Mysticism and Strategic Management Chapter 4: Managing Organization Environment Dependency

Chapter 4: Managing Organization Environment Dependency

On goals Value system and legitimation -- Managerial autonomy -- Organization-environment dependency Name-dropping: Nobel Prize Laureates

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A long debate on the social responsibility of business organizations highlighted the issue of whether or not organizations strategy have multiple goals or just one, namely, maximizing profits. According to the first-mentioned contention, goals are: market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and public responsibility. Some point out that uncertainty avoidance, goal satisficing, and the existence of a dominant coalition in the organization result in a five-goal structure which represents business firms reasonably well: production, inventory, sales, market standing, and profit goals. These five goals are more or less independent constraints. Professor Herbert Simon himself doubted the existence of one goal in business organization, and suggested instead a set of constraints, with the goal of the organization being to satisfy these constraints, rather than maximizing a single goal. Referring to managerial decision making and the process by which goals are pursued, Simon concluded that basically it is a matter of analytic (or linguistic) convenience whether constraints are treated symmetrically or if some of them are referred to asymmetrically as goals. All constraints are, therefore, expressions of goals. There are three analogous ways to relate to organizational goals: a single goal under multiple constraints,

Copyright 2006 Eli Segev

Mysticism and Strategic Management Chapter 4: Managing Organization Environment Dependency

multiple constraints, or multiple goals. EXAMPLE: In 1994, Bezos decided to leave his job as a vice president of a Wall Street based investment bank to pursue a vision of selling products through the Internet. He reached this decision after realizing that the Internet was growing at a pace of 2,300% a year. After pondering the question of what kind of commodity to sell, he narrowed the options to two: music and books. When he analyzed the music market and the books market he found out that music was a centralized market dominated by six major record companies, whereas the book market was decentralized and not dominated by a large player. In July 1995, having reached the understanding that the book market was less difficult to penetrate than the music market, Jeffery Bezos moved to Seattle and launched Amazon.com on the Internet. His choice of Seattle was based on the understanding of the importance of a suitable physical location for his virtual bookstore. Seattle was a place where he could easily find the technical employees he needed for his enterprise and it had the further advantage of being close to book warehouses. The four declared core values of Amazon.com were convenience, selection, service, and price. With lower expenses than physical bookstores, Amazon.com could afford to sell all books at a 10% discount and bestsellers at a 30% discount. Amazon.com kept only an inventory of bestsellers, all other books was ordered from the publisher when a purchase was made. It did not sell its books from expensive real estate, but employed a mostly automated process to ship them to customers. Amazon.com offered 1.1 million titles, over five times the largest physical bookstore. To simplify the process of buying a book, Amazon.com used sophisticated software to create customer profiles to fit the various customer preferences. Such customization is possible only in a virtual bookstore. In addition, Amazon.com provided the service of informing customers by e-mail of new books in their field of interest. If Bezos is to achieve his declared goal of turning Amazon.com into one of the worlds leading bookstore by the year 2000, he should seek ways to expand its activities, even on account of profitability. (Source: "Amazon.com," 1998, in Charles W.L. Hill and Gareth R. Jones,
Strategic Management an Integrated Approach, Houghton Mifflin, pp. C107-C122.)

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Since I have never met Herbert Simon, I have co-authored two books and more than 15 papers with Professor Phillip Ein-Dor. Later at Carnegie Mellon Universitys Center for Innovation in Learning, Professor Simons interest in human decision-making and problemsolving processes led him from computer science to psychology, administration, and economics. Focusing on the use of environmental analysis in strategic planning, I had to know more on decision making and problem solving. It is impossible to understand strategic process without Professor Simons foundations. It was-mid-summer, just like now, and most of the offices at Tel Aviv University were locked, just like now. Most faculty members were spending the summer visiting universities in the USA, refueling for the next academic year. In an adjoining office I met Phillip Ein-Dor. His doctoral dissertation focused on artificial intelligence, and his advisor was Herbert Simon. We agreed to cooperate in performing a short experience based on a business game played by the MBA students. We still occupy

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adjoining offices, and have lunch at noon and ice cream (now diet) at 3 p.m. My long years of work with Phillip Ein-Dor have all focused on top management information systems, not strategic management, but thats another book.

