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Concept file-5 Reading 2: Culture and globalization

Question: how organizational culture can be changed? 1. Replacement (changing the people) Depends heavily on the availability of suitable people within the organizations environment Using fresh start as a chance to build new structures . Re-education (changing the way the people operate) !hrough training" wor#shop programmes" etc. $. Re-design (changing organizational systems% reward" appraisal" etc.) !end to depend on the organizations environment" since they usually have to draw on the ideas and techni&ues that organizational gurus and consultants are currently offering Reading 3: National culture: dimensions and stories Reading 4: Ho stede on international cultural di erences Question: discuss Ho stede!s dimensions o national culture and t"pical #uestions on each dimension? $% High &s% low power-distance !his dimension is concerned with how far the culture encourages superiors to e'ercise and display power (n high power)distance cultures the e'ercise of power is what being a boss means *or#ing relationships are based on having power over someone" or being dependent on someone +mployees are fre&uently afraid to e'press disagreement" and prefer to wor# for managers who ta#e decisions (and responsibility) and tell them what to do (n low power)distance cultures ,uperiors and subordinates consider each other to be colleagues and have values that mean that ine&uality in society should be minimized ,uperiors are accessible because organization members are interdependent +mployees are seldom afraid to disagree" and e'pect to be consulted before decisions are made

2% High &s% low uncertaint"-a&oidance !his dimension concerns the degree to which the culture encourages ris#)ta#ing (n strong uncertainty)avoidance cultures -eople feel threatened by uncertain situations" and e'perience greater an'iety and stress from them. !his is countered by hard wor#" career stability and intolerance of deviancy !here is a search for ultimate values and a great respect for age +mployees agree that rules should not be bro#en and loo# forward to staying with the firm until they retire (n weak uncertainty)avoidance cultures .ifes inherent uncertainty is more easily accepted. +ach day is ta#en as it comes and so people e'perience less stress Page 1 of 18

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Concept file-5 !here is less need for rules" and people ta#e a very pragmatic view of #eeping or changing the e'isting rules . -

3% 'ndi&idualism &s% collecti&ism !his dimension concerns the degree to which the culture encourages individual" as opposed to collectivist or group" concerns (n an individualist culture (dentity is based on the individual. !he emphasis is on individual initiative or achievement and everyone is supposed to ta#e care of themselves plus only their immediate family +verybody has the right to a private life and opinion" and may well have only a calculated involvement with the wor# organization /ery important to have time for personal and family life 0ob training carries much less value" since it increases commitment to the company (n a collectivist culture 1 much tighter societal framewor#" where people are members of e'tended families or clans which protect them and which" in return" e'pect loyalty from them !he emphasis is on belonging and the aim is to be a good member !here is a belief in the value of group decisions !he value standards applied to members of ones own group" clan or organization can differ considerably from those applied to others +mployees value good physical wor#ing conditions" while personal challenge in wor# is of little importance 4% (asculinit" &s% emininit" !his dimension is based on a form of gender stereotype (n masculine cultures -erformance is what counts" ambition is the driving force" and high earnings" money" material standards and the opportunity to achieve are valued 2ig and fast are beautiful" machismo is admired !he manager is assertive" decisive" slightly macho and aggressive 1 lonely decision)ma#er loo#ing for facts rather than a group discussion leader !he se' roles tend to be clearly differentiated" with men e'pected to be assertive and dominating" and women to be caring and nurturing 1 dominant woman is regarded as unfeminine 3 although she is allowed to be manipulative in the bac#ground (n feminine cultures (t is the &uality of life that matters. -eople and the environment are important" service provides motivation ,mall is beautiful !he manager is less visible" intuitive rather that decisive" and accustomed to see#ing consensus ,e' roles in society are more fle'ible" unise' is attractive" and there is a belief in e&uality between the se'es 4ot considered unmusculine for a man to ta#e a caring role *or#ing co)operatively may well be valued highly .iving in a pleasant area is important !here is less value on gaining recognition for a good 5ob done Page 2 of 18

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Concept file-5 Reading ): Ho stede on internal organizational cultures

Question $: discuss the di erent between national and organizational culture? 6ofstede argues that national culture is to do with basic values" which are instilled in individuals through socialization within the family. 6owever" organizational culture is more to do with the attitudes and orientations associated with workplace practices.

