Impact of Internal and External Factors on Organizational Capability

by Jason Shaw
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Q1- Eurocopter

Q1. What are the Internal and External Factors That Had A Positive Impact on [The Organisation]’S Capability to Continuously Innovate?

Innovation is mainly about implementing a different approach or concept to achieve things. It signifies a break from the conventional way of doing things and it should be remembered that there are numerous internal as well as external influences in this circumstance that have had a positive effect on the capacity of Eurocopter to consistently innovate. Eurocopter provides an encouraging atmosphere that enables workers to put out creative concepts in their activities, and this plays an important role in terms of morale as it facilitates the development of a sense of belonging among them to the company. Eurocopter is therefore dedicated to the continued improvement of its goods, which places it in a stronger place to continually expand with innovation. About 10 percent of its total revenues was devoted to its R&D capital. The framework of the company has often added greatly to its performance because there is a strong connection between all the stages involved in production and a cordial interaction between the workers is promoted by culture. The reengineering strategy of global business operations by shifting from vertical to horizontal framework is another internal aspect that has contributed to the organization’s capacity to be constantly inventive. Innovative ideas are encouraged through the horizontal framework of the company, encouraging the exchange of ideas and information among employees. A strong comparison can be drawn from the realignment of the blade maintenance processes.

Contact plays a key role in the capacity of the company to encourage and harness new ideas within its workers. Contact networks are available and cross-functional teams can collaborate efficiently, which is a significant contributor to their creative capability. Different concepts originate from individuals and can be converted by collaboration into new insights, which is the core of creativity. The customer service team, the design and quality departments all have a near contact channel and this helps to establish shared understanding among them. In order to foster creativity among its workers, Eurocopter utilises numerous HR management functions and these involve task rotation and success evaluations, learning as well as strong management skills. These reasons inspire workers and they are happy to identify with the company that allows them the autonomy to use their brains to regularly propose solutions that will render their office a happier place to be every day. Eurocopter already has techniques in effect to gain consumer feedback that can be used in turn to create fresh awareness of consumers’ evolving preferences and desires in order to be best placed to fulfil them profitably.

Impact of Internal and External Factors on Organizational Capability

Externally, there are different factors that contribute towards Eurocopter’s continuous innovative capabilities. Environmental, government, customers as well as competitors help the organisation to shape its operations and continuously improve on its innovative capabilities as these constantly change. Each and every organisation exists in an environment that is regulated by the statutory framework of that particular country. In this regard, Eurocopter is guided by the environmental and government regulations in formulating its operational strategies. The European legislation for instance requires organisations to use user friendly methods in their operations. The NDP is particularly achieved through the need to meet the environmental requirements. The customer plays a significant role towards Eurocopter’s continuous capabilities to innovate. Most of its products are customer oriented which results in positive NDP success. The needs and interests of the customers shape the new ideas about new products. The organisation’s continuous ability to be innovative is also owed to its stance on the need for continuous research about the aerospace field which includes gathering information about how the other competitors operate which gives them the ability to have a competitive advantage in terms of product innovation.

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Q2 Eurocopter

Q2.  “HRM Factors Often Seem to Be More Important Than Non- HRM Factors to an Organisation’s Innovation Capability”. Do You Agree or Disagree with This Statement in Relation to [The Organisation]? Justify your answer.

 HRM related factors play a pivotal role in the operations of an organisation and it can be noted that in different sectors, they positively contribute to the organisation’s innovation capability. HRM is mainly concerned with factors such as recruitment, managing issues related to the human resources among other issues. Selecting the right people therefore plays a significant role in promoting long term survival and development of the organisation since effective HRM promotes the organisation’s innovation capability. Against this background, I strongly agree with the above assertion particularly with regards to the case of Eurocopter.  It should be remembered that there are several HRM factors that contribute to Eurocopter’s development of its capabilities to promote continuous innovation.

First and foremost, it can be noted that the management at Eurocopter uses leadership styles which are employee oriented and they play a significant role in motivating the employees to be innovative at work. It uses democratic participatory leadership style which gives the employees the autonomy to be part of the decision making process. This style also allows the employees to continually think beyond their expectations in the organisation which helps bring in new and fresh ideas. On the other hand the leadership at Eurocopter uses empowerment of the employees as a strategic tool to win their support and loyalty. By doing this, the employees are given the opportunity to find solutions to problems they may encounter during their work. This is a form of motivation which influences the employees to think deeper and come up with innovative ideas that are helpful to the organisation.  A close relationship between the employees and management is likely to be created which promotes mutual understanding. Eurocopter for instance can capitalize on this state of affairs in developing innovation capabilities.

