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Information Systems Management winter 2005 , pp 42-46
With the globalization large multinationals are adopting enterprise resource planning (ERP) systems to meet their international information management needs. Proper alignment between ERP and international strategy can lead to superior performance globally.
Managers of the firm should be aware of, and understand the interrelationship between ERP system configuration and the international strategy of the firm. On the topic of system configuration, there are three ERP systems issues that should be addressed:
Systems configuration, ERP systems should be configured hierarchically at four levels in the firm
Enterprise level; Four types of enterprise level ERP a firm can adopt:
Single-financial/single-operation, single-financial/multi-operations, multi-financials/single-operation, and multi-financials/multi-operations.
System level, implementing modules of logistics, financials and operations
Business process level, customization of user products
Customization level, customer designed modifications
Information architecture, how to configure the ERP information architecture
Centralized architecture, high levels of standardization
Distributed architecture, strong history or autonomous business units
Hybrid architecture, leverage global supply chains and localize products
Systems rollout to reap the benefits of ERP system alignment
Number of sites and users, level of complexity of the business process and levels of customization can be critical in determining the success of the rollout strategy. Two types of roll-out are the big bang approach (complete change in one phase), and the phased approach (incremental change)
Aligning the ERP systems with the international strategy of the LME is also important. There are three types of strategy that are most adopted, these are the multinational strategy, the global strategy and the transnational strategy. Each strategy adopts ERP on a different way to fully utilize it. This can be seen in the following table:
ERP system Configuration |
| International strategy | ||
Multinational strategy | Global strategy | Transnational strategy | ||
ERP software configuration | Enterprise level | Multi financials Multi operations | Single financial Single operation | Single financial Multi operations |
System level | Independent but linked to HQ through financial reporting | Centralized with interfaces to national units | Fully integrated, distributed functionality to national units | |
Business process level | Detailed | Default | Detailed | |
Customization level | High | Low | High | |
Information architecture |
| Stand alone databases Distributed architecture, Local hardware | Centralized databases, architecture and hardware | Distributed and integrated databases, Hybrid architecture and centralized and local hardware requirements. |
System rollout |
| Phased | Big bang | Big bang and phased |
ERP systems take considerable time and money to implement, and can create operational difficulties for the firm. Once implemented, these systems can be difficult and to expensive to undo. Some difficulties faced by managers stem from inadequate attention paid to synchronize the ERP systems with international strategy. Implementing an ERP systems is not merely a technological challenge, it involves significant and radical changes in the business. Careful planning of a firm’s ERP strategy alignment should always precede the ERP investment.
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British Journal of Political Science 39 (2009) pp449-482
This article provides a new framework for understanding the differences and similarities in economic and political institutions across developing countries, and aims on going beyond the three perspectives of institutional variance that have dominated studies on this topic for many years:
Modernization approach (1965), developing economies were modernizing industries however still dominated by pre-war practices to secure high growth rates.
Neo-corporatism (1970), states were able to bargain with employers and movements about wages, working conditions etc. Mass production economies.
Social system of production (1990), more attention to the behaviour of firms. Sectoral government, national innovation systems, new ways of production.
Where the authors fundamental break with these approaches, is how behaviour is affected by the institutions of the political economy. Three frameworks that visualise these relationship:
Institutions are socializing institutions that instill a particular set of attitudes and norms in those who operate within them
The effects of institutions follow from the power they confer to particular actors through sanctions the hierarchy supplies or resources it has
Institutions of the political economy are a matrix of sanctions and incentives, where to actors react and respond predictable
The firm is seen as an entity with ultimately relational capabilities, that need proper coordination to be effective and successful. The main relations a firm must coordinate are:
Industrial relations, how to coordinate bargaining over working conditions of the labor force
Vocational training and education, securing the workforce and investing in skills
Corporate governance, secure return on investment
Inter-firm relations, relations with other enterprises, suppliers and clients
Employees, ensure they have the requisite competencies and cooperate well with others to advance firm objectives
National economies can be compared on they resolve the coordination problems they face in these five spheres. The core distinction is drawn between two types of political economies, the liberal market economy and the coordinated market economy. Characteristics of the liberal market economy (LME) are that their activities are primarily coordinated via hierarchies and competitive market arrangements, more competitive.
Characteristics of the coordinated market economy (CME) are that they depend more on non-market relationships and more collaborative.
The presence of institutions enables three supporting activities, they provide capacities for the exchange of information, the monitoring of behavior and the sanctioning of defection. When these three points are present, it will be easier for organizations to cooperate, reach equilibrium and the potential returns will be higher.
Aspect is deliberation, institutions that encourage the relevant actors to engage in collective discussion and to reach agreements with each other. Deliberative institutions can provide the actors in a political economy with strategic capacities they would not enjoy otherwise. Also history and culture play an important role in the analysis. Informal rules and
.....read moreAcademy of Management Journal 51 (2008), pp 696-722
This article focuses on how acquisitions can be undertaken more successful.
