Lecture - 06

# Boundary Spanning
Boundary spanning occurs at the periphery of organizations where the outer
boundary allows for permeability for organizational actors to look out and others to
look in. This can facilitate coordinated activity where new structures are forged to
enable the sharing of resources and joint decision-making .

When Two or more organizations work together/cooperate, boundaries overlap .

Spanning boundaries is an important practice to find out new opportunities and
possibilities. It lets the boundaries intersect and collide to channelize new forms of
collaboration and innovative ways of working. It can help an organization to find out
new frontiers for resolving some issues.Boundary spanners work with a great
variety of people from differing positions, backgrounds, and locations.

Some examples of boundary spanning are :

● Merger
● Acquisition
● Joint venture
● Strategic Alliance
● Outsourcing

Stock market is also an organization. It is an individual entity. Society provides

capital to the stock market. Other organizations which are in stock market, also
contribute in the stock market organization.
# Merger
A merger occurs when two firms join together to form one .A merger is the
voluntary fusion of two companies on broadly equal terms into one new legal entity.
The companies agreeing to merge are typically equal in terms of size and scale of
operations.
Mergers are most commonly done to
● increase market share,
● reduce costs of operations,
● expand to new territories,
● increase efficiency ,
● increase productivity ,
● diversify products,
● reduce risk and competition
● grow revenues, and
● increase profits
all of which should benefit the firms' shareholders. After a merger, shares of the new
company are distributed to existing shareholders of both original businesses.
Mergers are a great way for two companies with unique experience and expertise to
come together and form one business that is more profitable than the two entities
were on their own. Example : Exxon-Mobil .

# Acquisition
An acquisition occurs when one company purchases and takes over the operations
and assets of another. The company that purchases another is called the acquiring
company, and the company that is bought is the acquired, or target, company.
Acquisitions can be the amicable result of friendly discussions between two firms in
which the target company welcomes the acquisition. In this situation, the two
companies negotiate the terms of the acquisition and ultimately reach an
agreement.
However, acquisitions can also occur against the will of the acquired firm’s
management in what is called a “hostile takeover.” In a hostile takeover, an outside
firm acquires a controlling interest in the target firm by purchasing more than 50%
of the target company’s shares.
Companies acquire other companies for various reasons. They may seek economies
of scale, diversification, greater market share, increased synergy, cost reductions
etc.
Example : Facebook buying Whatsapp and Instagram .

#What is the difference between a merger and an acquisition?

The most common difference between a merger and an acquisition relates to the
size of the companies involved. When one company is much larger than the other, it
is likely that it will integrate the smaller one into the larger one in an acquisition.
The smaller company may still retain its legal name and structure, but is now owned
by the parent company. In other instances, the smaller company ceases to exist
completely.
When the companies are of a similar size, they may come together to form a new
entity which is when a merger occurs.
In an ‘unfriendly’ deal (or hostile takeover), a target company does not wish to be
purchased, but may do so out of necessity. In these instances, it is always considered
an acquisition

Some of the largest mergers and acquisitions of all time.

1. Verizon and Vodafone (acquisition)
2. Heinz and Kraft (merger)
3. Pfizer and Warner-Lambert (acquisition)
4. AT&T and Time Warner (merger)
5. Exxon and Mobile (merger)
6. Google and Android (acquisition)
7. Disney/Pixar and Marvel (acquisition by Disney)

# Joint Venture
In general a joint venture is an agreement by two or more people or companies to
accomplish a specific business goal together. In buisness :
A joint venture (JV) is a business arrangement in which two or more parties agree to
pool their resources for the purpose of accomplishing a specific task. This task can
be a new project or any other business activity. Joint ventures can combine large
and smaller companies to take on one or several big, or little, projects and deals.
Generally, a joint venture consists of each of the following characteristics:
● The parties undertaking the joint venture are legally independent, with the
exception of the work they do together during this collaboration. The venture
is its own entity, separate from the participants' other business
interests .Here Individual company’s existence is not at risk
● The parties set out to accomplish a specific, mutually beneficial goal.
● Both parties contribute resources, share ownership of the joint venture’s
assets and liabilities, and share in the implementation of the project. Each of
the participants is responsible for profits, losses, and costs associated with it.
● The joint venture is temporary (but can be short or longer-term), dissolving
once the goal is reached.
There are many reasons to join forces with another company on a temporary basis,
including for purposes of expansion, development of new products, or entering new
markets (particularly overseas).
Here are some joint venture examples:
● Two mobile phone companies agree to share their network.
● A transportation provider and network provider join forces to provide Wi-Fi
on the transportation platform.
● Multiple real estate developers work together to build a shopping complex.

# Strategic Alliance
A strategic alliance is an arrangement between two companies to undertake a
mutually beneficial project while each retains its independence. The agreement is
less complex and less binding than a joint venture, in which two businesses pool
resources to create a separate business entity.
A company may enter into a strategic alliance to expand into a new market, improve
its product line, or develop an edge over a competitor. The arrangement allows two
businesses to work toward a common goal that will benefit both.
The relationship may be short- or long-term and the agreement may be formal or
informal.
The deal between Starbucks and Barnes & Noble is a classic example of a strategic
alliance. Starbucks brews coffee. Barnes&Noble stocks the books. Both companies
do what they do best while sharing the costs of space to the benefit of both
companies.
Strategic alliances can come in many sizes and forms:
● An oil and natural gas company might form a strategic alliance with a
research laboratory to develop more commercially viable recovery processes.
● A clothing retailer might form a strategic alliance with a single manufacturer
to ensure consistent quality and sizing.