Research has also shown the importance of human resources especially in the changing global environment in which organisations operate and the link with the performance of the organisations. The knowledge economy requires employees to develop innovative capabilities given that human resources are comprised of people with different minds which can create different ideas. The Eurocopter case study shows that the organisation continually trains the staff to gain more knowledge that can be useful in development of the growth. It has to be noted that in each organisation there is a culture which guides its operations and the behavior of its workers hence the HRM plays an important role in promoting innovative ideas.

Training and development helps create a free environment for exchange of knowledge among the members of the team which encourages them to be innovative. It can be noted that Eurocopter has highly motivated staff which helps them to freely share information which helps the firm to maintain and share their knowledge which helps in development of its innovation capabilities. This helps promote create a culture of sharing knowledge. In contrast, it can be noted that non-HRM factors do not promote continual innovation in an organisation. The administration of human capital plays an important part in motivating the employees to be innovative when doing their duties which helps create brilliant ideas that are beneficial to the organisation.

In conclusion, I can conclude that HRM factors play an important role in creating the organization’s innovation capability which can help it improve its operations.  HRM as noted plays a very significant role in ensuring a scenario that helps the company to be imaginative in order to maintain speed with the changes that may be taking place in the environment in which the organisation.

Q1 Star

Q1.  What Are the Internal and External Factors That Had A Positive Impact on Starpharma’s Capability to Continuously Innovate?

The core business of Starpharma is to develop commercial pharmaceutical drugs on the basis of innovation in the field of dendrimer science which is still in its developmental stages. Basically, this organisation is based in Australia and it specializes in biotechnology. The capability of innovation is based on intellectual property rights and it is influenced by both internal and external factors.

A: External Factors:

These are mainly comprised of external consulting partners found in different but major markets and these are acquainted with issues related to property rights. Thus, it can be noted that the existence of external influence on Starpharma is a challenge to the management to effectively manage the scientific processes given that the intellectual property rights are safeguarded by the law which may not be possible for the workers to be innovative for the benefit of the company. In such a case, credit and due recognition is given to the person who has discovered something new in the form of knowledge or products and it may not be treated as a collective bargain for the company. Intellectual right are protected and this can be a challenge to the organisation given that brilliant ideas which may be beneficial to the organisation may be suppressed for the sake of individuals gaining a credit for coming up with such innovative ideas.

However, the company still stands chances of benefitting through acquiring the intellectual property rights by virtue of using formal channels such as licensing whereby they can easily acquire the new knowledge generated by the other individuals. Licensing of intellectual property rights can be done through BRI and DNT which can also include collaborated efforts through its global research network. Through a formalized way, the company can gain a lot of useful information which is vital for innovation.

During the contemporary period, it can be noted that the protection of intellectual property forms the core aspect of business especially with regards to biotechnological firms. Essentially, protection of intellectual property rights is meant to ensure that the organisation does not lose some of its vital discoveries and useful formulas to unscrupulous people who may not want to pay for royalties for using the vital information. Indeed, if the firms are better positioned to protect their property rights, they are better positioned to invest and use biotechnology. As a result of the advancements being made in the field of biotechnology, intellectual protection rights also serve as a great commercial opportunity for organisations since they will be better positioned to protect their innovations.

B. Internal Factors:

In order for an organisation to be innovative, there is need for committed workforce with the required knowledge of running a biotechnological industry. For instance, Starpharma has one major advantage that it has a well educated staff compliment comprising of 11 people who are holders of PhD qualifications and these often take a leading role in conducting research which brings about innovative ideas. It can also be seen that the senior management team is mainly comprised of people with multi-disciplinary skills and good understanding of technology where almost all of them hold a scientific qualification which is a viable requirement in ensuring that innovation for the company is a success.

Culture plays a critical role in promoting innovation for the organisation in question. The individuals within an organisation are not limited to specific technical functions since their culture is broad and accommodative to different views and perspectives. The culture at Starpharma is so broad that it encompasses a lot of views and highly educated staff plays a pivotal role in promoting innovation within the company. Thus, the management plays a very important role in establishing and maintaining a corporate culture that is sensitive to the dictates of intellectual property rights. A good recipe to ensure that the organisation runs smoothly is good human resource management which also promotes the capability of innovation to take place.

