FACULTY OF COMMERCE AND ADMINISTRATION
DEPARTMENT OF ECONOMIC AND BUSINESS SCIENCES
MODULE: ADVANCED STRATEGIC MANAGEMENT
TOPIC: CPAPTER 2[THE PURPOSE AND CONTEXT OF BUSINESS: ELEMENTS OF
SUSTAINABLE ORGANIZATION]
LECTURER: Dr MAPRUNGA
ASSESSMENT: GROUP PRESENTATION
DUE DATE: 25 MARCH 2024
NAME
NAMHLA MIHLE
XOLELWA
AKHONA
SURNAME
MPUNZI
GAMNDANA
MAHAM
STUDENT NO
216276195
217044786
219486328
TABLE OF CONTENT
LEARNING OUTCOMES
PAGE
Cover page……………………………………………………………………………1
Table of content…………………………………………………………………….2
Introduction…………………………………………………………………….……3
Purpose……………………………………………………………………….……….3
From Short-Term to Long-Term Strategizing.....................................3-4
Stakeholders vs Shareholders…………………………………….…………......4
Types of stakeholders………………………………………………..…………..5-6
The dynamics business context and evolving risks………………….……6-7
Context as opportunities: shared value and inclusive
business……………………………………………………………………………...…7
The process of embedding context in strategy……………………..……..7-8
There are four steps of embedding context into strategy………………….8
What is the role of embedding local context in strategy……………………8
Four steps for developing contextual goals……………………………….…8-9
Measuring and reporting on progress…………………………………………….9
How to create a progress report in 5 simple steps…………………………….9
Conclusion……………………………………………..………………………………..10
References……………………………………………………………………………….11
Introduction
Organizations are always looking for ways to succeed over the long run and keep a
competitive edge in the intricate and dynamic world of business. Understanding and
incorporating the organization's mission and context into day-to-day activities is a
crucial component in creating a successful organization. Businesses also need to
concentrate on sustainability, striking a balance between commercial objectives and
environmental stewardship and social responsibility, in order to prosper in the face
of global difficulties and changing public expectations. We examine the importance
of context and purpose in creating a sustainable organization in this conversation.
Purpose
Building a sustainable organization requires a business to have a purpose. It
influences the operations, values, and identity of the organization. The purpose of a
firm defines its fundamental objectives and aspirations, which extend beyond
generating money. It explains the company's mission and the kind of global effect it
hopes to achieve. A well-defined goal can: - Encourage staff members, increasing
rates of engagement and retention.
- Draw clients who share the company's principles.
- Direct long-term planning and decision-making.
From Short-Term to Long-Term Strategizing:
In the world of business, organizations have typically concentrated on short-term
tactics meant to maximize shareholder value and profits. Nevertheless, this strategy
frequently ignores how crucial long-term planning is to the ongoing success and
expansion of the company. A long-term strategic strategy that takes into account
multiple factors, including purpose, context, and stakeholder expectations, is crucial
for the development of a sustainable company. An organization can implement the
change in the following ways:
1. Highlight Purpose-Driven Approach: A purpose-driven strategy goes beyond profit
generation to address the organization's mission and the impact it hopes to have.
Setting long-term objectives, establishing moral standards, and generating value for
all stakeholders are facilitated by aligning corporate operations with purpose.
2. Perform Stakeholder Analysis: Understanding the requirements and expectations
of diverse stakeholders, such as consumers, workers, suppliers, communities, and
shareholders, is essential to transitioning from a short-term to a long-term view.
Actively communicate with stakeholders in order to establish good connections and
gather information for strategic decision-making.
3. Evaluate the governance, social, and environmental (ESG) factors: By
incorporating ESG factors into business plans, organizations may better control risks,
solve environmental and societal issues, and provide long-term value that benefits
all parties involved. Create measurements
4. Foster Innovation and Adaptability: Sustainable organizations must be flexible and
adaptable in responding to changes in their context, such as emerging technologies,
market trends, and regulatory developments. Encourage innovation and
experimentation to find new solutions that address evolving business needs and
contribute to long-term success.
5.Invest in Long-Term Growth and Sustainability Initiatives: Allocate resources
towards initiatives that may not yield immediate results but have significant longterm benefits, such as employee development, research and development, and
sustainable business practices. This investment in future growth sets the
organization up for continued success.
6.Transparent Communication and Reporting: Establish open and transparent
communication channels with stakeholders to share the organization's long-term
strategy, goals, and progress. Regular reporting on sustainability performance builds
trust and accountability, reinforcing the organization's commitment to its purpose
and context.
All in all, transitioning from short-term strategizing to a long-term perspective
grounded in purpose and context requires a holistic approach to business
management, prioritizing sustainable practices, stakeholder engagement, innovation,
and adaptability. By focusing on these elements, organizations can ensure their
long-term success while making positive contributions to society and the
environment. (hamann & wendy , 2015)
Stakeholders vs Shareholders:
STAKEHOLDERS
• Have an interest in the business,
but don’t necessarily own it
•
•
•
SHAREHOLDERS
• Partly own the business through
share of stock
May be affected directly or
indirectly by the company’s
activity
Found in all types of organization
•
They typically invest in the
company with the expectation of
financial returns, such as
dividends or capital appreciation.
