Competitive and Collaborative Strategies

 General Environment ◦ Social, Technological, Economic, Ecological, and political forces  Task Environment ◦ Customer and buyer power, rivalry among competitors, substitute products/services, and potential new entrants  Enacted Environment ◦ Managerial perceptions and representations of the environment 19- 2

 Dynamism - the extent to which the environment changes unpredictably  Complexity - the number of significant elements the organization must monitor  Information Uncertainty - the extent to which environmental information is ambiguous  Resource Dependence - the degree to which an organization relies on other organizations for resources 19- 3

19- 4 Resource Dependence LowHigh Low High Information Uncertainty Minimal environmental constraint and need to be responsive to environment Moderate constraint and responsiveness to environment Moderate constraint and responsiveness to environment Maximal environmental constraint and need to be responsive to environment

 Uniqueness ◦ All organizations possess unique bundles of resources and processes that represent the source of competitive advantage  Value ◦ Organizations that arrange their unique resources and processes to produce products or services that have value (low cost, desirable features)  Difficult to Imitate ◦ Competitive advantage is sustainable when it is difficult to duplicate 19- 5

 Strategic Analysis  Strategic Choice  Designing the Strategic Change Plan  Implementing the Strategic Change Plan 19- 6

19- 7 Strategy S1 Organization O1 Organization O2 Strategy S2 Strategic Change Plan Strategic AnalysisStrategic Choice Implementation

 Strategic Analysis ◦ Assess the readiness for change and top management’s ability to carry out change ◦ Diagnose the Current Strategic Orientation  Strategic Choice ◦ Top management determines the content of the strategic change  Designing the Strategic Change Plan ◦ Development of a comprehensive agenda to achieve the change  Implementing the Strategic Change Plan 19- 8

 Merger - the integration of two previously independent organizations into a completely new organization  Acquisition - the purchase of one organization by another for integration into the acquiring organization.  Distinct from strategies for collaboration, such as alliances and networks, because at least one of the organizations ceases to exist

 Diversification  Vertical integration  Gaining access to global markets, technology, or other resources  Achieving operational efficiencies, improved innovation, or resource sharing

 Pre-combination Phase ◦ The organization must identify a candidate organization, work with it to gather information about each other, and plan the implementation and integration activities  Legal Combination Phase ◦ The two organizations settle on the terms of the deal, gain approval from regulatory agencies and shareholders, and file appropriate legal documents  Operational Combination Phase ◦ Implementing the operational, technical and cultural integration activities

 Involve two or more organizations who agree to work together to achieve their objectives  Align and coordinate organization strategies, goals, structures, and processes as they become interdependent  Allow organizations to perform tasks that are too costly and complicated for single organizations to perform  Also known as transorganizational systems, including alliances and networks

 When two organizations formally agree to pursue a set of goals  There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets  Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures

 Alliance Strategy Formulation ◦ Clarify the business strategy and why an alliance is needed  Partner Selection ◦ Leverage similarities and differences to create competitive advantage  Alliance Structuring and Start-up ◦ Build and leverage trust in the relationship  Alliance Operation and Adjustment

 Involves three or more companies joined together for a common purpose  Each organization in the network has goals related to the network as well as those focused on self-interest  Characterized by two types of change: creating the initial network (transorganizational development) and managing change within an established network

Identification ConventionOrganization Evaluation Who should belong to the transorganizational System (TS)? Relevant skills, knowledge, and resources Key stakeholders Should a TS be created? Costs and benefits Task perceptions How to organize for task performance? Communication Leadership Policies and procedures How is the TS performing? Performance outcomes Quality of interaction Member satisfaction

 Create instability in the network  Manage the tipping point ◦ The Law of the Few ◦ Stickiness ◦ The Power of Context  Rely on self-organization