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Chapter 12 Cooperation and Autonomy: Managing Interrelationships

Chapter 12 Cooperation and Autonomy: Managing Interrelationships. Chapter Topics. The importance of interrelationships in sustaining competitive advantage The need to balance cooperation and autonomy in supporting interrelationships Factors that promote the need for greater cooperation

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Chapter 12 Cooperation and Autonomy: Managing Interrelationships

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  1. Chapter 12Cooperation and Autonomy: Managing Interrelationships

  2. Chapter Topics • The importance of interrelationships in sustaining competitive advantage • The need to balance cooperation and autonomy in supporting interrelationships • Factors that promote the need for greater cooperation • Factors that promote the need for greater autonomy • The concept of “technology fusion” • Sources of internal resistance to organizational change

  3. Interrelationships at 3M • Translating Innovation • “Unintentionally discovering…” • Early product-division strategizing • Rewards, legends and myths • Sustaining Growth • Divisions and sectors • Reorganization of the sales force • Rewards for teamwork

  4. Cooperation versus Autonomy Cooperation Autonomy

  5. Cooperation versus Autonomy Cooperation Autonomy

  6. Achieving Strategic Alignment • Off-Line Coordinators – Individuals and groups, often experienced managers and staff personnel, outside the formal hierarchy who coordinate activities among subunits • Informal Integrators – People who act as internal “referees” to resolve disputes and conflicts between divisional managers

  7. Developments Promoting Need for Greater Coordination • Customers begin using formerly discrete products together in systems • Technologies of different products converge • Multipoint competition is on the rise • Acquisitions play a less important role in diversification • Global expansion increases

  8. Developments Promoting Need for Greater Subunit Autonomy • Acquisition activity increases • Creeping bureaucratization endangers firm’s ability to respond to market and industry changes • Environmental turbulence requires faster response time Corporate SBU

  9. Technological Convergence • Industry convergence • Design and engineering • Manufacturing capability

  10. Multipoint Competition • Competition between business lines • Commitment of entire product line versus rivals • Examples: • Heinz vs. Stouffer’s • EMI and CAT scanner

  11. Economies of scale Shared R&D costs Joint production efforts Tight management of interrelationships Search for internal synergy Sharing of ideas Creative product ideas Experimentation Customization of products Understanding needs of local end markets Search for new market opportunities Free thinking Need for Cooperation Need for Autonomy Technology Fusion and the Balance Between Cooperation and Autonomy “Fusion” occurs as the company develops and blends new technologies with existing ones to create higher-order products.

  12. Reactions to Shifts in Cooperation Versus Autonomy Reaction Support Opposition Shift to cooperation Shift to autonomy Corporate managers Subunit managers Subunit managers Corporate managers

  13. ? Ethics & Interrelationships • Major shifts from cooperation to autonomy can shake core values • IBM reconsiders lifetime employment tradition • Openness seen as key to shifting core values

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