Business Policy with an Ignatian Twist
Submitted by Stephen J. Porth and W. Richard Sherman,
Saint Joseph’s University
5600 City Avenue
Philadelphia, PA 19131
sporth@sju.edu
rsherman@sju.edu
ABSTRACT
Business Policy is the capstone course in the curriculum of many business schools, Jesuit
and non-Jesuit alike. At Saint Joseph’s University, we have designed this course in a
unique way, with an eye toward our mission as a Jesuit school of business. In addition to
the fact that the course is four-credits and team-taught by faculty from four different
business departments, the framework of the strategic management process that underlies
the entire course is different from the standard model. Rather than use the maxim that the
purpose of a business is to maximize shareholder wealth, our capstone course is based
upon a nuanced version of the stakeholder model of management which emphasizes that
the purpose of business is not to maximize profits, shareholder wealth or anything else for
that matter, but to create value for a group of key stakeholders. The challenge of
strategic management is that each of these stakeholders places legitimate but sometimes
conflicting claims on the organization.
The purpose of this paper and presentation is to introduce some of the models and
frameworks used in the course which reflect the Jesuit mission of the business school.
The emphasis will be on the Jesuit imprint on the course, which is subtle but fundamental
to the understanding of strategic management as the course is designed. It is subtle in the
sense that traditional Jesuit ideals such as cura personalis, men and women for others,
and magis may never be explicitly mentioned during the course but are inherent in the
philosophical understanding of what it means to be a successful strategic manager. The
paper and presentation will identify and discuss how this is accomplished.
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As it is taught at Saint Joseph’s University, Business Policy, the capstone course
for undergraduate business majors, is designed and delivered in a unique way. The
course is four credits and taught by a team of faculty from four departments –
management, accounting, finance and marketing. The textbook used for the course, now
in its second edition, was written specifically to support the course design and the Jesuit
mission of the business school in which it is taught. The purpose of this paper is to
emphasize a few of the “Ignatian” elements of the course and to present the models and
frameworks used to support that emphasis.
The Strategic Management Framework
The fundamental purpose of strategic management as defined in our capstone
course differs from the standard model. Rather than use the maxim that the function of a
business is to maximize shareholder wealth, our capstone course is based upon a nuanced
version of the stakeholder model of management which emphasizes that the purpose of
business is not to maximize profits, shareholder wealth or anything else for that matter,
but to create value for a group of key stakeholders and to perpetuate the value-creating
capability of the organization over the long-term. The most prominent of these
stakeholders, and the ones that receive the most emphasis in the course, are customers,
employees and stockholders (or owners) – the C-E-O Model.
We begin by discussing what the concept of value is for each stakeholder group,
how that is measured, and how the types of value are interrelated. It becomes apparent to
students that each of these stakeholders, and others such as the local community, place a
legitimate claim on the company, and that these claims are sometimes mutually
supportive while at other times they clash. The challenge of strategic management then
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is to manage these legitimate but sometimes conflicting claims on the organization so as
to sustain the long-term health of the organization. Figure 1 shown below is used
throughout the course to emphasize the imperative of value creation and its relationship
to the steps in the strategic management process.
Figure 1 - The Strategic Management Framework
Develop
Mission &
Vision
Perform
Situation
Analysis
Customers
Value
Creation
Employees
Owners
Set
Objectives
& Craft
Strategy
Implement
Strategy
Assess
Value
Creation &
Provide
Feedback
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Ethical Analysis of Strategic Choice
As is normally the case, our emphasis in teaching the Business Policy course is
not just strategic analysis but analysis for a purpose – to make strategic choices. This
focus on decision-making means that students need to be adept at identifying strategic
issues facing a company. Strategic issues are the critical challenges, opportunities,
problems or questions the organization needs to address for the sake of its future. Once
the “right” issues are identified, students begin to consider their strategic choices. As part
of that decision-making process, students are challenged to consider the ethical
implications of the various possible strategies. We emphasize that these strategic choices
are subject to critical assessment through the use of various ethical frameworks,
including:

Utility view- it is ethical if it represents the greatest good for the greatest
number of people.

Rights view- it is ethical if it protects and respects basic human rights.

Justice view- it is ethical if it treats people fairly based on basic standards,
rules, and laws.
