
re-negotiate contract
•
The Media
Exclusive interviews or
early release of information
Inclusion in social events
and other special treatment
•
Unions
Contract clauses that link
pay to performance
Joint committees on safety
and other issues
Joint industry/labor panels
Inclusion on management
committees
Appointments to the board
•
The Media
Exclusive interviews or
early release of information
Inclusion in social events
and other special treatment
•
Unions
Contract clauses that link
pay to performance
Joint committees on safety
and other issues
Joint industry/labor panels Inclusion on management
committees
Appointments to the board
Traditional Management
Tactics for Managing and Partnering
with External Stakeholders
Tactics for Managing and Partnering
with External Stakeholders
•
Financial Intermediaries
Financial reports
Close correspondence Finance and accounting
departments
High-level financial officer Audits
•
Financial Intermediaries
Financial reports Close correspondence Finance and accounting
departments
High-level financial officer Audits
•
Financial Intermediaries
Inclusion in management decisions requiring
financing
Contracts and linkages with other clients of financier
Shared ownership of projects
Appointments to the board
•
Financial Intermediaries
Inclusion in managementdecisions requiring financing
Contracts and linkages
with other clients of financier
Shared ownership of
projects
Appointments to the board
Traditional Management
Traditional Management
Partnering / Inclusion
Partnering / Inclusion
Source: Adapted from J.S. Harrison and C.H. St.John, “Managing and Partnering with External Stakeholders,” Academy of Management Executive (May 1996), p. 53. Used with permission
Actions that Increase the Likelihood
of Successful Partnerships
Actions that Increase the Likelihood
of Successful Partnerships
•
Carefully study and select a partner
•
Define roles of partners
•
Develop a strategic plan
•
Keep top managers involved
•
Meet often, informally, at all managerial levels
•
Appoint someone to monitor partnership
•
Maintain enough independence to develop
your own expertise
•
Anticipate and plan for cultural differences
•
Carefully study and select a partner
•
Define roles of partners
•
Develop a strategic plan
•
Keep top managers involved
•
Meet often, informally, at all managerial levels
•
Appoint someone to monitor partnership
•
Maintain enough independence to develop
your own expertise
Functional-Level Resource Management
Functional-Level Resource Management
•
Functional-level strategy is the collective pattern
of day-to-day decisions made and actions taken by
managers and employees who are responsible for
value-creating activities within a functional area
Paying attention to the details
Many companies are successful because of excellence at the functional level
•
The following characteristics are essential:
Decisions made within each function are consistent Decisions made within one function are consistent with
decisions made within other functions
Decisions made in all functional areas are consistent with and support the strategies of the business
•
Functional-level strategy is the collective pattern
of day-to-day decisions made and actions taken by
managers and employees who are responsible for
value-creating activities within a functional area
Paying attention to the details
Many companies are successful because of excellence at the
functional level
•
The following characteristics are essential:
Decisions made within each function are consistent
Decisions made within one function are consistent with
decisions made within other functions
Decisions made in all functional areas are consistent with and
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
Marketing Strategy
Target Customers—few vs. many, what groups, what regions
Product Positioning—premium commodity, multi-use, specialty use Product Line Mix—a mix of complementary products
Product Line Breadth—a full-line offering of products Pricing Strategies—discount, moderate, premium prices
Promotion Practices—direct sales, advertising, direct mail, Internet Distribution Channels—few or many, sole contract responsibilities Customer Service Policies—flexibility, responsiveness, quality Product/Service Image –premium quality, good price, reliable
Market Research—accuracy, frequency and methods for obtaining
marketing information
•
Marketing Strategy
Target Customers—few vs. many, what groups, what regions
Product Positioning—premium commodity, multi-use, specialty use Product Line Mix—a mix of complementary products
Product Line Breadth—a full-line offering of products Pricing Strategies—discount, moderate, premium prices
Promotion Practices—direct sales, advertising, direct mail, Internet Distribution Channels—few or many, sole contract responsibilities Customer Service Policies—flexibility, responsiveness, quality Product/Service Image –premium quality, good price, reliable
Market Research—accuracy, frequency and methods for obtaining
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
Operations Strategy
Capacity Planning—lead demand to ensure availability or lag demand to achieve capacity utilization
Facility Location—near suppliers, customers, labor, natural resources or transportation
Facility Layout—continuous or intermittent flow
Technology and Equipment Choices—degree of automation, use of computers and information technology
Sourcing Arrangements—cooperative arrangements with a few vs. competitive bid
Planning and Scheduling—make to stock, make to order, flexibility to customer requests
Quality Assurance—acceptance sampling, process control, standards Workforce Policies—training levels, cross-training, rewards, use of
teams
•
Operations Strategy
Capacity Planning—lead demand to ensure availability or lag demand
to achieve capacity utilization
Facility Location—near suppliers, customers, labor, natural resources
or transportation
Facility Layout—continuous or intermittent flow
Technology and Equipment Choices—degree of automation, use of
computers and information technology
Sourcing Arrangements—cooperative arrangements with a few vs.
competitive bid
Planning and Scheduling—make to stock, make to order, flexibility to
customer requests
Quality Assurance—acceptance sampling, process control, standards Workforce Policies—training levels, cross-training, rewards, use of
Areas of Interdependency and
Potential Conflict Between
Marketing and Operations
Areas of Interdependency and
Potential Conflict Between
Marketing and Operations
•
Facility Size and Process Choice vs.