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Although any specific goal is seldom pure, organizational goal structure, an important component of its strategy, may be viewed as composed of two kinds: performance goals and value goals. Performance goals refer to what organizations do, whereas value goals relate to why they do it. Thus, goals such as worker attitude or employee welfare fall within the realm of value goals; inventory and profit exemplify performance goals. Performance goals usually pertain to business decisions; value-oriented goals are linked less directly, or immediately, to the organizations operations. This view does not claim that performance goals are devoid of any value content, or that value goals have no bearing on organizational activities. Rather it recognizes two types of values: those that are more transcendental, moral and sacred, and those that are pragmatic and associated with functional outcomes. Factors that affect performance goals differ from those affecting value goals.

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An important component of organizational strategy is its value content. When organizational goal structure transcends narrow profit or survival interest, it has incorporated value or ideological content. While goals guide and direct an organizations activities, the values inherent in these goals morally or socially justify them. The social justification of organizational activities is directed to members of the organization as well as people outside it.

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More than seventy years ago Petach Tikva, my hometown, celebrated the fifty years since its establishment. Since Israel was under the British Mandate, big celebrations were planned and the British Governor was invited. The streets of the small settlement were swept clean, the synagogues freshly painted, school kids wore blue and white (flag colors) and the brass band was ready. Then all hell broke loose. Half of the settlement stopped talking to the other half, celebrations were canceled, and a few lawsuits were filed. It seems the settlement council decided to publish a fifty year anniversary book. Album style, high quality paper,

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with pictures. The book was to narrate the history of the settlement, from the first tour of its founders before purchasing the swamplands on which it was later established, up to its fiftieth anniversary. It was also to present the two relocations due to malaria and clarification of property rights, and the economic and political hardships, including the First World War, and the attack of the neighboring villages on the settlement. And it would detail the histories of the founding families, with profile articles (and pictures) of leading personalities. Seventy years on, some old families dont even mention the names of the other families, let alone marry one of them. Most of them are not even aware of the reason. Rumor has it that some families paid the author of the book to glorify the part played by some families and downplay, or even totally ignore, the part played by other families in the short history of Petach Tikva. The hostilities ended when all agreed to the suggestion of a mediator to hide all the copies of the book in the archives. It was never distributed or sold. As far as I know I have the only copy.

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Organizational values, imbedded in its strategy, are a group product and are not necessarily identical to privately held values. The consolidation of organizational goal

structure allows for differences in value goals among members of the organization but mainly between the organization and the external environment. The emergence of a goal structure is the result of power interplay within the dominant coalition. There are internal and external coalitions. The former is composed of members of the organization (usually top

management); the latter comprises outsiders, such as large stockholders, owners, customers, suppliers, regulatory agencies, or community and public pressure groups. Goals grow out of interaction, both within the organization and between the organization and its environment. Internal power play constantly questions the status quo. Individual executives

motivated by their own values and interests as well as by functional or subsystem affiliation may influence the organizational goal structure. External forces may employ different

methods to influence an organization, and effect changes in its goal structure. These include social norms, legal constraints, pressure campaigns, and board of director membership with its direct access to the organization and its decisions. Organizations can respond to external pressures in many ways, ranging from: outright resistance, through disingenuous support,

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attempts to influence the environment to accept goals sought by the organization, compliance and internal change, to advocacy of social or environmental causes. Accommodating external demands alters the goal structure. In the extreme, new goals may replace old ones. This process of organizational goal structure consolidation and

modification may result in goal differentiation among members of the organization, as well as between the subordinate (organization) and superordinate (environment) system.

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The organizational value system and its presentation to outside factors both play a major role in organization legitimation. Legitimation is the process whereby an organization justifies to other organizations, including governing organizations, its right to exist. Adoption by the organization of external values is a process of legitimation. An organization can survive only if it develops goals and operations perceived as legitimate by the larger society. Legitimacy is bound up with social norms and values, and since it is a conferred status, the environment controls it. To achieve legitimation the organization has to attend to the goals of the dominant segment of the environment. Legitimation is a retrospective process, in which justification is made to provide approval for the organization. Organizations themselves seek to establish their status in society by generating statements of their goals that in the current environment will be found to be acceptable by the relevant publics.

