Intermediate II Chapters 8-14

Strategy

The specific pattern of decisions and actions that managers take to use core competencies to achieve a competitive advantage and outperform competitors.

Core competences

The skills and abilities in value creation activities that allow a company to achieve superior efficiency, quality, innovation, or customer responsiveness.

Functional resources

The skills possessed by an organization's functional personnel.

Organizational resources

The attributes that give an organization a competitive advantage such as the skills of the top-management team or possession of valuable and scarce resources.

Coordination ability

An organization's ability to coordinate its functional and organizational resources to create maximal value.

Transfer of core competences abroad

An organization transfers a core competence in one or more of its functions to an overseas market to produce cheaper or improved products that will give the organization a low-cost or differentiation advantage over its competitors.

Establishing a global network

Locate sets of task and reporting relationships among managers, functions, and divisions that link an organization's value-creation activities in other countries to enhance its low-cost or differentiation advantage.

Gaining access to global resources and skills

Because each country has unique economic, political, and cultural conditions, different countries have different resources and skills that give them a competitive advantage.

Using global learning to enhance core competences

After an organization learns a new functional skill in one country, for example, it can transfer it to its domestic base to enhance its core competences.

Dangers of outsourcing

Loss of control of its core skills and technology and if they outsource a functional activity, it will no longer be investing resources to improve its skills.

Functional-level strategy

A plan of action to strengthen an organization's functional and organizational resources, as well as its coordination abilities, in order to create core competences. Responsibility of functional managers.

Business-level strategy

A plan to combine functional core competences in order to position the organization so that it has a competitive advantage in its organization. Responsibility of top-management team.

Corporate-level strategy

A plan that indicates in which industries and national markets an organization intends to compete. Responsibility of corporate managers.

Global expansion strategy

A plan that involves choosing the best strategy to expand into overseas markets to obtain scarce resources and develop core competences.

Functional activities which gain competitive advantage

Lower costs than rivals, resulting in lower prices. Product differentiation by giving unique qualities to customers, leading to higher or premium prices.

Functional strategy culture

It is very difficult for a competitor to imitate another organization's culture because culture is embedded in tacit knowledge.

Business strategy needs

To select the domain in which they will compete and settle a good position so they can use its resources and abilities to manage its environment.

Low-cost business-level strategy

A mechanistic plan whereby an organization produces low-priced goods and services for all customer groups.

Differentiation business-level strategy

An organic plan whereby an organization produces high-priced, quality products aimed at particular market segments

Focus strategy

To specialize in one segment of a market and focuses on all the resources on that segment.

Three factors that affect the choice of structure

1. Greater range of products.
2. If it seeks to find new customer groups.
3. Coordination among functions is increased.

Backward vertical Integration

A strategy in which an organization takes over and owns its suppliers.

Forward vertical integration

A strategy in which an organization takes over and owns its distributors.

Related diversification

The entry into a new domain that is related in some way to an organization's domain.

Unrelated diversification

The entry into a new domain that is not related in any way to an organizations' core domain.

Corporate-level strategies for entering new domains

1. Input domains
2. Output domains
3. Related domains
4. Unrelated domains

Conglomerate structure

A structure in which each business is placed in a self-contained division and there is no contact between divisions

Structures for related diversification

1. Larger corporate headquarter staff
2. More managerial time and effort
3. Greater bureaucratic costs
4. More communication and coordination

Corporate strategy culture

1. Appropriate values can reduce bureaucratic costs
2. Norms and values cooperation between divisions
3. Common corporate culture can overcome differences in divisional orientation
4. Multidivisional matrix structure permits rapid change of ideas and transfer of norms and values.

Multidomestic strategy

A strategy in which operating decisions are decentralized to each country to enhance local responsiveness.

International strategy

A strategy where Marketing and R&D is centralized at home and all the other value-creation functions are decentralized to national units.

Global strategy

A strategy oriented towards cost reduction, with all the principal value- creation functions centralized at the lowest cost global location.