Question 2: discuss Ho stede!s si* dimensions o organizational culture? $% +rans ormation orientation &s% output orientation 1) (n transformation-oriented organizations people avoid ris#s and ma#e limited efforts in their 5obs ) (n output-oriented organizations people put in a large effort and are ready to ta#e on new challenges 2% ,eople orientation &s% tas- orientation 1) 1 people-oriented culture will encourage concern for personal and group welfare ) 1 task-oriented culture will be concerned with getting the 5ob done 3% .rganizational orientation &s% occupational orientation 1) Organizational orientation is where employees identify themselves primarily as employees of a particular organization ) Occupational orientation is where employees tend to identify themselves by their 5ob" occupation or profession 4% .pen &s% closed communication climate 1) (n an open climate information is easy to find and communication is clear and straightforward. !he organization is accessible to outsiders" and new people find it easy to settle in ) 1 closed climate tends to be secretive" with only special people who have been there a long time" fitting in )% /oose &s% tight internal control structure 1) (n tight organizations" costs are closely controlled" meetings are punctual and 5o#es about the organization are rare ) Loose organizations tend to have a more rela'ed atmosphere 0% Normati&e &s% mar-et 1i%e% customer2 dri&en orientation 1) (n normative cultures" complying with organizational procedures and meeting high standards of honesty and ethics are regarded as crucial ) (n the market-driven cultures" priority is given to understanding and meeting customers demands and achieving results" and doing whatever is needed to achieve this. Reading 0: 3nowledge ashions in the managerial en&ironment Question: discuss the ad&antages and drawbac- o business ads? 2ut it also has some huge draw)bac#s. 7or instance% 1. (t tends to lead to standard solutions are being imposed without real analysis of the underlying issues. . *hatever the merits of the initial ideas in the hands of their originators" the fashionable solutions often degenerate rapidly into empty formulae 3 often little more than a set of buzz) words. Page 3 of 18

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Concept file-5 Reading 4: 3nowledge management

Question $: there are two t"pes o -nowledge% 5iscuss the meaning o each one? +wo t"pes o -nowledge 1. +acit -nowledge (e.g. intuitions" unarticulated mental models and embodied technical s#ills) . 6*plicit -nowledge (i.e. a meaningful set of information articulated in clear language" including numbers or diagrams). !hese two types of are mutually complementary. !hey interact with one another and may be transformed from one type to another through individual or collective human creative activities Dynamic theory of organizational knowledge 4ew organizational #nowledge is created by human interactions among individuals who have different types (tacit or e'plicit) of #nowledge Question 2: discuss the our modes o -nowledge con&ersion? $% 7ocialization -rivate e'periences become shared 8ou need to arrange situations where participants share a common e'perience at the same time and the same place Tacit knowledge has two dimensions 1) Technical% young apprentices wor# with old master craftsmen" thereby ac&uiring technical s#ills through observation" imitation and practice ) Cognitive% by setting up informal meetings outside the wor#place" where participants chat over a meal. !hrough this informal process they create common tacit #nowledge 2% 6*ternalization !acit" unarticulated #nowledge is converted into e'plicit concepts by using metaphors" analogies" concepts" hypotheses or models 3% Combination (solated bits and pieces of new or e'isting e'plicit #nowledge become combined into an integrated and systemic pac#age of #nowledge such as a set of specifications for a new product prototype !his mode starts with lin#ing different bodies of previously independent e'plicit #nowledge. 2ut it can also start from the other end 4% 'nternalization +'plicit #nowledge is converted into tacit" operational hands)on #now)how" e.g. from learning by doing

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Question 3: organizational -nowledge is created through a -nowledge spiral% 6*plain? 9rganizational #nowledge is created through what we call a #nowledge spiral across these four modes of #nowledge conversion. 1 #nowledge spiral may start from any mode" but usually begins with socialization. Reading 8: Coping with the organizational en&ironment Question: .rganization has to ind wa"s to deal the apparent con usion9 comple*it" and instabilit" o the en&ironment% 5iscuss in detail each one? ,ome ways to cope successfully with the apparent confusion" comple'ity and instability of organizational environment% 1. ,eople in the organization can de&elop their problem-articulating s-ills . 1rticulating and defining what it is needed to be wor#ed on. . :dopting simpli "ing strategies. :a#ing issues more simplified to cope with comple'ity. $. :dopting power-pla" strateg". 1chieving control by colonization ;<=>?@A your environment. B. Collaborating with the en&ironment. 7inding ways to wor# with it rather than e'ert control over it. ,roblem articulating s-ills: !his refers to the process whereby someone considers a comple'" confusing situation" and finds a way to define and e'press what is needed. !his is one of the #ey roles a good manager plays" because if a challenge can be well articulated and communicated then it becomes accessible. 7impli "ing strategies !here are many various simplifying strategies managers can use to try to grasp the enormous comple'ity of their organizationCs environment% 1. 7electi&e attention. 7ocusing the areas which might be directly or indirectly important to you rather than switching attention at random. . :ssuming uni&ersalit". !his is the assumption that my e'perience of environmental events is everyoneCs e'perience. ( have found that aspect 1 always easy to manage" while 2 has been troublesome" so ( assume that these are true everywhere. Page 5 of 18

