Knowledge is a competitive advantage for all organization but the way we used the knowledge is the most important. The aim of this study to discuss the relationship between knowledge sharing mechanism and the development of pricing strategy, how we can know that we developed a successful pricing strategy, how we can achieve our goals? How knowledge help us to determine the best successful pricing strategy. Knowledge sharing behavior has positive impact on the strategic planning during the process of strategic planning. Knowledge sharing depend on trust among employee and influence by the organization culture (Hu,2012). Knowledge sharing is useful tool to enhance learning and achieve effectiveness inside communities (Leng,2009). The role information system as tool for reports on the strategic decision making and how influence strategic and tactical planning ( Karim, 2011).
Organization process to achieve organization goals by formulating strategies and implement them. According to (Sveiby,2001) the origin of strategy competence of people, without people no need for strategy formulation. A strategy must meet the organization requirement and must be workable and realizable (Bryson, 1988).
2. Knowledge management and knowledge sharing
2.1 Knowledge Management: Knowledge Management is one of the widest definitions because is one of the useful assets for organization to get a competitive advantage. There are a lot of definitions of knowledge management. ‘the systematic process of finding, selecting, organizing, distilling, and presenting information in a way that improve an employee’s comprehension in specific area of interest'( Mertins, Heisig, & Vorbeck,2003). According to (Teece,2000) Knowledge management involves the panoply of procedures and techniques used to get the most from an organization’s tacit and codified know-how. Knowledge Management aims to fostering and managing processes like knowledge creation, transfer, application, and evolution in order to create value within the organization(Stefanie, &Johannes,2005)
2.2 Knowledge Sharing: Is the way for sharing information, plans, innovation, ideas, goals, and expertise among people and organization to develop good understand for problems, goals and innovation using mechanism to make it easy and reachable any time. Successful knowledge management relay on knowledge sharing (Wang, Noe,2010). Knowledge sharing is the organizational process whereby various channels of interactions are involved in the interconnection of individuals to pursue and accomplish organizational goals through means such as social networks, informal and formal meetings and dialog (Yang,2009).
2.3 Tacit Knowledge: Is the knowledge in human mind can’t know what is it without emotion or writing it. According to (Polanyi,1967) ‘we can know more than we can tell’ so for that tacit knowledge hard to observe. Tacit knowledge is valuable for the organization to be sustainable. Although it hard to get but it’s leading to competitive advantage.
2.4 Explicit Knowledge: Is the Knowledge which be shared by several among people, This type of knowledge is formalized and codified and is sometimes referred to as know-what (Brown & Duguid,1998). Must keep an eye on it must be shared and available to whom they need in which time they need.
2.5 Knowledge Acquisition: is the way that you can extract information, make it usable and listed in sufficient way to retrieved in the time we need to develop database of solution to face every problem that face the organization. According to (Roa, 2005:247) Knowledge acquisition is a tool used to highly and speedily retrieval of information and directs it to the right department and people to speed up the process of solution given to problem solving. Knowledge acquisition is the core component in knowledge management and speed up the process of retrieve information (Mchombu, 2007).
2.6 Knowledge Retention: is the way to keep knowledge and remain it when add to knowledge management system (KMS) and maintain it when add to the KMS(Newman & Conrad, 2000). According to (Wamundila,2009) knowledge retention can be characterized as a movement guided at holding What’s more settling on accessible important knowledge vital to manage operations effectively Furthermore adequately.
2.7 Knowledge Component Model:
3. Pricing strategy: The most important factor for product is how we can determine the price of this product, depending on what to determine the price, in this paper will discuss some factors that can influence the pricing strategy and how we can get successful pricing strategy and how knowledge can help or influence determining the pricing strategy.
Many organization do consultant about determining their pricing strategy or employ ‘pricing expert’ to do that but this way is highly costly to organization (Calogridis,2006). According to (Ny??r??di,2007) the best pricing strategy depend on the situation, so you must understand the situation and keep in mind the factors influence pricing strategy like costs, short term, long term sales and profits. Pricing strategy has positive effect on the marketing planning (Salmani, Daraei& Bayazdi,2014).
