Strategic Management 9-12

Ways to acquire capabilities

- mergers and acquisitions, developing internally,

CSR strategy has following elements

-actions to promote workforce diversity -actions to support philanthropy, participate in comm. service and better the quality of life worldwide -actions to protect and sustain environment -actions to enhanve employee well-being and make the company a great place to work -actions to ensure the company operates honorably and ethically

intangible or less visible costs

-customer defections -loss of rep. -lost employee morale and higher degree of cynicism -higher employee turnover -higher recruiting costs -adverse effects on employee participation -costs of complying with often harsher govt regs

Structuring the work effort to promote strategy execution

-decide what value chain activity to perform internally and which to outsource -align the org structure with strategy -decide how to centralize authority and delegate down line of command -facilitate collaboration with external partners/strategic allies

unethical business behaviors three main drivers

-faulty oversight, enabling the unscrupulous pursuit of personal gain and self-interest -heavy pressures on company managers to meet or beat short-term performance targets -a company culture that puts profitability and business performance ahead of ethical behavior

visible costs

-government fines and penalties -civil penalties arising from class-action laysuits and other litigation aimed at punishing the company for its offense and the harm done to others -the costs to shareholders in the form of a lower stock price (and possibly lower dividends)

Good business reasons why companies should devote time and resources to social responsibility initiatives, environmental sustainability, and good corporate citizenship

-increased buyer patronage -reduces risk of rep damaging incidents -lower costs and enhance employee recruiting and workforce retention -opps for revenue enhancement -in the best long-term interest of shareholders

internal Admin Costs

-legal and investigative costs incurred by company -cost of providing remedial edu. and ethics training to company personnel -costs of taking corrective actions -admin. costs associated with ensuring future compliance

Accessing capabilities through collaborative partnerships

-outsource the function requiring the capabilities to a key supplier etc -collaborate with a firm that has complementary resources and capabilities in the joint venture, strategic alliance or other type of partnership to achieve a shared objective -engage in partnership to learn how the partner does things internalizing it methods and acquire its capabilities

common practices companies dedicated to staffing jobs with most capable ppl

1. effort on screening and evaluating job applicants- skills, energy, initiative, judgement, aptitude and personality 2. training programs continuous 3. challenging, interesting, skill stretching assignments 4. rotating people 5. Stimulate and engaged work environment 6. employees can challenge existing ways of doing things, their views and opinions count 7.promotions salary increases, performance bonuses, stock options, and fringe benefits 8. coaching avg up and weeding out underperformers

Heightened focus on strategy-critical activities yield 3 benefits

1. improves chance for outclassing rivals in performance and turning competence into a distinctive competence 2. streamlining of internal ops that flows from outsourcing-> flattens org structure, decrease beauracracy, speed decision making,and shorten response time 3. Partnerships add to amount of capabilities

Action agenda for executing strategy

1. staff the org with managers and employees for executing strategy 2. build the org capabilities required for successful strategy execution 3.create a strategy- supportive org structure 4.allocate sufficient resources- budgetary and other 5. institute policies and procedures that help execution 6. adopt best practices and business processes that drive continuous improvement 7. install info and operating systems that enable personnnel to carry out strategic roles 8. Tie rewards and incentives direct to achievement of strategic and fina targets 9. Instill a corporate culture that promotes good strategy execution 10. Exercise strong leadership to propel strategy forward

two reasons a strategy should be ethical

1. unethical strategy is morally wrong and reflects badly on character of company personnel 2. ethical strategy can be good business and serve the self-interest of shareholders

Dynamic capability

A

Ethical Relativism

A

Ethical Universalism

A

Good Sttrategy

A

major drivers

B

Business ethics

C

Ethical principles

C

3 components

D

Int social contract

D

CSR Triple Bottom Line

Goal: Excellence in the economic, environmental, and social performance dimensions

Centralized decision making

Highly centralized org where top execs retain authority for most strategic and operating decisions Advantage: tight control by manager, reduce potential for conflicting decisions, Disadvantages: hierarchical command can make large orgs sluggish in responding to changing market conditions, bureaucracy , no encouraged responsibility on low level managers and employees

Efforts to decentralize decision making and give company personnel some leeway in conducting ops must be

Tempered with the need to maintain adequate control and cross unit coordination

Network structure

The arrangement linking a number of independent orgs involved in some common undertaking

The ultimate goal of decentralized decision making is to put authority in the hands of

Those persons closest and most knowledgable about the situation

Multidivisional structure (divisional, M-forms)

a decentralized structure consisting of a set of op divisions organized along business, product , customer group, or geo lines, and a central corp headquarters that allocates resources, provides support functions and monitors divisional activities

in devising an action agenda for executing strategy, the place for managers to start is with

a probing assessment of what the organization must do differently to carry out the strategy successfully

quiz question

a) Internal development

in many industries adding to a company's talent base and building intellectual capital are more important to good strategy thean

additional investments in capital projects

According to integrated social contract theory

adherence to universal or "first-order" ethical norms should always take precedence over local or "second-order" norms

