1. Chapter 4 Relationships Between Organizations
Members:
Melody, Bonnie, Vincent, Paul

2. Outline The changing Interorganizational Framework Case ─ Foxconn.
Resource Dependence
Collaborative Network
Population Ecology
Institutionalism
Case ─ Foxconn.

3. The changing Past Recent Future
Focus on their own business area, and seldom make the relationships with the other companies
Recent
Increasingly dense web of relationships among organizations
Future
A web of horizontal relationships across organizations

4. Organizational ecosystem
A system formed by the interaction of a community of organizations and their environment
Retailers
Business
Non-profit Organizations
Government

5. Organizational ecosystem
EXHIBIT 4.1

6. Ford GM Is Competition Dead?
The number of corporate alliances has been increasing at a rate of 25 percent annually.
Ford GM

7. The Changing Role of Management
Traditional Managers
Operations Roles
Have traditional vertical authority
Accountable for business results
Collaborative Roles
Be highly flexible and proactive
Achieve results through personal communication
Assertively seeking out needed information and resources
Modern
Managers

8. Managers need to learn
Learn to move beyond traditional responsibility of corporate strategy and designing hierarchical structures and control systems.
Think about horizontal processes rather than vertical structures.

9. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

10. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

11. Resource Dependence Organizations try
To minimize the dependence on other organizations for important resources
To influence the environment to make resource available
To adapt or alter the interdependent relationships to lock in necessary resources
Purchasing ownership in suppliers
Long-term contracts
Joint ventures

12. Resource Dependence

14. Resource Dependence Organizations try
To minimize the dependence on other organizations for important resources
Ex: Nestle increases the source and can minimize the dependence on original coffee bean supplier
To influence the environment to make resource available
Ex: Nestle helps farmers plan good quality and quantity coffee beans

15. Resource Dependence Supply Chain Management
Supply chain is a network of multiple business that are connected through the flow of products or services.
Supply Chain Management refer to managing the sequence of supplier and purchaser
Helping use resources more efficiently and improve the performance

16. A Basic Supply Chain Model
EXHIBIT 4.3
Product Flow

17. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

18. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

19. Collaborative Network
Collaborative Network is an emerging alternative to resource dependence theory
Companies join together to become more competitive and to share scarce resources
Why ?
Sharing risk when entering new markets
Cooperation is a necessary for greater innovation, problem solving, and performance

20. Changing Characteristics of Interorganizational Relationship
EXHIBIT 4.4
Traditional Orientation: Adversarial
New Orientation: Partnership
Low dependence
High dependence
Suspicion, competition, arm’s length
Trust, addition of value to both sides,
high commitment
Detailed performance measures,
closely monitored
Loose performance measures;
problems discussed
Price, efficacy, own profits
Equity, fair dealing, both profit
Limited information and feedback
Electronic linkages to share key information, problem feedback, and discussion
Legal resolution of conflict
Mechanisms for close coordination;
people on site
Minimal involvement and up-front investment, separate resources
Involvement in partner’s product design and production, shared resources
Short-term contracts
Long-term contracts
Contract limiting the relationship
Business assistance beyond the contract

21. Changing Characteristics of Interorganizational Relationship
EXHIBIT 4.4
Traditional Orientation: Adversarial
New Orientation: Partnership
Low dependence
High dependence
Suspicion, competition, arm’s length
Trust, addition of value to both sides,
high commitment
Detailed performance measures,
closely monitored
Loose performance measures;
problems discussed
Price, efficacy, own profits
Equity, fair dealing, both profit
Limited information and feedback
Electronic linkages to share key information, problem feedback, and discussion
Legal resolution of conflict
Mechanisms for close coordination;
people on site
Minimal involvement and up-front investment, separate resources
Involvement in partner’s product design and production, shared resources
Short-term contracts
Long-term contracts
Contract limiting the relationship
Business assistance beyond the contract

22. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

23. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

24. Population Ecology
Because it focuses on organizational diversity and adaptation within a population of organizations.
What does this theory mean in practical terms?
It means that large, established organizations often become dinosaurs.

25. The limitations of organizations to change
From heavy investment in plants, equipment, and specialized personnel;
Limited information;
The established viewpoints of decision makers;
The organization’s own successful history that justifies current procedures;
The difficulty of changing corporate culture.

