CHAPTER :11

ACHIEVING
INTERRELATIONSHIPS

Presented by
Batul Bharmal
Pankaj Chaudhari
Shivkala 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
Ø An interrelationship leave negative
impact on Business unit but
Beneficial to the firm as a whole.
Ø Difficult to agree Business unit to
work together
Loss of Autonomy and
control
 Some of the common source of
resistance include..
ü Protection of Turf
Manager don’t want to give up power

ü Perceived dilution of buyer

relationship
Concerned with loss of buyer by sister

company or damage their image

e.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
units
Ø Difficult to measure BU’’s contribution in
firm
Ø Managers not give performance if they
are uncertain to receive credit for
them.
 Measurement biases
Ø The measurement of revenue, cost and
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


q Highly decentralized firms with many small

business units
q Firms with a strong tradition of autonomy
q Firms built through the acquisition of
independent company
q Firms that have made little or no effort to
create a corporate identity


q 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.
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
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
Horizontal conflict resolution
process

 The corporate role in
facilitating interrelationship
 Interrelationship and mode of
diversification
 THANK YOU