Inter Organizational Strategy

Task 1
1.1 Evaluate the restraints and constraints on the integration of inter-organisational strategy.
Inter-organizational strategy must evaluate the restraints and constraints on the integration of organizations, such as supply chains, shipping, sales and so on. A constraint keeps the organizational from achieving a goal. A restraint places pressure on the organization as it seeks to achieve the goal. The Theory of Constraints can be used to help organizations evaluate their constraints and restraints in order to make effective decisions and reach their organizational goals (Cox & Goldratt, 1986). Goldratt (1998) would explain the theory as useful in determining and controlling for variations in throughput, operational expense, and inventory. Throughput refers to cash generated by sales, operational expense refers to the cost of production, and inventory refers to the money invested in all the parts required for production. Throughput, expense and inventory can involve numerous organizations, which are in turn impacted by politics, economics, society, and other issues. Policies, innovation and intelligence gathering serve a part in the process. Restraints can be manifested in social, cultural and political ways that will impact the organization’s ability to operate as well. For example, if a nationalist policy were to be adopted by the leaders of a foreign government, any organization operating in that country that was not domestically owned would be subject to increasing pressures that would lead to organizational constraints.
According to Goldratt (1998), every organizational goal is limited by at least one constraint, because otherwise sales would be infinite. The reality is that no organization is capable of achieving infinite throughput because there are typically numerous constraints that have to be accounted for in business. These can include restraints in the marketplace, among competitors, demand, social consciousness, political turmoil, disruptions in the supply chain, economic depression, and any number of other restraints that would impact throughput.
1.2 Identify and assess the respective contributions of participating organisations and administrations to the development and integration of inter-organisational strategy.
The respective contributions of participating organizations and administrations in the development and integration of inter-organizational strategy consist of communication, especially with regard to the dissemination of policy, and the flow of information which is so crucial to effective decision making. Communication channels, first of all, must be open between organizations so that strategy can be developed, shared, and maintained (Brinkhoff, Özer & Sargut, 2015). At the same time, these channels help to cascade policy from the top downward while ideas flow from the bottom upward.
Every inter-organizational business unit acts as a source of intelligence that top level administrators use to shape policy. The ideas come from the business units because they are on the front lines, interacting with consumers, who give information about the types of products they want. The units pass this information upwards through the “intelligence gathering” flows and are incorporated by the administration as it seeks ways to re-shape policy so that the organization as a whole is working together as one in the same direction to give consumers what they want.
1.3 Analyse the separate components of the planning and implementation process and the impact of tensions between them on the inter-organisational strategy and its implementation.
The separate components of the planning and implementation process and the impact of tensions between them can be seen in the organization’s approach to strategic planning, based on (a) scenario, (b) deliberate or emergent strategy, and (c) resources. Scenario, strategy and resources all combine to provide a view of the total framework that will serve the administration in identifying constraints while planning for ways to overcome them as well. The emergent or deliberate strategy may combine with the scenario-based strategy as well as the resources-based strategy to more fully integrate all the avenues of information within the inter-organizational administrative effort to supply guidance and oversight. In addition to these, motivation, control, knowledge and the sources of knowledge all contribute to the ownership and maintenance of the strategic planning and policy formulation process, the development of strategic plans and their respective policies, and the oversight of functional plans and policies that guide the lower level business units.
1.4 Assess the impact of the inherent and respective power and status of the participating organisations and administrations on the inter-organisational strategy and its implementation.
Power and status play an important part in shaping strategy and implementing it. Strategy and policy are formulated at the top of the organizational hierarchy. The various organizations contribute information through their information flows, but only those administrators with power and status within the organization will be the ones to develop policy and oversee its implementation. However, the recent rise of the power of social media has seen power become increasingly concentrated in the hands of those who wield the influence of social media (Bolander, Satornino, Hughes & Ferris, 2015). This communication channel has become extremely useful for Tesla’s CEO Elon Musk—but also very dangerous for the company, as he has used it to make statements to investors that may or may not be true and could cause the company to be substantially fined by the SEC. Such concentration of power and status at the top and in the hands of a single individual who has the ability to put out what amount to press releases without oversight or input from the PR department or from other members of the inter-organizational administration is dangerous.
