Oc 6440 competitive and collaborative strategies

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

2. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-2
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

3. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-3
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

4. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-4
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

5. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-5
Environmental Dimensions and
Organizational Transactions
Resource Dependence
Low High
Low
High
Information
Uncertainty
Minimal
environmental constraint
and need to be
responsive
to environment
Moderate constraint
and responsiveness
to environment
Moderate constraint
and responsiveness
to environment
Maximal
environmental constraint
and need to be responsive
to environment

6. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-6
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

7. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-7
Integrated Strategic Change
(ISC)
• Strategic Analysis
• Strategic Choice
• Designing the Strategic Change Plan
• Implementing the Strategic Change Plan

8. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-8
The Integrated Strategic
Change Process
Strategy
S1
Organization
O1
Organization
O2
Strategy
S2Strategic
Change
Plan
Strategic Analysis Strategic Choice
Implementation

9. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-9
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

10. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-10
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.

11. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-11
Merger and Acquisition
Rationale
• Diversification
• Vertical integration
• Gaining access to global markets,
technology, or other resources
• Achieving operational efficiencies,
improved innovation, or resource sharing

12. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-12
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

13. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-13
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

14. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-14
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

15. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-15
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

16. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-16
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

17. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-17
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

18. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
19-18
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