MNGT Chap 9

shared know how

Combined units often benefit from sharing knowledge or skills. This is a leverageing of core competencies

Ecomomies of scale or scope

Coordinating the flow of product or services of one unit with another can reduce inventory, increase capacity utilization and improve market access

shared tangible resources

combined units can sometimes save money by sharing resources, such as a common manufacturing facility or R&D lab

Pooled negotiating power

combineed units can combine their purchasing to gain bargaining power over common suppliers to reduce costs and improve quality.

organizational life cycle

describes how organizations grow, develop, and eventually decline. It is characterized by five stages; (Stage I) Birth, (Stage II) Growth, (Stage III) Maturity, (Stage IV) Decline, and (Stage V) Death.

Stage II: Functional Structure (of a corporation)

entrepreneur replaced by team manager with functional specializations, corporate strategy favors protectionism through dominance of industry, concentration and specialization in one industry, all eggs in one basket a weekness

New business creation

exchanging knowledge and skills can facilitate new products or services by extracting discrete activities form various units and combining them in a new uint or by establishing joint ventures among internal business units

Five Stages of internaitonal developement

Stage I: Domestic Company Stage II: Domestic Company with export division Stage III: Primarily domestic compamy with international division Stage IV: Multinational corporation with multi-domestic emphasis Stage V: MNC with global emphasis

the four stages of corporate developement

Stage I: Simple Structrue, Stage II: Functional Structure, Stage III: Divisional Structrure, Stage IV: Beyond SBUs

Principles for reengineering proposed by Michale Hammer

1. Organize around outcomes, not tasks 2. Have those who use the output of the process perform the process 3. Subsume information-processing work into the real work that produces the information 4. Treat geographically dispersed resurces as though they were centralized 5. Link parallel activities instead of intergrating their results 6. Put the decision point where the work is performed and build control into the process 7. Capture informaition once and at the source

six forms of synergy

1. Shared kow-how 2. Coordinated strategies 3. Shared Tangible resources 4. Economies of scale or scope 5. Pooled negotioationg power 6. New business creation

Synergy

A concept that states that the whole is greater than the sum of its parts; that two units will achieve more together than they could separately. Synergy is said to exist for a divisional corporation if the return on investment (ROI) of each division is greater than what a return would be if each division were an independent business.

coordinated strategies

Aliginging the business strategies of two or more business units may provide a corporation significant advantage by reducing inter-unit competition and developing a coordinated response to common competitors.

Stage IV: Beyond SBUs ( of a corporation)

New advanced forms of organizational structure emerge,emphasizes collaboration over competition in managaing of and organization's multiple projects, the matrix and the network are two possible candidates, emphasizes horizontal over vertical connections

Stage III: Divisional Structrue (of a corporation)

Typified by the coproration's managing diverse product lines in numerous industries, move to a divisional structure wigh a central headquarters and decentralized operating division, grows diversifying their product lines and expanding to cover wider geograpnical areas, can evolve into SBUs (strategic business units), almost unlimited uses, usually so large and complex that it tends to become relatively inflexible

Stage I: Simple Structure (of a corporation)

Typified by the entrepreneur, little formal structure, typical managerial functions performed to a limited degree, flexible and dynamic, extreme reliance on the entrepreneur

How a corporation's live cycle can be extended

a. Called the Revival phase- b. can be extended by managerial and product innovations. Developing new combinations of existing resources to introduce new products or acquiring new resources through acquisitions can enable firms with declining performance to regain growth. This can occur through the implementation of a turnaround strategy. c. A corporation must be able to identify indications that a firm is in the process of changing stages and to make the appropriate strategic and structural adjustments to ensure that corporate performance is maintained or even improved.

The purpose of reengineering

a. is the radical redesign of business processes to achieve major gains in cost service or time. b. is an effective program to implement a turnaround strategy. c. strives to break away from old rules and procedures to develop and become ingrained in every organization over the years.