1.5 Determine which key stakeholders and change-making agents are able to promote and implement inter-organisational strategy.
Key stakeholders and change-makers will wield their power and influence (status) to drive motivation, control, disseminate knowledge and add legitimacy to the overall operation and strategy. Again, Tesla’s CEO Elon Musk is a perfect example of how this would be achieved. Musk provides knowledge to investors and stakeholders, uses his celebrity (status) to control the flow of information and the narrative regarding the organization and inter-organizational policies. Work design, culture, climate, and formal management systems are all overseen by him, which is what investors and many stakeholders want as they recognize him as the visionary and the main reason for the company’s success. People skills, social intelligence, communication abilities, technology like social media as well as assembly room technology and data warehouses can all be used to measure performance and manage performance. In other inter-organizational administrations, key stakeholders would include board members, advisors, lobbyists, workers, clients and customers, and investors. Every stakeholder controls some aspect of information and thus has some aspect of power and influence in terms of shaping strategy, whether it is by sending information and ideas up the pyramid or receiving policy and implementing from the top of the hierarchy on downward.
Task 2
2.1 Compare and evaluate the missions, goals, roles, strengths and weaknesses, opportunities and threats of partner and competitor organisations and administrations.
SWOT analysis is a helpful way to identify where a company is positioned in the market. In comparing and evaluating the missions, goals, roles and strengths and weaknesses, opportunities and threats of partner and competitor organizations and administrations, one can see how this approach is relevant. For example, the company Tesla has as its mission is to focus on “not only all-electric vehicles but also infinitely scalable clean energy generation and storage products. Tesla believes the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better” (About Tesla, 2017). Its goal is to produce an affordable EV (electric vehicle) that is stylish yet clean-energy-based. Its role is to be an innovator in the marketplace. Its strength really rests on the celebrity of its CEO and his ability to communicate a vision to the public that many stakeholders want to invest in. The weakness of the company is its debt problem: it has used Musk’s popularity to fund a great deal of questionable decisions and administrative practices which have resulted in substantial losses year over year. The opportunity to capitalize on Musk’s celebrity and vision, however, are still there as the stock price clings to exponential gains over recent years indicating that investors are still in love with the vision and the mission and the idea of sustainability in style. Threats abound, however, as other auto manufacturers are entering the luxury EV market and have much better administrative experience in managing operations (and actually make profits).
One example would be BMW which has as its mission the goal of creating the ultimate driving experience. Its role in the industry is to produce luxury brand cars and its strength is its long-standing reputation throughout the world. Its weakness is that it lacks a celebrity personality type at the top who can promote a new vision and win popular support. Especially since the market is growth-oriented right now and BMW is already established, the company has less appeal to investors. There is an opportunity for BMW to grow, however, in the EV market and it intends to do so. The threat is that the economy will collapse before EV’s become a viable market.
Tesla’s partner is Solar City, which Tesla has actually bought but this was not viewed as a sound strategic decision financially. Administratively, it has allowed Musk to continue to run the company single-handedly as Solar City’s executives moved over to the Tesla board and have allowed Musk to be himself and wield all the power.
