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Topic 4 Reading Kraus And Lind Notes

Accounting Notes > Strategic Finance, Digitization and Extended Enterprises Notes

This is an extract of our Topic 4 Reading Kraus And Lind document, which we sell as part of our Strategic Finance, Digitization and Extended Enterprises Notes collection written by the top tier of LSE students.

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AC310: Topic 4 Reading - Management Control in Inter-Organisational Relationships (Kraus and Lind 2007)

Topic 4: Management Control in InterOrganisational Relationships (Kraus and Lind 2007) Introduction

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Interdependence is central to inter-organisational relationships Likely to gain benefits not achievable in arms-length transactions through the market or via vertical integration E.g. success of British supermarkets due to inter-organisational relationships with suppliers (Frances and Garnsey 1996) Develop organically as customer/supplier relationships become more longterm or through formal structures Managers must now consider activities and resources outside their company May be a mixture of inter-organisational relationships of differing importance o i.e. network of interconnected inter-organisational relationships Activities and resources so no longer be considered in isolation

Inter-organisational relationships- drivers and trends

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No consensus on the main drivers o Some argue environmental shifts o Some argue more gradual change Main drivers: o Globalisation
? Fierce competition on a worldwide basis
? Emergence of new business opportunities
? Collaboration has become important o Rapid technological transformation
? Previously, vertical integration was a successful strategy
? More difficult to maintain expertise in all areas

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Makes sense to outsource some o Increased technical complexity of the products
? Deeper coordination between technologies
? Hard to rely on own R&D

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Must use suppliers knowledge o E.g. Apple relies on Samsung and other display technology providers for knowledge Formation of inter-organisational relationships is important for companies to share fixed costs and risks associated with these drivers o Creates barriers to entry for competition

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