STRATEGIC MANAGEMENT,
TERMS & CONCEPTS,
BUSINESS ETHICS
Those actions (or by default,
inactions) which determine the
long term future of an
organization.
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THREE KEY QUESTIONS
1. Where is the organization
today?
2. Where do we want it to be in
the future?
3. What needs to be done to get
there?
2
CHARACTERISTICS OF
STRATEGIC ACTIONS AND
DECISIONS
•Infrequent
•Consequential
•Precedent -- and policy -- setters
•Multifunctional
3
SOME EXAMPLES
•Miller Beer and Philip Morris
•Lockheed and the Electra
4
HIERARCHY OF STRATEGY
•Corporate
•Business
•Functional
Ideally, these play together
Realistically, there’s often
conflict
5
SOME EXAMPLES OF
CONFLICT
•Clara Peller and Wendy’s
•Ford, Kawasaki, and social
responsibility
6
WHAT IS THE PURPOSE OF A
BUSINESS?
•Profit?
•Revenue?
•Jobs?
•Meet society’s needs?
•Something else?
7
JAMES INVESTMENT
RESEARCH, INC.
Firm Objectives
• Provide highest quality service to our clients
– Good performance
– Lots of communications
– Provide economic or such other advice/assistance as possible
• Provide good work environment for our employees
• Compensate staff at high levels
– Stable and growing client base
– Low expenditures except for salaries
– High firm profits to be shared with employees
• Technological leadership in investment research
– State of the art equipment
– Emphasis on innovation and creativity
• Strong professional reputation of the firm and its personnel
– Honesty and integrity
– Competence
– Quality of work
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THE CONCEPT OF
STAKEHOLDER
•Old view: maximize stockholder value
•New view: one maximizes stockholder
value over the long run by balancing the
benefits to all stakeholders:
customers
employees
management
government
neighbors
stockholders
vendors
competitors
& more . . .
•Some examples . . .
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STRATEGIC DECISION
MAKERS
•Boards of Directors
•Senior management
•Roles, skills, tasks
10
BOARD OF DIRECTORS
•Elected by shareholders
•Mission:
– Protect interests of owners
– Hire -- and fire -- top management
– Approve management initiatives
•Trends:
– Codetermination
– Board responsibility
– Board activism
– Strong owners, e.g., mutual funds
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MANAGEMENT TASKS
DIFFER WITH LEVEL
Technical
Interpersonal
Conceptual
Supervisor
Manager
CEO
12
STRATEGIC PLAN: A VITAL
TOOL
•Seven parts:
– Evaluate current performance
– Scan external environment: Identify
opportunities and threats
– Scan internal environment: Identify
strengths and weaknesses
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SEVEN PARTS (cont.)
– Analyze strategic factors: SWOT
– Develop and select alternative
strategies
– Implement the strategy
– Evaluate and control the strategy
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BUSINESS ETHICS
•Is this just something taught in schools?
•Some real life cases:
– Ford’s Pinto
– Manville’s asbestos
– Financial houses: Barings, Saloman Brothers
– Tobacco
– Handguns
– International Fabricating Corporation
•Impacts? Financial? People?
15
WHY BE ETHICAL?
1.
2.
3.
4.
Moral reasons
Self-interest
Financial well-being
Retain autonomy
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AN ETHICAL MODEL
•From The Power of Ethical
Management, by Peale and
Blanchard:
1. Is it legal?
2. Is it balanced?
3. How does it make you feel about
yourself?
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MOVING FROM INDIVIDUAL
TO CORPORATE
1. Hire correctly
2. Set standards
3. Model, or “What you can learn
from your dog.”
4. Talk
5. Institutionalize into decisionmaking
6. Reward, and sanction
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