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Long Range Planning

37/1 February 2004

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Charles Baden-Fuller Editorial

1. Globalisation
Our opening theme for 2004 is that of effective responses to the pressures of globalisation. Allen Morrison describes a new organisational response to these pressures. He shows that traditional forms in networked firms (such as Benetton) have been further modified taking advantage of the developments of the internet to create a highly effective constellation called Netchising. While few firms have truly perfected this form, he claims many are on their way, and that this organisational form is increasingly being adopted by established firms, rather than just being the exclusive preserve of new entrants. Moreover, he also claims that this new organisational form is being increasingly adopted by established existing firms rather than being the exclusive preserve of new entrants.

Hanne Lenkes and Chris Carr look at regionalisation strategies for services generally and retailing in particular. Retailers have traditionally found it hard to internationalize effectively; however, these authors show that things are changing. Developing the ideas of Roland Calori published earlier in this journal, they develop a framework that can both predict trends and identify correct choices for those in services facing the pressures of globalisation.

2. Middle Managers
Middle mangers are often the unsung heroes of the organisation, expected to make suggestions about the future and implement the policies set down from above. But they can and do more than this: they can shift the organisation's direction and uncover hidden value. Famous studies such as that of Intel show that middle managers created lasting value in the processes of new product innovation. Inger Boyett and Graeme Currie provide an insight into their activities in the process of internationalisation. They take the patterns of a major Telecom company to illustrate their theme. They show how host country and parent company middle managers interacted effectively to create added extra value far beyond the original ambitions of senior management.

Nardine Collier, Francis Fishwick and Steven Floyd broaden out the theme to look at the perceptions and involvement of middle managers in the strategy process. They use a survey of 6,000 managers who attended courses at Cranfield to point out that middle management involvement, correctly managed, will typically yield positive results.

3. SMEs
The modern trend towards supply-chain management has inevitably encompassed many SMEs, but how many of them get the policy right? Ram Mudambi, Peter Schrunder and Andrew Morgan identify that among those who have tried to encompass the policy many have got it wrong. Rather than adopting the cooperative strategic mode that brings potentially lasting benefits, they have fallen into the trap of "close but adversarial" relationships. Supported by both statistical and case study evidence, the authors probe carefully into why such mistakes are made and how the SME can adjust to the new order more effectively for its own benefit. The claims of the authors are based on both statistical and case study evidence.

4. Forthcoming Special Issues
I am delighted to remind readers that a special issue on Peripheral Vision that will appear very shortly edited by two professors from Wharton, George Day and Paul Schoemaker. It addresses the question: How should we sense and act on weak signals? For both individuals and organisations, the dilemma is that our attention is a limited resource––the more we focus on the periphery the less attention we have for the core, but we ignore the periphery at our peril. In seeking how to resolve this dilemma, the special issue has contributions from leading academics such as Day, Schoemaker, Winter, Bob Johansen, C.K. Prahalad and practitioners such as John Seely-Brown (Xerox), Anil Menon (IBM), Larry Houston (P&G) and Stephan Haeckel (IBM).

 

Globalisation


Allen Morrison, Cyril Bouquet and John Beckand Netchising: The Next Global Wave? amorrison@ivey.uwo.ca

This article offers a vision of the future for companies with global ambitions, but who are keen to avoid undue spending on overseas brick and mortar and the time and energy involved in executive travel and attention. Identifying trade, foreign direct investment and franchising as three modes of MCN engagement, they authors proclaim the virtues of netchising as a superior global business model in many situations, releasing local entrepreneurial energy for product development and adaptation while using sophisticated internet contact to monitor and discipline overseas affiliates to ensure quality control and defend hard-earned brand names.
With examples taken from field interviews with executives at 35 different MNCs, the authors examine how an increasing number of companies are exploiting this ‘virtual network’ style of organization for procurement, sales, and maintaining customer relationships, and non-equity partnership arrangements to provide direct customer interfaces and local delivery of products and services. The article reviews four key factors governing whether a company is ‘Internet-ready’, and addresses the question of when netchising becomes a viable alternative to other traditional approaches to globalization. The authors’ provocative vision of overseas control achieved through other means than ownership is clearly one for the future of many companies.