Earlier studies suggest that a successful acquisition was dependent on
The strategic fit between the two parties in the acquisition, complementarily or resource similarity
The organizational fit, the effective integration of both parties. These studies stated that strategic fit creates merely synergistic potential, rather than synergy realization.
Acquisition is not an isolated event, but merely one part of an overarching sequence of acquisitions. Earlier research always assumed firms started with a clean slate every acquisition. This is not the case however. Two themes that play part are the search and organizational learning.
The search project for new acquisitions is subject to the bounded rationality of managers. They are forced to look for solutions that are more satisfactory rather than optimal. This leads them to engage in more often in local search. When local search fails, they go after a more distant search. This will lead to accumulating organizational inefficiencies. Organizational restructuring is defined as increasing the efficiency and effectiveness of management teams through significant changes in the organizational structure.
Through organizational learning, practices become more routinized and refined. Firms are likely to adapt the same strategy for every acquisition when they believe it is the most efficient.
Acquirers go through long-term cycles of acquisitive growth and organizational restructuring. The contribution of a given acquisition to an acquirer’s performance depends on the acquisition’s position within the sequence. This sequence of acquisitions gradually increases the demand for major organizational restructuring, and this restructuring leads to more fully realizing the acquisition’s potential.
Firms can develop a restructuring capability, although extant theory predicts that it is difficult for them to do, since restructuring occurs infrequently and are highly heterogeneous and causally ambiguous.
Whereas acquisition experience allows a firm to learn to search locally for effective approaches to integrating each acquisition individually, restructuring experience may enable it to learn to engage in distant search for effective ways of integrating an acquiring firm as a whole. It will cost some time, but in the long term restructuring will lead to a more fully unlocking of the synergistic performance and increase its performance.
Harvard Business Review jan/feb 1994, pp 77
During the 1980s, manufacturing companies adopted improvement programs, to pursue the goal of superior manufacturing. Nevertheless, many of these programs failed. This is because simply improving manufacturing is not a strategy for manufacturing to achieve competitive advantage. The essence of competitive strategy are the skills and capabilities that enable a factory to excel and make it possible for these improvements programs to achieve their goal. The key to long term success is being able to do certain things better than your competitors, and these organizational capabilities are much more sustainable than something you can make or buy.
By adopting improvement programs, or outsourcing projects the company is not encouraged to learn and develop capabilities. The theory of the focused factory, centered at a narrow set of tasks, enhances the development of skills, the creation of routines, competencies and better operating skills. The same with vertical integration and sourcing, organizations can forget how things are done. There is no learning potential anymore.
Long-term success requires that a company continually seek new ways to differentiate itself from competitors, and transform their manufacturing organizations into sources of competitive advantages. Two important points to look after are:
Start with the idea that the primary way manufacturing adds value to an enterprise is by enabling it to do certain things better than its competitors can. Grate manufacturing strategies are built on unique skills and capabilities, not on investments, systems or practices that can be easily imitated.
The company has to develop a plan for building the capabilities it wants to acquire. Providing guidelines and programs for this, enables managers to be more focused on the tasks, which enables and enhances the development of these capabilities.
Information Systems Management winter 2005 , pp 42-46
With the globalization large multinationals are adopting enterprise resource planning (ERP) systems to meet their international information management needs. Proper alignment between ERP and international strategy can lead to superior performance globally.
Managers of the firm should be aware of, and understand the interrelationship between ERP system configuration and the international strategy of the firm. On the topic of system configuration, there are three ERP systems issues that should be addressed:
Systems configuration, ERP systems should be configured hierarchically at four levels in the firm
Enterprise level; Four types of enterprise level ERP a firm can adopt:
Single-financial/single-operation, single-financial/multi-operations, multi-financials/single-operation, and multi-financials/multi-operations.
System level, implementing modules of logistics, financials and operations
Business process level, customization of user products
Customization level, customer designed modifications
Information architecture, how to configure the ERP information architecture
Centralized architecture, high levels of standardization
Distributed architecture, strong history or autonomous business units
Hybrid architecture, leverage global supply chains and localize products
Systems rollout to reap the benefits of ERP system alignment
Number of sites and users, level of complexity of the business process and levels of customization can be critical in determining the success of the rollout strategy. Two types of roll-out are the big bang approach (complete change in one phase), and the phased approach (incremental change)
Aligning the ERP systems with the international strategy of the LME is also important. There are three types of strategy that are most adopted, these are the multinational strategy, the global strategy and the transnational strategy. Each strategy adopts ERP on a different way to fully utilize it. This can be seen in the following table:
ERP system Configuration |
| International strategy | ||
Multinational strategy | Global strategy | Transnational strategy | ||
ERP software configuration | Enterprise level | Multi financials Multi operations | Single financial Single operation | Single financial Multi operations |
System level | Independent but linked to HQ through financial reporting | Centralized with interfaces to national units | Fully integrated, distributed functionality to national units | |
Business process level | Detailed | Default | Detailed | |
Customization level | High | Low | High | |
Information architecture |
| Stand alone databases Distributed architecture, |
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