1. Organization Development and Change
Chapter Nineteen:
Competitive and Collaborative
Strategies
Thomas G. Cummings
Christopher G. Worley

2. Learning Objectives for Chapter Nineteen
To compare and contrast two different classes of strategic interventions: competitive and collaborative
To describe two competitive strategy interventions: integrated strategic change and merger and acquisition integration
To describe two collaborative interventions: forming alliances and developing networks
Cummings & Worley, 8e (c)2005 Thomson/South-Western

3. Organizational Environments
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

4. Environmental Dimensions
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

5. Environmental Dimensions and Organizational Transactions
Resource Dependence
Low
High
Low
Minimal
environmental constraint
and need to be responsive
to environment
Moderate constraint
and responsiveness
to environment
Information
Uncertainty
Maximal
environmental constraint
and need to be responsive
to environment
Moderate constraint
and responsiveness
to environment
High
Cummings & Worley, 8e (c)2005 Thomson/South-Western

6. Competitive Strategies
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

7. Integrated Strategic Change (ISC)
Strategic Analysis
Strategic Choice
Designing the Strategic Change Plan
Implementing the Strategic Change Plan
Cummings & Worley, 8e (c)2005 Thomson/South-Western

8. The Integrated Strategic Change Process
Strategy S1
Strategy S2
Strategic
Change
Plan
Organization O1
Organization O2
Implementation
Strategic Analysis
Strategic Choice
Cummings & Worley, 8e (c)2005 Thomson/South-Western

9. ISC Application Stages
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

10. Mergers and Acquisitions
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.
Cummings & Worley, 8e (c)2005 Thomson/South-Western

11. Merger and Acquisition Rationale
Diversification
Vertical integration
Gaining access to global markets, technology, or other resources
Achieving operational efficiencies, improved innovation, or resource sharing
Cummings & Worley, 8e (c)2005 Thomson/South-Western

12. Merger and Acquisition Application Stages
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

13. Collaborative Strategies
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

14. Alliance Interventions
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

15. Alliance Intervention Application Stages
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

16. Network Interventions
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

17. Application Stages for Transorganizational Development
Identification
Convention
Organization
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
Cummings & Worley, 8e (c)2005 Thomson/South-Western

18. Managing Network Change
Create instability in the network
Manage the tipping point
The Law of the Few
Stickiness
The Power of Context
Rely on self-organization
Cummings & Worley, 8e (c)2005 Thomson/South-Western