According to (V??zquez-Gallo, Est??vez & Egido,2014) when we have doubt about the demand of product may influence the success of pricing strategy, so for that we should have a knowledge and learn from past event to determine successful pricing strategy. The pricing strategy is influenced by the governmental polices (Ahmad, Al-Qarni, Alsharqi, Qalai & Kadi,2013). According to (Marinescu, Mihai & Toma,2010) pricing strategy is very critical for maximize probability and retain customer to repurchase product and ensure the loyalty of customer. The pricing strategy may affect the tone about brand and customer loyalty for the organization (Shih,2011).
4. Factors affect pricing strategy: There is some factors affect the pricing strategy, in this paper will list some factors and how knowledge sharing can influence these factors, like geographic location, customer demand, innovation, products specification, advertising, social network, communication tools, market changes, polices and regulation. Will discuss these trends from knowledge sharing prospective and see how knowledge can help us to determine good pricing strategy.
4.1 Geographic Location: we should know the geographic location for determine the price of product based on location, every location has specification that can affect the pricing strategy, so knowledge sharing can make a road map and big vision for the geographic location and how we can got right pricing strategy based on the location.
4.2 Customer Demand: Customer demand may be the most factor that play role on determining the pricing of product or service that organization provide, knowledge sharing can provide us with information needed about the demand of customer. We know that the demands of customer’s may change from time to time, so we must up to date with new demands that knowledge sharing can provide to the organization.
4.3 Innovation: According to (Jacobson,1992) Schumpeter vision that firms should not be searching for the stable conditions; they must look after unsettled market for a process of building strategy, better than the search for stability to create a competitive environment. Innovation leading organization to survive, new product need new pricing strategy so for that innovate new products can affect the pricing strategy and may change it. Knowledge sharing provides us with new innovation by information they provide to the organization and help us to determine the pricing strategy for new products and services.
4.4 Product Specification: Some products and some geographic location need specification deferent than usual product specification, knowledge sharing help organization for determine the right specification for the geographic location, for that we need to change pricing strategy to be suitable with the product specification.
4.5 Advertising : Advertising may influence the pricing strategy for product or service depend on the cost of advertising, knowledge sharing informed us about the target group of customer that we must focused on them, the promotion form what should be delivered to customers, the most suitable way for advertising, all these will influence the pricing strategy.
4.6 Social Network: Social network play huge role for marketing these days and may influence the pricing strategy, knowledge sharing play a big role for providing organization about the social network and its role in marketing so pricing strategist must beware of this how they can promote products by using social network, discount on price they can provide, services they can serve customer based on social network.
4.7 Communication Tools: It’s very important to have communication skills to deal with customers, how to communicate will with customer will lead to provide information about the quality of products, specification that need, all this information can be handled by knowledge sharing and may change the pricing strategy for goods to be suitable for customers.
4.8 Market Change: knowledge sharing can supply organization about the market status what the set of exchange made to the market, what the set of reaction can be made to develop the pricing strategy for organization goods, what other competitors prepare to compete other organization. Knowledge sharing provides organization by information they need to change pricing strategy to face the change in the market.
4.9 Polices and Regulation: Organization should worry about the polices, laws and regulation about their products and services they provide, polices may take a Tax or other fees on some products, the knowledge of this regulation, polices and law make change the pricing strategy, what the action will been taken to this issue, knowledge sharing support organization with suitable information to be aware to this factors.
Free Technology Essay: Knowledge Management
John | October 22, 2011
WritePass - Essay Writing - Dissertation Topics [TOC]
Why do some knowledge-based organizations perform well in terms of innovation but less well in terms of efficiency? To what extent can information systems help to redress this balance?
In this paper, focus will be given on analysing how an innovative organisation can be in-efficient. The key role of information systems in addressing this issue will be discussed. The perspectives of various researchers will be taken into consideration. The different type of knowledge management will also be discussed. The drawbacks of Knowledge Management without proper information systems will be highlighted.