These ethical norms are in contrast to a norm of individualism that suggests an
action is ethical if it serves one’s own self-interests, and relativism which suggests that
there is no way to determine right from wrong since it all depends on the situation and
every situation is unique. Relativism and individualism are criticized because they
represent ways to justify almost any type of action or behavior.
The framework for ethical analysis below presents a three-stage process for
analyzing the ethical aspects of a strategic choice.
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Figure 2 - A Framework for Ethical Analysis of Strategic Choice
Source: Adapted from Cavanagh, G. F. (2006). American Business Values : A Global
Perspective (5th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
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Before making a commitment to a strategic choice, managers need to assess the
ethical dimensions of the strategy. Does the strategy pass the ethics test? Some
companies ask themselves, “Will we be comfortable reading about ourselves and this
strategic choice in a front-page newspaper article?”
In stage one, the facts and evidence about the strategy are gathered. What is the
strategy, what resources will it consume, what stakeholders will it impact, what are its
intended and unintended consequences?
In stage two the strategy is analyzed according to various ethical frameworks and
moral principles described above. The utility analysis seeks to identify the various
stakeholders impacted by the strategy and the relative costs and benefits of the strategy
for each. The utilitarian approach emphasizes consequences and aims to assess the
aggregate welfare that the strategy produces. The better strategy is the one that produces
the most overall benefit for stakeholders. Some inherent problems with this approach
include the practical difficulty of predicting and measuring consequences of strategies
and the possibility that even a strategy that benefits many stakeholders can violate the
fundamental rights of a particular stakeholder.
To counteract these inherent problems, a rights-based analysis can be conducted.
This approach recognizes the basic rights of stakeholders such as respect for property
rights and personal dignity, and the duty of the organization to respect those rights. The
Golden Rule, “Do unto others as you would have them do unto you,” is a rights-based
principle, emphasizing the norm that a decision or act is ethical if it results in
implications for others that you would not mind for yourself.
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Similar to the rights approach, the justice approach evaluates the strategy based
on principles of fairness and justice. The justice approach might apply to issues such as
setting executive compensation versus workers salaries, equal opportunity for women and
minority candidates, sweat shops, and the question of a living wage. For example, is it
fair for supermarkets (or other retailers) to avoid impoverished neighborhoods? Do
companies, in this case, food retailers, have any obligations to serve consumers in poor
communities? If so, how are those obligations balanced against the obligation to be
profitable and create value for stockholders? Some companies are turning conventional
wisdom upside down and finding creative and profitable ways to serve the poor as
consumers. These strategies not only respect and promote the dignity of the poor but also
create value for stockholders.
The third and final stage of ethical analysis is to make a judgment as to whether
the strategic choice is ethical. Strategies that pass the ethics test are ready to be
considered for the next steps of the strategic management process.
The Balanced Scorecard
As previously noted, the Strategic Management Framework is used to analyze
value creation for ALL stakeholders, not merely the owners of the firm. Consequently,
traditional measures of maximizing stockholder (i.e., owner) value are inadequate.
Moreover, given the integrative nature of the Business Policy course – and of strategic
decisions themselves – financial measures alone will not suffice in evaluating the success
of strategic choices. The balanced scorecard (BSC) developed by Kaplan & Norton
(1996) provides a vehicle to broaden the scope of performance measurement. By its very
nature, it cuts across disciplines, turning functional silos on their sides. The BSC
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approach allows finance and accounting to interface with marketing and production; it
not only facilitates but requires operations to work with organizational design. In short,
the BSC provides a comprehensive approach for considering the full impact of some
decisions while at the same time helping to solve smaller isolated problems that can more
readily be seen within its structure. It strikes “the balance between short- and long-term
objectives, between financial and non-financial measures, between lagging and leading
indicators, and between external and internal performance perspectives” (Kaplan &
Norton, 1996, p. viii). In the Business Policy course, the BSC provides a flexible,
integrative and more inclusive way of keeping score that addresses customer, employee
and other interests.
Figure 3 – The Balanced Scorecard
Financial:
(Past)
How do we look to our
owners?
Customer:
(Outside)
How do our
customers
see us?
Balanced
Scorecard
Internal:
(Inside)
At what business
processes must
we excel?
Learning & Growth:
(Future)
Can we continue to improve
& create value?
Employees
(Adapted from Kaplan & Norton, 1992, p. 72)
As the above diagram illustrates, the BSC explicitly addresses four value drivers
of organizational performance – financial, customer, internal, and learning & growth.