Starpharma has a good and adaptable business strategy that continuously tries to scan the environment and then try to match its operations with the situation obtaining on the ground so as to be better positioned to adapt to the dictates of the intellectual property rights. In order to successfully align innovation and its objectives, the company’s activities are streamlined in such a manner that they are not in contravention of thedemands of the market and environment.

Q2 Star

Q2.  “HRM Factors Often Seem to Be More Important Than Non- HRM Factors to An Organisation’s Innovation Capability”. Do You Agree Or Disagree With This Statement In Relation to  Starpharma? Justify You Answer.

To a greater extent, I agree with the assertion that HRM factors are often seem to be more important than non-HRM factors to an organisation’s innovation capability. The human resources in any given organisation are the most valuable asserts to it since they are the major drivers of production that may take place within that particular organisation. As far as Starpharma is concerned, it can be noted that without the human resources in the form of employees, the organisation could have been nonexistent. The human resources collectively work as a team towards the attainment of the organisational goals and they are the major contributors of innovative ideas which help the organisation to grow and develop.

Thus, in an organisation, the HRM has greater functions which includes the following activities: recruitment and selection, dealing with disciplinary issues, dealing with issues of rewards as well as putting measures in place that are meant to ensure that learning and development places are put in place so as to allow the organisation to be continuously innovative.  In order to attain this feat, there is need to ensure that there is a correlation between the HRM function and the overall business strategy such that there will not be a clash of interests.

One basic tenet of the HRM is to recruit the right people as these would be groomed for the betterment of the organisation. Once the right people have been hired, training and development programmes can be put in place that will be meant to promote them to be innovative in their specific duties and tasks. There is need for good HRM in the organisation as a way of trying to create an environment which promotes mutual understanding among the staff members. The employees also ought to be given the autonomy to contribute towards decision making as well as attempt to find solutions to the problems they may encounter in their day to day dispensation of duties. Incentives should be given as a way of motivating the employees as far as innovation is concerned since this will create a sense of belonging among them.

Starpharma is a small organisation with 22 employees whereby more than half of them are involved in R&D capacities. One notable aspect about the workforce is that it is highly educated given that 11 of them are PhD holders whilst the senior management is also comprised of highly skilled employees especially in the science related field. Structures have been placed in order to guarantee that the employees are well geared for organizational and managerial change, particularly in the areas which planning, training and development as well as restructuring the organisation to ensure that it conforms to the changing factors in the environment. At Starpharma, intellectual properties rights are given priority and they form the backbone of innovation where all technologies discovered by individuals are protected by property laws. This also requires good human resources management such that intellectual property is protected as a way of motivating those who contribute towards the innovation of new ideas.

 Organization culture is mainly concerned with the way people within an organisation behave. This is a great factor which contributes towards innovation capability of the organisation. When the employees are accustomed to the way they do their business, there will be high chances of them forming greater connection to the organisation which can enhance their innovation capability. At Starpharma, the environment and culture are just conducive and the responsibilities of the employees are broad and they are not limited to certain functions and this can promote them to think broadly. Managing intellectual property is a strong form of conviction towards innovation capability as the employees will be aware that their products will be protected. Thus, it can be noted that HRM plays a great role in creating and maintaining the organisation’s innovative capability through promoting the development of a corporate culture of innovation.

Q3 Star

Introduction

In order to meet constantly evolving markets, the idea of diverse skills is used to define the capacity of the organisation to incorporate, develop, and reconfigure internal and external competences. This also allow the organisation to establish a competitive edge over the other competing rivals by imaginative capabilities. The “Teece model” is an optimal model that can be used to describe how an organisation can improve its innovation capability. In particular, this model splits the complex capabilities into three steps: capabilities detecting and influencing opportunities and threats, seizing possibilities, and maintaining competitiveness through improving, merging, securing and defending the organiform reconfiguration. This model, thus, is like a vicious loop whereby the organisation can turn it after discovering its chance, and come back again searching for another opportunity that will go through the same period. In order to develop its diverse capability, Starpharma (SPM) is one organisation that follows this model. In this context, this essay aims to systematically evaluate the elements of each phase in the Teece process and to demonstrate how this model is implemented by SPM.