Transnational strategy

A strategy focused so it can achieve both local responsiveness and cost reduction: some functions are centralized and others are decentralized at the global location.

Technology

The combination of skills, knowledge, et ceterat that people use to convert or change raw materials problems, and new ideas to evaluate goods and services.

3 levels of technology

1. Individual level (personal skills)
2. Functional level (techniques that groups work out create competences)
3. Organizational Level ( the conversion of inputs into outputs)

Mass-production

The organizational technology that uses conveyor belts and a standardized, progressive assembly process to manufacture goods.

Craftswork

The technology that involves groups of skilled workers who interact closely to produce custom-designed products.

3 stages of technology

1. Input stage
2. Conversion stage
3. Output stage

3 Approaches to measure and increase effectiveness

1. External research approach (used to increase the ability to manage and control external stakeholders)
2. Technical approach (used to improve efficiency and reduce costs)
3. Internal systems approach (used to improve efficiency and reduce costs)

3 Theories of technology that affect organizational design

1. Technical complexity (Joan Woodward)
2. Routine task and complex tasks (Charles Perrow)
3. Task interdependences (James D. Thompson)

Programmed technology

A technology in which the procedures for converting inputs into outputs can be specified in advance so that tasks can be standardized and the work process can be made predictable.

Technical complexity

A measure of the extent to which a production process can be programmed so that it can be controlled and made predictable.

Small-batch technology

An organic structure production of small numbers of goods in response to a specific customer request.

Large-batch technology

An mechanistic structure production of high volume of good in assembly lines with mass production technology.

Continuous-Process Technology

An organic structure production that is highly automated and technical complex, and has a continuous production flow.

Technological imperative

The argument that technology determines structure.

Task variability

The number of exceptions, new or unexpected situations, that a person encounters while performing a task.

Task analyzability

The degree to which search activity is needed to solve a problem.

4 Types of technology

1. Routine manufacturing (low variability and high analyzability)
2. Craftswork (both low)
3. Engineering production (both high)
4. Non-routine research (vice-versa of 1)

Routine tasks

High standardization, low mutual adjustment, individual, high formalization, tall organization, centralized, mechanistic.

Non-routine tasks

Low standardization, high mutual adjustment, joint, low formalization, flat organization, decentralized, organic.

Task interdependence

The manner in which different organizational tasks are related to one another, if it is low, then people and departments are individually specialized.

Mediating technology

Technology that allows each department to work independently by virtue of providing products or services that mediate or link clients from the external environment.

Long-linked technology

A technology characterized by a work process in which input, conversion, and output activities must be performed in series.

Intensive technology

A technology characterized by a work process in which input, conversion, and output activities are inseparable.

Slack resources

Extra resources that enhance an organization's ability to deal with unexpected situation.

Specialism

Producing only a narrow range of outputs reduces the costs of intensive technology.

2 Ways of mass production maximization

1. Using dedicated machines and standardized work procedures
2. Protecting the conversion process against production slowdowns or stoppages

Fixed workers

Workers who perform standardized work procedures increase an organization's control over the conversion process.

Fixed automatization

Combination of dedicated machines, fixed workers, and large stocks of inventory makes it expensive and difficult for an organization to begin to manufacture different kinds of products when customer preferences change.

Advanced manufacturing technology

Technology which consists of innovations in materials and in knowledge that change the work process of traditional mass-production organizations.

Materials technology

Comprises machinery, other equipment, and computers

Computer-aided design (CAD)

Advanced manufacturing technique that greatly simplifies the design process.

Computer-aided materials management

An advanced manufacturing technique that is used to manage the flow of raw materials and component parts into the conversation process, to develop master production. Pull approach.

Just-in-time inventory systems (JIT)

System that requires inputs and components to be delivered to the conversion process just as they are needed, neither earlier nor later, so that input inventories can be kept to a minimum.

Flexible manufacturing technology

Technology that allows the production of many kinds of components at little or no extra cost on the same machine.