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Another way of expressing the BSC is it views an organization through four different but
interrelated lenses - in terms of past performance, future potential, an outsider’s view, and
an insider’s perspective. Traditionally, decision-makers have focused primarily, if not
exclusively, on financial measures such as profitability, cash flow, sales growth and
return on equity to assess a company’s performance. However, such a focus fails to
capture the necessary interrelationships among the perspectives. In addition, the use of
financial measures alone does not and can not capture the value created by intangible
assets (measures in the Growth & Learning Perspective) which often create the
competitive advantage for a company (Kaplan & Norton, 2001; Lev, 2001). Furthermore,
disappointing financial results often stem from serious problems in core business
processes (i.e., measures in the Internal Perspective). Most critically, as one author notes,
using financial measures alone is like driving a car looking through the rear view mirror
(Niven, 2005).
The BSC creates metrics that drive value creation. Differing strategies dictate
what should be included in the scorecard. This is the beauty of the BSC. It can be adapted
and expanded to include metrics on leadership (Van De Vliet, 1997), supplier
relationships (Partridge & Perren, 1997), workforce diversity (Knouse & Stewart, 2003),
the strategic readiness of intangible assets (Kaplan & Norton, 2004a), community
investment (Kaplan & Norton, 2004b), and/or corporate social responsibility (Crawford
& Scaletta, 2005). Indeed, Kaplan & Norton (1996) suggest any stakeholder interest
which defines a business unit’s mission should be included in the BSC.
It is important to recognize the hierarchical nature of the traditional BSC. Kaplan
& Norton’s basic model assumes that financial performance is the ultimate goal of a
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business (Bryant, Jones & Widener, 2004). However, the primacy of financial
performance and the interests of owners are not necessary assumptions in our Strategic
Management Framework. The interests of customers and employees as well as other
important stakeholders can and should be included in the BSC. For example, Van der
Woerd & van den Brink (2004) offer a modification of the traditional BSC. Set within the
European Corporate Sustainability Framework (ECSF), the “Responsive Business
Scorecard” (RBS) adds a fifth perspective to the traditional BSC.
Figure 4 – The Responsive Business Scorecard
The Responsive Business Scorecard
Customers
&
Suppliers
Financiers
&
Owners
Society
&
Planet
Internal
Processes
Employees
&
Learning
(Source: van der Woerd & van den Brink, 2004, p. 178).
Unlike the traditional BSC which emphasizes profit as the ultimate goal, “in a
RBS, People and Planet must become on equal footing with Profit” (van der Woerd &
van den Brink, 2004, p. 177). This is just one example of how the BSC can be modified
to support the C-E-O model of value creation in our Strategic Management Framework.
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Conclusion
The Business Policy course is unique in several respects. While the standard
course at Saint Joseph’s meets for three hours per week (3 credits), Business Policy
carries four credits. Most courses in the undergraduate business program are taught by a
single faculty member, are housed in a particular academic department, a fact recognized
by the departmental prefix attached to the course (e.g. ACC 1011; FIN 1341; MGT 1011;
MKT 2031). Business Policy is team-taught by members from four departments. The
course carries a BUS prefix (BUS 2901) in recognition of the fact that this is not a course
that is housed in a particular department but is “owned” by the school of business as a
whole. It is designed and delivered as being a truly integrated capstone experience.
What further distinguishes Business Policy from the capstone courses at other
schools are the models and frameworks used in the course which reflect the Jesuit
mission of the business school. This paper has illustrated how the Strategic Management
Framework with its C-E-O model departs from the maxim that the purpose of a business
is to maximize shareholder wealth and instead focuses on value creation for a group of
key stakeholders. The challenge of strategic management is that each of these
stakeholders places legitimate but sometimes conflicting claims on the organization. The
use of an ethical framework for the analysis of strategic choice helps resolve some, but
not all of these potential conflicts. At the very least, it challenges our students to
explicitly consider the ethical implications of their “business” decisions. Finally, the use
of the Balanced Scorecard which highlights the cause-and-effect relationships among
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employees, customers and owners provides a more inclusive way of measuring the
success of strategic choices.
The Jesuit imprint on the course is subtle but fundamental to the understanding of
strategic management. It is subtle in the sense that traditional Jesuit ideals such as cura
personalis, men and women for others, and magis may never be explicitly mentioned
during the course but are inherent in the philosophical understanding of what it means to
be a successful strategic manager.
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