It is imperative for the organisation to begin by sensing the potential if it occurs in order to improve its dynamic capability. This entails scanning as well as developing conservation benefits. It often applies to the organization’s willingness to learn and perceive certain resources (Teece, 2009. p9). The environmental scanning method consists mainly of four elements that involve the following phases: processes to guide internal R&D and also pick new technologies, processes to tap external technology growth, processes to take advantage of supplier and complimentor innovation, as well as processes to target the business segment and handle consumer needs and innovation.

These 4 main elements are going to be used as guidelines for the company to search and explore the opportunity. As far as direct internal science and growth and technologies are concerned, SPM has quite a strong internal R & D team. As noted from the case study, the organisation is comprised of a highly qualified workforce whereby 11 out of the 22 workers are holders of PhD qualifications. These also contribute to the in-house incremental approach on its innovation. It can be noted that these two factors can enhance SPM to have a large opportunity to explore internally. On top of that, it is also mentioned in its annual report that SPM develops high value dendrimer nanodrugs in order to address the unmet needs of the market which could help it to create another new opportunity.

Processes to tap technology’s external creation at SPM mainly draw from the external market by observing the competitors’ patenting portfolios which is also used as a guide to niche its market. The organisation observes the technology used by the competitors then tries to filter if there can be any other technology it can explore further. It can be noted that a close analysis of the case study shows that there is overwhelming evidence to suggest that SPM has considered tapping the external technology. In the 2002 AGM, the foundation of its value proposition included the new technology, Nanotechology, which is the new technology that SPM was interested.

The third stage is dealing with systems to leverage the supplier’s creativity and it can be noted that SPM has much collaboration with its suppliers and complimentors. First and foremost, it can be noted that it has a good relationship with DNT which is holding many patents for the dendrimer science field. Given that SPM holds 49.99% in DNT, it would be very easy for SPM to have access to this large intellectual property portfolio and help accelerate its new product development process. Additionally, SPM has clearly stated that it empowers its competitive advantage though partnership which is considered as an “Umbrella arrangement.” As a result of this agreement, SPM believes that closely working together would reduce the barriers to entry and encourage other companies to help each other to invest in the development of the dendrimer.

The final stage is the method of approaching the business niche and managing consumer demands and technologies. The case study has shown that SPM observes the competitors’ patenting portfolio and it can use the result for this observation to target its niche market. The case study also shows that the market is characterized by a pull situation which implies that SPM is encouraged to work with its customers closely in order to understand their needs and what it can offer to them. It can be seen that SPM considers the dendrimer market as its target market.

Having found that opportunity in the dendrimer market, the next step SPM should be focusing on is seizing. This is the ability to address, develop, and commercialize the opportunity. Addressing the opportunities also involves maintaining and improving the company’s technology as well as competences and complementary assets. This should enable it to create an appropriate business model that could lead it to commercialization capabilities. In order to achieve this, the decision making in the company should not be biased and it has to be transparent. Seizing the step is comprised of four important areas which include the following: refining the business model, selecting the decision-making protocol, selecting the platform as well as building loyalty.

Using the SPM model as an example, the above-mentioned factors will be used to illustrate how it operates. The business model for SPM is that it is a group company which consists of SPM, Viralstar Limited, and Angiostar Limited. SPM is the license holder for technology and it manages the group innovations or intellectual property portfolio. The other two subsidiaries specifically focus on its own technology which involves Anti-viral therapeutic and Angiogenesis. They mainly focus on research and commercialization process that is related to its core technology only. This business model is mainly concerned with innovation capabilities that would be enhanced as each company could focus on its own technology, explore and exploit on that of specialty.

In the decision making protocol, SPM focuses on how to shorten the decision making process so that it would benefit in the launching of a product or even registering for the intellectual property protection process. On the other hand, the business platform for SPM in developing its innovation capabilities is based on the dendrimer platform technology. SPM adopted the “dendrimer” as a platform and consider it as pharmaceuticals, different from other competitors which consider dendrimer as a drug. As a pharmaceutical, SPM could easily explore, develop and add more value to the existing dendrimer technology.

 The last element is the seizing the step which is concerned with building loyalty among the stakeholders involved. This refers to the process whereby the leadership communicates the goals, values and expectations of the organisation while at the same time motivating the employees to create a sense of belonging to the organisation. This can be used as a step to increase innovation capabilities through its action and communication process.

 By virtue of following the above mentioned four main areas, the company should be better positioned to seize and commercialize the opportunity it would have found. However, there is no guarantee that its profitability and growth can be sustained in the future. Therefore, the company should be concerned with managing its threats while at the same time reconfiguring its operations. This can be done through four different steps which include: decentralization, core specialisation, governance and knowledge management.