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When my uncle was ninety years old and my aunt eighty-five they decided this time they would celebrate the birthdays modestly. Five years earlier they had rented two buses and taken their family and friends to the head waters of the Jordan River (more than three hours drive) for a party and a fresh trout lunch. Boarding the buses, the partygoers received lunch boxes with breakfast and fruit. On the way north the buses stopped at the Sea of the Galilee for coffee and homemade pies and cakes. A mother of a cousin confessed she had not finished breakfast yet, and wondered if she would be allowed mid-morning coffee. I told her we would keep it a secret and hid the full box under the seat. The party was a great success. The trout was really fresh, and the speeches were short and touching. My mother told again how my then not yet uncle had to jump out of the window, leaving my aunt confused and scared, when my grandmother and Zeide returned home one evening unexpectedly. This

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time, because of flu, I missed the festivities. I apologized, but was forgiven only after promising to attend the next party. When writing this paragraph my aunt and uncle are away for a two-week vacation in Austria, chaperoned by their three daughters. I heard my uncle gave back his driving license, but my aunt has never given up ice cream and three-layer cream pies.

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Organization/environment relationships are reciprocal. An organizations existence may be dependent on its environment, but the opposite may also be true. There is a

continuum of influence in organization/environment relations, ranging from the organizations domination of its environment to its domination by the environment. Typical relationships are: Monopoly-monopsony, A large and precedent-making organization and a labor union, and, of course, Large stockowners and corporations.

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An important facet of environment/organization dependency is perceived managerial autonomy: managers ability to make decisions in spite of external intervention. Perceived managerial autonomy may lead to a gap between the organizations goal structure and the dominant values of its environment. The alternatives available to management to obtain a higher degree of decision-making autonomy when faced with external demands include satisfying the demands of the dominant component in each environmental segment, and tradeoffs among conflicting demands. Perceived autonomy of managers is higher when the Several measures of performance (profits,

performance of the organization is better.

dividends, sales, work places, exports) satisfy the demands of the various components of the organizational environment; greater achievements in these fields would be accompanied by a greater manager perceived autonomy from the environmental component. The length of tenure of the organization's top management also leads to a gap between the organizations goal structure and the dominant values of its environment. Executives adopt the values of their organization rather than those of the larger system, or the environment. This socialization process during which executives may relax their

commitments to environmental values takes time. The longer the executives tenure, the

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greater the gap. When the degree to which the dominant component of the environment is dependent on the organization increases, the gap between the goal structures widens. This sheds light on the relative importance of the value goal component in organizational goal structures. Although large organizations may view relatively small and insignificant units as easily divestible, the managers of such units may emphasize their non-monetary attributes such as: Past experience, High technology, and Contribution to corporate image (corporate image is its image as perceived by competitors, customers and other stakeholders, in terms of business strength, product quality, recognized brand names, quality of operations, labor relations, management reliability and performance, and its contribution to society, among other qualities). On the other hand, breadwinner units are probably unaware of the need to assign high priority to corporate value goals. In such cases corporate goal structure may be modified over time so that these units come to be perceived as giving priority to value goals. Managers of organizations aspire to gain autonomy or to control the relevant environments of their organizations. Both the achievement of autonomy and the gaining of control may be advanced by the organizational performance. Since the relevant environment is composed of a number of heterogeneous interests and controlled by a variety of means, management faces the problems of both setting priorities in dealing with the environment and allocating the necessary resources according to these priorities. Since the determination of a suitable strategy for an organization begins in identifying the opportunities and risks in the environment, an essential part of the process of strategic management is the identification of the pattern of external conditions that will affect the life of the business. It is also necessary to predict all possible changes in the environment as well as their probable impact on any given organization. In order to adapt action to a changing environment, it is necessary to institute systems of surveillance of all relevant factors and trends in the environment and their impact on the organization and to watch for signs of changes that require shifting priorities or a major revamping of strategy. EXAMPLE: When Microsoft was founded in 1974 by two high-school friends, Bill Gates and Paul Allen, it began its operation writing BASIC computer language for the computers of that era. The BASIC language that Microsoft wrote was designed as a foundation for users to write their own programs. The big breakthrough came when IBM, realizing that it had overlooked the potential of that particular market, went all out to produce its own personal computer. IBM had decided to use outside contractors as part of this effort and approached

