Collateral Organization

Ex. GM in Flint Michigan

Meeting between randomly selected people from all levels of organization to deal with problems.

Threat? No

Quality Circle? No

Project team? No

Benefits are : 1. Pension fund underfunded??

2. people (Hawkins and Granovetter)

Hawkins (Benefit of Collateral Organization)

30 students from working class(low class), and 30 from the middle class and showed them a series of 4 pictures telling a story. All 60 students had the same vocab, intellegence, and perception. They did however have a difference in their high variety role set.

The working class had low variety role set:

 Similars: although they are nice people, what can you teach or learn from them?

Stereotypic narrow world: Workers think abotu 5pm and beer while execs think about ROA, ROI, ROE.

The middle class had a high variety role set:

Break out of trap, be in the big picture.

 Collaterall organization

When explaining the pictures they saw, the working class did not have reference points, and did not explain the story unless you had the pics infront of you, while the middle class students could explain you the story without ever seeing the pics.

There were 2 neighborhoods in boston. They were settled same decade, same old country, both had thriving neighborhoods. As dwellers grow older, neighborhoods go downhill.

One neighborhood lived, while the other was wiped out. This was due to the ties. The neighborhood with the strong ties died, while the weak ties lived.

This was because the weak ties could still reach out with one hand because they werent wrapped up in their strong ties.

SOWT - Strength of Weak ties

Never loose touch with the idea that you need friends in low places.  

1. Low entry barriers ($, expertise)

2. Absence of econmies of scale

3. Costs (Inventory, Scrap)

4. High Transport Costs of fragmented

5. Regulation (decision between fragmented and consolidation. Trade-off between most modern banking systems and personalized service)

6. Newness of industry

7. Diseconomies of Scale (Fast change, creativity, exculsivity)

8. High exit barriers (Economic barriers - Cant get rid of assets. Psychological barriers - subborn pride).

Strategy has become all about innovation. High and low tech industries can be fragmented or consolidated (face of industry).

Consolidation or Fragmentation has no effect on how much technology is used. And how much technology is used has no effect on face of industry.

Economies of Scale

Price    ->(constant)

-Cost    v    (down)

=Profit   ^         (up)

Absence of Economies of Scale

Price    ->(constant)

-Cost    ->(Constant)

=Profit   ->(Constant)

Price    ->(constant)

-Cost    ^         (up)

=Profit   v      (Down)

1. Create economies of scale

2. Standardize and modularize

(Grow large by redesigning processes to be abke to produce one industry all in one company) ex. chairs...back, legs, seats, all same place

3. Neutralize time and distance (omni-presence)

Run stores in all different places (franchising) this lowers transport costs by being everywhere all at once.

History of Strategy timeline

Concentrated vs Fragmented Industry

Concentrated

• 4 biggest firms in the industry control more than 40% market share.

Fragmented

• 4 biggest firms in the industry control less than 40% market share.

'69 had a bigger industry than in '57, so half was actually even better than 78%

O>E and E>O (both correct)

> is have power over.

O>E IFF (only need 1)

1. Slack resources

2. Flexibility (like ninjas - dont get wet)

3. Proactivity

4. Enviromental Scanning (needle in a haystack, but if you find it, its all worth it)

Company                           Headquarters

Sony                                Japan

Bertelsman(Merged)                      Germany

EMI                                 Britain

Vivendi Universal              France

WMG                               USA

Then: The industrial age - Perfect and cheap - analog.

Now: Info age - Perfect, fluid, almost free (downloading music)  - digital

Future: Authentic, personalized (not vanilla), and liquid. Those who look for the new will be succesful.

Candles: Used to be for the rich, were a sign of luxury. Then electricity came and were for the poor. Then electricty was around for even the poor, and candles became luxurious again. Now scented candles are for the rich and luxurious.