Computer integrated manufacturing (CIM)

An advanced manufacturing technique that controls the change over from one operation to another by means of the commands given to the machines through computer software

Organizational change

The process by which organizations move from their present state to some desired future state to increase.

Targets of Change

1. Human resources
2. Functional resources
3. Technological capabilities
4. Organizational capabilities

Forces for Change

Organizational level
1. Competitive forces
2. Economic forces
3. Political forces
Functional level
4. Global forces
5. Demographic forces
Group level
6. Social forces group level
7. Ethnical forces

Organizational inertia

The tendency of an organization to maintain the status quo.

Organizational-level resistances to change

1. Power and conflict
2. Differences in functional orientation
3. Mechanistic structure 4. Organizational culture (conservative values

Group-level resistance to change

1. Group Norms
2. Group Cohesiveness 3. Group think
4. Escalation of Commitment

Individual-level resistance to change

1. Uncertainty and insecurity
2. Selective perception and retention
3. Habit

Lewin's force field theory of change

A theory of organizational change that argues that two sets of opposing forces within an organization determine how change will take place

Managers must find a way to increase the forces for change,reduce resistance to change, or do both simultaneously.

Evolutionary change

Change that is gradual, incremental, and specifically focused.

Revolutionary change

Change that is sudden, drastic, and organization-wide.

Sociotechnical Systems Theory

A theory that proposes the importance of changing role and task or technical relationships to increase organizational effectiveness.

Total quality management (TQM)

An ongoing and constant effort by all of an organization's functions to find new ways to improve the quality of the organization's goods and services.

Quality Circles (QC)

A small group of employees who work voluntarily on company time to address work-related problems and increase performance.

Flexible workers and flexible work teams

A group of workers who assume responsibility for performing all the operations necessary for competing a specified stage in the manufacturing process.

Reengineering

The process by which managers redesign how tasks are bundled into roles and functions to improve organizational effectiveness

Business process

An activity that cuts across functional boundaries, and is vital to the quick delivery of goods and services or that promotes high quality, service and speed.

3 Guide lines for performing reengineering successfully

1. Organize around outcomes, not tasks o
2. Have those who use the output of the process perform the process o
3. Decentralize decision making to the point where the decision is made

E-engineering

Companies' attempts to use information systems to improve their performance.

Restructuring

A process by which managers change task and authority relationships and redesign organizational structure and culture to improve organizational effectiveness.

Downsizing

The process by which managers streamline the organizational hierarchy and lay off mangers and workers to reduce bureaucratic costs.

Innovation

The process by which organizations use their skills and resources to develop new goods and services or to develop new production and operating systems so they can better respond to the needs of their customer.

Lewin's three step change process

1. Unfreezing the organization from it's present state
2. Make the desired type of change
3. Refreeze the organization an new, desired state

Action Research Model

A strategy for generating and acquiring knowledge that managers need to use for define an organization's desired future state and to plan a change program.

Steps in Action Research

1. Diagnosing the organization
2. Determining the desired future state
3. Implementing the action
4. Evaluating the action
5. Institutionalizing action research

External change agents

Outside consultants who are experts in managing change.

Internal change agents

Managers from within the organization who are knowledgeable about the situation to be changed.

Top-down change strategy

Implemented by managers at high level in the organization.

Bottom-up change strategy

Implemented by employees at low levels in the organization that gradually rises until it felt throughout the organization.

Organizational development

A series of techniques and methods that managers can use in their action research program to increase the adoptability of their organization.

Sensitivity training

Consists of intense counselling in which group members, aided by a facilitator, learn how others perceive them and may learn how to deal more sensitively with others.

Process consultation

An OD technique in which a facilitator on the job to improve his or her interactions with other group members.

Team building

An OD technique in which a facilitator first observes the interactions between group members and then helps them to become awe of ways to improve their work interactions.

Intergroup training

An OD technique that uses team building to improve the work interactions of different functions or divisions.