Strategies for managing symbiotic resource interdependencies - Research Paper Example

? Strategies for Managing Symbiotic Resource Interdependencies The development and success of any industrial action or a business is frequently bound by few natural resources on which firms rely, in addition to limited space for operation. Moreover, most companies are faced with problems of monopoly and unsafe competition. Symbiotic resource interdependencies encompass joint resource management by varied firms in geographic closeness to attain ecological and economic advantages. These advantages might include decreases in operational costs and releases, more safe access to raw materials and fundamental utilities, and augmented durability of the resource base. Generally, companies choose to partake in symbiotic relationships for a mixture of external and internal purposes including organizational, economic and strategic factors. This paper will describe the nature of symbiotic relationships, their advantages, limitations to the relationships and the strategies that should be applied to manage these interdependencies. Introduction Symbiotic resource interdependency is described as a set of jointly reinforcing relations between two different businesses with the ability to establish adaptive changes and improvements to each colleague’s policies and organizations. The significant characteristic of these associations, though, is their ability to make adaptive changes to organization and policy. Symbiotic unions frequently use exact technology partnerships as the platform for these alterations (Davis & Eisenhardt, 2007). Ashton (2008) suggests that this interdependency happens when different, physically adjacent organizations collaborate to perfect the administration of resources, which include water, energy and waste, and thus create both public and private advantages. There are three kinds of activities linked to symbiotic resource interdependency. These include utility sharing where organizations mutually own or administer universal utilities for example energy or water; byproduct swap over where one company’s leftover is used as an input by another; and service sharing where a third party offers a service with an overt environmental advantage that caters to the requirements of numerous organizations. The percentage of Outsiders and Insiders under the system does not present a clear hint of which partnership may rule. Insiders rule the first 18 months and Outsiders from then. It looked like Insiders are used primarily to alleviate and uphold the obtained company, so that its important arrangement is not lost, and then Outsiders are used for major inter-organizational alteration (Agwin, 2004). Duncan & Maureen (2009) add that extensive efforts are made to encourage trust between the two organizations and change enterprises begin to switch towards the boundary. This is where Outsiders are then engaged as they are more responsive to the dynamic features of the two developing unions. Audia (2006) shows that when two associations take part in continuing financial exchange, they can be thought to be in direct contact. Consequently, both traders and consumers get direct contact with instruments producers. Traders and consumers are tied to instruments manufacturers by a symbiotic relationship since their disparities supplement each other according to Ecologists. The transfer of information across organizational boundaries is the by-product of these financial relations. As Duncan & Maureen (2009) affirm, symbiotic acquisitions have great tactical interdependence, as worth is generated by high levels of independence and inter organizational synergies since its arrangement is highly valued. Moreover, the urge to achieve synergies through conveying capabilities entails high levels of interdependence and high levels of change. Advantages of Symbiotic Resource Interdependencies Symbiotic relationship is deemed as a prospective vehicle for pursuing diverse intentions that would be hard to realize through internal solutions. Particularly, it has been established that they have normally been used as a means of change administration (Colombo & Conca, 2010). Horizontal networks in symbiotic relationships permits the achievement of previously unachievable economies of scale; mass buying decreases costs; and network members achieve market power, in addition to access to technology that is otherwise costly. Similarly, the firm enters vertical networks effecting in assimilation with retailers and suppliers. On the other hand, the vertical networks offer better access to raw materials and ease market research. Inconsistently, with its multi-polar control formation, the approach of symbiotic management offers more efficient control than the case with ownership (Wright & Dana, 2003). Intra-firm enthusiasm and external forces both act on organizations, for instance globalization, technological change, inter- firm competition, drive cooperation and resource constraints. In cases where natural resource accessibility or regulations restrict operations or make them very costly, joint relationships can grow to allow firms to function. Firms are persuaded to seriously think about resource sharing and cooperation through internal identification of likely cost savings. Companies that yearn for clearance cost reductions look for local buyers for their by-products, changing these costs into income streams. In the same way, organizations that get by-products as input do so to get those resources at lower costs, as well as transportation and transaction costs (Ashton, 2008). Network marketing notably cuts down selling costs. Even finance is simplified to gain from banking networks. Transaction costs were reduced via the internet, which