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$. :&eraging% 1ssuming that individuals and organizations behave li#e the average individual or B. E. F.
organization. :ssuming continuit" o&er time. 1ssuming that wor# in the past will wor# in the same way in the future" things will #eep going in the same way. !he business will #eep growingD customers will #eep the same level of satisfaction. /ocal ocus. 7ocusing on the nearest part of the environment and assuming that it represents the whole. +"pi "ing. 1ssuming that particular cases (cases ( #now very well) can be generalized to different conte'ts. (f ( #now one large scale producer well" ( would probably be 5ustified in assuming that ( do have some #nowledge of the general issues facing large)scale producers. !he tric# is to recognize 5ust what my e'perience is GtypicalG of. ,roblem bias% 7ocusing on the ma5or problems and ignoring the minor ones.

H.

Control b" colonization% !his has become a less popular strategy" as the difficulties of attempting to e'ercise complete control over oneCs environment. :odern forms of commercial empire" such as 2enetton and :ar#s and ,pencer tend to be based on alliances. ;inding wa"s to wor- with en&ironment uncertaint"% :ost organizations and their managers have had to learn to wor# with the uncertainties and to respond &uic#ly to different emerging situations. 6ere are four possibilities% $% :ccepting uncertaint" and preparing or it% !o learn to e'pect the une'pected" and to recognize that we live in a world that is constantly changing and full of uncertainty. 9ne way to cope with the changing environment is to learn to live with it. 2% /earning and adaptation% (n new and unfamiliar environments we need to learn how to learn and how to adapt to changing. !hose who are always learning are those who can ride the waves of change and who see a changing world as full of opportunities not damages. 3% Networ-ing and connecting. 1nother very valuable way of coping with uncertainty is to spend time networ#ing and ma#ing connections with other organizations. !his will #eep you in close touch with what is going on in the many environments that surround your organization. 4% Creati&it" and 'nno&ation% Uncertainties may offer une'pected opportunities to do things differently to be creative and highly innovative. 1s the old saying goes% G4ecessity is the mother of inventionG. Reading <: ;our en&ironmental challenges Question: discuss the our challenges an organization has to deal with9 also discuss the possible responses to each challenge? $% +he challenge o instabilit" 1 dynamic" unstable environment" may follow from factors such as o Iapidly changing technology o ,udden changes in customer tastes or demands o !he rate at which new products come into the mar#et o 2roader macro)economic changes and unpredictable government interventions !he unstable variability and unpredictability of a dynamic environment creates uncertainty" and with it many #inds of management problems within organizations 'nternal responses to en&ironmental instabilit" % this refers to strategies an organization can adopt internally" to ma#e it better able to cope with whatever environmental challenges impinge upon it" as distinct from e'ternal responses that attempt to tac#le the challenge itself Page 6 of 18