•
•
Directly affected by the
company’s financial performance
Found only in companies that
issue shares
Shareholders exercise their
influence through voting rights in
corporate decision-making
processes, such as electing the
board of directors or voting on
major company initiatives.
Types of stakeholders:
Internal
Directors
Shareholders
Management
Employees
Volunteers
External
Customers
Suppliers
Distributers
Competitors
Creditors
Banks
Union
The government
Media
Transitioning from a shareholder-centric approach to a stakeholder-centric approach
is a fundamental shift in organizational philosophy, especially in the context of
sustainability. Here's how this transition might be articulated in the context of a
sustainable organization:
1.Expanded Focus: A sustainable organization moves beyond solely prioritizing the
interests of shareholders (those who own shares of the company) to consider the
needs and concerns of all stakeholders. These stakeholders include employees,
customers, suppliers, local communities, the environment, and society at large.
2.Long-Term Value Creation: While shareholders are important, a stakeholder
approach recognizes that the long-term success and resilience of the organization
depend on the health and well-being of all stakeholders. By considering the impacts
of business decisions on a broader set of stakeholders, the organization aims to
create sustainable value over time.
3.Integration of Environmental, Social, and Governance (ESG) Factors: A
stakeholder-oriented approach inherently considers environmental, social, and
governance factors in decision-making processes. This means accounting for the
environmental footprint of operations, promoting social equity and responsibility, and
upholding strong governance practices that ensure transparency, accountability, and
ethical behavior.
4. Collaborative Decision-Making: Engaging with stakeholders in decision-making
processes becomes a key aspect of organizational governance. This may involve
consulting with employees on workplace policies, seeking input from local
communities on development projects, or collaborating with suppliers to improve
supply chain sustainability.
5. Risk Management and Resilience: By taking a holistic view of stakeholder
interests, organizations can better identify and manage risks associated with social
and environmental issues. Proactively addressing these risks enhances the
organization's resilience and ability to navigate uncertain future challenges.
6. Brand Reputation and Trust: Prioritizing stakeholder interests and demonstrating a
commitment to sustainability can enhance the organization's brand reputation and
foster trust among stakeholders. This can lead to increased customer loyalty,
investor confidence, and support from the wider community.
7. Regulatory Compliance and Legal Considerations: Embracing a stakeholderoriented approach may align with or even exceed regulatory requirements related to
sustainability, social responsibility, and corporate governance. By staying ahead of
regulatory trends, the organization can mitigate compliance risks and demonstrate
leadership in its industry.
8.Measuring Impact and Accountability: Sustainable organizations often establish key
performance indicators (KPIs) and metrics to track their impact across
environmental, social, and governance dimensions. Regular reporting on these
metrics enhances transparency and accountability to stakeholders, fostering trust
and credibility.
Overall, the transition from a shareholder to a stakeholder orientation in a
sustainable organization represents a paradigm shift toward more inclusive,
responsible, and resilient business practices. It acknowledges that the success of the
organization is intrinsically linked to the well-being of all its stakeholders and the
wider society in which it operates. (callaghan, 2015)
To navigate the dynamic business context and evolving risks, organizations
must adopt a proactive approach to risk management. This involves:
1.Risk Assessment: Conducting comprehensive risk assessments to understand the
nature, likelihood, and potential impact of various risks on the business.
2. Agility and Flexibility: Building organizational agility and flexibility to adapt quickly
to changing circumstances, such as by fostering innovation, streamlining processes,
and empowering employees to make informed decisions.
3.Collaboration and Communication: Facilitating open communication and
collaboration across different functions and levels of the organization to ensure that
risks are identified and addressed effectively.
4.Compliance and Governance: Ensuring compliance with relevant regulations and
industry standards while maintaining strong governance structures to mitigate legal,
regulatory, and reputational risks.
To navigate these evolving risks, businesses need to adopt a proactive and adaptive
approach to risk management. This may involve conducting regular risk
assessments, staying informed about relevant developments in the business
environment, implementing effective risk mitigation strategies, and fostering a
culture of resilience and innovation within the organization. Additionally, businesses
can leverage technologies such as data analytics, artificial intelligence, and predictive
modelling to anticipate and manage risks more effectively in a dynamic and evolving
business context.
CONTEXT AS OPPORTUNITIES: SHARED VALUE AND INCLUSIVE BUSINESS
This refers to a strategic approach where businesses aim to create value for
themselves while simultaneously addressing societal challenges and creating
opportunities for all stakeholders, including marginalized groups. This concept
involves leveraging the specific context in which a business operates-such as the
local environment, culture, and socio-economic factors-to create sustainable
business models that benefit both the company and society at large.
