1 / 40

Operational Strategy: Balancing Planning and Control

This chapter focuses on the challenges of coordination across functions and business units in operational strategy. It emphasizes the importance of creating incentive compatibilities to minimize conflicts and enhance smoother operations. Firms often organize to reduce transaction costs, which affect how markets and hierarchies function. The concept of double marginalization highlights that profits in vertically integrated firms can exceed those of unbundled firms. Key considerations like transaction characteristics, value chain profit patterns, and channel structures play a crucial role in making informed scope decisions.

maylin
Download Presentation

Operational Strategy: Balancing Planning and Control

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. Operational Strategy: Balancing Planning and Control Vish V. Krishnan The University of Texas at Austin

    2. 2 Recapping from Last Class Coordination across functions and business units is a major challenge. Creating incentive compatibilities is key. Minimizing incentive incompatibilities essential for smoother functioning. Firms organize themselves to minimize transaction costs. Markets motivate, Hierarchies coordinate. Double marginalization is the phenomenon under which profits in a vertically integrated firm is higher than the combined profit of unbundled firms (with monopoloy power). Transaction characteristics, Value chain profit patterns, and Channel structures should influence scope decisions.

More Related