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o :dopting a more le*ible structure% Dynamic organizational environment demand versatile" organic structures that can cope with fre&uent changes of suppliers" products" staff" mar#ets" and so on better than traditional bureaucracies. Jalbraith (1KHB) advocates two pairs of strategies to achieve this fle'ibility% :a#e it easier for small ad5ustments to be made locally to cope with local variations by% 6aving sufficient slac# in the system to ensure that there is always a little spare capacity in hand 9rganizing the wor# into self)contained tas#s (e.g. the use of semi) autonomous wor#)groups) :a#e it easier for the organization to process the large amount of information involved in managing rapid changes by% +nhancing capacity to handle information flowing vertically up and down the organization (e.g. (!)based management information systems" or special people dedicated to information management) +nhanced capacity for information to flow laterally (e.g. using special liaison staff" multi)functional teams" etc.) o Developing a more flexible workforce% 1 fle'ible wor#force is as important as a fle'ible structure. 9ptions include% Use of team)wor#ing of various #inds Ieducing 5ob demarcation through 5ob design -lacing greater emphasis on s#ills that allow switching between tas#s (multi) s#illing) +mpowerment (ncreasing managerial direction (ntroducing pay and incentive systems (ncreasing use of part)time staff o dopting organizational cultures that support change % 4ew ways of thin#ing about organizational life that are better adapted to coping with a turbulent environment !he learning organization% this sees the organization as an organism that is continually meeting changes in its environment Loping rather than optimizing% coping becomes more important than perfection !hriving on the edge of chaos 6*ternal responses to en&ironmental instabilit" % (f my organization depends very strongly on another" then ( am vulnerable to uncertainties in their environment as well as to those in my own. 2% +he challenge o comple*it" Decentralizing decision)ma#ing o 1 common response to comple'ity is to decentralize decision)ma#ing. !here are two main reasons for this% !he periphery offers more options Decentralized decision)ma#ing minimizes information transmission ,elf)contained tas#s o (f a mar#et is very diverse" it ma#es sense to split the organization into mar#et)based units so that the different units can develop appropriate responses to their own mar#ets 7ocusing on core processes o !he essence of this strategy is to stic# to the #nitting" i.e. stic# to the business you #now best and are best at. .imit your organization to doing what you do best" and buy in any other materials or services you need from others who are doing what they do best Page 7 of 18

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Concept file-5 o (n a sense" you are e'porting some of the environmental comple'ity and uncertainty to other organizations" so simplifying what your own organization has to deal with

3% +he challenge o hostilit" 6ostility may come from various sources o Lompetition arising from the number and the power of other competitors in the mar#et o Jovernment regulatory pressure o ,ocial pressure by pressure groups 6ostility from competitors (three types of threat) o !he threat of new entrants o !he threat of substitution o !he threat from e'isting competitors. Iesponses to this may be Do nothing !ry to improve position Lollaborate with others Lontrol the mar#et place Iesponses to e'treme hostility o (n the face of e'treme hostility" organizations tend to centralize their structures" particularly if survival is at sta#e. !he idea behind this strategy is that a faster response will be possible if decisions are all handled at the centre 4% +he challenge o dependenc" Dependency has the effect of moving power away from the dependent person or organization" towards the person or organization depended on. ,ome of the possible responses to dependency include o !he dependent organization may centralize and formalize its structure o Diversification% to reduce its dependence" the supplier might find other customers" or develop other products for the same customer o !ncrease mutual dependence% a small supplier organization might try to ma#e itself indispensable to its dominant customer Reading $=: 7imple tools or e*ploring the en&ironment Question: 5iscuss some o the tools used to e*plore the organization en&ironment? 7imple tools or e*ploring the en&ironment 1Reading $=2 Using a chec#list andMor diagram in this way can enrich your perception of the environment simply by prompting you to thin# and focus your attention in a more systematic way. !ool (1)% ,!+- chec#list (,ocial" !echnological" +conomic" -olitical" and ,ustainability). !ool ( )% ,9*! analysis (,trengths" *ea#nesses" 9pportunities" and !hreats) !ool ($)% E*s and 6 (*ho" *hat" *here" *hen" *hy" and 6ow) !ool (B)% (nputs" !ransformation" and 9utputs !ool (E)% 1uditing :intzbergCs ,ta#eholders !ool (F)% +conomic ,ector 1nalysis

$% 7+6,7 chec-list 17ocial9 +echnological9 6conomic9 ,olitical9 and 7ustainabilit"2%

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,!+-, chic# list is a useful method to identify and mapping a range of environmental interactions with your organization. (ts advantage is its simplicity and wide applicability. !o use ,!+-," wor# your way through the five categories" brainstorming as many possible factors in each category as you can thin# of that might be relevant to chosen system. !hen shift through these to identify any significant impact on" or be affected by your organization" and e'plore their potential influence more thoroughly. ,!+-, could be used either to thin# about current patterns of influence" or to thin# about possible future developments and changes.

