Oc 6440 competitive and collaborative strategies

Organization Development and Change

Thomas G. CummingsChristopher G. Worley

Competitive and Collaborative Strategies

Cummings & Worley, 8e (c)2005 Thomson/South-Western

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Learning Objectivesfor 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


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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


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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


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Environmental Dimensions and Organizational Transactions

Resource DependenceLow High

Low

High

InformationUncertainty

Minimalenvironmental constraint

and need to be responsive

to environment

Moderate constraintand responsiveness

to environment

Moderate constraintand responsiveness

to environment

Maximal environmental constraintand need to be responsive

to environment


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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


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Integrated Strategic Change(ISC)

• Strategic Analysis• Strategic Choice• Designing the Strategic Change Plan• Implementing the Strategic Change Plan


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The Integrated Strategic Change Process

StrategyS1

OrganizationO1

OrganizationO2

StrategyS2Strategic

ChangePlan

Strategic Analysis Strategic Choice

Implementation


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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


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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.


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Merger and Acquisition Rationale

• Diversification• Vertical integration• Gaining access to global markets,

technology, or other resources• Achieving operational efficiencies,

improved innovation, or resource sharing


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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


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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


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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


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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


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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


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Application Stages for Transorganizational Development

Identification Convention Organization Evaluation

Who shouldbelong to the transorganizational System (TS)?• Relevant skills, knowledge, and resources• Key stakeholders

Should a TSbe created?• Costs and benefits• Task perceptions

How to organize for task performance?• Communication• Leadership• Policies and procedures

How is the TSperforming?• Performance outcomes• Quality of interaction• Member satisfaction


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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

Oc 6440 competitive and collaborative strategies

Business

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