lowered the cost of obtaining information. Previously, local or regional markets became global (Wright & Dana, 2003). The symbiotic relations developing from connections also offer individuals with chances to create social ties with other actors who may sustain new firms in the central population. These connections may prove beneficial not only for hiring persons who have comprehensively knowledge of the business, but also for obtaining support from prospect exchange associates. Besides, such social integration raises the personal integrity and authority of the new firm (Audia, 2006). Competitors struggle to form emerging industry formations and paradigms needed to support their expansion and diffusion in addition to competing to build new technologies. In addition, rivals are provided with a chance to develop their technology aspects directly into society as institutional regulations due to the formation of new industry structures and principles (Garud, 1994). Moreover, they have come to be regarded as a striking growth plan for tapping new markets and speedily gaining larger market shares (Sie & Yakhelf, 2010). Limitations to Realizing Symbiotic Resource Interdependencies According to Garud (1994), collaborative relationships can be extremely interrupted by fast technological alteration. The introduction of new expertise can interrupt particular arrangements reached between partners working together founded on specific technological platforms. Such an interruption generates dilemmas in places where complex technologies are engrossed since it takes quiet a time and effort to advertise products rooted in complex technologies. In most cases, numerous product forms have to be built before commercial victory can be attained hence, the interruption of collaborative associations can bring about a loss of both shared knowledge and technological resources supported in the relationship. Colombo & Conca (2010) argues that, incorporation process may be hindered by the occurrence of certain patterns of behavior at the interpersonal and hierarchical-organizational stages. Likewise, there are compound problems of adding the official processes by which each association administers the duties and responsibilities of each person and each company operation; typical examples are the requirement to normalize procedures related to the information schemes for accounting and functions. Mirata & Pearce (2000) agree that feeble presence of organizational aspects favoring mutual action can ensue from poor compatibilities in technological features within the overriding segments and limiting the potential for material links. This lack of local determination power presents extra obstacles for securing the essential devotion for the program, and for founding a cooperative business environment. The ambiguity that a central firm perceives concerning its association with a business partner causes abandonment in the alliance formation. In addition, it augments the probability of ethical hazards, as the partner will employ a transactional form instead of developing high relationality. On the other hand, high asset specificity and shared trust lessen partnership ambiguity and generate a pleasing transaction climate; the feelings that exist among transacting parties whereby the parties share an element bonding or acceptance (Yaqub, 2009). Strategies for Managing Symbiotic Resource Interdepedencies The ambiguity and turmoil linked with technical change thus requires supportive behaviors between collaborating partners. Connections between collaborating parties should be accepting, ?exible and distinguished by trust. These characteristics are possible only if mutual relationships are deemed to be optimistic games where both parties stand to gain from the triumphant commercial development of new expertise. In order to press out the best deal from their collaborating associates, firms need to have bargaining advantage over their collaborating partners, while creating and maintaining such associations. Additionally, due to the regular change and ambiguity, the high level of rivalry among competitors needs a high level of cooperation among collaborating partners. During this phase of technology growth, partnership among collaborating partners is certainly possible. This is because firms enter into mutual associations if they have corresponding skills or assets while having a collective interest seeing that products from their symbiotic association are commercialized (Garud, 1994). As candidate firms reflect on the worth of by-product trading, they will require support as one feature in their site selection. Enrollment conferences would assist firms to learn regarding other symbiotic approaches while discovering possible exchanges. This will also permit company workers to test the notion of collaborating with neighboring firms and encounter the type of contenders the project is attracting. The enrollment strategy will have to adapt as the managers learn what works and what does not as in any industrial development. Moreover, each new contract might change targeting to some degree. For example, a major food- processing firm might produce demand for steam and yields of biomass and heated water. These input and output necessities would propose niches for recruitment (Lowe, 1997). Agwin (2004) argues that in this kind of system, there is need for planned interdependence and need for institutional sovereignty. The need for strategic interdependence is the manner in which worth is likely to be generated and might be connected to the notion of strategic fit. The necessity for organizational independence is the degree to which the strategic potentials of the acquired firm require to be safeguarded and can be associated with the idea of