2% 7.>+ anal"sis 17trengths9 >ea-nesses9 .pportunities9 and +hreats2

,9*! is simple and well #nown techni&ue that can help in the analysis of aspects of the environment and the organizationCs relationship to them" particularly if you are loo#ing ahead at what might happen in the future. (!he opportunities and threats the environment holds for you). .pportunities and threats !he strengths and wea#nesses (,*) are those of your organization. !he opportunities and threats (9!) are those of its environment. :a#e analysis for each group ,ee figure 1N. - (HN) !hen%

1. +'plore ways in which you might best use your strengths to e'ploit the opportunities and manage the threats. 2. +'plore ways in which you might prevent you wea#nesses. 3. -rioritize a set of actions you wish to ta#e" set time)scales" and identify necessary resources. (n ,*9! the value lies on the wider discussions" ideas" observations" etc. (t is a vehicle for discussion and the e'change of views as an analytic tool. *hat you learn on the 5ourney often matters as much as what you achieve at the destination.

3% )>s and H 1>ho9 >hat9 >here9 >hen9 >h"9 and How2

(t is essentially a list of the si' main &uestions enginesD it draws attention to the basic components of any human situation% 1 6uman elementsD 2 -hysical elementsD 3 .ocationsD 4 !imesD 5 +'planationsD 6 1nd mechanisms. 1n e'cellent way to generate a multiple cause diagram is 5ust to #eep on as#ing. Page 9 of 18

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4% 'nputs9 +rans ormation9 and .utputs

!his way is to consider your organization as a transformation process.

1 well constructed input)output diagram should be a simple" compact and informative way of answering the &uestion G*hat do we doOG 3 1nswer% we ta#e P" 8 and Q and transform them to -" R and I Iemember that in any input)output diagram mass and energy are conserved. (f ENN tones go in one side" ENN tons have to come out of the other side.

)% :uditing (intzberg!s 7ta-eholders

(f we you want to understand what is going on in a situation" or if you want to intervene in a situation in some way" itCs very useful to thin# about the sta#eholders" as they are the people who matter in the situation. :intzberg has arranged his (:intzberg ,ta#eholders) diagram to loo# li#e a clownCs face.

0% 6conomic 7ector :nal"sis

+conomists group economic activities according to sectors. 1ll the organizations in a particular sector produce similar products or services" and ten to be affected by similar influences. ,o its a useful way to e'plore an organizationCs environment is to identify its sector ( other organizations in the same sector" customers" the differences" competitive advantage" the net wor# of supply chain and distribution channels wor#) Reading $2: 7ome t"pes o dependenc" Question: list and e*plain the di erent t"pes o dependenc"? $% 6conomic dependenc" !his arises where sales or purchases are such that they distort the normal free mar#et mechanisms (t arises when% o 1n organization produces or re&uires a highly specialized product (the llama saddle)D o 1n organization generates a massive supply of" or demand for" products. .arge manufacturers can deliberately create economic dependency by various devices" such as multi)sourcing 3 i.e. using a large number of small suppliers in preference to a smaller number of large suppliers. 2% ;inancial dependenc" !his happens when some other organization (e.g. a ban#) has invested in" or lent money to" an organization. Page 10 of 18

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3% +echnical dependenc" !his is similar to e'pert power and is the reliance of one organization upon the technical e'pertise of another (t may be increased by devices such as% o 9ffering the services of visiting technical e'perts or advisers to an organization that needs this e'pertise and cant get it in other ways o Deliberately retaining the technically more sophisticated tas#s" such as design or innovation" within the dominant organization o 1 dominant company may impose specific technical standards 3 perhaps of &uality 3 and collaboration with the dominant company may be re&uired in order to achieve these standards. 4% ,s"chological dependenc" 2onis (1KSN) points out that strong personal lin#s (social friendship as well as professional associates) may begin to develop between the staff of two inter)dependent organizations

Reading $3: 'nterpenetration mechanisms Question: interpenetration mechanisms are a term used to describe wa"s o e*erting control across organizational boundaries% 5iscuss each mechanism? $% 'nterpenetration through ?oint &entures 0oint ventures have traditionally been thought of as devices for securing some of the advantages of a merger (economies of scale" for instance) while at the same time preserving the identity and autonomy of the organization ,tern saw them as mechanisms for reducing conflict between organizations -ennings (1KS1) saw collaborative ventures between two organizations as a way of bringing them together 2% 'nterpenetration through sta e*changes (nvolves the formal e'change of staff for a specified length of time. !his can occur at different levels in an organization 3% 'nterpenetration through the roles o boundar" people 2oundary people are those within an organization who are concerned primarily with e'ternal relations with other organizations ,ome boundary people may actually carry out wor# on the premises of a lin#ed organization. 7or instance" computer manufacturers may station personnel at a customers premises for a long time to perform engineering wor# 4% 'deological penetration (nvolves sharing certain basic standards and values )% 'nterpenetration through co-option Lo)option is essentially a defensive strategy" adopted because some other group or organization appears to threaten your organizations stability or e'istence (t involves inviting an outsider from another organization into the organization. 2ut" unli#e other forms of cross)membership" the motive is to transform the attitudes of the co)opted person" and hence to reduce the threat that his or her organization represents Lo)option doesnt always wor# as intended% Page 11 of 18