2.2 Compare and evaluate theories and methods of strategy formulation used in partner organisations and administrations.
The scenario based strategy of Royal Dutch Shell can compare to the resource based view of Grant, the deliberate and emergent strategies of Mintzberg, and the types of strategy by Porter. Shell uses scenarios to explore the future potential of an assortment of possibilities. By developing scenarios, Shell looks at whether it would be more profitable to explore for gas and oil, to mine them, to invest in other developments, or to sell off an aspect of the company, for example. It looks at factors and inputs that might impact the scenario and develops strategy accordingly. The resource based theory developed by Grant (1991) looks at the resources of firms to see where competitive advantage lies and then uses resources to leverage that advantage over competitors. Mintzberg’s (1985) emergent strategy is based on the idea that actions can emerge in the form of a pattern that appears over time that shows an organization has learned how to develop a strategy that works but that was not specifically intended. Deliberate strategies on the other hand depend on precise, calculated decision-making that is designed to enable the organization to achieve a clearly defined goal. Porter’s types of strategies are cost leadership, differentiation, and focus. Porter posits that the lowest cost competitor wins the market; the company that provides a product or service that is unique wins the attention; and the company that focuses on the specific target demographic while forgetting the rest of the market wins the niche.
All of these strategies and theories are effective at guiding organizations. The best strategy is the one that works the best for the organization and its particular set of circumstances, mission, resources, aims, power, and so on. Shell benefits from a scenario based strategy because of its industry and its place in the industry both constantly driven by global economic conditions. A smaller company like Tesla, however, might benefit more from Porter’s strategies of differentiation or focus in order to reach its goals of breaking into and dominating the EV market.
2.3 Evaluate how effectively strategies link policy objectives, goals and aspirations to operational outcomes.
Beer’s viable system model (VSM) helps an organization structure effect change and redesign concepts when appropriate (Espejo & Gill, 1997). In order to be successful, however, the VSM has to link S5 (policy setting and direction) with S1 systems (operational units) and make sure that communication and information flow channels have variety. This means that to create an effective strategy with policy objectives, goals and aspirations that link to operational outcomes, the organization’s leaders have to have access to information from workers, stakeholders such as clients, consumers and investors, and other persons who can contribute to the overall vision that the administration will then take to craft the policy for implementation. Various channels of communication and flow have to be open and with the use of technology today, they can be: from social media to virtual meetings to surveys and Big Data, the more channels the better.
2.4 Identify, and assess the impact of, methods for managing risks and opportunities in the strategy.
The types of risk impacting a national or international organization are: Financial and liquidity risk, Operational risks, Technical risks, Market risks, Supplier and customer risks, and Credit risks. Legal risk also occurs when, for example, the EU adopts laws that companies must abide by—as has happened recently with the case of Google and Facebook and their collection of users data. Managing risks like these depends upon using the operational risk road map which provides a way for the practical implementation of a structured framework so that operational risk management along with the MOST dimensions—Management—Operational—Social—Technical—are addressed. Likelihood and Consequences Risk Matrices could also be used to manage risk. Moreover, the barriers to risk management include lack of due diligence, lack of foresight, lack of proper assessment of the possible scenarios (using the Shell strategy), or of the resources available (using the resource-based strategy) or of cost and how other companies are differentiating themselves. Risk tools like FMECA can be helpful in making adjustments.
Task 3
3.1 Assess the means of obtaining, co-ordinating, measuring and analysing strategic intelligence.
Big Data is important to organizations today and using Big Data can help in both national and international organizations in identifying a common set of KPIs that can be used organization-wide. At the SBU level, data and intelligence gathering activities are performed and the information is then communicated upwards to enable the formation of the organizational policy.
Big Data is obtained through the use of survey research and the structured questioning method. Tufte, for example, used structured and unstructured data to identify patterns and weaknesses and indeed believed it was a moral act to do so (Bamforth, 2011). Throughout an organization, however, there can be cultural differences, as analytical or diagnostic methods are used in conjunction with data gathering. Ackoff, for instance, pointed out a fundamental difference between diagnosis and analysis: analysis must precede diagnosis, because the diagnosis depends upon the analysis. An incomplete analysis will produce a wrong diagnosis and the wrong problem will be addressed instead of the right one (Ciborra, Gasbarra & Maggiolini, 1978).
3.2 Interpret strategic intelligence and determine measures of confidence in that intelligence to inform the development, implementation and review of inter- organisational policy and strategy.