organizational fit. Strategic symbiotic alliance makes a theoretical difference between two ways in which one firm benefits the other firm. One method is through value capture, which they connect with a financial asset or capital markets standpoint of short-term transaction rewards. The other is by value formation, a longer-term occurrence resulting from administrative actions to exploit precious synergies between the companies. There is need for dismissal of any form of restructuring or reformation, respect of the target company’s uniqueness and honesty, maintenance of organizational boundaries and gratitude independence of the members of the acquired firm as regards operation and resource organization. Another strategy for managing symbiotic interdependencies is through merging the precise strengths of the acquiring and acquired firm. There is also the need for conception of the inclusion process in a condition of collaboration and honesty. The acquiring firm should not display any intent of controlling the acquired firm by imposing its activities or management approach (Koenig & Meier, 2001). A firm can as well build a good status in the eyes of suppliers and customers through production of high-quality goods and services, on time payment of bills and equality and honesty. In the long term, a deceitful firm will be fruitless. The most often-used connection system for managing symbiotic interdependencies is developing a good status (Caillouet, 2008). Sharing of resources by numerous companies and strategic coalitions are widely used for managing interdependencies. Coalitions comprise joint venture, networks, lasting contracts, and trivial ownership. Agreements that are more official offer stronger connections and tighter influence over mutual activities. A network is more official than a contract since more ties bond members who share competencies with partners. Partners use that expertise to augment competence and decrease the core organization’s size and costs. A firm can execute design work and have partners manufacture the product (Caillouet, 2008). Developing symbiotic innovations depends on using suitable organizational procedures that lead associations over time and on proper design situations. Successful alliances use a rotating leadership procedure that generates fleeting independent leadership chances for each partner. On the other hand, less successful alliances are linked with dominant leadership or consent leadership procedures. Rotating leadership entails revolving decision control between partners to produce high-quality involvement of technologies. This will change the flows of network creation, which actively alter innovative team composition that efficiently search the wider space of probable innovations (Davis & Eisenhardt, 2007). Competitive ambiguity can be decreased by conspiracy; a secret deal among participants to share data for an unlawful function. Moreover, a cartel, which is a group that synchronizes activities, augments the strength and prosperity of an association’s environment and decreases vagueness. Conspiracy includes setting industry principles on pricing and product requirements, making synthetically high prices industry values and signaling a nod to rivals concerning price hikes and approaches through proclamations (Caillouet, 2008). The Active Role of Managers in Strengthening Symbiotic interdependencies The Chief Executive Officer must act in line with a strategic pattern for symbiotic relationship management. The associations influence several different purposeful areas within a company. However, they are of meticulous significance for the marketing manager because the manner in which a firm's portfolio of associations is arranged describes which reasonable advantages and preconditions to serve customers that can probably be attained. The Chief Executive Officer together with the marketing manager should specify a goal for the company’s deeds for each horizontal relationship, and for how the portfolio of associations should best be arranged. Moreover, the fact that the associations to other companies will modify over time must be considered in managing symbiotic relationships (Bengtsson & Kock, 1999). Since symbiotic interdependency is one way to realize business policies, the firm must assume a course of value-based planning. In this planning, the management has the duty of looking for finest, practical merger of the two firms' resources through steady incorporation and well planning in terms of timing and phasing. The extent of incorporation attainable among the businesses and the institutional formations determines the synergistic effect, by which the combination of several business and operations increases the benefits, will fundamentally depend on (Colombo & Conca, 2010). The formation of the essential institutional structure is another area where coordination can bestow to symbiotic interdependence. This can be done by categorizing the main parties within an area, increase their understanding in related areas, offer communication platforms, and thus aid the creation of the essential common understanding and purposes, and combined commitment for their accomplishment. However, this should not be restricted to the firms and other parties within the region. In addition, it should be extended to contain communication and feedback outlets connecting regulatory bodies, other policy makers and financiers to the course, who can help conquer rigid or financial obstacles, or can ease the development of essential inducements (Mirata & Pearce, 2000). Making use of the charm of some managers who are capable of convincing the organization of the desirability of reacting optimistically to the change in development is a good strategy for supporting the