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Concept file-5 (t can easily become a purely symbolic gesture without any real communication or influence (f communication is good" the co)opted person may be re5ected by the former organization as having gone over to the other side ,ometimes co)opting and co)opted organizations may each be see#ing to influence the other" so that the co)opted person may become a mole or a pawn. Lo)option may then have a high price

0% 'nterpenetration through interloc-ing elites 9rganizations often depend on one another for intangibles" such as sustaining business confidence" getting information and advice" locating good contacts" or building goodwill and gaining legitimization. !his is one of the reasons why many large organizations try to develop lin#s between their senior people and those in other organizations !he interloc#ing elites concept is based on two assumptions% !hat most organizations have an elite made up of individuals who have a great deal of e'perience" and e'ercise a good deal of influence !hat useful flows of information" confidence" esteem" and so on" will be generated if these individuals are simultaneously part)time members of the elite of other organizations (nterloc#ing elites can become established both formally and informally% "ormal mechanisms% large private companies may encourage senior people in their company and another one to ta#e on part)time directorships in one anothers companies. 4ot only does each side benefit from the s#ills and prestige of the other companys director" but they also ac&uire #nowledge and e'ert influence with in the other organization !nformal mechanisms% contacts formed in places where managers meet socially Reading $4: 5e&eloping a relationship: @aguar and Nippondenso Question: there are two orms o supplier relationships% /ist and discuss the di erences o these two orms?

Reading $): (ultiple le&els o relationship: 7peedo swim-wear Question: there are man" di erent le&els concerning the relationship between two organizations% 5iscuss these le&els? /6A6/ $: +he basic salespersonBbu"er relationship o !his is the classic model in which a salesperson from one company negotiates a sale with the buyer of another company. 4obody else in the two companies meets o !he salesperson and the buyer may be able to help when a problem arises between the two companies o (t is ine'pensive to run /6A6/ 2: +he account management relationship Page 12 of 18

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Concept file-5 o !his is essentially an upgrade of the basic model (level 1). !he salespersonMbuyer roles have now evolved so that there are people in one or both organizations that #eep an eye on all aspects of transactions with the other organization o !his is good where the benefits of ensuring that transactions run smoothly are greater than the cost of allocating special staff to loo# after the relationship

/6A6/ 3: 5irect department-to-department relationship between companies o 8ou begin to find direct lin#s between the similar departments in each company and form a relationship between them o !his #ind of relationship ma#es sense when there is a very intimate operational lin# between two companies /6A6/ 4: +otal pro?ect integration o (n this type of relationship" the two organizations merge completely for the purpose of a particular pro5ect" creating an inter)organizational e&uivalent of the matri' pro5ect structure o !he members of the 5oint pro5ect organization are reporting both to the management of this 5oint structure" and to their own parent organizationsD at the end of the pro5ect they return to their parent organizations o 1ppropriate where it is important that people from the two organizations can wor# closely together (e.g. in innovative design or ITD pro5ects). Reading $8: Hierarchies Question $: discuss the routes whereb" organizational growth occurs?

