Lecture 23 - Inter-organizational relationships Flashcards
(?) Describe different considerations on the value chain
Out- or insourcing:
- Focus or not on core competence
- Relevant for many firms
- More aspects than price
- Decision consideration
- Quality consideration
Control of suppliers:
- Performance consideration
- Technology consideration
- Capability consideration
- Quality consideration
Cost of quality:
Technologies & capabilities:
(!) Describe an inter-organizational relation / IOR
Definition:
-“Cooperation between two or more organisations that extents exchange of products and/or services & money beyond arm’s-length relationships”
General:
- More complex make-or-buy
- Seek economies of scale & scope
- Joint cost reduction
- Dont squeeze other chain links
- Require more info-systems
- Reduce info-asymmetry
- No zero sum game: Both gain
- Consider bargaining power
- Fight markets as non-controllable
- Access to specialized resources
- Possible to combine resources
- Risk that weak link strive back
- Saying too much or little both badly influence resource dist.
- Decision wrong if data wrong
- Agree on analysis: Eg. Use FA
- Succes depend on flexibility & access to resources
Relation to MA:
- Accountable if not telling truth: Self-regulating
- Accounting as actor: Self-regulating & orchestration mechanism
- MA as representation: Boundary between parties
Relations:
- Dyadic relation: Two firms
- Network relation: More firms. More complex
Examples:
- Joint ventures
- Strategic alliances
- Joint development projects
- Extended buyer-supplier relationsship
(!) Describe the main drivers for IOR
External tendencies:
Globalization:
- Be present everywhere
Rapid technological development:
- Latest standards
- Steep bath-tub: Steeper each time new product on market
Increased technical complexity:
- Need compatible components
___________
Company specific tendencies:
Resource access:
- Focus on core competence lead to narrow part of value chain which require others
Flexibility:
- Customer driven
- Need content or volume change
(!) What are the managerial challenges of IOR?
- Actively choose relations
- Increase vulnerability
- Info at face value invalid for DM since interest diff.
- Never told the whole story
- Some info lost
- Loose poss. direct intervention
- Need to manage aggregated info
- Eg. Dont choose low solvency firm: May leave market
(!!!!!!!!!!) Describe solutions to the managerial challenges of IOR
General:
- Trust & control absorb uncertainty: Substitutes or complements
Complements:
- Trust & power coexist: Not competing strategies
Substitutes
- Trust vs. control: Signals no trust
__________
Control / Power:
- Control over resources & info –> Power
- Discipline > Coercive
- Free will > Domination
- Contract
- Theoretical framework: Governmentality
- Us & them > We: Different goals
- Infrastructural CS
- Control up-stream supply chain
- Joined ERP-system: Require power position. Eliminate boundary.
- Risk strike back if power position: Not share confidential info
- Usable in earlier stages
- Eg. Size or a brand
- Non-coercive power create trust
- If quick reaction needed
- Set the agenda
- Define right & wrong
- Manageable at distance: Management technologies
- Since constant “I am right” battle
- Convince > Supplier incentive
- Define the “game”
- Try make fence against free will
Dominating power:
- Forcing actions: Eg. Certain system
- Efficient
- Direct acces to info make supply chain manageable
- Supplier feel squeezed
- Risk wrong data –> Wrong DM
- Risk wrong numbers
Disciplinary power:
- Favor suppliers interest
- Negotiation process
- Time consuming
Compared to trust:
- Immediate
- Flexible
- Ending relation dont destroy it
- Define wants & sanction dislikes
- No personal investment: Fix paradox of embededness
- Absorb uncertainty
- May have more wrong numbers
___________
Trust:
General:
- Familiarity
- Degree of IOCM depend on relation closeness
- Build by positive experiences
- Create hard bond to break
- Problem when absence
- Condition for advanced acc.
- Smooth & cost efficient coord.
- We > Us & them
- Target costing as heart: Yet dont actively involve supplier
- “Operating principle”: Required trust as moral obligation
- Accounting can either foster trusts, be an alternative to trust or trust be a condition for advanced accounting
Considerations:
- Paradox of embeddedness: Difficult to break relation
- Static > dynamic & adaptable
- Complex
- Loose touch with surroundings
- Opportunity costs
- Take time to build
- Put faith in others hand
- End relationship may destroy it
- Less flexible
- Slow reaction time
___________
Types of trust:
Contractual trust:
- Written or oral promise
- Eg. Both use benchmarks
Competence trust:
- Technical or managerial skill
Goodwill trust:
- Open commitment
- Doing more than expected
___________
Degree of relationship:
- Family member
- Major supplier
- Subcontractor
- Common supplier
Describe contracts
- Central
- Communication device for terms
- Become the boundary
- Define room to manuoevre in
- Create contractual trust
- Forum for negotiation
- Representation of project
- Both link & separate parties
(?) Describe different ways to actively involve both suppliers & buyer in the design team
Functionality-price-quality tradeoff/FPQ:
- Minor changes
- Fixed end-product specifications
- Eg. Reduce mat. No redesign
IO cost investigations:
- Bigger design change
- Almost like JIT
- Incl. Parties design engineers
- Fixed end-product specifications
Concurrent cost management:
- Significant/major design change
- Great cost saving
- Only high value items
- Involve supplier much earlier
- Either parallel or simultaneous: Uncoupled or during stages
Describe attributes for relational context for IOCM
- Resource & info-sharing
- Supplier participation
- Outsourcing substantive item
- Timing
- Equal commitment
- Stability: Expected future relation
- Collaborate: Beyond arms length
- Governance structure: Shift?
- Asset specificity: Alternative use without lost productive value
- Design dependence: Investment & its switching costs
(?) Describe a representation
General:
- What is on agenda & not
- Mean for power
- Managerial when added info
- Not explicitly stated
- Eg. Financial report
- Coupling between two parties
- Create coherence across boundaries & support common perception
- Abstract or concrete structure symbolize or correspond to other structure
- Eg. Standard costing representing production process
- Eg. OB & Benchmark cost info
___________
Components:
Remote control:
- Enable control at distance
Displacement:
- Transfer info in space & time
Abbreviation:
- Image of full picture
(!) Describe different handling of boundaries
General:
- Mix is best
Erase / Surpress:
- Eg. ERP
Forget:
- Replace with trust
Embrace:
- Highlight
- Cooperate with contract
(!) Describe governmentality
Aspects:
Power:
- Instead of trust
- Action on others action
- Mobilize > Dominate
- Shape & reshape actions within space of regulated freedom
Governmental apparatuses:
- Apparatuses = Devices
- Define forum of government
- Frameworks make government at distance possible
- Budgeting techniques
- Costing systems
Free will:
- Governor & governed assumed free & act accordingly
- Behave & think independent
- Open strategic game on promoting personal interests
Code of conduct:
- Affect actions as directly governed by governor
____________
Governmentality in CC:
Contract as framework for cooperation:
- Cooperation contract?
- For negotiation
- Not as a law
- Agreement on business partner relation: Not family
Open-books central for right price:
- Central target price
- Changes must be rooted in substantial reductions of input
Benchmark info as market ref.:
- Provide inspiration & arguments to negotiations
- Carry business logic
Dual competition adds to the power of CC:
- Contract enable CC to change partner during dev. process
