Question

• What are the major sources of uncertainty in an environment? Discuss how these forces affect a moderate sized family farm and a large carmaker.
• According to resource dependence theory, what motivates organizations to form interorganizational linkages? What is the advantage of strategic alliances as a way of exchanging resources?
• According to transaction cost theory, what motivates to form interorganizational linkages? Under what conditions would an organization prefer a more formal linkage mechanism to a less formal one.
• What interorganizational strategies might work most successfully as a company expands globally?

Answer 1

What are the major sources of uncertainty in an environment? Discuss how these forces affect a moderate sized family farm and a large carmaker.

Impact of uncertainty sources
Richness has a huge impact on the car industry, the more skilled the company is
Growth would be the most workers. This resource also affects the smallest

Company of biotechnology located in the poor geographical zone.

The availability of suppliers' raw materials shows the growth of the car's production

Enterprise. It would also create a global establishment with more uncertainty.

A large car manufacturer would face greater environmental uncertainty because of

More complexity and dynamism in front of it. On the other hand, there is insecurity

A relatively small amount of biotechnology will be

According to resource dependence theory, what motivates organizations to form interorganizational linkages? What is the advantage of strategic alliances as a way of exchanging resources?

According to the resource dependence theory the organization must reduce their dependence on other organizations for the scarce resources. It must be able to influence other resources to make them available the required resources. In this regard the organizations make interlinking strategies so as to increase their domain. With the help of various linkage mechanisms the organizations aim at controlling various symbiotic and competitive interdependencies. Strategic alliance refers to a system wherein two or more organizations come together with the aim of sharing their resources and developing a new business opportunity. The following are the advantages of strategic alliance:

a. The organizations have greater access and availability of the required resources

b. A new business opportunity comes in place

c. It serves as an important tool to manage symbiotic interdependencies

According to transaction cost theory, what motivates to form interorganizational linkages? Under what conditions would an organization prefer a more formal linkage mechanism to a less formal one.

According to the transaction cost theory, the organizations aim at minimizing the cost involved in exchanging the required resources from the environment. The inter-organizational linkages help in reducing the uncertainty, the risk as well as the cost involved in obtaining the resources from the environment. The interorganizational strategies are chosen by the organizations which reduce the transaction as well as the bureaucratic costs. These interorganizational linkages mechanisms include formal and informal types. The formal mechanisms are contracts and reputation whereas the informal mechanisms are merger and takeover. The following are the conditions under which a more formal linkage would be preferred by an organization:

a. The organization exchanges specific goods

b. Greater uncertainty

c. Potential exchange partners are less

What interorganizational strategies might work most successfully as a company expands globally?

A franchising system could prove to be beneficial as an organization grows globally. Frankfurt
refers to a system in which a company permits a company to sell its goods and services. In
Return, the company gives a fee or a share in profit to the organisation.
A franchise could be useful in the world as the organization expands
Managers may lose the incentive to preserve quality across borders. On the contrary, the
Franchisers deal with customers directly and are more motivated to maintain their quality and
Get more profit. Get more profit.
The cost involved in maintaining consistency is shown to exceed that in large organisations.
Additional profit from full ownership could be achieved.