Keywords: Knowledge Management, information systems, knowledge management disadvantages, knowledge management innovation
It has regularly been said that the knowledge based organisations are not as efficient as they are innovative. The report by the top consultancy firm, KPMG also confirms this statement. A knowledge manager of KPMG, Nagle (1999) says that one of the major challenges being faced by the firms in today’s world is how to best capture, store, retain and share the vast amount of knowledge possesses by their professionals. As per Cameron (2000), “Knowledge is power, but without the adequate management of that knowledge, the consequences for [organizations] could be devastating”. It should not come as a surprise to us that most of the firms are of the view that the key enabler for efficient knowledge management will be technology. Currently the corporate efforts are concentrated more on the group of technologies called as Knowledge Management Systems (KMS).
KMS in firms assists its employees to easily access the information in a better way, share ideas and learn from previous mistakes. In theory, by facilitating the sharing of ideas, KMS improves the innovativeness of the business. However, the downside of this is that by following this process, firms become less efficient. In this process, employees tend to spend more time in doing things, discussing different ideas which results in issues in streamlining the work and doing it in an efficient manner.
The central question of discussion here is how information systems like SAP or ERM can help in enhancing the efficiency of KMS. How can the implementations of a new information system can help in reduction of time wastage and simultaneously assist in making the knowledge transfer process more efficient.
In this paper, first an introduction to the knowledge processes will be given. Then how the role of knowledge management evolved in organisations will be discussed. The merits of knowledge management will be highlighted. Furthermore the potential inefficiencies due to knowledge management will be discussed. Afterwards the role of information systems in curbing the drawbacks of knowledge management will be discussed in detail taking the example of few organisations who successfully implemented information systems in their organisations.
“Knowledge Management is concerned with the exploitation and development of the knowledge assets of an organisation with a view to furthering the organization’s objectives. The knowledge to be managed includes both explicit, documented knowledge and tacit, subjective knowledge. Management entails all those processes involved with identification, sharing and creation of knowledge.” (Davenport et al, 1998).
Figure 1: Knowledge hierarchy
Figure 1 gives a good idea of the hierarchy of knowledge. It shows how value can be added from the raw data which are at the disposal of organisations. By following the hierarchy, it can be seen how the data become information when applied to a particular context. This perspective will be discussed in detail later on. Furthermore, that information becomes knowledge when a particular meaning is applied to it. Finally that knowledge becomes wisdom when it is used as an insight. This wisdom is then useful for any organisation.
Knowledge can mainly be classified into two types: tacit and explicit knowledge. It has always been difficult to define these two types of knowledge. Tacit knowledge is basically rooted in a specific context, is subjective, highly experimental and largely unconscious. While explicit knowledge is mainly rule based, reusable and is objective.
Figure 2: Tacit and Explicit Knowledge
Figure 2 displays the difference between explicit and implicit knowledge when applied in the context of adding value to an organisation. It highlights the fact that the main difference between the two is use of communication in tacit knowledge. While in the case of explicit knowledge models are being used to add value.
Figure 3: Types of Knowledge (Willcocks and Whitley, 2009)
Knowledge can further be classified into individual level and collective level. Figure 3 shows the interaction between the types of knowledge in a matrix form. This figure further highlights the difference between the explicit and tacit knowledge.
In the case of knowledge based organisation, KM can mainly be classified into two varieties. First is, IT-focussed where knowledge is an object. IT is used to increase productivity of an organisation. Firms attempt to leverage the already held data. The firm wide relationship is enabled electronically. Second variety is Human- centred where knowledge is a process which leads to creation of more knowledge. It is primarily focussed on sharing knowledge and learning and innovation.
Figure 4: Interaction of Knowing and Types of Knowledge
Source: Small and Sage, 2005/2006
Figure 4 shows how knowledge is applied in the context of an organisation. In this interaction, the process of ‘knowing’ remains at the core of the matrix and is used as an ‘action’.
