Appunti esame Management Organization in the digital economy, prof Tunisini

Management and organization in the digital economy.

Annalisa Tunisini and Ivana Pais.

- the course is still mandatory for students of management.

- 2 separate modules.

- the first one is the digitalization from the managerial prospective. how the company

face the present environment? We are going to use some historical starting point.

- the second part will start in middle October. How economy is in our society? important

the platform economy. no books for the second part, just papers uploaded on black

board.

- not attendant students cannot make the middle exam (after 4 weeks of course).

Attendant students can integrate the mark with a personal work from home, or with

another students. free to decide to attend or not.

1

An evolutionary perspective.

Mass production is linked to economies of scale. Mass production is a starting point for

us. Lin production is flexible, is capable to adapt and to be effective not only efficient.

Get economies of scope not only economies of scale. this is all in order to be a digital

factory, a 2.0 factory.

IOT, internet of things. devices can talk each other. Social media are used to study the

consumer behavior. They are studying us in a very detailed way. Big data needs to be

interpreted well. They are creating something of new.

Industry 4.0

digital transformation is transforming the structure of a company. (3 people togheter,

working about a seminary, to discuss with the prof.. to get 2 points more on the exam.)

the program: 1.first part: mass production and the large business enterprise. the fordism

and his maturity.

2. second part: works on the present. most of the companies now are in this part (flexible

automation years 1990-2000s). modularity, servitization, network.

3. third part: digital transformation interconnected to products.

11 files on black board that should to be study. (the first one is a brief summary, and a

guideline.)

5 october: ing Cassani.

7 october: ing Brioschi. (IBM)

12 october: dr. Cristina Farioli.

with this tree seminars we cover manufacturing, purchasing and digitalisation. there 3

could be use by who wants to do the project. the project should be discuss on the 14 of

october.

2

Fordism.

1913, second industrialisation. You can reduce the cost if you produce a lot.

Ford produces cars with highly mechanized cycles, with an assembly line. Pieces of

product moves from one workstation to the next.

Fordismo is the name used to refer to the technological and social paradigm that

emerges from the widespread use of the organizational and social forms consistent with

the requirements of mass production. The answer is the fragmentation of the mechanical

work. This things reduced the costs, and made possible for many people to get access

to products they couldn’t buy before. A ford competitor is general motors or craisler. The

philosophy behind General Motor (Sloan) is pretty different from the philosophy of Ford.

General motor is thinking about some people that are able to pay more for cars. the

philosophy is ‘a car for every purse and purpose’ . The key is to produce what can be

sold, obviously reducing the standardization of the products.

the second industrialization has a different approach to people. Standardization is the

key. Besides the cost advantage the company could win whit the generalization of the

products. business strategy could be divided in cost advantages (ford) and differentiation

(Alfred p. Sloan). Sloan introduced some small components according to the customer

view.

SLOAN’S APPROACH

This approach seemed to resolve the conflict between the need for standardization and

the model diversity required by consumers. The goal of this system was: 1-standardizing

many mechanical items 2-annually altering the external appearance of each car, to

introduce and endless series of “hang-on” features such automatic transmission, air

conditioning and radios which could be installed in existing body design to sustain

consumer interest. The usa car companies dominated te world automotive industry and

the US market accounted for bulk of the world’s auto sales. Ford, GM and Chrysler.

By the 1955 this tree firms were losing their competitive advantage. In Europe the

diffusion of mass production technology had taken place somewhat slowly. In Europe the

problem was the attachment to the craft-production traditions, Just 30 years after Ford,

his technology becomes fully diffused.

what is changing the technology, is the environment. Nowadays is still important the

tecnology. 6 years ago the ford model was the winner. Mass products for the mass

affordable costumers. The future was wonderful, because some people could buy

something that they couldn’t buy before. (rec)

3

reducing prices makes people to wants things and to buy it. The right product and the

right organization is important.

to face mass consumer you must to be big. The large corporation wins, is the model

more common. vertical, hierarchical structure wins. Ford controls the market and any

technology inside the company because is built to be efficient. The power is this: to be

big and to face all the functions inside of the company (just few suppliers).

Everything of new is developed in R&D department.

From the top to the bottom to be efficient must to be liked with a clear division of levels,

rigid routines, efficient processes. everyone have to follow rules. when the mass starts to

have fridges, tv, cars, we start to have problem. the problem is to be on time, to have

new models of things that comes out. the problem of the company is to replace things on

the market, to think about on the commercial side. Company have to convince people to

re-buy things that basically are standardized. this is the false differentiation, with small

adaptation, and small things changed from before.

Costumers thinks that the company is proposing a false differentiation. so the company

needs to found the way to show a real differentiation.

The product services. Services means basic services (e.g. insurance to the car). The

large corporation start to support such services.

the large corporation should support costumers. The innovation model is still controlled

by ford, purchasing function is not only facing logistics but also new departments. so

new company borns to do things instead of the main company.

The innovation is totally controlled by ford and big companies like this.

The third industrialization is in the 1954 (electronic automation). in the 70s, things are

more critical. The critical changes were so strong and rapid that broke the rules that

were in the market before (and that rules were winning before). This creates new

opportunities but also create a different situation for who was in the market before.

We have to pay attention to economic crisis. The economic crisis, the high prices,

deflation, inflation. It’s also about a decline of the mass production. That instability arises

from a concentration of many destabilizing factors linked to each other but which can be

divided and summarized in cyclical nd structural factors. Cyclical: -exchange rates -oil

prices -raw materials prices. Structural factors: - penetration and diffusion of innovations

components -IT. In the 70s IBM started to produce computers more little and more

useful. First of all the automation of the process, you can combine cost advantage with a

real differentiation. Is an important change. This advances in technology introduce a lot

of new things, the automation of the process was possible. This make possible a real

differentiation. Now, companies that are winning are no longer like Ford.. actually this

4

companies have to be more flexible. The creation of a network between the company

and the suppliers, research centers, customers is needed. As a consequence of

innovation, processes are not totally controlled by the single company but also by other

companies that perform the outsourced activities.

Flexible businesses models:

In this time period flexibility is represented by Toyota. -Toyotismo is a new philosophy:

Lean Production. Is started by japanese people. They drive the world economy with this

philosophy. Still now some companies look at this benchmark to imitate it.

As we need a flexible company, the model of the small enterprise is fine.

Small companies were born from this process of downsizing.

It’s difficult to be flexible if you are organized in the old way which was used by Ford.

Small is beautiful at that time. Clusters is the correct name to define them. A business

cluster is a geographic concentration of interconnected businesses (districts) suppliers,

and associated institutions in a particular field. e.g. Luxottica, that was capable to grow

more than others.

-SMEs The small business, defined by porter as ‘’geographic concentrations of

interconnected companies, specialized suppliers, service providers, firms in related

industries, and associated institutions in particular field that compete but also

cooperate’’. In SMEs face to face interactions reduces transaction costs. SMEs in district

are highly specialized, many of them where born as consequence of the deverticalization

snd outsourcing process started by the large corporation.

Craft production and mass production are contained by lean manufacturing. in particular,

is a management philosophy derived mostly from the toyota production. Craft

production: highly skilled workers and simple but flexible tools. This is to make exactly

what the consumer asked for. Products produced by craft production costs too much for

people, for this reason mass production was a good alternative. Craft basically is: -highly

skilled in design, machine operations, and fitting.

-organizations decentralized

-long production volume.

Henry Ford understood the drawbacks of craft