COMPETITION & OSD Prof Venkatesh Naga

LO’S
 Understand how competition impacts Organization Strategy & Structure
 Identify the various factors/dimensions that get impacted by competition?
 Learn about Coopetition & its impact on org design
Apply the learnings with Amazon Case Study
LEARNING TEASERS
How did GSM service providers respond to Reliance Jio ( what did
they do?) What is the structural
 What did Videocon, Philips and LG do with LCD TV manufacturing impact on collaboration ?
& why ?
 Bancassurance – why did it come into picture ?
 NDTV & Fortis – More to Give Initiative ?
 NDTV & Dulux - ABOUT HOMES OF THE BRAVE CAMPAIGN
What do banks do to lend to a customer whose requirements are
beyond exposure limits prescribed by RBI?
WHY DO ORGANIZATIONS COMPETE
 Resources
 Market share
 Customer Intimacy
 Productivity/Profitability
COMPETITION FACTORS
• How do suppliers
impact ?
• How can technology
impact ?
• How can people
resources impact ?
TYPES OF COMPETITORS

• Is there a possibility of
competitors to collaborate
?
• If yes how?
BUSINESS MODEL – KEY COMPONENTS
1) Customer value proposition How do these component
 Emirates knocking down check-in baggage from 46Kg impact organization design
to 23 Kg
?
2) Profit formula https://hbr.org/2011/01/h
ow-to-design-a-winning-
 Centralized/outsourced etc
business-model
3) Key resources
 Backward integration?
 Forward integration ?

4) Key processes.
 Self-check-in in airports
BUSINESS MODEL – CHOICES
Business Model ?
How do these choices
“the story that explains how an enterprise works,” impact org deisgn ?
Choices
 Policy Choice
 Asset Choice
 Governance Choice ( Decision making over other two )
RYANAIR – EXAMPLE
Take, for instance, Ryanair, which switched in the early 1990s from a traditional business
model to a low-cost one. The Irish airline eliminated all frills, cut costs, and slashed prices to
unheard-of levels.
The choices the company made included offering low fares, flying out of only secondary
airports, catering to only one class of passenger, charging for all additional services,
serving no meals, making only short-haul flights, and utilizing a standardized fleet of
Boeing 737s.
It also chose to use a nonunionized workforce, offer high-powered incentives to employees,
operate out of a lean headquarters, and so on.
The consequences of those choices were high volumes, low variable and fixed costs, a
reputation for reasonable fares, and an aggressive management team, to name a few.
(See “Ryanair’s Business Model Then and Now.”)
The result is a business model that enables Ryanair to offer a decent level of service at a
low cost without radically lowering customers’ willingness to pay for its tickets.
COMPETITION – PARADIGM SHIFT
Open Business Model ?
 OPEN BUSINESS MODEL – EXAMPLES
Qualcomm used to make its own cell phones and base stations but ceased doing
so years ago.1 Now others manufacture those products, and Qualcomm just makes How does the open
chips and sells licenses to its technologies, period. In fact, every phone that uses its business model
technology is sold by a customer of Qualcomm, not by the company itself. challenge
organization
Genzyme licenses technology from the outside and then develops it in-house. The
company has turned these external ideas into an array of novel therapies that design
deliver important cures for previously untreatable rare diseases. It has also built an
impressive financial record in an industry in which profits have been difficult to
achieve.
Procter & Gamble has rejuvenated its growth through a program called Connect
and Develop, which licenses or acquires products from other companies and brings
them to market as P&G brands. With early successes like the Crest Spin Brush, Olay
Regenerist and Swiffer Dusters, P&G now actively seeks external ideas and
technologies through an extensive network of scouts.
COOPETITION ?
COOPETITION
"Coopetition is expected to increase the profits of those organisations acting together because such
alliances help to improve products and services for consumers and customers in the value chain (Walley,
2007)."

Coopetition is an innovative business approach that emphasises win-win scenarios between

competitors. The concept details the strengths and disadvantages of cooperating with competitors,
and case study evidence illustrates the types of relationships that can be achieved.
COOPETITION – LEVELS • Cisco and Airtel
• Maruti & Toyota –
Baleno
COMPETITION VS COLLABORATION ?
Students in campus ?
Candidates appearing for
selection process ?