Different academics are of different views about knowledge based organisations. Pentland (1995) says that knowledge is mostly constructed socially and is shared between the participants in an organisational culture even though the participants have their own individual perspectives and views of the organisational situations. Sahay and Robey (1996) further capture on this concept in their proposal of knowledge operationalization as “social interpretation” (Schultze and Leidner, 2002).
The different perspectives of knowledge in an organisational context are: knowledge vis-à-vis data and information, state of mind, object, process, access to information and capacity. To further elaborate on the same it can be said that data is facts, raw numbers. Knowledge is customized information. In this case, KM concentrates on passing potentially useful information to individuals, thereby enabling incorporation of information. Next is the perspective of “state of mind” where knowledge behaves as the expression of knowing and interpreting. Here KM includes improving employees learning and understanding by providing information. Another perspective is that knowledge is perceived as a body to be stored and modified. Fourth is the view of knowledge being perceived as the expertise application process. The central focus of KM is over the process of creation, sharing, distribution and flow of knowledge. Fifth perspective is the knowledge being viewed as a requirement to retrieve information. The KM focuses of on methodological access to and retrieval of information. Finally knowledge is perceived as the potential to influence action.
KNOWLEDGE BASED ORGANISATIONS
In this section, it will be analysed as to how knowledge based organisations innovate better than the ones who are not knowledge based. Automotive industry provides a very good opportunity to examine inter-organizational learning. More than 70 per cent of the value of vehicle is developed and manufactured by OEMs and their supplier networks. As a consequence of this, the productivity of the network of firms working in collaboration is directly related to the quality and cost of the automobile. Most of the research in automotive sector shows that Japanese automotive network, in particular, Toyota has been far superior in transferring the productivity improving knowledge throughout the supply network (Dyer and Nobeoka, 2000).
Figure 5: Comparison between Automotive Labor Productivity of US and Japanese Carmakers
The ‘network’ of Toyota seems very effective in facilitating inter-organisational knowledge transfers (Dyer and Nobeoka, 2000). It will not be wrong to call it a model for the future of automotive industry.
One of the major dilemmas which Toyota faced while implementing the knowledge management processes in their organisation is to how to do the knowledge transfers among a large number of individual members in the most efficient manner. There were appropriate conditions to take care of other dilemmas like keeping the individuals motivated enough to participate actively and curbing free riding. But the critical steps necessary for proper flow of knowledge among members was not efficient enough. While explicit knowledge can easily be codified and transmitted to a large group of individuals via meetings and other activities, transfer of tacit knowledge required strong collaboration and can probably be transferred merely to a small cluster of individuals at a particular location only(Dyer and Nobeoka, 2000). Sharing information through meetings will result in inefficiency in transfer of tacit knowledge.
To counter this issue, Toyota promoted the thinking of kyoson kyoei and created a collective network-level knowledge transmission, repository and processes of diffusion. Four of the key network-level processes were: “(1) the supplier association (a network-level forum for creating a shared social community, inculcating network norms, and sharing knowledge), (2) Toyota’s operations management consulting division (a network-level unit given accountability for knowledge acquisition, storage, and diffusion within the network), (3) voluntary small group learning teams (jishuken), or a sub-network forum for knowledge sharing that creates strong ties and a shared community among small groups of suppliers, and (4) inter-firm employee transfers (some job rotations occur at the network level)” (Dyer and Nobeoka, 2000). These four critical processes managed to create an ‘identity’ of the network. Moreover it also facilitated knowledge transfer among network member.
Figure 6: Toyota’s network-level knowledge-sharing processes
Figure 6 gives a fuller picture of the knowledge sharing processes implemented in Toyota. By following these processes, Toyota managed to build robust mutual relationship with suppliers. Furthermore suppliers also started getting critical knowledge at nominal cost. As of result of this, suppliers participated in the network with a keen interest. It was not only to show their commitment towards Toyota but also to get knowledge transfers from Toyota. The more valuable tacit knowledge was being transferred in the bilateral atmosphere. This resulted in giving a powerful identity to the network. Suppliers began to correlate with the social community of the network.
