Lecture 4 Flashcards
What are the major sources of change?
- Advancements in science and technology (artificial intelligence, biotechnology, renewable energy, and communication technology are reshaping industries, creating new ones, and altering the way people live and work)
– Globalization (the impact of industrial revolutions on world economy is booming.
The impact of industrial revolutions, especially the ongoing digital and automation-driven Fourth Industrial Revolution, is significant. These revolutions have altered the nature of work, production processes, and supply chains. They’ve also led to discussions about the future of work and the potential for job displacement.)
– Climate change:
– World demographics: Changes in the world’s demographics, including population growth, aging populations, and urbanization, are transforming societies and economies. This affects issues like healthcare, social services, and the job market.
What are some other strategies for change?
- another strategy is to actually create change, tesla, amazon, koppla till omnichannel. Weigh a lot in political decisions
-Exit strategy, drop out of the industry, not willing to deal with the new trends of consumption etc.
What is the difference between change for individuals and change for businesses?
We have to recognize that predicting, anticipating, accepting, and adapting to change is not easy:
For individuals, change is disruptive, uncomfortable, and stressful.
For businesses, there are resources of inertia that they have to overcome.
Why are the life cycles of firms shorter than industries?
The forces of inertia (stagnation) are even stronger. The life cycles of firms tend to be much shorter than the life cycles of industries. Changes at industry level seem to occur through the downfall/death of existing firms and the rise of new ones, rather than through continuous adaptation by the same firms.
while industries can persist and evolve over longer periods, individual firms’ life cycles are often shorter due to the various challenges they face in adapting to industry and market dynamics, technological change, and competitive pressures. Effective management, innovation, and strategic decision-making are crucial factors that can help extend a firm’s lifespan within a dynamic industry.
what is the main facotr that affects market share?
mainly profitability that affects market share (apple example about market share, market share may not be sufficient to measure how a company’s performing. Apple takes 75% of smartphone profits despite 13% market share.)
What has taken kraft heinz stock to drop suddenly?
They ignored that consumers are changing and didn’t adapt. They exploited current opportunities but didn’t explore the change.
Change is not only the result of external forces:
The competitive strategies of firms are key drivers of change—industries are being continually re-invented by competition.
Understanding, even predicting change in an industry’s environment is difficult.
But an even greater challenge is adapting to change.
What are the sources of inertia, barriers to change?
- Organizational Routines:
Existing patterns of coordinated activity make it difficult to develop new capabilities.
- Social & Political Structures:
Change threatens existing social relationships and power structures.
- Conformity:
Imitation locks firms into common structures and strategies (“institutionalism”). Such as a lot of japanese firms in the 70s and 80s, they adapted and imitated successful firms.
- Limited Search:
Organizations tend to limit search to areas close to their existing activities, preferring exploitation of existing knowledge over exploration for new opportunities.
- Complementarities between Strategy, Structure, and Systems:
Firms create unique configurations of close-fitting organizational features. Localized changes tend to be dysfunctional, while systematic change is difficult.
What are some threats to technological change?
- Competence Enhancing versus Competence Destroying Technological Change:
Established firms will have difficulty in adjusting if the new technology requires different resources and capabilities from those they already possess.
- Architectural versus Component Innovation:
Established firms have greater difficulty adjusting to innovations that involve a new product architecture than those that relate to particular components.
- Sustaining versus Disruptive Technologies:
New technologies that augment existing performance attributes are easier to adapt to than those that incorporate different performance attributes compared to existing technology.
What product life cycle stage is the electric vehicle in?
The growth phase. (Introduction, growth, maturity, decline)
What do firms need in terms of dual strategies?
- A strategy for today that exploits existing capabilities and resources and current market positions
- A strategy for tomorrow that prepares for the future
What do firms need in terms of organizational ambidexterity?
That means a company’s ability to effectively pursue and balance two seemingly contradictory strategies or capabilities at the same time.
- Exploit existing capabilities and resources and current market positions
- Explore for tomorrow that prepares for the future
What are the differences between dual strategies and organizational ambidexterity?
While dual strategies involve maintaining separate, distinct business models for different markets or customer segments, organizational ambidexterity is about managing the tension between exploiting current capabilities and exploring new opportunities within a single organization. Dual strategies are a way to diversify risk and revenue streams, while ambidexterity is a strategy for achieving adaptability and innovation within a single entity.
How do you combat organizational intertia?
- Creating Perceptions of Crisis:
A crisis facilitates organizational change. If there’s no crisis, create the perception of one! It’s crucial to note that creating a perception of crisis for manipulative purposes can have severe ethical, legal, and reputational consequences.
- Establishing Stretch Targets:
Demanding performance targets can generate ambition and mobilize effort.
- Organizational Initiatives:
Initiatives launched by the CEO can be useful vehicles for change. For example, Jack Welch at GE was known for using such initiatives.
- Reorganizing Company Structure:
Restructuring breaks down existing power bases and creates openings for external hires.
- New Leadership:
If an organization is performing poorly, an external CEO tends to be more effective at leading change than an internal appointment.
During what life cycle phase is ROI and product R&D/sales higher?
During growth and maturity.
