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Chapter 15
Complementarity
George Hendrikse;Firms are complex mechanisms for coordinating and motivating individuals’ activities. They have to deal with a much richer variety of problems than simply the provision of investment incentives and the resolution of hold-ups. Ownership patterns are not determined solely by the need to provide investment incentives, and incentives for investment are provided by a variety of means, of which ownership is just one. Thus, approaches that focus on one incentive problem that is solved by the use of a single instrument give much too limited a view of the nature of the firm, and one that is potentially misleading. ;Figure VI.1: Positioning ;Example:Marketing and production ;Equilibria;Complementarity;Topics;Organisations can be analysed as systems of attributes which have to be aligned. Organisational consistency / coherence becomes the main theme.;Result;Complementarities (synergy, fit) lead to predictable relationships among activities.;2. Alignment principles;2.1. Equal compensation principle;Example: physical therapist;There are eight possible organisational forms regarding the physical therapist.;Which organisational forms are equilibria?;Observation;How do you represent these organisational forms in a figure?;X2;2.2. Law of large numbers;Production to order versusdelivery from stock;Strategy for dealing with uncertainty;Pooling of uncertain demands
Law of large numbers
Economies of scale in inventory
;Equilibria? Is 37% to order and 63% to inventory an equilibrium policy / strategy for dealing with uncertainty?No.;Either all production is to inventory or all is to order.;Figure 15.3: Choice of assortment and delivery policy ;Comparative statistics analysis;Applications;Real organisations have many more attributes than just inventories and assortment policy.;Figure 15.4: Mass production versus lean manufacturing ;Figure 15.4 specifies 16 attributes;Answers (when each attribute has two possible v
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