All this was made possible by the learning groups which resulted in strong multi-dimensional relationships. Moreover suppliers also recognised the merits of sharing of knowledge. Additionally the Toyota suppliers were also in competition among themselves in the sense that the quickest grasping supplier will most probably get business for the new model.
It has been a major accomplishment for Toyota in the way they managed to “motivate all the members to participate and contribute knowledge” (Burgess, 2005) for the collective good.
Organisations who are leaders in knowledge management have used extrinsic rewards (Davenport & Prusak, 1998). To further substantiate this statement, experienced consultants at Ernst & Young and McKinsey were evaluated, on the basis of knowledge they contribute to their organisation. These consultants are of the view that “one party has to be willing to give something or get something from another party”. They were of the view that open and organic information culture leads to larger sharing. Furthermore they also proposed that those individuals who feel that their knowledge belongs to them rather than to their organisation can be expected to share their knowledge more (Burgess, 2005).
Disadvantages of KM
Research has shown that the ready availability of examples for KMS users led to a significant enhancement in their problem-solving skills when compared to the skills level gained through the use of traditional reference materials (McCall et al, 2008). Results have further shown that groups having access to KMS far outperforms those working in the traditional groups. Moreover this edge vanishes when the KMS access is removed. It has also been deducted that while both the groups gain different types of explicit knowledge the traditional groups have a tendency to encode most of the rules in memory. However the KMS group manages to gain superior-level of explicit knowledge which acts as a key to tacit knowledge formulation.
In the context of business, researchers have found that employees are more willing to exchange knowledge if it is related to business goals (Small and Sage, 2005/2006). They have put more emphasis on the importance of business strategy to be communicated to the employees. Another important aspect to be noted here is that the knowledge sometimes acts as a double-edged sword; though too less leads to in-efficiencies, too much can lead to rigidities that can be counterproductive in a rapidly changing world. Furthermore too little may lead to muddled social relations, too much will lead to curbing of different perspectives (Bowker and Star, 1999). According to Schultze and Leidner (2002), too little may lead to costly errors, too much may lead to undesirable answerability. IT can play a major role in all the knowledge management processes like knowledge creation, storage/retrieval, transfer and application.
One of the most critical issues being faced by the organisations in today’s world is their deficiency of skill to capture and incorporate information located in different sources. While some of these are internal to an organisation (data warehouse, transaction database, knowledge portals) others are external (commercial database, credit reports, news agency announcements, etc.) (Delen and Hawamdeh, 2009). If the organisations try to integrate the multiple sources into a single unified system just for the sake of centralization of the sources of information then it leads to highly rigid systems which are not practically manageable.
Some of the major reasons of the failure of KM are the multifaceted and multidimensional nature of knowledge available in an organisation. The dynamic nature and relationships between the knowledge management frameworks is also cited as one of the major reasons of failure of KMS.
Role of Information Systems
An efficient KMS should allow the user to easily access the explicit knowledge stored in any system that can be applied to address the issue in hand. KMS should increase the ease with which user can find a potential solution to the problematic situation. KMS makes the user relax about the need to encode the explicit knowledge in long-term memory as the knowledge components can easily be accesses by the user’s active working memory (McCall et al, 2008).
There are two critical demerits of KMS which might balance out the potential of the encoding of the knowledge available explicitly. Firstly, the vast amount of information and different ways of retrieving it via KMS could lead to likely increase in the amount of mental workout to retrieve the information (Rose and Wolfe, 2000; Rose, 2005). Secondly, it is the supposed simplicity of availability. If the information is easily accessible then the user will just use it for his situation without feeling any kind of motivation to encode the knowledge.