As Ackoff points out, analysis cannot right the wrong problem. That is why it is important for organizations to recognize the cultural difference in how they approach data and interpret strategic intelligence. This will affect their confidence in the intelligence to inform the development, implementation and review of inter-organisational policy and strategy. Strategic intelligence based on data collection and analysis is one view of how to approach data. Another is the concept of strategic intelligence based on holism, in which weak signals and emergence are the focus. Different management competences are required for these two approaches: the former requires the ability to use Big Data and data warehouses; the latter requires the ability to move from signals to meaning to organizing to strategy (Rouse & Ziestma, 2008). The difference between national and international organizations would be that there are laws that must be followed, which will differ from zone to zone; cultural differences in approaches to intelligence will require different frameworks; norms will vary based on customs.
3.3 Explain how strategic intelligence has a key influence in inter-organisational planning and decision-making.
Strategic intelligence has a key influence in inter-organizational planning and decision-making in the sense that the two approaches—the idea that data collection is the pathway to intelligence vs. the idea that holism is the pathway—can impact inter-organizational planning. Data collection contributes to the development of policies at the executive levels: these policies are passed down to lower level managers and leaders who pass up to the executives the data that is collected and analyzed. The lower level workers in the inter-organizational operation, which can include organizations to whom data collection and analysis is outsourced, will be the ones overseeing the data collection and analysis process. In this sense, the executives at the top and dependent upon lower level engineers and IT firms for all their decision-making. What seems like a top-down approach is really more of a bottom-top approach, because the Big Data organizations are the ones wielding the power and influence. In the holistic approach, the executives maintain more control over what is seen, because they are more accustomed to this type of analysis: Big Data techniques are highly specialized, whereas holistic-based approaches to intelligence are more intuitive.
3.4 Examine the concept of “acceptable risk” associated with the gathering and use of strategic intelligence.
Frequentist vs. Bayesian statistics both offer pros and cons for the gathering and usage of strategic data and intelligence. Frequentist statistics make the assumption that data will be normally distributed, which means that acceptable risks are contained within a predetermined set of parameters and controls. They rely on the standard deviation of the mean as a control limit for acceptable risk. Bayesian statistics focuses instead on the idea that risks can be unforeseen and unplanned for—Black Swan events—i.e., the probability of something happening that could trigger a domino effect of reactions. Both approaches allow for an organization to make precautions; however, there is actually some interplay between the two, as both can recognize that the other offers something it does not. The Frequentist approach for instance can appreciate the Black Swan warning of caution that Bayesian statistics provides while the Bayesian approach can appreciate the consistency and stability of the Frequentist method (Bayarri & Berger, 2004).
Acceptable risk for organizations will differ, especially as organizations really have no memory. For example, acceptable risk for Netflix is spending billions of dollars on content annually, which is money that it borrows at currently low rates. Another company would view this as unacceptable risk—but there are reasons why: Netflix is public and benefits from a high stock price and can leverage its popularity with investors by borrowing against the future to reap short-term benefits, which will please CEOs and other executives in the inter-organizational field, all of whom can cash out their shares at a high price because of the popularity of growth stocks. A company that has already grown would view borrowing billions to add content as unacceptable risk because it would not be able to leverage its popularity as a growth stock and would have perhaps a longer-term outlook, with executives less eager to cash out shares.
3.5 Evaluate the effectiveness of the risk theories and models used in inter-organisational strategic planning.
The effectiveness of the risk theories and models used in inter-organizational strategic planning depends on their individual situations—for example, the scenario for Netflix will differ from that of Disney or Sony. Risk models will examine management, operational, social and technical factors while also seeking to manage the prevention of risk, the prediction of risk, and the transference of risk. For example, mortgage lenders will loan money to sub-prime customers and then transfer the risk off their books by bundling the loans and selling them to investors because they know that transference of risk is a preventive strategy that works based on risk prediction models.