:ost small companies aim to increase in size for simple functional reasons% Page 13 of 18

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o ,ize gives you more economic power. !he more economic power you have" the more control you can e'ert o ,ize also gives you more opportunities for economies of scale and for economies arising from specialization ,o enterprises often grow organically and incrementally through the natural processes of their own internal structure as they e'pand into new mar#ets" offer new products" ta#e on new pro5ects" etc. Jrowth can also happen as a deliberate choice through mergers and ac&uisitions. !hese are usually chosen to achieve either vertical or horizontal integration o /ertical integration means ac&uiring or merging with organizations (such as suppliers and distributors) that occur either upstream or downstream of a firms own activity o 6orizontal or unrelated integration can help the organization to grow by diversification 3 i.e. by ac&uiring other organizations with related" but complementary products 9nce the company gets too large to manage as a single entity" the ne't step has often been the adoption of a divisional structure. (n effect" each division became a semi)autonomous internal business. 4owadays this might well be ta#en to its logical conclusion" with the development of an internal mar#et" or even by spinning off some units completely" as separate companies !he final stage is international expansion to evolve into a global multi)national 3 though modern information technology developments can sometimes mean that a company can nowadays enter the global mar#et at a much earlier stage in the development se&uence

Question 2: choosing to conduct business in a hierarch" or a mar-et depends on comparing transaction costs and other actors% 5iscuss this statement? $% +ransaction re#uenc"% if something happens very fre&uently it is probably better handled in) house 2% Cncertaint"% if the load is patchy and unpredictable" it might be better contracted out. 2ut if very fast responses are re&uired" you might still prefer to handle them in)house 3% (anagement and relati&e costs% will the in)house option cost more or less than the contracted)out optionO 4% 5ependenc" considerations% if the activity is a core activity and central to the organizations transformation process" you will probably want to retain it in)house )% ,ercei&ed competencies and the le&el o -nowledge re#uired to manage the transactions% who is capable of doing the 5ob best% your in)house team or the e'ternal contractorO 0% :sset base% if you already have well)developed in)house physical) and staff)resources in some area" you will probably prefer to use them than to use an e'ternal contractor Reading $<: (ar-ets %Question $: the term mar-et is used in di erent wa"s% >hat are the"? $% (t can be used rather loosely to refer to the ways in which capital" labor" goods" services and commodities are allocated in the modern economy. ,o there are mar#ets for goods" services and commodities" capital mar#ets" and a labor mar#et for employees and the unemployed. (n this sense" mar#et really 5ust means% the system of flows of capital (or labor" or whatever). 2% :ar#et is also used in a more specific way" to identify a particular area of competition between firms" as when we spea# of the mar#et for personal computers. 3% !he most general and abstract sense of mar#et is its use as a description of a philosophy or set of operational principles. !he market concept envisages a set or relationships in which member organizations compete amongst themselves for the resources they want" and where competition allocates resources according to price. Page 14 of 18

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Question 2: what are the underl"ing assumptions o the mar-et ideolog"? (n the 1KHNs and 1KSNs the mar#et concept became a central plan# of government policy in a number of countries" including the UU% the model had turned into an ideology" and was applied to many new areas" such as the public sector and welfare. !his ideology held that% :ar#ets are the most efficient way of organizing e'changes between organizationsD :ar#ets fit well into liberal democraciesD :ar#ets allow individual choice and the ma'imizing of individual satisfactionD Lompetition #eeps prices down. Question 3: discuss the limitations o the mar-et concept? $% (t is easy to 5udge the nature and &uality of goods and resources # 2% (nformation about prices" &uality" alternative suppliers" alternative purchasers" etc." is freely available" and information flows are reasonable. 3% !he mar#et is dynamically self)correcting so that profit leads to competition" which leads to less profit and less competition. 4% 9wnership of goods and resources is distributed throughout the mar#et" and there are many competing buyers and sellers. )% (t is fairly easy for new firms to enter the mar#et" and for ineffective ones to leave it # 0% +'ternalities (such as effects of third parties" environmental conservation concerns" government regulation" and so on)" are minimal and may be ignored by the mar#et # 4% !here is an agreed framewor# for fair dealing" redress" what constitutes illegal behavior" and so on. Question 4: what is the meaning o #uasi- mar-et? Quasi-mar-ets and the public sector ,ervices are often purchased by the state on behalf of the public (e.g. to provide care for older people). (n recent years it has become common for this to be tal#ed about in terms of the mar#et concept" for instances tendering for residential care provision on the open mar#et 2ut there are some important differences here from what happens when" say" a company buys the services or supplies it needs on the open mar#et Users of those services are not who buy them. !here is a (purchaser)provider)user) relationship rather than the simpler purchaser)provider relationship of the conventional mar#et. (f something goes wrong with the service" the purchaser is no longer the person who is directly affected" so undermining one of the fundamental assumptions of the mar#et model !here are other differences from the classic mar#et and it may be better to regard this sort of relationship as a $uasi-market with the following characteristics% Demand is influenced and structured by a variety of factors other than strict mar#et ones !here may be few buyers of services apart from the state" so service providers may be few in number" competition between them may be very limited" and the mar#et may be opa&ue" problematic to enter" and structured in an unconventional way :easuring the performance and &uality of institutions such as schools" hospitals" prisons" etc. is very much more difficult than measuring the &uality of most normal commercial products or services Question ): discuss the mar-et-hierarch" continuum? (n reality" the hierarchyMmar#et difference is not a simple either)or distinction. !here is a continuum of possible co)ordination mechanisms from pure mar#et to pure hierarchy Page 15 of 18

