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The Importance of Knowledge Management to Organizations

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Martime is a Mexican headquartered trading firm that sources goods (from its own factories as well as third party suppliers) primarily in Greater China and Southeast Asia and sells finished goods to mid-level retailers in North America, Australasia and Europe. As a value-adding intermediary, it has established a highly profitable niche for itself. Recently, it has successfully negotiated a Vendor Managed Inventory (VMI) contract with Szekeli Associates (SA), a Hungarian conglomerate with interests in department stores in Central Europe. The VMI contract, which took three years to negotiate, with substantial involvement from lawyers and auditors, applies to sixty lines of goods. As it negotiated the VMI contract with SA, so Merlin developed considerable knowledge about VMI and negotiations with European retailers. The CKO of Merlin has recognised that this knowledge is a valuable asset that should be leveraged appropriately so as to generate additional future revenue for Merlin. Indeed, Martime is currently approaching three more potential VMI clients - in Argentina, Brazil and Venezuela, as it seeks to open up the South American market. The teams for these three VMI projects have been established, but the CKO hopes to be able to shorten the time needed to set up the contracts. Therefore, he plans to encourage those employees who were involved in the original VMI contract with SA to share their knowledge with the members of the three new project teams.

A) Why is Knowledge Management so important for firms like Martime?

B) Do you think that the Martime employees who worked on the first VMI contract for three years will be willing to share their knowledge with the members of the three new teams? If yes, why; if no, why not?

C) Assume that you are the CKO (Chief Knowledge Officer) for Merlin. You need to position this new knowledge sharing initiative very carefully in the organization. What approach(es) would you take in order to maximize the likelihood of success?

D) Assume that in order to systematize the knowledge sharing process, you have implemented a simple Knowledge Management System which includes an online Discussion Forum where team members can post new knowledge items, ask and answer questions, search for company documents, etc.
i) What would be the most effective way of measuring the success of this Discussion Forum? Please identify at least three measurements that you believe would be critical to an understanding of the impact (if any) of the system.
ii) How could use of the Discussion Forum be incorporated into annual appraisals of employees?

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A) Why is Knowledge Management so important for firms like Martime?

Knowledge management (KM) is the way an organization creates and shares knowledge and how it uses that knowledge for the further advancement of the organization both technologically and organizationally. In order to remain competitive, it is very important that organizations build upon existing knowledge and create new knowledge that will allow them to advance exponentially. Consequently, KM entails the following components (http://www2.sims.berkeley.edu/courses/is213/s99/Projects/P9/web_site/about_km.html):

? Generating new knowledge
? Accessing valuable knowledge from outside sources
? Using accessible knowledge in decision making
? Embedding knowledge in processes, products, and/or services
? Representing knowledge in documents, databases, and software
? Facilitating knowledge growth through culture and incentives
? Transferring existing knowledge into other parts of the organization
? Measuring the value of knowledge assets and/or impact of knowledge management

B) Do you think that the Martime employees who worked on the first VMI contract for three ...

Solution Summary

How knowledge management affects the development of organizations.

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Identifying the factors that characterize a company's strategic situation is the basis for the strategy process. These factors can be classified as SWOT (strengths, weaknesses, opportunities, and threats). Analyzing these factors using various tools enables a manager to formulate strategies more effectively.

Strategy, in business is the combination of foresight, planning, and decision-making that prepares an enterprise to achieve long-term goals and manage the consequences of contemporary decisions.

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