Strategic and Financial Changes Literature Review Chapter

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[. . .] One of the approaches revolved around the study of external control that was carried out by Salancik and Pfeffer in 1978 and offered the idea that the external authorities or population decide the organization's resource dependencies that further convince those charged with managing to come up with decisions and select strategies premised on the level to which the organizations can guarantee reliable amount of resources coming into the corporations.

The second research methodology depicted that when Jamaican organizations reacted to upcoming threats from technological advancements they emphasized and employed the resources to the development and improvement of products already in existence so that an existing customer base could be catered to (Cooper & Schendel, 1976). In 1996 Bower and Christensen deduced the DI model by combining the respective research approaches mentioned above with their study carried out in the same year that assessed the global industry of disk drive in the year of 1990 and later.

The DI model was based on the idea that corporations keep resources for assignments and task that deal with the requirements of present consumers -- a phenomena known as sustaining technologies while no strategic change takes place. Consequently, organizations that are "astutely managed" (Christensen & Bower, 1996, p. 197) end up losing their market share and dominance when faced with unsettling changes of technology, a threat mostly posed by competitive organizations. The respective competitive Jamaican organizations direct their attention to markets which the existing organizations have hitherto not developed an innovative plan of action for. The DI model connected the resource dependence and allocation theories by determining a causal link among them.

Even though, those charged with the responsibility of management are likely to rely on the sources where their resources come from, circumstances occur where skilled and able managers have to exercise their authority and decision making powers on matters related to resource allocation and thus, they can alter where the organization is going in terms of their overall strategy and plan of action (Christensen & Bower, 1996).

The two kinds of innovative technology that led to change were identified by Christensen, Anthony, and Roth (2004). The two types were sustaining innovation and disruptive innovation. The sustaining kind offered the organizations to make profits by enhancing the present product lines, services offered and processes directed towards the more important and currently present consumers. An example of a sustaining innovation is of a computer that is faster and offers a storage capacity that is higher than the previous models. As for the disruptive innovation, it can either develop and exploit new markets or reform the present markets. Also the disruptions can be either new market or low-end (Christensen et al., 2004).

Disruptive innovations that are of the low end kind take place when the present competitive product line, services and process allow enhanced features and options than what the consumers desire and are priced at a level that consumers are not so willing to bear. An example of such an innovation is of Wal-Mart, a discount retail store that fulfills more consumer demands is still more affordable than high-end stores like Sears, Roebuck and Company (Christensen et al., 2004).

Disruptive innovations that targets new market takes place when the present product lines restrict the level of possible clientele or facilitate the consumption of products in centralized and convenient conditions (Christensen et al., p. xvii). The respective product line allows it to be more convenient for the public to carry out a task that earlier necessitated the use of a skill or resources (Christensen et al., p. xvii). An example of such a disruptive technology can be of a number of health products that save the consumers a visit to the health clinic.

The DI model maintains that the present organizations, like educational institutions, that employ sustaining innovation have a greater chance of faring well against emerging organizations. On the contrary, when disruptive innovation is the basis of competition, the emerging organizations are likely to fare better in almost all situations (Christensen, Anthony, & Roth, 2004, p. xv). The circumstances that can allow the emerging organizations to fare well against the dominant existing organizations are also explained by the DI model.

The model suggests that this can be achieved by coming up with less complicated and more cost effective innovation that might be perceived to be inferior but it assures the organization of importance in the market and lends it a competitive gain quicker than the existing product line of the present leading organizations (Christensen, Johnson, & Rigby, 2002).

Existing Jamaican organizations, like the Jamaican educational institutions, that are successful usually do not keep aside resources for projects and task that go further than just sustaining technology. Ultimately, the plan of action paves way to reduction in power of the existing leading organization that is brought about by the emerging organizations targeting a market's low end (Christensen, Anthony, & Roth, 2004). Upcoming organizations come up with innovative services and product lines to a consumer base that has not been exploited or to present consumers whose demands are not being sufficiently met by the product line currently existing. This is how they increase their market share and affirm their hold while the competencies of disruptive innovation go up.

Innovative corporate processes in Jamaican educational institutions led by disruptive innovation have it in them to affect the progress, continuity and behavior of an organization (LeBlanc & Christensen, 2001; Von Hippel & Katz, 2002). Even though innovative processes and products revolve around the use of innovation, the situation that facilitates emerging companies in attacking the existing ones is explained by disruptive innovation (Adner, 2002). It is disruptive innovation when the upcoming or the present consumer line begins to prefer the newer offerings of an organization which are less complicated, less expensive and allows increasing convenience (Denning, 2005). Coming up with DI necessitates carrying out tasks in a different manner, something a number of organizations are not very good at (Denning, 2005).

The DI model integrates the Salancik and Preffer's (1978) theory of resource dependency with studies depicting that organizations reacted to upcoming challenges by concentrating their resources on enhancing the present product line for an already existing consumer base, thereby representing instances where the resources of the organizations can either be controlled by managers or the market (Christensen & Bower, 1996; Cooper & Schendel, 1979). This applies to Strategic and Financial Changes in Private, Higher Education Institutions in Jamaica as the resource dependency allows or disallows the institutions to engage their present target audience with newer improvements in the curriculum or technology in class and this allows the parents and students to either accept the innovative changes or refute them; hence, playing a part in the innovative strategies that are adopted by the institution in the long run based on the resource dependency notion.

Keeping the above stature and approach of Jamaican educational institutions in mind, it is important to note that the DI model depicted that organizations being intimidated by increasing competition from upcoming organizations had a higher probability of concentrating their resources on sustaining technologies that deal with the requirements of the present consumer base without having to bring about strategic change (Christensen, Anthony, & Roth, 2003; Christensen & Bower, 1996).

Furthermore, disruptive innovation is different from sustaining innovation in the sense that the latter concentrate on the corporation's present consumers and allows for incremental advancements or breakthroughs in the existing product line (Christensen et al., 2004; Denning, 2005). Identifying whether corporations make use of strategies that either disrupt or sustain assists in determining the chances of an organization's continuity and survivability in a competitive market.

With respect to determining, explaining and forecasting the changes in the education industry, the process of DI revolves around determining the indicators of competition, strategic choices and change. Following paragraphs explain each process.

Indicators of change were suggested by Christensen, Anthony and Roth (2004) that also took into account an assessment of overshot and undershot consumers, non-customers and non-market settings that revolved around regulatory authorities coming up with or removing obstacles to institutional innovation. Assessment of competition between educational organizations revolves around reviewing the competencies and flaws of each organization in the web of competition and determining the attacker and the organization defending to identify the more successful organization with the best accuracy (Christensen et al., 2004).

A review and assessment made on strategic choices of Jamaican institutions revolves around inquiring if the educational organizations make decisions which enhance or reduce their probability of achieving success or higher student performance in the long run (Christensen et al., 2004, p. 54). This analysis revolves around detecting the work that goes in and in identifying value networks surrounding emerging organizations and deciding whether the existing firms have achieved a Black Belt in disruptive innovation (Christensen et al. 2004).

The existing research concentrates on strategic choices. The preparation or the effort put in by the entrant educational institution decides whether the state of… [END OF PREVIEW]

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Strategic and Financial Changes.  (2011, March 30).  Retrieved February 18, 2019, from

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"Strategic and Financial Changes."  30 March 2011.  Web.  18 February 2019. <>.

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"Strategic and Financial Changes."  March 30, 2011.  Accessed February 18, 2019.