CHAPTER :11ACHIEVING INTERRELATIONSHIPS

Presented byBatul Bharmal

Pankaj ChaudhariShivkala Vasava

Vishal Gandhi

Content….

Interrelationships….??? Impediments to Achieving Interrelationships Organizational mechanism for achieving

interrelationship horizontal structure Horizontal system Horizontal human resource practices Horizontal conflict resolution process

Interrelationships….???

Example: If TATA agrees with KORUS to share the

Technology or Production division etc. then its called the Interrelationship.

Type of Interrelationship 1.Tangible interrelationship(production

equipment) 2.Intangible interrelationship(expert) 3.Competitor interrelationships(market

share)

Impediments to Achieving Interrelationships

Tangible interrelationship require BU to share activity in value chain with other with remaining a separate entity.

Can raise cost. Business units view each other as a

rivels competing for limited resources and management attention.

Sources of impediments

A symmetric Benefit An interrelationship leave negative

impact on Business unit but Beneficial to the firm as a whole.

Difficult to agree Business unit to work together

Loss of Autonomy and control

Some of the common source of resistance include..

Protection of TurfManager don’t want to give up powerPerceived dilution of buyer

relationshipConcerned with loss of buyer by sister

company or damage their imagee.g. stockbrokers

Inability to fire a sister division

More controllable to deal with outside company

Conflicts inside and outside firm can be “fired”

Conflicts over priorities in shared activity

Shared activity create conflicts

e.g. engineers allocation on different department

Unfair blame for poor performance

Managers evaluates the result and business unit manager fears about the blame game.

The business unit autonomy is a key to firms success

Trained and promoted those managers who performed well in this environment.

Biased incentive systems Some incentive system problem encourage

the formation of outside coalition not with sister unit.

Some of the way in which incentive systems work against interrelationship include… Lack of credit for contribution to other unitsDifficult to measure BU’’s contribution in

firmManagers not give performance if they are

uncertain to receive credit for them. Measurement biasesThe measurement of revenue, cost and

assets and allocation

Differing business unit circumstances

E.g. Tata & korus Strong business unit identities Differing cultures Management differences Differing procedure Geographic separation

Fear of tampering with decentralization

Reasons….. Dampening entrepreneurship Desire for a consistent organization Difficulty of measuring performance Fear of providing “Excuses”

Interrelationships and equity

Fairness principle

The managers complaint about the reward given to other who does not perform well

All business units must agree on interrelationships.

Difference in impediments among firms

Greatest difficulty in following condition

Highly decentralized firms with many small business units

Firms with a strong tradition of autonomy Firms built through the acquisition of independent

company Firms that have made little or no effort to create a

corporate identity

Firms which little or no history of interrelationship.

Organizational mechanism for achieving interrelationship

Business unit manager must the benefits and compromises which is not possible without in-depth knowledge.

Not occurred by incidents Frustrated with conflicts Organization structure is horizontal &

vertical

Horizontal organization categories

1. horizontal structure

Groping of business units Interdivisional task force

Partial centralization

Grouping business units

Group or sector in which number of business unit reports to single executive

The single most powerful device for focusing attention on and reinforcing interrelationship

All business unit reports to single group or executive the all problems will solved

The group strength varies from group to group.

To manage, process of balancing the overall competitive advantage against cost.

Role of the group executive Must become the chief strategic officer of

the group In depth knowledge in group is necessary

Partial centralization It is common in activities such as

procurement, sales & logistics etc. It is desirable to Report to a line manager Require proper structure and awareness

about how it is valuable to firm

Other cross business unit organizational mechanisms

Important devices to serve this purpose

1. market focus committees 2.Technology, channel and other

interrelationship committees 3.temporary task force

Managing cross business unit organization

cross business unit organization must report to senior executive to provide information

Headed by credible executives Influence their unit to work Help to overcome the other

impediments to interrelationship

Horizontal system

Management systems with a cross business unit dimension

Horizontal strategic planning

Horizontal procedure(pricing, purchasing, hiring)

Horizontal incentives.(Involve group rather than the individual manager)

Horizontal human resource practices

human resource practices that facilitate business unit cooperation, such as cross business unit job rotation, management forums and training.

Personal rotation among business unit Some firm wide role in hiring and

training Promotion from within Cross business unit forums and meeting Education on interrelationship concept

Horizontal conflict resolution process

The corporate role in facilitating interrelationship

Interrelationship and mode of diversification

THANK YOU