Does it have a bearing on

inter-organizational
relationship ? If yes how ?
COOPETITION - EXAMPLES
Ford and Toyota teamed up in 2013 to design the Atlas Ford F-150 Hybrid Concept
Mortal enemies Apple and Microsoft teamed up to license mobile operating system
features and patents
Google and Mozilla started working together when Google-funded Mozilla’s free, open-
source Firefox web browser (a rival to the Google Chrome) to limit the influence of rival
browsers Microsoft Internet Explorer and Apple’s Safari
Refrigerants Naturally is a non-profit that was established by fierce competitors Coca-
Cola, Pepsi Co, Red Bull, Unilever, and others to develop sustainable refrigeration
technologies to combat climate change and ozone depletion, by replacing fluorinated
gasses with natural refrigerants
AMAZON CASE STUDY
Please go through the Amazon case study and answer the following questions in
groups :-
1. Why did Amazon collaborate with its competitors ?
2. Comment on the Amazon strategy keeping in view the strategy alternates that it
has ?
3. Analyse the various collaborations that Amazon has ?
4. What are the purposes for which organizations adopt Coopetition ?
5. What kind of structural impact does coopetition have on the organization ?
6. Comment on the examples of coopetition given in the case study
COOPETITION – RISKS
 “sleeping with the enemy”
 Occurrence of opportunistic behaviour
 Uncontrolled leakage of information
 Real risk of losing control over a firm’s own resources
 Coopetition also leads to the asymmetry of benefits
 High degree of conflict
 Loss of organizational independence and decision-making
 weakening of existing sources of competitive advantages and key competences
 Frequent attempts were made by stronger units to take over weak partners
RAMIFICATIONS ON ORGANIZATIONAL DESIGN
Low-Cost Leadership
 Focus on efficiency Examples for these kind of
 Strong, centralized authority organizations
 Close supervision on routine tasks
Differentiation
 Learning orientation
 Research capabilities
 Build customer relationships
 Rewards creativity and innovation
Give example of
one organization
for each of the
organization type
and comment on
the structure

How does the

typology impact
the strategy &
structure ?
COOPETITION BUSINESS MODEL
COMPETITIVE ADVANTAGE & COLLABORATION

Does competitive design have a

bearing on the strategy &
structure ? If yes how ?

Does the nature of

business impact the
strategy & structure ?
OTHER FACTORS
Environment
 Is it fast paced?

Technology
 How is it used within the company?
 How is Google Leveraging Technology ?

Style/Life Cycle
 Size of company
 What did Patanjali do yesterday & why ?

Culture
 Company’s current cultural climate
DISCUSSION
 Maruthi Falling market share
https://economictimes.indiatimes.com/industry/auto/cars-uvs/maruti-suzuki-feels-the-heat-loses-
market-share/articleshow/66628645.cms
https://economictimes.indiatimes.com/industry/services/retail/amazon-goes-shopping-for-future-
retail-to-buy-9-5-stake/articleshow/66504698.cms
RAMIFICATIONS ON ORGANIZATIONAL DESIGN

Prospector
 Learning orientation
 Research oriented
Defender
 Efficiency orientation
 Close supervision
Analyzer
 Combines both efficiency and creativity
Reactor
 No stable direction
 PORTER’S COMPETITIVE STRATEGY
Competitive Advantage
Low Cost Uniqueness

Broad Low-Cost
Competitive
Leadership Differentiation
Scope

Narrow Focused Low-

Competitive Focused
Scope Cost Leadership
Differentiation
MILES & SNOW’S STRATEGY
Four Strategies
 Prospector
 Growing environments
 Defender
 Hold onto existing customers
 Analyzer
 Stable product, innovate around periphery
 Reactor
 Respond to conditions as they occur
EFFICIENCY AND EFFECTIVENESS
Efficiency and Effectiveness

Effectiveness
 Hard to measure
 Several different approaches
CONTINGENCY EFFECTIVENESS APPROACHES

Goal Approach
Resource-based Approach
Internal Process Approach
GOAL APPROACH
Did company reach its desired output?
 Operative goals

Advantage
Disadvantage
RESOURCE-BASED APPROACH
Focuses on inputs
Advantages
Disadvantages
INTERNAL PROCESS APPROACH
Looks at transformation process
Measures internal organizational health and efficiency
 INTEGRATED MODEL
Focus
Internal External
Structure

Flexible HR Emphasis Open Systems

Emphasis

Control Internal Process Rational Goal

Emphasis Emphasis
INTEGRATED EFFECTIVENESS MODEL
Focuses on various areas of the company
Two components
 Focus
 Structure