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Microsoft to write an operating system for the new computer. At first Microsoft declined the offer knowing it lacked the ability to produce such software, recommending another firm named Digital Research instead. When Digital Research refused to agree to IBMs strict conditions, Back in the ring as a candidate, Microsoft then purchased the rights to an operating system from a small company and signed an agreement to supply it to IBM. Microsofts operating system, known as MS-DOS, was written to fit not only IBM machines but IBM compatibles as well. Since then, almost every personal computer in the world has used MS-DOS and later Windows as its operating system. Even though Microsoft dominated the operating system market segment it continued to develop new generations of the product to satisfy new needs as they evolved. Microsoft was aware that Apples operating system was superior to Microsofts limited Windows. Microsoft also acknowledged that its operating system was not fitted to deal with networking activities as well as others like UNIX, and developed the Windows NT as an entrant to the emerging networking market. With the launching of Windows 95, a real graphic user interface operating system, Microsoft closed the gap with Apple. Windows 95 replaced MS-DOS and Windows 3.00 and sold 15 million copies. But Microsoft did not restrict itself to the operating system market segment. Funded by MS-DOS royalties, Microsoft developed its Word and Excel to compete with WordPerfect and Lotus 1-2-3, the dominant word processing and spreadsheet applications. This was the first stage of the concept of offering the users a comprehensive solution rather than an isolated application, taking advantage of their familiarity with its operating system to promote its other applications. When it introduced Windows 95, Microsoft released Office 95, a package containing application like Word and Excel designed to work under Windows 95 or Windows NT. But this was not the only segment Microsoft entered. In the early 1990s, the Internet was expanding fast. Microsoft soon realized that it had overestimated its ability to mold the new evolving market as it saw fit and decided to abandon its concept of developing a Microsoft network. However, when the Netscape Web browser held 90% of the market, Microsoft responded by developing its browser and giving it for free to purchasers of its Windows 95. It was this step that precipitated the antitrust legal intervention to curb Microsofts exploitation of the dominant position it had achieved. (Source: "Microsoft Corporation in 1996," 1998, in
Charles W.L. Hill and Gareth R. Jones, Strategic Management an Integrated Approach, Houghton Mifflin, pp. C78-C91.)

In practice, a full and permanent search or scaling of all environmental forces is both too costly and intractable in terms of management time. Even when the search is limited and at least partly structured, it may still be too costly in terms of the energy and attention it consumes, let alone other resources. Management, instead of trying to monitor every part of its environment that might change, has to take steps to identify major and crucial aspects of the environment. How does one go about identifying the crucial aspects of the environment, and how can one be sure that all these variables have been identified? The crucial need to take the environment into account in devising strategy is certain. But how should an organization go about obtaining the relevant information about the changing environment? In fact, it is impossible to devise a system because of mans limited capacity and his tendency to reach satisficing rather than optimizing decisions. Managers do not try to identify all environmental factors. They classify what they perceive to be the relevant environment into certain segments, each consisting of various

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components. Once these segments have been classified, managers concentrate their search on the identification of a dominant component in each segment. A dominant component is an environmental component which, when satisfied or controlled, results in larger management autonomy from, or control of, that segment of the environment than existed before this component was satisfied; for example, a large stockholder, a major supplier, a key account (A key account has the advantage of special market relations such as being a supplier to an internationally renowned company like IBM, Marks & Spencer, and so on. The advantages of key accounts include customer commitment and long-term contracts. In return the organization may have to provide tailor-made products or promise exclusive rights.)

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The identification of the dominant components not only saves energy and attention in the permanent search of the environment, but it also saves resources that might have been allocated to satisfy or control non-dominant components. Dominant components are not very sensitive to non-major changes in the environment. This means that the amount of resources directed at scanning the environment may be reduced by resorting to only periodic checks as to whether or not there have been changes in the dominant component. An optimal strategy for an organization manager seeking to increase autonomy would be to concentrate his/her efforts on one or more of the components in the relevant environmental segments and secure the degree of desired autonomy from them. A spillover effect will generalize this autonomy to other environmental components as well. Managers should concentrate on the ways used to identify relevant environmental factors and the amount of possible spillover. Perceived autonomy is not always positively related to performance. In some cases, increased performance will reduce autonomy (for example, the more one exports, the less the autonomy one perceives one has). Therefore, desired autonomy is not always achieved by increasing performance. In fact, certain strategic actions may reduce autonomy. Managers who value autonomy do not always agree to respond to government pressures because such a response might be associated with reduced autonomy.