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*or#ing along the continuum we have% 1t the mar#et e'treme are situations where hard contracts are appropriate 3 i.e. contracts that are tightly specified and are used when the two contracting parties want to ma'imize their own interests independently. ,oft contracts" also referred to as relational contracts" are based on a closer relationship between the two parties and an assumption that there is a considerable overlap of interests. 7ranchising and 5oint ventures fall in the middle of the continuum. 6ere the two organizations are still clearly separate and are still 5oined by a contract between them. Decentralized profit centres are units that lie within the boundaries of a single organization. 6owever" they have the ma'imum degree of autonomy that the organization can permit. 1 hierarchical chain of command is the traditional organizational structure. Reading 2=: Networ-s Question $: people and organizations are inter-connected in man" di erent wa"s% 5iscuss these wa"s? !he idea of a networ# includes aspects of inter)organizational relationships that are not covered either by the notion of hierarchy (the world of long)term" built)in" authority structures) or the notion of mar#et (where players are independent and self)interested" but form short)term agreements with one another). (n a networ# people and organizations are inter)connected in many different %ways" such as $% ,ersonal networ-s: 4etwor#s are all around us. 7or instance" within an organization" most informal communication and gossip (the grapevine)" and much wheeling and dealing (ma#ing bargains" mobilizing power and e'ercising it) depends on informal networ#s 3 who #nows who" who meets who in the canteen" etc. (f you were to draw a diagram of the patterns of influence in your organization" you would probably find yourself including many influence flows amongst friends" colleagues and associates that cut across the formal organizational structure and the organizational boundary. !hese nonhierarchical influences are typical of a networ#. (f you thin# of the people you #now and might tal# to about matters that are directly or indirectly wor#)related they might well include% 7amily and community connections. -rofessional colleagues. !rades union contacts. -eople you #now in similar 5obs in other organizations. -eople who are interested in what your organization does. !hey are potential customers" suppliers" investors" political allies" etc. Page 16 of 18

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:any people are familiar with self)help networ#s for babysitting" gardening and family support. :uch voluntary sector wor# is directed at building informal networ#s. 2% 'nter-organizational networ-s: 9rganizations may also be involved in networ#s. 7or instance" a networ# might form among organizations involved in e'porting to a particular country. (nformation about dealing with that countrys bureaucracy" about its trading practices and standards and about local contacts could pass through the networ#" to the mutual advantage of all the members. !he deliberate development of relationships between organizations and the people within them as part of the strategic management of the organization is an ancient strategy. 7or instance" inter) marriage between the families of the monarchs of different nation states as a device for cementing inter)state alliances is as old as history Question 2: discuss the properties o a networ-%? 1. The position of an organization in the network . (s it in contact with a large number of other nodesO (s it a communication gateway between two ma5or groups of nodesO (s it merely a peripheral member of the networ#O . %ow much control does an organization exert& (s it a dominant or minor player in the networ#O !his is partly a matter of position in the networ#" but also of how much it contributes" and how important its role is to other players. $. 'hether the network is loosely or tightly coupled . !his depends on the strength and intensity of relationships and the fre&uency of interactions. 7or instance" a supply networ# is li#ely to be tightly coupled to the organization being supplied (and in the case of 5ust)in)time supply" the coupling is very tight indeed). 6owever a networ# of old buddies and (nternet contacts you occasionally e)mail for bits of information are li#ely to be very loosely coupled indeed. Question 3: when does a networ- turn into a hierarch"? *hen a relationship between two companies is a very close and long)term one" with the wea#er company being highly dependent on the stronger one" it could be argued that the strong partner benefits even more than it might have done from traditional hierarchical vertical integration. Reading 2$: (ar-ets9 Hierarchies and Networ-s Question: what are the -e" di erences between mar-ets9 hierarch"9 and networ-s?

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