The decentralization and co specialisation would help the company to sustain its innovation capabilities while governance and knowledge management would help the company to reduce the threats on its innovations.

SPM is a small organisation comprising of a small number of employees. As a result of this small number of the employees, decentralization of the workforce is achievable since the roles and responsibilities for the individuals are broad. As noted, the roles of the employees are primarily focused on technological factors which entails that this loose organisational structure enhances better chances for the employees to embrace the innovation from each other and from each position they involved. Co specialisation can be further developed from its complimentors as noted above. The strong relationship with the complementors such as DNT, they could further support each other in creation as well as information and knowledge exchange with each other. SPM also better positioned to engage with the external consultants for its intellectual property landscape since this could help it to ensure that its patents will be properly protected and help it to enjoy its competitive advantages over its innovation.

Governance is mainly comprised of three aspects at SPM. The senior management regularly meets to discuss the issues pertaining to innovation and commercialization of the current products and R&D projects. This means that SPM has a control process to ensure that its current innovations are in a proper direction and also that they meet the customer or market’s requirement. Additionally, this senior management is also responsible for creating and maintaining a culture which has already helped SPM to enhance its innovation capabilities. It can also be seen that SPM regularly reviews its patent portfolio to ensure that the patents are in line with the corporate strategy. SPM ensures that the patents which have expired will be replaced with new ones so as to be able to sustain its competitiveness. SPM tries to be in compliance with international standards and regulations.

SPM is a good example of an organisation which practices knowledge management through provision of access to external facilities such as the biomedical resources. On top of that it uses the internet to stay connected with the global community and as well as to update its knowledge about the competitors. It already has online resources which provide the multi-user access to various knowledge directories.

In conclusion, it can be noted that a close analysis of SPM above shows that SPM has passed though many activities which resemble the Teece’s model. This is the reason why SPM is successful in its dendrimer technology. It can be noted that once all the steps in the Teece’s model have been successfully achieved, the company will be better positioned to have sufficient capabilities to gain competitive advantages. It follows that dynamic capabilities would start again from the sensing stage or even the seizing stage.

Q3 UGM

Basically, the purpose of Teece’s model is to analyse the dynamic capabilities which allow the business to establish, maintain as well as to safeguard valuable assets to the organisation that are not tangible to ensure its survival and viability in the long run. This model is mainly comprised of three steps which include the following: model sensing, seizing and managing threats as well as transforming. Thus, this model is going to be used to analyse how Caterpillar Underground Mining (UGM), a world leader in mining machines and components industry, uses the Teece’s model in forming its dynamic business capabilities.

The sensing stage is a preliminary stage and is mainly concerned with analytical systems that are meant to search, filter and shape the opportunities in the environment. Basically, as going to be illustrated below, the sensing of the opportunity is divided into four categories. The first and major process is to direct internal R&D and select new technology. This is primarily concerned with exploring and checking if there are opportunities in the R & D activities which also include scanning the environment for probable technologies that can be pursued. UGM usually derives its measurement of innovation capability through calculating the percentage of R & D spending to the sales obtaining at that particular moment. It can be noted that UGM’s innovation is mainly influenced by its continuous exploration of the R & D which also involves shaping and testing the opportunity to improve its products or services, business models as well as processes. UGM strongly relies on selecting the appropriate technologies that can help it improve its business processes as well as the products. It is important to take a good analogy from the stance it took to select technologies meant to minimize waste, reduce pollution as well as to recycle waste. These components of technology were aided by advanced communication technologies supported by the use of GPS and as well as wireless technologies.

It can be seen that UGM does not solely rely on local sources for the technologies used to improve its products but they also come from external sources. The dynamic capabilities model posits to the effect that tapping of supplier and complementor innovation can be classified as the other example of a process of sensing.

The next stage is concerned with tapping developments in exogenous science and technology. This often is concerned full use of external assets finding information and searching as well as shaping the opportunity. It can be noted that that the major notable achievement of UGM with regards to the second process is that it managed to take into account the government’s regulation policy pertaining to the environment as its opportunity for SD. UGM also uses different sources to learn about the new products. As far as the external sources are concerned, UGM works hand in hand with the external partners such as Commonwealth Scientific and Industrial Research, the Australian Metal Industries Research Association, the small automate Technology Company and Brisbane-based Cooperative Research Center of Excellence in Mining in a bid to information related to technology as well as the output of research.