Sustainable business practices

are those that meet the needs of the present without compromising the ability to meet the needs of the future

Every action a company takes

can be interpreted as a statement of what it stands for

a companies capabilities must be continually refreshed and renewed to remain aligned with

changing customer expectations, altered competitive conditions and new strategic initiatives

organizational structure

comprises the formal and informal arrangements of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is adminstered

outsourcing the performance of selevted value chain activities enables a company to heighten strategic focus and

concentrate on performing the value chain activites that are at the core of its strategy, where it can create UNIQUE value

simple structure (line-and-staff, flat)

consists of a central executive who handles all major decisions and oversees all ops with help of small staff. also called line-and-staff or flat

A company's environmental sustainability strategy

consists of its deliberate actions to protect the environment provide for the longevity of natural resources maintain ecological support systems for future generations and guard against ultimate endangerment of the planet

quiz question ?

critical mass

Codes of conduct based on ethical relativism can be

ethically dangerous for multinational companies by creating a maze of conflicting ethical standards

the most important consideration is to

fill key managerial slots with smart people who are clear thinkers, good a figuring out what needs to be done, skilled in managing people and accomplished in delivering good results

School of Ethical Relativisim

holds that different religious beliefs, customs, and behavioral norm as across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong. These differing standards mean that whether business-related actions are right or wrong depends on the prevailing local ethical standards

School of Ethical Universalism:

holds that the most fundamental conceptions of right and wrong are universal and apply to members of all societies

Morals

individualist what is good and bad to you

Business ethics:

involves the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel 3 types) universalism, relativism, social contract theory

The quality of an org's people

is always an essential ingredient of successful strategy execution

CSR strategy

is defined by the specific combination of socially beneficial activities the company opts to support with its contributions of time, moey, and other resources

The two best signs of good strategy execution are whether a company

is meeting or beating its performance targets and whether thy are performing value chain activities in a manner that is conducvie to companywide operating excellenc

Putting together a talented management team with the right mix of experiences, skills, and abilities to get things done

is one of the first steps to take in launching the strategy-executing process

functional structure (Departmental, unitary, U-forms)

is organized into functional departments with departmental managers who report to CEO and small corp staff.

short-termism

is the tendency for managers to focus excessively on short-term performance objectives at the expense of longer-term strategic objectives. It has negative implications for the likelihood of ethical lapses as well as company performance in the longer run

Conducting business in an ethical fashion is not only morally right

it is a companys enlightened self-interest

Deciding which activities to outsource can lead to these advantages

lower costs, heightened focus, less internal beauracracy, speedier decision making and better arsenal of org capabilities

shareholders suffer major damage when a company's unethical behavior's is discovered

making amends for unethical business conduct is costly and it takes years to rehabilitate a tarnished company rep

strategy execution is therefore a critical

managerial endeavor

Building new competencies and capabilities is a

multistage process that occurs over a period of months and years

self-dealing

occurs when managers take advantage of their position to further their own private interests rather than those of the firm

Knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-botls operating improvements that lead to

operating excellence

When strategies fail its often because of

poor execution

corporate social responsibility

refers to a companys duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of the life in the local communities where it operates and in society at large

CSR strategies and environmental sustainability strategies

social benefits and fulfill customer need in a superior fashion can lead to competitive advantage Corporate social agendas that address only social issues may help boost a company's rep for corporate citizenship but are unlikely to improve its competitive strength in the market place

How to build an organization capable of strategy execution

staffing the org-> strong mgmt and recruiting and retain employees Key Resource capabilities -> develop a set suited to current strategy, update them as external conditions change, train and retrain to maintain knowledge and skills based capabilities Structure org and work effort-> good org arrangements, lines of authority and reporting relationships established decide how much authority to delegate for decisions

superior strategy execution capabilities are the only source of sustainable competitive advantage when

strategies are easy for rivals to copy

local ethical standards

take precedence over what the ethical standards may be in a company's home market

good strategy execution requires

team effort

The litmus test of whether a company's code of ethics is cosmetic is

the extent to which it is embrace in crafting strategy and in operating the business day to day

The higher the public profile of a company or its brand

the greater the scrutiny of its activities and the higher the potential for it to become a target for pressure group action

the best companies make a point of recruiting and retaining talented employees

the objective is to make the entire workforce a competitive asset

In instances involving universally applicable ethical norms (like paying bribes)

there can be no compromise on what is ethically permissible and what is not

Under ethical relativism

there can be no one-size-fits-all set of authentic ethical norm as against which to gauge the conduct of company personnel

According to integrated social contracts theory

universal ethical principles based on the collective views of multiple societies form a "social contract" that all individuals and orgs have a duty to observe in all situations. Within the boundaries of this social contact, local cultures or groups can specify what additional actions may or may not be ethically permisable

Ethics

what society as a group thinks what is right and wrong, via laws etc