production of consent. Another necessary strategy concerns the transmitability of resources and competencies. This requirement is present when the acquired firm specifically holds the proficiency and competencies for success or when the acquired firm loses its own tactical and operational independence. The endeavors must be intended at creating osmosis between the two institutional units, without encouraging a treacherous denial crisis (Colombo & Conca, 2010). Sharing of Resources and Expertise When the inputs by each partner are made out to be equitable and balanced, the coalition is considered stable while systems fail when one or more partners notice unfair treatment or a substandard ratio between input and compensation. As the associates of a planned network combine the specialized knowledge/resources to make synergies through a mutual arrangement, the irregularity in resource contributions, frequently, encourages the resource main players to anticipate larger payoffs (Yaqub, 2009). Coordination bodies examine the key resource flows linked with the focal region in an attempt to deal with the informational issues, thus identifying areas where main improvements concerning waste reduction or resource consumption are needed. This can help in generating objectives the collaboration should accomplish. However, the focus in offering informational support is founded on evaluating the requirements and capacities of the economic activities in the region, with the aim of identifying supplementarities (Mirata & Pearce, 2000). To administer associations and networks with customers, suppliers and with other companies, new skills will be required. Entrepreneurs have to develop means to recognize network-based opportunities for generating the potentials and acquiring the specialized resources required to compete in current's worldwide marketplace, and to comprehend their own strategic worth in the framework of networks as an interdependent unit (Wright & Dana, 2003). Another important strategy that is vital for the culmination of trust and loyalty in symbiotic relationships is the co-sharing of reputation for being dependable and opposed to inequality. Consequently, this lessens the fears and chances of undesirable selection and therefore facilitates the creation of mutual arrangements. In addition, this intensifies the network operation when enhanced with co-sharing of inclinations of general trust (Yaqub, 2009). Yaqub (2009) further argues that there has to be a significant determination to change problematic occasions into opportunities for development geared to foster the relationship and prompt the parties of what is good for and among them. Partners take up joint searches for acceptable results to contradictory conditions if they manage to found social norms for mutual value maximization. They can as well effortlessly escape the disintrumental effects of these tensions. All this is achievable under symmetrical structural arrangements. On the other hand, in the asymmetrical associations, there is a strong appeal to win the conflict so as to exploit one‘s own results at the cost of other‘s leading to the erosion of trust and dedication. Duncan & Maureen (2009) add that increasing interaction through capacity transfer is essential over time as both firms work toward a new institutional solution. It is possible that insiders will be linked with the pressing post-acquisition era and Outsiders afterward as the level of assimilation and organizational change augment. Generally, the symbiotic method requires a period of initial preservation where affiliates of each company coexist and learn from each other prior to making strategic changes, consequently beginning to work as one. It needs incorporation such as: developing a broad evolution management formation, creating an environment that promotes cooperation between members of both companies, and coordinating incorporation activities and help recognize best practices. Other strategies include maintaining a slower speed to handle the compound challenges generated by balancing the concurrent need for boundary protection and boundary permeability and permitting target firm managers to have some equipped responsibility, (Sie & Yakhelf, 2010). Conclusion Symbiotic resource interdependencies present various benefits to firms and industries. This includes ecological advantages due to decreases in resource exploitation, economic benefits resulting from cuts in the costs of resource production, inputs and waste disposal and from creation of extra income owing to higher value of by-product and waste streams. There are also business advantages due to enhanced associations with external parties, and growth of new products and their markets. In addition, there are social advantages by creating new employment and raising the eminence of existing employments, and by creating a cleaner, secure, natural and working condition. Despite these advantages, there are some limitations to formation of these relationships. These are majorly presented by uncertainties of merging, management problems and fast technological alteration. Firms and industries should incorporate fairness and rotating leadership in order to realize successful relationships. References Angwin, D. (2004). The Managing Executive in Post-Acquisition Management. Advances in Mergers and Acquisitions, 3, 1, 55–79. Ashton, W. (2008). Sustaining Industry on Small Islands by Harnessing Opportunities For Collaborative Resource Management. Business, Finance & Economics in Emerging Economies, 3, 1, 37-60. Audia, P. et al. (2006). Organizational Founding in Community Context: Instruments Manufacturers and their Interrelationship with other Organizations. 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