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MN200 MICHAELMAS TERM - MANAGEMENT THEORY?Week 1 - Management and Strategy Michael Porter - argues firm skills are fixed, strategy = aptly positioning firm Gary Hamel - argues firm skills are fluid, strategy = evolving the firm Habereberg and Rieple: Exogenous factors (unrealised strategy + emerging strategy) can shape the end strategy different from the intended strategy
Week 2 - The essence of strategy Value Added, Distinctive Capability, Competitive Advantage John Kay - "Foundations of Corporate Success"
? Added Value (merely, output - input) versus Value Added (difference between value of output created by firm and rivals with same resources); type of economic rent
? Firms set of contracts/relationship between stakeholders
? Develops distinctive capabilities which can be sustained and appropriated
? = Competitive Advantage. Of four types: o Architecture: successful external and internal contracts =
? Accumulation of organisational knowledge (knowledge cloud)
? Cooperation between stakeholders
? Development of routines
? Difference betw. Organisation Man's vertical silos and the fluid "Modern Firm" (John Roberts) (up or sideways)
? Knowledge Worker will only thrive in right culture combined with need for speed and efficiency
? Switch from "Lego to DNA". Corporate DNA consists of: Decision rights, information, motivators = structure!
? best consumer signal (but in a limited sphere?)
? premium of having reputation of providing high quality > cost of providing it
? repeated purchases ? only market for long-term experience goods o Innovation
? can set standards - needs to be appropriated
? need it for "top-line growth"
? depends on "knowledge workers" who are "thinking for a living" o Strategic Assets - natural monopolies, sunk costs, licensing and regulation, anti-trust laws first-mover advantage
? Douglas McGregor - Theory X(sticks) vs. Theory Y(carrots, & non-pecuniary) Michael Porter's Five Forces of Strategy:
1. Threat of new entrants (think barriers to entry, incumbent's retaliation)
2. Threat of substitutes
3. Industry Rivalry (think intensity and basis of competition)
4. Buyer Power (think concentration, differentiation, switching costs, price
5. Supplier Power sensitivity) Criticisms
? How the heck do you define an industry? (By checking similar 5 forces?)
? Forces provide a snapshot in time, need to update them continuously
? Important considerations: industry definition, industry structure (and stability) and future strategic directions??
Week 3 - Analyzing Resources and Capabilities An examination of the resource-based view of the firm Firm Strategy = Maximising your resources and capabilities To best maximise, analyse your structures and systems, goals and values Also see your position and dynamic, & boundary limits (vertical, horizontal) Two-pronged approach: o Step 1: Industry (External) Analysis (week 5) o Step 2: Resource-Based View of the Firm (Internal)
* Financial, physical assets (e.g. PPE)
? Intangible Resources
* Technology (or intellectual property), reputation, culture
? Human Resources
* Employee skills ? need Motivation and Communication Capabilities: necessary for making resources productive (core competencies) Kay's distinctive capabilities interact and need to be sustained (e.g. through trust, appropriability)
Week 4 - Organisational Design and Competitive Advantage Alfred Chandler - "Structure follows strategy", yet circular in real life
1. Why do we need organisational structure?
a. Mechanism/ Location of Decision-Making b. Divide into functional divisions c. But also to integrate different divisions d. For three keys 21stc challenges: i. Speed of Change - increased uncertainty ii. Knowledge Creation and Knowledge Sharing iii. Globalisation - increases coordination problem
2. What affects the choice of structure?
a. Product differentiation i. Mass volume, uniform product = centralized hierarchy (machine bureaucracy) ii. Small volume, differentiated product = decentralisation (adhocracy) b. Area differentiation Need local knowledge or global uniformity?
c. "Reinforcing cycles" - environment, strategy, authority etc
3. Two fundamental problems with structure a. Co-ordination problem i. Dilemma between "specialis^" (market) and "integrat^" (firm) ii. Solution = efficient information flows and decision-making b. Incentives problem i. The principle-agent problem ii. Divorce between ownership and control
4. Solution to structural problem?
a. A rchitecture: division of subunits, reporting, recruiting, rewarding b. R outines: generally accepted methods to doing things c. C ulture: values and goals
5. Types of structure: a. Functional - divided via production, finance, marketing etc. b. Multidivisional - divided via products, services or geography c. Matrix structure - layers of both of the above d. Holding, transnational, team-based and project-based
6. Types of processes: direct, indirect control over inputs, outputs Week 5 - The External Context of the Firm
1. Industry Definition a.SIC (standard industry classification) b.market versus industry c.geographical boundaries d.demand and supply-side substitutes
2. Industry Structure a.Depends on a variety of factors: number of buyers and sellers, barriers to entry, vertical integration, product differentiation, cost, diversific^
3. Industry Life Cycle a.Emergence/ Introduction i. Huge uncertainty: technologic, market, organisational, strategic ii. Only winning approach survives "shake-up" period: then retention and imitation. "Liability of newness": John Wiley b.Growth i. Innovation in product shifts to innovation in processes
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