26. Managerial Question
The success or failure of a start-up is largely determined by the smarts and management ability of the entrepreneur?
Disagree. Luck is often as important as smarts because larger forces in the environment, typically unseen by managers, allow some firms to succeed and others to fail. If a start-up happens to be in the right place at the right time, chances for success are much higher, regardless of management ability.

27. The processes of population change
Variation
Selection
Retention
Large number of variations appear in the population of organization
Some organizations find a successful niche and survive
A few organizations grow large and become institutionalized in the environment

28. Strategies for Survival
Generalist
Organizations with a wide niche or domain--- that is , those that offer a broad range of products or services or that serve a broad market--- are generalists.
Specialist
Organizations that provide a narrower range of goods or services or that serve a narrower market are specialists.
Ex: Amazon

29. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

30. Interorganizational Framework
Resource
Dependence
Population
Ecology
Collaborative
Network
Institutionalism
Dissimilar
Similar
Competitive
Cooperative
Organization Type
Organization Relationship
EXHIBIT 4.2

31. Institutionalism
Describes how organizations survive and succeed through congruence between an organization and the expectations from its environment.
The institutional environment is composed of norms and values from stakeholders.
The institutional view believes that organizations adopt structures and processes to please outsiders, and these activities come to take on rule-like status in organizations.

32. Three Mechanisms for institutional Adaptation
Mimetic
Coercive
Normative
Reason to become similar
Uncertainly
Dependence
Duty, obligation
Events
Innovation visibility
Political law, rules, sanctions
Professionalism─
certification, accreditation
Social basis
Culturally supported
Legal
Moral
Example
Reengineering, benchmarking
Pollution controls, school regulations
Accounting standards, consultant training

33. Three Mechanisms for institutional adaptation
Mimetic Forces
Ex: McDonald adds healthier menu items and new types of beverages.

34. Three Mechanisms for institutional adaptation
Coercive Forces
Ex: Walmart is requiring its suppliers to calculate the “full environmental costs’ of making their products (such as water use, carbon-dioxide emissions, and waste) and provide this information for the company to distill into a rating system that shoppers will see alongside the price of the item.

35. Three Mechanisms for institutional adaptation
Normative Forces
Normative forces are pressures to achieve standards of professionalism and to adopt techniques that are considered by the professional community to be up to date and effective.
Changes may be in any area, such as information technology, accounting requirements, marketing techniques, or collaborative relationships with other organizations.

36. Managerial Question
Managers should quickly copy or borrow techniques being used by other successful companies to make their own organization more effective and to keep pace with changing times.

37. Managerial Question Answer:
Agree. Managers frequently copy techniques used by other, successful organizations as a way to appear legitimate and up to date. Copying other firms is one reason organizations may begin to look and act similar in their structures, processes, and management systems.

38. Case Study
Foxconn
The rise of Foxconn with its relationships among corporations as a flexible and notorious corporate model.

39. Case Study
Company Name: Foxconn (Hon Hai Precision Industry Co., Ltd.)
Chairman and President: Terry Guo
Industry: Electronics
Founded: 1974

40. Case Study Employees: Approximately 1.2 million (2011)
Services: Electronics Manufacturing Services (OEM, ODM)
Revenues: US$ billion (2011)
Net Income: US$ 2.64 billion (2011)

41. Case Study
Related Organizations: Apple, Intel, Amazon.com, Kindle, Sony, Playstation 3, Microsoft, Xbox 360, etc …

42. Case Study Supply Chain Relationships of Foxconn: Supplier Distributor
Manufacturer
Retailer

43. Case Study Resource Dependence
Power implication: Large and independent companies have power over small suppliers.

44. Case Study
Evolution of Foxconn:
OEM
ODM
CEM
EMS
eCMMS

45. Case Study Population Ecology
Adaptation and Selection: In a rapidly shifting environment, organization, that fails to struggle for existence, dies.

46. Case Study Institutionalism
Coercive Forces: All organizations are subject to pressure from other important organizations, especially those on which an organization is dependent.

47. Case Study Collaborative Networks
Why Collaboration: Organizations join together to become more competitive and to share scarce resources.

48. Conclusion Frenemy & Coopetitism
No friends are forever, nor enemies eternal.

49. The End.
Thank you !