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Topic 4 Reading Malecki And Moriset 2008 Chapter 4 Notes

Accounting Notes > Strategic Finance, Digitization and Extended Enterprises Notes

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AC310: Topic 4 - Reading: Malecki and Moriset -"The Digital Economy" - Chapter 4 (Digital Production and Business Organizations)

Topic 4 - Reading: Malecki and Moriset - Chapter 4 Introduction

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IT and the Internet have permeated the value chains of every business sector (Porter and Miller, 1985; Porter 2001) Deeply transformed the organization of firms (Dutton et al. 2005) "Digital capitalism" (Schiller 1999) Customers are central to business today, and IT has empowered consumers Virtual organizations epitomize the transformation of value chains The acceleration of technological change has led to the "commoditization, disintegration and instability" of value chains (Luthje 2005)

Mastering Complexity with Technology

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"Organizational complexity is a key condition necessary for a firm to maximize the benefits it can derive from the new information technologies" (Sassen 2001) Trade off between complexity and overall efficiency Intertwined problems faced by companies: o Rise of customer power o Shortening of product lifecycles o Globalization of sales and purchases o Splintering of supply chain Requires increasing trust and cooperation between suppliers and purchasers o E.g. extended enterprise (Post et al. 2002) Bandwagon Effect Companies don't just rely on marketing and technological innovativeness but also organizational innovativeness (Chesbrough and Teece 1996) Vernon (1966) and Day (1981) made popular the concept of product lifecycle o Leads to conceiving production in global terms Oracle marketed it s e-business suite as a single database for the entire product lifecycle (2003 marketing campaign) Management and administration are increasingly becoming parallel to core production processes Activities impact others much more CATIA software o Used by Airbus and Boeing o Boeings 777 was first plane to be designed and prototyped completely in digital form (launched 1990)
? Information technologies were long in use before the Internet o Connects to collaborative software allowing global sourcing, value chain unbundling and engineering "Distinction between service and product is blurring" (Zysman 2005) o E.g. automobile-industry selling cars, insurance, repairs and credit

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