# Joint Venture vs Strategic Alliance

A joint venture is a form of business arrangement entered into for the purpose of
accomplishing a specific task by combining resources. On the other hand, a strategic
alliance is an informal agreement between parties to reach a mutually beneficial
goal by sharing resources. Furthermore, a joint venture is a separate legal entity,
whereas a strategic alliance is not.
In a joint venture, parties operate as one. They combine their resources to make a
separate legal entity. Conversely, in a strategic alliance, parties work together but
operate separately and independently.
In a joint venture, there is usually a contract outlining the duties and obligations of
each party. On the contrary, a strategic alliance can be no more than a handshake
between the parties. However, this may lead to increased risk of trust.

# Outsourcing
Outsourcing is a business practice in which a company hires a third-party to
perform tasks, handle operations or provide services for the company. Outsourcing
is a practice usually undertaken by companies as a cost-cutting measure.
The outside company, which is known as the service provider or a third-party
provider, arranges for its own workers or computer systems to perform the tasks or
services either on site at the hiring company's own facilities or at external locations.
Outsourcing can help businesses reduce labor costs significantly. When a company
uses outsourcing, it enlists the help of outside organizations not affiliated with the
company to complete certain tasks.
In addition to cost savings, companies can employ an outsourcing strategy to better
focus on the core aspects of the business. Outsourcing non-core activities can
improve efficiency and productivity because another entity performs these smaller
tasks better than the firm itself. This strategy may also lead to faster turnaround
times, increased competitiveness within an industry, and the cutting of overall
operational costs.
Advertising, office and warehouse cleaning, and website development are the best
examples of outsourcing.

# Supranational-Organization :
The supranational definition describes a group of multinational associations
wherein member countries have the decision-making authority over issues that
affect the sovereignty of each member state.
The EU, NATO , ASEAN, the World Trade Organization (WTO) are all supranational
groups, to one degree or another. In the EU, each member votes on policies that will
affect each other member nation.
These organizations are responsible for regulating the market, overseeing the
international monetary system, establishing international treaties, and promoting
international norms for activities like trade and sports.
These associations are global in scope and have regulatory powers over the
interaction between nations and large organizations.

# Confedaration
Confederation, primarily any league or union of people or bodies of people. The
term in modern political use is generally confined to a permanent union of
sovereign states for certain common purposes—e.g., the German Confederation
established by the Congress of Vienna in 1815.

# Formal Economy vs Informal Economy

In a formal economy, a worker:
● has a formal contract with the employer
● has pre-defined work conditions and job responsibilities
● gets an assured and decent fixed salary with perks and incentives
● has fixed duration of work time
● is part of an organized group of people working in the same environment and
is legally and socially aware about its rights
● is covered by a social security for health and life risks
● has to pay tax and every activity is listed
● In BD 30-40% economy is formal

In an informal economy, worker has:

● has no formal contract with his employer
● has no systematic work conditions
● gets irregularly and unevenly paid.
● has no forum to express his grievances
● has no fixed hours of work and mostly earns hand to mouth
● is not covered by any kind of social security system and has poor knowledge
about the need to protect himself socially and economically
● does not have to pay tax and activity is not listed
● In BD 60-70% economy is informal
For example : Street vendors

# Tax Holiday
Lecture - 02
Organization Boundary are defined by :
● Exchange
● Transaction
● Communication
# Boundaryless Organization
Organizations, by definition, are entities with boundaries. External boundaries
separate a company from its suppliers and customers and define its geographic
reach. Internal boundaries separate the departments between each other,
management from employees. Such lines of differentiation have been necessary.
Different departments in the organization work towards the common goal of the
overall success of the business.
However, companies that thrive within the new environment of global competition,
rapidly changing technologies, and shifting markets are characterized by not having
many boundaries. The new model of success is defined as “boundaryless
organization”, a term created by Jack Welch during his term as CEO of GE.
A boundaryless organization is a company that rejects the external boundaries and
internal hierarchies of more traditional organizations. A boundaryless organization
seeks to remove vertical, horizontal, and external barriers so that employees,
managers, customers, and suppliers can work together, share ideas, and identify the
best ideas for the organization. Some believe that the boundaryless organization is
the perfect organizational structure for the 21st century.
In boundaryless organizations, employees are empowered to make decisions;
therefore decisions are made by people closest to the root of the problem and who
have to live with the consequences. Empowering and giving authority to employees
allows the shortest time between decision and implementation.
The primary goal of such organizations is to ensure greater flexibility and
responsiveness, as well as a smooth flow of information and ideas.

# One man Organization

One person company (OPC) means a company formed with only one (single) person
as a member, unlike the traditional manner of having at least two members.
The concept of OPC is not alien to the world. Through the years, this concept has
been legally recognized in the UK, USA , China, Singapore , Turkey , UAE, Pakistan .
A sole proprietorship business organization is a 'One man show' type of
organization. A sole proprietor single handedly manages such an organization. He is
the sole decision maker and thus, alone bears the risk of the business. He only bears
the profit or loss of the business.

# Authority Delegation
Lecture 07