There is also a need to develop know how’s that can be applied in inter-organizational contexts. Underpinning knowledge especially in the international environment can help organizations benefit from various factors that could impact cash flow, exchange rates, interest rates, swaps, derivatives exposure and so on. Inter-organizational leaders must be aware of the need to know the fundamentals of risk strategy so that they see how their role impacts the whole.
Task 4
4.1 Evaluate the concepts of culture, character, ethos, beliefs, attitudes and needs and how they impact on the development and management of inter-organisational alliances and coalitions.
Hofstede (1984) describes six cultural dimensions in his model of how culture impacts different people. The dimensions include: the power distance index, individualism vs. collectivism, uncertainty avoidance, masculinity vs. femininity, long-term orientation vs. short-term orientation, and indulgence vs. restraint. These dimensions can impact how an organization goes about mega marketing—i.e., Kotler’s idea of managing an organization’s external environmental factors, such as tech, politics, laws, society, media, and so on. The use of social media by companies like Tesla or even by the U.S. President is an example of mega marketing that incorporates aspects of Hofstede’s model as well. Mattel in China had to reshape its image to sell to the Chinese, for example: that is the degree to which culture plays a role. National beliefs in China, for example, focus on collectivism rather than individuality. In the West, individuality is highly prized—but not so much in China. China as has more of a view on the long-term whereas the West is more oriented towards the short-term. For this reason, Barbie had little appeal for the Chinese audience, which is why Mattel had to pull out of China after a failed attempt to sell its products there initially: it did not research the culture to understand the differences between Chinese national beliefs and American national beliefs.
As Hofstede As Hofstede notes in his “identity pyramid,” the very top of the pyramid is where “we see ourselves as complex and special, and we resist any tendency to simplify, stereotype, or make generalizations about who we are” (Davidson, 2002). However, identity is often impacted by the way we think others see us, and that has to be taken into consideration by organizational leaders as they will be working to appeal to other nationalities in international business situations. They will have to respect different laws and customs and be flexible in their own manner so as not to offend. In the West, for example, there are fairy stories about girls becoming princesses after slaving away unrecognized by the world only to be given a chance to win the love of a young prince thanks to the intervention of a fairy godmother. This speaks to the idea in the West of upward mobility: people in the West believe that they can lift themselves out of a lower class situation and enter into an upper class situation thanks to hard work and virtue. This is the essence of the American Dream. In other parts of the world, such as India, these stories are not as culturally relevant—particularly because in places like India there is a strong focus on the caste system and the idea that upward mobility is simply not possible.
4.2 Assess the influence of domestic, national and multi- national contexts on the development and implementation of inter-organisational policy and strategy.
The underlying beliefs of domestic, national and multinational organizations are shaped by these same fairy stories, as they form the essence of beliefs that people hold. However, historical events also play a significant part in the contexts of the development and implementation of inter-organizational policy and strategy. For example, a company in the U.S. that partners with one in Germany and one in China and another in South Africa and a fourth in France will also have to contend with four different historical narratives that have constructed these countries’ identities. South Africa has struggled with and still struggles with apartheid, so this will impact the extent to which a “white” corporation is able to find favor in the country, especially during a hostile period like now when lands are being taken from white farmers to give to blacks. Germany, as another example, had to suffer extensive war reparations after WWI, and then after WWII it had to deal with the aftermath of losing its dignity on the world stage. Japan suffered a similar fate at the hands of U.S. military technology. In the Middle East, there is more turmoil as proxy armies fight for territory, resources like water and oil, and access to pipelines. In short, all of these inputs will impact the context that a multi-national organization will have to consider: not every part of the world is the same or shares the same ideas and beliefs. Some are focused more on practical concerns, others on redressing wrongs, and others on building for a brighter future while still others are idealistic and entrepreneurial.
