Company Vision and Mission “WHICH ROAD DO I TAKE?," Asked Alice "WHERE DO YOU WANT TO GO?“ Responded the Cheshire Cat "I DON'T KNOW," Alice Answered. "THEN IT DOESN'T MATTER,” said the Cat. “IF YOU DON'T KNOW WHERE YOU ARE GOING, ANY ROAD WILL GET YOU THERE.” Vision Statement Why does the company exist? Inspiring Long-term Driven by and evokes passion Broad; Overarching; Brief Fundamental statement of the organization’s Values Aspiration Goals 3M: To solve unsolved problems innovatively Cargill: To improve the standard of living around the world Hewlett-Packard: To make technical contributions for the advancement and welfare of humanity Lost Arrow Corp: To be a role model and a tool for social change Mary Kay Cosmetics: To give unlimited opportunity to women Merck: To preserve and improve human life Nike: To experience the emotion of competition, winning, and crushing competitors Wal-Mart: To give ordinary folk the chance to buy the same things as rich people Walt Disney: To make people happy Mission Statement What does the company do? Unique purpose of the company Basis of competition and competitive advantages More specific than vision Focused on the means by which the company will compete It is the mission of Advance Auto Parts to provide personal vehicle owners and enthusiasts with the vehicle related products and knowledge that fulfill their wants and needs at the right price. Our friendly, knowledgeable and professional staff will help inspire, educate and problem-solve for our customers. Ecolab’s mission is to be the leading global innovator, developer and provider of cleaning, sanitation and maintenance products, systems, and services. As a team, we will achieve aggressive growth and fair return for our shareholders. We will accomplish this by exceeding the expectations of our customers while conserving resources and preserving the quality of the environment. CVS will be the easiest pharmacy retailer for customers to use. To nourish and delight everyone we serve. (Darden Restaurants) The purpose of the Cooper Tire & Rubber Company is to earn money for its shareholders and increase the value of their investment. We will do that through growing the company, controlling assets and properly structuring the balance sheet, thereby increasing EPS, cash flow, and return on invested capital. We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. Values Statement How do we behave? • Statement of ethical priorities • Guidelines for norms and decision making • Standards of behavior and practices • Basis for moral courage Strategic Objectives What will we strive for? Operationalize the mission statement SMART(S) Indicates strategic intent – BHAG Strategic v Financial S Long-term v short-term stretch Hierarchy of Goals Values Statement Corporate Governance Management – “Agents” Shareholders – “Principals” Board of Directors Corporate Governance The relationship among various participants in determining the direction and performance of the company Mechanisms to ensure that management fulfills its basic purpose: to promote the long-term interests of the shareholders Primary Participants: Shareholders Board of Directors Senior Management Agency Problem Arises because of separation of ownership (principals) and management (agents) Management may act to promote their own interests at the expense of the interests of stockholders (opportunistically) Control Mechanisms Internal Responsible BOD Active shareholders Management Compensation External Takeover constraint Auditors Banks and investment analysts Regulations Media and public activists Corporate Social Responsibility • Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It addresses how companies manage their economic, social, and environmental impacts. • Corporate social responsibility generally applies to company efforts that go beyond what may be required by regulators or environmental protection groups. • Corporate social responsibility may involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change. The Purpose of Business Few Trends could so thoroughly undermine the very foundations of our free society as the acceptance of a [corporate] social responsibility other than to make as much money for the stockholders as possible (within the rules of the game). Milton Friedman A group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society. David Packard Approaches to Corporate Social Responsibility Economic/Legal View Businesses are legal entities and have no social or moral purpose Purpose of business is to maximize owner's wealth within the limits of the law Compliance-based ethics encourages meeting legal obligations. Corporate Governance Approaches to Corporate Social Responsibility The Stakeholder View Businesses are social entities and have social and ethical impact on society Purpose of business is to satisfy the needs of multiple stakeholders including the financial interests of stockholders Integrity-based ethics encourages morally responsible behavior Corporate Governance Stakeholders Firm Stakeholders Any individual or group who can influence or is influenced by the operations of a firm Types of Stakeholders Primary – participation and support required for survival of the firm Inside: Stockholders, Board of Directors, Managers, Employees, … Outside: Customers, Suppliers, Creditors, Competitors, Governments, Community, … Secondary – not directly involved in the activities of the firm but can have influence over its operations Media, Special Interests, Investment & Rating Firms, Unions, … Stakeholder Analysis 1. Identify Inside Outside Secondary Stakeholders 2. Identify Stakeholder Interests Potential impact of the firm on the stakeholder 3. Identify Stakeholder Power and Influence Potential impact of the stakeholder on the firm 4. Prioritize Stakeholder Interests Rank stakeholders in terms of importance to the firm 5. Identify Stakeholder Management Actions taken to satisfy stakeholder needs Stakeholder Analysis Stakeholder Inside …… Outside …….. Secondary ……. Interest Power Consequences Importance Stakeholder Management Stakeholder 1 Interest and Consequences Actions taken to address needs Assessment of continued support Stakeholder 2 .. .. .