33 Questions
What is the organizational environment?
The set of pressures and forces surrounding an organization that can affect the way it operates
What does the term 'organizational domain' refer to?
The specific range of goods/services that the organization produces and the customers it serves
How can an organization enlarge and protect its domain?
By expanding internationally
What does global supply chain management involve?
Planning and controlling supply/distribution activities related to the movement of goods
Which forces are part of the specific environment of an organization?
Competitors and market demand
What is the main goal of an organization in managing its environment?
To maximize its ability to secure resources
What is the main challenge associated with integration and communication according to the text?
Bureaucratic costs
According to transaction cost theory, what must managers do when deciding which strategy to pursue?
Estimate the transaction cost saving from using different linkage mechanisms
What is an example of a linkage mechanism mentioned in the text that helps organizations avoid bureaucratic costs while minimizing transaction costs?
Keiretsu
What does franchising involve according to the text?
Selling the right to use a company's resources in return for a flat fee or share of profits
What does outsourcing involve according to the text?
Moving value creation activity outside the organization where it is done by another company
What is the purpose of using transaction cost theory according to the text?
To weigh the saving in transaction costs against bureaucratic costs of operating linkage mechanisms
How can managers use transaction cost theory when choosing an interorganizational strategy?
By weighing transaction cost saving against bureaucratic costs of operating linkage mechanisms
What are three examples of linkage mechanisms mentioned in the text?
Keiretsu, franchising, strategic alliance
How does keiretsu function as a linkage mechanism according to the text?
It helps achieve benefits of a formal linkage mechanism without incurring its costs
What is the significance of estimating bureaucratic costs when choosing an interorganizational strategy?
To evaluate the cost of operating different linkage mechanisms
What is an interlocking directorate?
A linkage resulting from a director sitting on the board of another company
What is the purpose of long-term contracts in strategic alliances?
To reduce competitive uncertainty
What is a keiretsu?
A group of organizations owning shares in each other and working together to further their interests
What is the ultimate weapon for managing competitive interdependencies?
Merger and takeover
According to transaction cost theory, when do transaction costs increase?
When organizations begin to exchange more specific goods and services
What is the goal of an organization according to transaction cost theory?
To minimize the costs of exchanging resources in the environment
What are sources of transaction costs?
Environmental uncertainty and bounded rationality
When will an organization start using more formal linkages such as long-term contracts to govern its exchanges?
When transaction costs increase
What are the three factors that cause uncertainty in the organizational environment?
Environmental complexity, environmental dynamism, and environmental richness
According to the resource dependence theory, what are the two aspects of an organization's resource dependence that need to be managed?
Influence over other organizations and response to the needs of other organizations
What is environmental richness a function of?
The amount of resources available to support an organization's domain
What do symbiotic interdependencies generally exist between?
An organization and its suppliers and distributors
How does an organization manage symbiotic interdependencies by neutralizing problematic forces in the specific environment?
By bringing problematic forces within the organization
What is the main goal of an organization according to the resource dependence theory?
To minimize its dependence on other organizations for resources
What are the factors that determine the level of demand for products and price of inputs?
Economic forces and demographic forces
In what type of environment are uncertainty levels low because resources are plentiful?
Stable environment with predictable force effects
What is environmental dynamism a measure of?
The degree to which forces in the specific and general environments change quickly over time
Test your knowledge of strategic alliances with this quiz focusing on the types and characteristics of strategic alliances, including interlocking directorates and formal alliances. Explore how companies can share resources and develop new business opportunities through strategic partnerships.
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