ADVANCED MANUFACTURING TECHNOLOGY - ORGANIZATIONAL DESIGN AND STRATEGIC FLEXIBILITY

This paper explains how investments in flexible, advanced manufacturin g technologies (AMT) have special properties that can transform organi zation design and the economic bases of strategic flexibility. Investm ents in AMT that provide significant economies of scope (i.e. low-volu me/low-cost manufacturing) produce strategic options that allow the fi rm to place a 'call' on related markets that it may potentially enter. The value of AMT investments grow with the increasing changes in the environment. In addition, CAD/CAM networks, a vital component of most AMT systems, enable the firm to work selectively with external designe rs, suppliers, customers and other firms to rapidly compress the produ ct development and commercialization process. Firms seeking to maximiz e economies of scope and the option value of AMT need to reconfigure t heir organizations into loosely coupled systems with a modular, open s ystems perspective. Flexible AMT systems facilitate the pursuit of eme rgent, product-based strategies based on the selective exercise of the process technology's option value. Furthermore, AMT helps firms devel op more complex competitive strategies (e.g. integrated low cost and d ifferentiation) necessary for strategic competitiveness in global mark ets. Finally, AMT can facilitate the development of a learning laborat ory in organizations.