Shared value: refers to the idea that economic value creation for a business can be
closely tied to addressing social and environmental needs. Instead of viewing social
responsibility as a separate aspect of business, shared value suggests that
businesses can find competitive advantages and long-term success by identifying
and addressing societal needs through their core business activities.
Similarly, inclusive business: refers to business models that intentionally integrate
low-income or marginalized communities into their value chains as suppliers,
distributors, employees, or consumers. Inclusive business models aim to create
opportunities for these communities while also generating profits for the business
(Amos davis Hamannn & Louw &, 2015).
By viewing the broader context as opportunities rather than constraints, businesses
can innovate and develop strategies that not only drive financial performance but
also contribute positively to society. This approach often involves collaboration with
governments, non-profit organizations, and other stakeholders to address systemic
challenges and create sustainable solutions. Ultimately, businesses that adopt shared
value and inclusive business practices can create more resilient and prosperous
societies while also strengthening their own competitiveness in the long run.
THE PROCESS OF EMBEDDING CONTEXT IN STRATEGY
•
•
A strategy can be defined as a plan that focuses upon the achievement
of a predefined objectives constrained by inherent uncertainty.
Embedding a contextual approach is of prime importance for any
strategic planning.
THERE ARE 4 STEPS OF EMBEDDING CONTEXT INTO STRATEGY.
•
•
•
•
STEP 1 – determining and evaluating socio-ecological factors and their
respective thresholds, the level at which the organization’s immunity
becomes vulnerable.
STEP 2 – determining the focus areas where the organization has the
strongest influence. It involves the recognition and understanding of
principal socio-ecological trends with respect to their associated
thresholds to determine the degree of impact the organization’s
activities have on the threshold and therefore, ranking the same in the
order of priority such that the degree of influence can be enhanced
post-recognition.
STEP 3 – it is to understand the degree of change needed to adhere to
the threshold and motivate others to commit to the same.
STEP 4 – it is the commitment to the achievement and allocation of the
change that was identified in the third step. Performance is tracked
and analyzed by using trajectory targets as comparison parameters.
WHAT IS THE ROLE OF EMBEDDING LOCAL CONTEXT IN STARTEGY
•
Micro-level factors of local context play the role of setting the
preconditions for product development and determining the extant of
productivity that can be achieved in the local context. The strategic
implications that must be considered at the local level when applying a
global brand include brand identity.
•
Business’s new strategies guide helps companies respond to the
growing call for businesses to articulate their purpose and shift the
global economy towards the reduction of inequality, a rapid climate
transition, the preservation of biodiversity, and the elimination of
waste.
FOUR STEPS FOR DEVELOPING CONTEXTUAL STARTEGIES AND GOALS
•
Acknowledge – the need to operate within global, regional, and local
socio-ecological thresholds.
•
•
•
Transparently – understanding and priorities a set of focus areas in
relation to key socio-ecological trends at the global, regional, and local
level.
Set strategy and goals by transparently articulating the current
performance gap and portion of this gap the business will address.
Transparently tract performance against realistic trajectory targets.
MEASURING AND REPORTING ON PROGRESS.
There are 6 steps a business can measure progress namely as follows❖ Establish a SMART goal.
❖ Set a deadline.
❖ Break your larger goal down into smaller goals.
❖ Create a compelling scoreboard to track progress.
❖ Measure and Review progress regularly.
HOW TO CREATE A PROGRESS REPORT IN 5 SIMPLE STEPS
❖ Step 1 – clarify goals and timeline, you firstly need to briefly
explain the project to give context to the rest of the report.
❖ Step 2 – consider the stakeholders.
❖ Step 3 – share recent updates.
❖ Step 4 – identify drivers and blockers.
❖ Step 5 – list the next steps.
You can monitor progress using both qualitative and quantitative methods.
Quantitative project tracking methods look at numerical metrics such as costs, time,
and other milestones. Qualitative methods, on the other hand, use survey data and
regular team meetings to track progress.
CONCLUSION
This chapter covered organisational purpose and context as vital elements of
strategy. To identify strategic objectives and priorities, we need to define and agree
on the purpose of our organisation. To define our objectives and corresponding
targets, we need to understand and respond to the changing context in which we
are operating, we are now better able to design and implement strategy that shifts
from short-term returns focus for shareholders to longer-term value creation for a
range of stakeholders.
References
Amos davis Hamannn, J. v. R. C. N. P. V. & Louw &, V., 2015. Strategic Management. fourth ed.
Siuthern Africa: Janine Leodolf.
Anon., n.d. In: s.l.:s.n.
Anon., n.d. In: s.l.:s.n.
callaghan, a. d. h. j. v. r., 2015. strategic management. forth ed. south africa: janine leofolff.
hamann, a. d. & wendy , P., 2015. THE PURPOSE AND CONTEXT OF BUSINESS:KEY ELEMENTS OF
SUSTAINABLE ORGANISATION. In: W. PRIILAID, ed. STRATEGIC MANAGEMENT. SOUTH AFROCA:
jANINE LOEDOLFF, p. 596.