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Any governmental intervention contributes some degree of regulation in an industry. Laws, decrees, and governmental agencies may dictate the content, quality and price of

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products and services, control inputs, transactions and agreements, or require accreditations for conducting business. Regulation usually defines the rules for competing within an industry. The average performance of the organizations competing in a regulated industry may be higher than the average performance in a non-regulated industry. Being exposed to regulation may affect use of raw materials, production and transportation facilities, disposal of wastes, or a specific marketing and promotion program because of price, quality, or safety control. These regulations enhance the economics of some product markets and are to the detriment of others. Organizations operating in inconsistent product-market domains but which respond to environmental pressures to change their product market perform better than other organizations in regulated industries. EXAMPLE: Two decades after the deregulation of the airline industry some voices were heard favoring regulation. Following the introduction of the open-skies policy, fare prices had dropped significantly, thus apparently indicating that deregulation had achieved its goals. Some claimed, however, that the main companies had adjusted to the situation, making the industry less competitive than it used to be. Legislators called to take measures to protect start-up companies, improve service to small cities, and decrease the influence major airline companies had in the main airports. The US Department of Transportation planned to release a definition of predatory behavior to deter the major carriers from engaging in such behavior. The large companies claimed that market conditions prevented them from implementing anticompetitive behavior, but data showed that when a new cheap carrier entered the market prices were slashed significantly. In order to improve service to underserved destinations, a bill was suggested to provide low-rate loans to carriers that agreed to fly to these destinations, a step designed to help start-up companies. Another bill suggested taking slots at major airports from the main carriers and auctioning them to low-fare start-up carriers. The intention of this direct attack was to reduce the hold on resources at main airports of major companies like American and United Airlines, which in 1998 accounted for about 87% of the flights at OHare Airport. (Source: Business Week, 1998, " Prying open the open skies " February 9, p. 39.)

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Professor Oliver Williamson, a world-renowned economist whose work also focused on industrial organizations (industries) said that he had not been aware that all his life he had been studying strategic management. While visiting UCLA, I was invited by Professor William Ouchi, who studied Japanese organizations and is well known for his intraorganizational clan studies as well as Theory Z (not X, which is mechanistic, or Y, which is people oriented, but Z, which is orthogonal to both), to participate in a long weekend retreat on strategy. The invitees were management and marketing faculty, and two well-known economists. The meeting was held on a beautiful ranch southeast of Los-Angeles. It was the first time I experienced a Jacuzzi, or thought about the economic foundations of strategic

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management. Professor Armen Alchian enjoyed the opportunity to play golf. His primary field in economics was in the area of property rights, but he explained to us that at the time he was focusing on golf courses, because he liked to play golf. He also argued, that while all firms may not maximize profits, those that survive will be the ones that are managed so as to maximize profit. Professor Williamson, who has been quoted by every self-respecting student of industries, listened carefully to the management jargon being bandied about, and tried to help. I had the distinct feeling that he regarded us as an illegitimate child.

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When a segment of the environment is heterogeneous, the strategy of satisfying the interests of a dominant component may not work as effectively as in homogeneous segments. In some cases the requirements of different segments of the environment may be so diverse that no dominant factor can be found. For example, government is not a monolithic body, and the manager therefore will not be able to achieve autonomy by satisfying an important (or a dominant) environmental component. In such cases, an alternative strategy is possible: the use of constraints imposed by one component of the environment to achieve more autonomy from another. For example, a manager who is constrained by governmental policies from raising prices, may use this constraint (or dependence) in order to relieve himself/herself from the constraint of achieving a certain target rate of return on investment, or a certain dividend payout. By the same token, in a situation in which the organization is not free to raise prices without governmental approval, a manager who is forced by a strong union to raise wages can use the increase in wages as a bargaining weapon to get approval to raise prices, thus effectively reducing his/her dependence on the government. Finally, one would expect managers to resort to the excuses of governmental dependencies when dealing with clients. A simple example is the use of restricted credit terms to clients because of governmental monetary policy. In other words, dependency does not necessarily imply weakness, but can be used as a source of strength. Pressure from a certain environmental component to do a certain thing can be reduced and even eliminated, by demonstrating how a particular course of action followed by the organization has been imposed on it by other components in the environment.