Identifying the target market segment is the last stage which is also concerned with changing the customer needs. The customer needs constantly change given that we are in dynamic markets and this stage is very important since there is need to identify the customer needs and put measures in place to satisfy those needs. This will enhance the organisation to create a vision that will be very helpful in its endeavor to gain competitive advantage in the industry that can ensure its long term survival and development. UGM is better positioned to detect the changes in the market through maintenance of a close relationship with the customers. It often obtains information about the customers through site visits or surveys which makes it able to stay in touch with the changes that can take place on the ground. Potential markets are also identified by UGM through market research where opportunities for growth of the market are identified and nurtured. These opportunities are mainly related to engine products as well as the broad range of other products such as electrical power generation, petroleum, marine and industrial applications. By virtue of combining various factors which include focusing on customer needs, increased used of sophisticated technology as well as continuous improvement of R&D greatly help in development of requisite solutions for UGM.

The seizing stage is concerned with the establishment of the strategic decision as well as the business model that is meant to address the investment in development as well as identifying the opportunity for commercialization.

The other important stage involves the selection of decision-making protocols. UGM made its decision on NDP through taking into consideration the aspect of cannibalization. This would entail shortening the process of NDP while the new products are being launched in the market so that they will compete with the other old products. UGM is influenced in its decisions by the knowledge that paying particular attention to solutions addressing current needs of the customers may be dangerous if new customer segments and new markets are ignored.

The next move includes the selection of business limitations for the administration of supplements and control platforms. This refers to aspects related to the organisation’s tangible assets such as the machinery, buildings as well as the assets which are not tangible such as IP. Taking an example from UGM, it can be noted that makes use of the EPA standards while developing its products which does not sacrifice its performance and reliability. Apart from that, the organisation has set a platform to fit its low emission engines that can fit on many trucks in line with its green revolution.

 The last sub-stage is concerned with building the commitment and loyalty among various stakeholders which involves providing positive leadership qualities, building a culture which is accommodative as well as working towards the attainment of the goal. The success of this stage is mainly dependent on the effectiveness of the management. UGM has a clear sustainable development statement in the corporate mission that shapes the consistency of business strategy between regional companies and dealers in order to achieve the SD. Another quality of UGM’s management is that it is comprised of strong leadership which is required in forming innovative organisation through creation of an enabling environment that allows knowledge sharing.

Combination, reconfiguration and asset protection skills is a stage which is associated with transforming the firm to be readily better positioned to deal with a dynamic ecosystem as well as managing threats that can emerge from the ever-changing environment. This is comprised of four sub-stages outlined below in relation to UGM.

Decentralization and Near Decomposability is the first stage and it is mainly concerned with reorganization of the organisations activities so as to be flexible in responding to changes that are unprecedented as well as embracing open innovation of external development. As far as UGM is concerned, it can be said that it has managed to address the stage efficiently given that it has a flat organizational structure which is supportive of creativity as well as innovation which is also owed to improved performance. This system allows a two way communication channel whereby the customers and the dealers can freely exchange feedback and other related information about what they want the products and services to be like in view of changing tastes and interests. Additionally, UGM is also effect in that it makes use of job rotation which entails that the employees are multi skilled and they are interconnected. This also leads to the creation of mutual understanding among the employees.

The second sub-stage is Governance which is concerned with measures that are in place that to enable learning as well as generation of new knowledge, and preventing misuse of governance and IP by the employees. The use of the reward system by UGM has greatly played a significant role in improving the performance of the employees. It cannot be ascertained however the extent to which authority is abused.

The next sub-stage is Co-specialization which involves the management of complementary assets in a bid to enhance value. UGM uses this system to manage the environment that is supportive to innovative capability and competencies in underground mining machinery as a way of enhancing new product value. On top of ensuring competencies in underground machinery, UGM also uses specialisation to compete with other rival competitors in the industry such as forestry of agriculture industries which may require the use of the same machinery.

The last sub stage is Knowledge management and this involves the process whereby the knowledge is created, disseminated or shared, integrated into existing knowledge as well as managing it to be used for the benefit of the organisation in its operations. UGM makes use of continuous research, training and education which have enabled the employees to develop and maintain the necessary skills to execute their expected duties and tasks. Motivation is also used as a viable to promote the employees to improve their performance through making use of the best technology available. This is also aided by job rotation whereby cross functional teams are also in place to help the organisation to promote learning and sharing knowledge.

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