An inter-organizational strategy and policy therefore will necessary take into consideration all these different contexts—at the local, national and international level. For example, relations between Iran and the U.S. have not been good for many decades. A European company will struggle to enter into business with Iran out of fear of sanctions from the U.S. though at the same time it will want to keep a good relationship with Iran because of the potential for rewards should the U.S. and Iran ever iron out their differences or should the rest of the world ever construct a settlement network that reduces the power that the U.S. wields over other countries monetarily. These contexts are important to think about, because what happens at the local level (such as an Iranian revolution and the taking of American hostages) has an impact on the international level for years to come—which is an effect of globalization.
4.3 Analyse information about cultural differences to propose innovative ways of mitigating or enhancing the impact of cultural differences on inter-organisational policy and strategy.
Cultural differences are important to consider when entering into business relationships with other organizations. Russian culture for instance is focusing on traditional qualities and promoting conservatism in the face of Western liberalism. Nationalism is on the rise in the U.S. and other parts of the world, such as in the UK. Innovative ways of mitigating or enhancing the impact of cultural differences on inter-organizational policy and strategy are to be mindful of how historical and cultural events impact a nation’s orientation and how certain countries tend to fight for long periods of time over regions, such as China with its neighbors in the South China Sea. Countries want to appear strong to other nations. North Korea attempted to do this so as to threaten the U.S. and keep it at bay—but President Trump showed that he too could be strong and he intimidated North Korea into backing down; first he demonstrated toughness then he demonstrated a willingness to talk and negotiate a deal. This shows that enhancing the impact of cultural differences or mitigating them does not mean that one organization has to stop being who or what it is but rather that some negotiation between differences is required—but there should always be a demonstration of respect on the part of policy makers because strategy that has no respect clause built into it is a strategy aiming for war.

References
About Tesla. (2017). Tesla’s mission. Retrieved from https://www.tesla.com/about
Bamforth, I. (2011). Edward R Tufte–the ‘Information Man’: a profile of America's
leading proponent of effective strategies for seeing and showing. Br J Gen Pract, 61(593), 737-740.
Bayarri, M. J., & Berger, J. O. (2004). The interplay of Bayesian and frequentist
analysis. Statistical Science, 58-80.
Bolander, W., Satornino, C. B., Hughes, D. E., & Ferris, G. R. (2015). Social networks
within sales organizations: Their development and importance for salesperson performance. Journal of Marketing, 79(6), 1-16.
Brinkhoff, A., Özer, Ö., & Sargut, G. (2015). All You Need Is Trust? An Examination of
Inter?organizational Supply Chain Projects. Production and operations management, 24(2), 181-200.
Ciborra, C., Gasbarri, G., & Maggiolini, P. C. (1978, October). A participative approach
to systems analysis: An action research in the local government. In Conference of the European Cooperation in Informatics (pp. 62-81). Springer, Berlin, Heidelberg.
Cox, J. & Goldratt, E. M. (1986). The goal: a process of ongoing improvement.
Croton-on-Hudson, NY: North River Press.
Davidson, M. (2002). Primer on social identity: Understanding group membership.
Charlottesville, VA: University of Virginia Darden School Foundation.
Espejo, R., & Gill, A. (1997). The viable system model as a framework for understanding
organizations. Phrontis Limited & SYNCHO Limited.
Goldratt, E. M. (1998). Essays on the Theory of Constraints. Great Barrington, MA:
North River Press.
Grant, R. M., (1991) The resource-based theory of competitive advantage:
implications for strategy formulation. California Management Review 33 (3) 114-135.
Hofstede, G. (1984). Cultural dimensions in management and planning. Asia Pacific
Journal of Management, 1(2), pp.81-99.
Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic
management journal, 6(3), 257-272.
Rouse, M. J., & Ziestma, C. (2008). Responding to weak signals: the emergence of
adaptive dyanmic capabilities for strategic renewal. In The international conference on organizational learning, knowledge and capabilities (pp. 1-23).