Researchers have found that many companies who have implemented Enterprise Resource Planning (ERP) are of the view that the software will provide them a new chance to improve operational support and will simultaneously provide them a competitive advantage also (Irani et al, 2007). However the concept of ‘justification’ happens only at those places where every employee is made aware of the importance of the new software for the organisational sustainability. Although the resources of knowledge varies firm wide but usually it constitutes of manuals, letters, information about customers and derived knowledge of work processes. Organisations are realising that knowledge will not automatically flow throughout the company.
A critical aspect of knowledge sharing is providing the right means which should work within the organisational context. Over the period of time, organisations have realised that information technology (IT) is the only means by which enterprise knowledge can be shared effectively. Video-conferencing, sharing of application and providing support electronically are some of the key enablers of knowledge sharing processes. They can provide an excellent support to the already existing infrastructure of knowledge management.
Few of the major benefits of Knowledge Management systems are (1) In-valuable information can be shared throughout the hierarchy of the organisation. (2) Provides the opportunity to do away with churning out the same work thereby resulting in reduction of out-dated work. (3) New employees can be trained in a shorter period. (4) The intellectual property is retained by the organisation even of the employees’ leaves if it is possible to codify that knowledge. Some of the organisations who implemented the KMS very effectively and efficiently are MIT Open Course Ware, Knowledge Wharton. Although both of these organisations are educational institutions they provide an excellent case study of efficiently using information systems in their KM processes.
The key role being played by information systems is to assist in the storage and diffusion of knowledge so that knowledge can be accessed across the space and time (Schultze and Leidner, 2002). Information systems provide visibility to the invisible work and the complexity involved in doing that work.
Figure 7: KMS Success Model (Halawi et al, 2007-2008)
Figure 7 shows the key role being played by information systems in the success of KM projects. Normally it is at the centre of many KM projects (Halawi et al, 2007-2008).
However organisations who are implementing information systems into their KMS need to take few factors into consideration. The so-called ‘free’ exchange of knowledge is possible only in an ‘open’ corporate culture, non-departmental hierarchy. Furthermore sometimes this ‘open’ culture can act as an obstacle for employee empowerment (Irani et al, 2007).
Another point to be noted about multi-faceted aspect of KMS is that an effective KMS in not just about technology. It incorporates cultural and organisational aspects as well, it is necessary to design proper metrics to access the positives of KMS (Halawi et al, 2007-2008). Furthermore an integrated technical architecture is the critical driver for KMS. Proper use of information systems will facilitate the process of knowledge transfer, assisting in both the transmission and absorption and utilisation of knowledge. Researchers have found groupware, an IT tool for working in a group is of immense help in the proper implementation of KM in organisations. Groupware helps in interpersonal communications and facilitates the transfer of tacit knowledge (Wua et al, 2010). Researchers have found that the software tools and information systems applications are very crucial for both the ‘provider’ side and ‘receiver’ side.
Most of the top technology firms rely mainly on their dynamic ability to transform the knowledge in their organisation to add value to their customers. Researchers are of the view that the focus on tacit knowledge should not lead to not giving due importance to proper implementation of information systems. A proper balance needs to be found and exercised (Kalkan, 2008). In the current world, any organisation having improper implementation of information systems will be at a disadvantage position in the marketplace. Implementation of information systems should always be knowledge oriented.
This paper makes an attempt to analyse the role of information systems in efficient utilisation of KM. It has been highlighted as to how information systems are crucial in making an innovative organisation highly efficient. The demerits of KM without proper information systems are discussed. The efficient way in which Toyota managed its knowledge sharing using information systems within the organisation and across its suppliers has been discussed in detail. An attempt has been made to throw more light on the other aspects of proper IS implementation. Organisations should not consider that just by implementing Information systems all our problems will be solved. Information Systems should not be considered as a ‘silver bullet’.
As the research area is still evolving, more future research can be done on this topic. There are further sub-categories within KM which can be researched in more detail. Those categories will further provide a detailed view of the topic. While few organisations who implemented information systems has been analysed, other organisations also need to be analysed in this regard. Furthermore the definition of innovation and efficiency can be analysed from the perspectives of organisations implementing. This will provide a broader picture of the research area.
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