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My Zeides (grandfather) seat at the grand synagogue, in the first row, was with its

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back to the walled cabinet where the Holy Scriptures are kept, facing the endless rows of prayers. Between his seat and the neighboring seat, occupied by the local legendary hero who never killed or was killed during all his life, there was a round pillar, which left room only for a very narrow bench. I spent many hours on this uncomfortable tiny bench. It was strategically located. I was close enough to watch the opening of the ark, to see and hear the cantor, to watch the bulky Shamesh (beadle) towering high on the mid-synagogue platform, trying to hush the crowd, to see my father and uncles probably joking - six or seven rows down the aisle. I even caught an occasional glimpse of my mother sitting with her sisters on the first row of the partially curtained balcony. I once asked my Zeide about his backwardfacing seat, and he explained to me the meaning, and the status, of the first row, where the Rabbis and the elders sat. I had some rough fights over the bench. My eldest brother, eleven years older than me, was too big for it. So was my only male cousin on my fathers side. My other brother, seven years younger than me, was no competition. But my three female cousins, about my age, were highly competitive. Time and male chauvinism were on my side: little by little their excursions to the lower floor diminished; they had to stay with their mother on the balcony.

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One can even imagine situations where the organization might invite pressure from certain components in order to reduce pressure from others or to improve its bargaining position in another context. For example, union pressures have been invited to secure

governmental contracts, to receive subsidies in development regions or to prevent reduction in tariffs or to induce import restrictions. Thus, resourceful managers may be able to turn environmental threats into opportunities, using their dependence on a certain environmental force as leverage to reduce their dependence on another environmental factor. These

offsetting rather than complementary dependencies, which make a tradeoff possible, are likely to be perceived among government entities and between government and other environmental segments, mainly organization owners and market elements. The environment is a source of scarce resources sought after by a population of organizations, which compete as well as share them. There are a whole variety of possible responses that an organization can make to environmental demands. One possible response is satisfaction of the demands of the dominant component in each one of the segments of the environment. This strategy allows an organization to generate a spillover that should satisfy,

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or at least neutralize, other components of the environment. Within the government segment, various components have conflicting interests. Moreover, components of the government may have conflicting interests with other segments of the environment. In this case, the strategy of satisfying the dominant component is counterproductive: satisfying the demands of one segment of the environment may well not reduce demands of others. In such cases an alternative strategy is appropriate. A useful strategy could be to identify conflicts of interests between different agencies and policies of the government and between government agencies and policies and other segments and components of the environment. Once these conflicts have been identified, they are the best means for attaining autonomy restricting pressures and constraints in the environment. Indeed, some think that the right manipulation of conflicting interests and demands in the environment is an important determinant of success. This strategy may be termed a tradeoff strategy, in which pressures generated by one component of the environment are used as a means to reduce pressures by other components. Since the output of the focal

organization serves as input to other organizations, a clever manipulation of this output should not only provide the focal organization with the means of survival, but could also increase its bargaining position in the environment beyond that of similar organizations with similar outputs. Managers may use other methods to increase organizational autonomy from the government (for example, political action, lobbying, and co-operation of regulatory agencies). In order to cope with government dependence, organizations or industries are more likely to increase the relationships with other organizations by diversification, merger, long-term contracts, interlocking directorates, and so on. Relationships with other organizations may be effective in reducing dependency on the government as a buyer, supplier or even owner and may be ineffective in reducing other dependencies on the government: for example, organizations cannot merge with the government or diversify into its business. EXAMPLE: When talking about relationships among organizations one can not ignore the Japanese keiretsu or mutual help networks. This system of interconnected organizations used to be considered a major strength of the Japanese economy, but now that the economy has hit rough times this is not so obvious. In 1949, Toyota was still a small auto manufacturer recovering from World War II. Needing cash to avoid bankruptcy, it turned for help to its keiretsu - the Mitsui. At the time, the Teikoku Bank, a fellow member of the Mitsui, loaned Toyota 1.7$ million. Fifty years later the situation has reversed. Teikoku Bank, now named Sakura Bank Ltd., has accumulated a significant debt and turned to members of the Mitsui keiretsu, and particularly to Toyota, for help. But Toyotas president Hiroshi Okuda feels that Sakura Bank should ask the government for help rather than the Mitsui keiretsu. Although

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Toyota has 19$ billion in cash it has been estimated that it will need the whole of this sum in order to contend with the intense rivalry in the market. Okuda does not wish to appear to be evading the keiretsu obligation to help members in trouble but is adamant that Toyota must not fail as a result. Thus, the keiretsu can not be seen solely as an advantage to the Japanese economy. (Source: Business Week, 1998, "Will Toyota Play Sugar Daddy?," November 16, p. 68.)