Market Forecasts
•
Facility Location vs. Market Planning
•
Production Schedules vs. Forecasts,
Orders and Promotions
•
Operating Policies
•
Facility Size and Process Choice vs.
Market Forecasts
•
Facility Location vs. Market Planning
•
Production Schedules vs. Forecasts,
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
Information Systems Strategy
Hardware—local area network (LAN), mainframe, minicomputer, internal systems, links to Internet
Software—data processing, decision support, Web management,
computer automated design (CAD), computer integrated manufacturing (CIM), just-in-time inventory
Personnel—in-house experts, subcontracting or alliances
Information Security—hardware, software, physical location and layout Disaster Recovery—off-site processing, backup procedures, virus
protection and treatment
Business Intelligence—management support, marketing, accounting, operations, R&D, human resources, finance
Internet—uses of Internet in communications, marketing, resource acquisition, research or management
•
Information Systems Strategy
Hardware—local area network (LAN), mainframe, minicomputer,
internal systems, links to Internet
Software—data processing, decision support, Web management,
computer automated design (CAD), computer integrated manufacturing (CIM), just-in-time inventory
Personnel—in-house experts, subcontracting or alliances
Information Security—hardware, software, physical location and layout Disaster Recovery—off-site processing, backup procedures, virus
protection and treatment
Business Intelligence—management support, marketing, accounting,
operations, R&D, human resources, finance
Internet—uses of Internet in communications, marketing, resource
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
R&D/Technology Strategy
Research Focus—product, process, applications
Research Orientation—leader, early follower, late follower
Project Priorities—budget, quality, creativity, time
Knowledge Creation—training, alliances and ventures,
acquisitions, cross-functional teams
Corporate Entrepreneurship—“seed money” grants, time off
to develop a venture, management support, rewards for
entrepreneurs, ideas come from everyone
•
R&D/Technology Strategy
Research Focus—product, process, applications
Research Orientation—leader, early follower, late follower
Project Priorities—budget, quality, creativity, time
Knowledge Creation—training, alliances and ventures,
acquisitions, cross-functional teams
Corporate Entrepreneurship—“seed money” grants, time off
to develop a venture, management support, rewards for
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
Human Resources Strategy
Recruitment—entry level vs. experienced employees, colleges, technical schools, job
services
Selection—selection criteria and methods
Nature of Work—part-time, full-time, or a combination, on site or off site, domestic or foreign
Performance Appraisal—appraisal methods and frequency, link to rewards
Salary and Wages—hourly, piece rate, commission, fixed, relationship to performance, competitiveness
Other Compensation—stock ownership programs, bonuses
Management Compensation—stock awards, stock options, bonuses linked to performance, perquisites, low interest loans
Benefits—medical, dental and life insurance, paid leave, vacations, child care, health club
Personnel Actions—disciplinary plans, outplacement, early retirements Training—types of training, availability of training to employees, tuition
reimbursement
•
Human Resources Strategy
Recruitment—entry level vs. experienced employees, colleges, technical schools, job services
Selection—selection criteria and methods
Nature of Work—part-time, full-time, or a combination, on site or off site, domestic or
foreign
Performance Appraisal—appraisal methods and frequency, link to rewards
Salary and Wages—hourly, piece rate, commission, fixed, relationship to performance,
competitiveness
Other Compensation—stock ownership programs, bonuses
Management Compensation—stock awards, stock options, bonuses linked to
performance, perquisites, low interest loans
Benefits—medical, dental and life insurance, paid leave, vacations, child care, health
club
Personnel Actions—disciplinary plans, outplacement, early retirements
Training—types of training, availability of training to employees, tuition
Conducting a Functional Strategy Audit
Conducting a Functional Strategy Audit
•
Financial Strategy
Sources of Capital—debt, equity, or internal financing
Financial Reporting—frequency, type, government, shareholders,
other stakeholders
Capital Budgeting—system for distributing capital, minimum ROI
for investments, payback
Overhead Costs—allocation of overhead costs based on direct
labor, machine use, sales volume, activity
Financial Control—system to ensure accuracy of internal and
external financial information, audits
Returns to Shareholders—dividends policy, re-purchase of stock,
treasury stock, stock splits
Financial Targets—establishment of financial targets for functional
areas and business units, method of reporting on progress
•
Financial Strategy
Sources of Capital—debt, equity, or internal financing
Financial Reporting—frequency, type, government, shareholders,
other stakeholders
Capital Budgeting—system for distributing capital, minimum ROI
for investments, payback
Overhead Costs—allocation of overhead costs based on direct
labor, machine use, sales volume, activity
Financial Control—system to ensure accuracy of internal and
external financial information, audits
Returns to Shareholders—dividends policy, re-purchase of stock,
treasury stock, stock splits
Financial Targets—establishment of financial targets for functional
