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What is your understanding of ARC framework? Are the elements in this framework (A, R and C) substitutes or complements?

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Topic: What is your understanding of ARC framework? Are the elements in this framework (A, R and C) substitutes or complements? ARC framework often appears in an effective organisation design. This framework is made up of three main components, architecture, routines, and culture and it intends to address the coordination and incentive problems that plague many potentially successful organisations today. To unleash the full potential of these organisations, it is imperative to build a better understanding on this framework. So, this essay will examine the three components and their relationships in this framework. There are infinitely many ways for firms to tackle coordination and incentive problems. However, without any form of order, they are more confusing than helpful to the organisation designers. So, to make the framework more assessable, the designers categorised them into three main groups; Architecture, Routines and Culture. And, this framework has since then been named: ARC framework. The architecture component of this framework can essentially be divided into two sub-groups; the architectural structure and the compensation system. ...read more.


In a stable environment, much of the daily activities within a firm are highly mundane and routine. So, it is possible for firms to be operationally more efficient by establishing a standard protocol in these daily engagements. Usually, the parties involve in these engagements are expected to know what will flow across them and the procedures in the process. In this way, routines help reduce much unnecessary communication and therefore, allow the employees to be more specialised in their daily tasks. Besides, routines also help in the incentive problem because they create many standardised interfaces which are highly measurable and therefore, become good indicators of performance. On the other hand, in a dynamic and complex environment, culture also plays a vital role in resolving the two problems within an organisation. In this context, culture means the commonly held values and beliefs of an organisation both constrain and enable the actions firms can take. So, when the problems a firm faces are not repetitive, a strong culture across the firm that will foster common understanding; will help in the firm's decision making. ...read more.


This might be true but in reality, the many activities at the firm should rely on more than just one mechanism to be successful. For example, routines may seem to render the need for structural linking mechanisms unnecessary in an organisation. However, while the linking mechanisms will function better for infrequent coordination, routines are excellent devices for repeated coordination. So, in reality, both components are more about complementing than about substituting to each other. In fact, this relationship will only be more entrenched because of the shorter product cycle and the more competitive business environment today. These phenomena require firms to continuously explore new markets while exploit its competitive advantages in its old markets simultaneously. To pursue these completely different market segments, these firms are more likely to have organisation designs that are consist of these complementary components. In short, the ARC framework is a framework which relies on the architectural designs, the compensation systems, routines and culture of the firm, to tackle its coordination and incentive problems. Since these components are interdependent of one another, they act like complements in this framework. Reference: **Strategic Management, SSP, Chapter 4, pg 79 ...read more.

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