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The important dimensions connecting strategy and actions are organization design, strategic process, and strategy content. Sometime divided into primary and secondary

strategies, primary, or corporate, strategy is the selection of product markets or industries and allocation of resources among them, and secondary, or business, strategy, is the competitive weapons an organization uses to attain distinctive competence, which depend on task environment characteristics. There is no problem in distinguishing between the corporation (scope and resource deployments among businesses) and the business (how to compete in a particular industry or product/market segment). Thus, business is that level in the organization at which

responsibility for the formulation of a multifunctional strategy for a single industry or product-market arena is determined and business strategy is the competitive weapons used to give a business its distinctive competence. Integration of industrial organization, marketing and administrative behavior has indicated that industrial organization and marketing paradigms address strategy content, whereas the administrative behavior paradigm addresses strategic process. Integration of content and process is called for since the processes whereby the strategy is developed and implemented affect the content of strategy. Also, the processes available to managers are affected by the content of previous strategic decisions. Although strategic process and strategy content have been conceptually defined, there are difficulties regarding their clear-cut operationalization, some of which have included elements of design (both structure and process) in strategy content. There are strong

relationships between strategies and organizational properties that are integral parts of the strategy process or organizational design. The inherent relationships between strategies and organizational design mean that many problems arise when each is studied separately. Some call the structure and processes that facilitate the organizations adaptation to its environment the administrative system, and suggest specific solutions to the administrative problems that should be adopted by each strategy.

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It is possible to set out from a strategy point of view, and then proceed to incorporate design elements into a wider, holistic approach to the organization/environment adaptation cycle, or to address the same issue from a different point of departure. For example, one may emphasize the process from which strategies emerge, rather than their content: the motives for decisions, how alternatives are evaluated, who makes the decisions, the decisions horizons, age of the organization, organization goals, and flexibility of modes. (Flexibility is the ability to handle internal changes, at any functional level without disrupting the whole system, and to make the switches quickly and cost effectively. For example, the ability to switch from one type of raw material to another using the same machinery means the machinery is flexible. Switching from production of product A in small batches to product B in large batches - quickly and efficiently - means the manufacturing line is flexible. Flexibility is also measured in management decision making, data handling -is the computer system flexible or rigid- budgets, manpower, and so on.) And only then look for types of environments beneficial to each.

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When I was born my Zeide (grandfather) could still detect light and rough contours of bodies and shapes. His eyes had been badly hurt by complications caused by the several bouts of malaria he contracted during his lifetime working in the citrus groves next to the mosquito-infested swamps. A few years later, as a result of an unsuccessful eyes operation he completely lost his eyesight. He knew all the daily prayers by heart, of course. He also remembered, word for word, prayers and texts used in rituals only once a year. We lived in his house, and when our school assignments included recitations from the Tora (the first five books of the Bible), he would patiently correct all our mistakes. The map of our hometown was clearly imprinted in his mind, and he used to send us to various places, streets away, with exact instructions, to look for a willow branch used in a yearly ritual. His small synagogue was next to our home; his grand one was more than half an hour away. My grandfather prayed in the small synagogue daily, Saturdays and holidays in the larger one. Every Friday, two hours after midnight he walked alone, tapping his way with his cane, to the

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grand synagogue, returning a few hours later for breakfast. Fridays were our nights out. Many times walking with friends back home after a party I would meet him midway. We had a routine joke. I would say Good morning, Zeide, and recognizing my voice he would answer And good night to you. I assumed then his after-midnight excursions were part of the standard ritual. Only much later did I understand that he took part in the midnight tikkun (repairing), which is central to the practice of the Kabbalists: a complex form of meditation aimed to bring the divine light back into the material world.