Hanne M. Leknes and Chris Carr Globalisation, International Configurations and Strategic Implications:the Case of Retailing Chris.Carr@ed.ac.uk

Is this a defining moment for retailing? With international takeovers, expansion and retrenchment and bankruptcies, whether and how players in the sector should dfollow manufacturing in combating saturation, economic downturns and restricting legislation in their home markets by seizing opportunities as overseas markets has become a hotly debated strategic issue.
This article investigates whether the new tyopologies, as outlined by Calori and others in a recent LRP issue, can be adapted to a service sector such as retailing, analysing performance differences across the set of categorisations as well as segregating some of the main sectors. It offers a case study demonstrating how this approach can still yield strategic insights and recommendations at an early stage in internationalisation by examining the prospects and suggesting a globalisation trajectory for a Norwegian clothing market leader.
The authors point out the U-shaped curve which sees performance falling gradually moving from the national to the regional stage, before improving markedly as the strategy becomes global, with the most profitable retail strategy configuration - the bold ‘global shaper’ – as also the most costly in risk and investment-terms The article commends configuration performance analysis as a useful tool, both for strategic benchmarking’ against sector high performers to set an agenda for operational improvements, as well as the difficult judgements inherent in identifying their best international strategy choices.

Middle Managers

Inger Boyett & Graeme Currie Middle Managers Moulding International Strategy: an Irish Start-up in Jamaican Telecoms inger.boyett@nottingham.ac.uk

This article tells the fascinating story of how an Irish-Jamaican middle management team steered the strategy of an international venture away from the original short-term intent towards arguably far greater and long-term success. The authors’ case study of Digicel, an Irish company launching a mobile telecommunications network in Jamaica, is based on a sequence of interviews with both middle management in Jamaica and senior executive figures in Dublin. They identify the two distinctive groups of middle managers -- parent country nationals and host-country nationals – and chart the extent to which they co-operated with or obstructed each other, and how they handled reporting back to a busy Irish head office. They show how middle management’s transmutation of the executive’s original strategy for establishing a one-product, ‘flat-and-flexible’ operation to be swiftly ‘Jamaicanised’ and sold off stemmed from their realistic reaction to the social, political and economic situation on the ground in Kingston. This in turn yields an informed thesis from which executive management tasked with designing successful organisational strategy, structure and human resource management for an international venture can increase their potential for success by maximising the contribution of their PCN and HCN middle managers.

Nardine Collier, Francis Fishwick and Steven W. Floyd Managerial Involvement and Perceptions of Strategy Process n.collier@cranfield.ac.uk

Should managers be involved in the process of developing strategy – or not? Intuitively it sounds right, but academic research has produced mixed prognoses. Some observers say that involvement can strengthen shared vision, increase rationality and improve adaptiveness, while others point to damaging political behaviour, increased cultural inertia and the involvement of internal and external constraints. But do the positive effects outweigh the negative?
Using a large sample (more than 6,000 managers from over 601 organizations, public and private, canvassed over seven years), the authors of this article study the correlation between managers’ levels of involvement and their positive or negative perceptions of the strategy development process. Their findings not only confirm the positive effects of involvement predicted by the literature, but actually contradict the negative ones, which appear to be less evident in managers perceptions that researchers have forecast. Pointing out that managers will act on their perceptions, the authors affirm that increased managerial involvement its will tend to influence the strategy process development favourably.

SMEs

Ram Mudambi, Claus Peter Schruender and Andrew Mongar How Co-operative is Co-operative Purchasing in Smaller Firms? Evidence from UK Engineering SMEs rmudambi@sbm.temple.edu

How many firms involved in co-operative purchasing arrangements get them right? On the evidence of this article, not many even try, and those that do make mistakes, often retaining fundamentally adversarial stances towards partners, or failing to recognize how they fit into a wider network of purchasing arrangements. Looking at the SME engineering sector from the UK Midlands, the authors find only a minority have arrangements that could be called ‘advanced’ and even these yield patchy evidence of success.
Offering a taxonomy of strategy, the article divides these ‘advanced’ firms into three types: those where co-operative purchasing is a consciously-designed and long-term part of management policy (deliberate strategies); those where, despite some development of close ties, defensive, short-term and ‘low-trust’ attitudes still predominate (close but adversarial) and those whose strategies have simply grown up over the years in a incomplete and haphazard fashion (described as emergent). The article analyses key factors such as how partnership is developed, how communication is handled, and whether JIT processes, joint product development and cost-reduction projects feature in the mix. The authors offer a list of managerial implications, noting that larger firms increasingly expect co-operative attitudes in trading partners, and, as they grow, small firms with emergent strategies will need to choose to adopt a definite strategy.

This issue is available in full on-line at www.sciencedirect.com

 
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