[8] 2002 e-business-strategies-for-virtual-organizations

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Outsourcing, partnering and the virtual organization services and operations are benchmarked against the marketplace of external providers of such services. If the costs and benefits of internal sourcing of such services do not compare well with external sourcing, the business service is outsourced. 9.6 Strategic outsourcing and core competencies Strategic outsourcing rests on the proposition that resources and management time are focused on core competencies while considering non-core activities as possible targets for outsourcing. But to be able to focus on, cultivate and grow core competencies, one must first identify them. However, given that organizational core competencies are rare, complex and embedded in organizational routines and practices, it can be difficult to identify and characterize them. The core competence approach to outsourcing tells us that we may usefully see the defining characteristics of core competencies as: � Skill and knowledge sets, not just products and functions. � Broad areas subject to reassessment, adaptation and evolution. � Limited in number. � Unique sources of leverage in the value chain. � Areas where the company can dominate. � Elements important to customers in the long run. � Embedded in the organization’s systems and practices. Core competencies are unlikely to be located in products or functions. Competitors too easily imitate these. Core competencies are likely to emanate from certain sets of skills and knowledge which are difficult to specify and imitate. The skills giving rise to core competencies are likely to cut across several functions, and knowledge is likely to be tacit rather than explicit. Core competencies, because of their importance in underpinning the competitiveness and hence the survival of the firm, require intensity of focus and management dedication. For these reasons core competencies in the true sense should be limited to two or three in number, and certainly do not number more than five. They are concentrated in areas where the firm can dominate. Since each company is really in competition with every supplier of every activity in its value chain, it is important that the activities in which it chooses to excel are areas in which 197
e-Business Strategies for Virtual Organizations it can really achieve preeminence. It is worth noting that at least one of these areas should be in the domain of understanding and managing the customer relationship, since this is so important to business competitiveness and survival. Finally, core competencies are likely to be embedded in organizational systems, routines and practices thus not only rendering them difficult to imitate but also difficult to identify, understand and cultivate. Nonetheless core competencies are vital capabilities that are important to nurture, evolve and grow. In common with the PriceWaterhouseCoopers thinking introduced in section 9.1 above, this thinking stays with traditional thinking that there must be a single dominant player leading or controlling the consortium. This thinking is at odds with the more flexible models introduced in Chapter 3 and tacitly assumed throughout this text. 9.7 Linking outsourcing to strategy 198 It is important that an enterprise’s external sourcing decisions are aligned to its strategy. Insinga and Werle (2000) present a planning guide to help in this matter. The guide is structured around two basic dimensions. First, the activities of the firm are considered for their potential to yield a competitive advantage, and are assessed as either key to producing a competitive advantage, emerging towards being the key activity, basic to the firm or simply commodity activities. Second, the activities of the firm are rated in terms of the firm’s capability at undertaking them, and assessed as activities in which the firm has a strong, moderate or weak capability. The planning guide is shown in Figure 9.2. Generally speaking as one moves down and to the left of the matrix in the Figure 9.2 it is recommended that there be less investment in the activity, less knowledge of the particular business domain nurtured in the company, and less direct control over the day-to-day operations involved. Core competencies are thus located in the upper right of the matrix and commodity activities, suitable for outsourcing to a business service provider, are located in the lower left. However, when activities are examined in this way there may be significant differences between the recommended position of the activity in the company and its historical and present reality. Such differences require the attention of senior management, since these differences indicate other than the sensible and optimal allocation of resources.
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e-Business Strategies for Virtual O
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e-Business Strategies for Virtual O
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Contents Computer Weekly Profession
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Contents 6 Globalization and e-busi
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Contents 11.6 The increasing power
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Computer Weekly Professional Series
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Authors’ Preface There are dozens
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Authors’ Preface model will there
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Authors’ Preface alliances, bette
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1 e-business and the virtual organi
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e-business and the virtual organiza
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Figure 1.2 e-business and the virtu
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1.5 e-business e-business and the v
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Figure 1.3 e-business and the virtu
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Figure 1.4 Virtual objects, Scholz
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Characteristics of the virtual orga
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Figure 2.1 Formation of business al
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� empowerment of staff; Character
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e-business models for virtual organ
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3.4 Models of efficient response e-
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Figure 3.4 Star alliance model e-bu
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Figure 3.6 Market alliance model Fi
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Figure 3.10 Virtual alliance framew
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Figure 3.11 Virtual organizational
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References e-business models for vi
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IS planning strategies for emerging
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Figure 4.1 The evolution of IS/IT p
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Figure 4.3 A framework for SISP (Wa
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Figure 4.4 Planning adopts a busine
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Figure 4.5 Interconnected ecologies
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Figure 4.6 The interrelationships b
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4.8 Conclusion IS planning strategi
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References IS planning strategies f
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Moving from e-business to i-busines
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Globalization and e-business strate
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Adoption and deployment of online i
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Table 6.1 Online business models On
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Figure 6.2 VIM strategy Globalizati
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7 Developing knowledge-based strate
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Developing knowledge-based strategi
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Page 220 and 221: 9.9 Summary Outsourcing, partnering
Page 222 and 223: References Outsourcing, partnering
Page 224 and 225: e-business strategies in the virtua
Page 242 and 243: 10.10 Summary e-business strategies
Page 244 and 245: 11 Creating virtual cultures for gl
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Page 264 and 265: Figure 11.4 The four paths of evolu
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References Creating virtual culture
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Creating virtual cultures for globa
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Creating virtual cultures for globa
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Advanced knowledge, see Knowledge A
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[8] 2002 e-business-strategies-for-virtual-organizations

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