Taiz master program
Engineering & Management
Course Strategic management
Strategic position (ECS adapted)
Lecturer : John L Simons
www.jlsimons.org
j.l.simons@rug.nl
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Learning Outcomes (1)
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Identify the components of the
governance chain of an organisation
Understand differences in governance
structures across the world and the
advantages and disadvantages of these
Identify differences in the corporate social
responsibility stances taken by
organisations and how ethical issues
relate to strategic purpose
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How about our ethics ?
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Learning Outcomes (2)
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Undertake stakeholder analysis as a
means of identifying the influence of
different stakeholder groups in terms of
their power and interest
Consider appropriate ways to express the
strategic purpose of an organisation in
terms of statements of values, vision,
mission, or objectives
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Exhibit 4.1 Influences on
Strategic Purpose
Governance
structure
Strategic
purpose
Social
responsibility
and ethics
Stakeholder
expectations
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What are Stakeholders?
Stakeholders are
those individuals
or groups who
depend on an
organisation to
fulfil their own
goals and on
whom, in turn, the
organisation
depends.
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What is Corporate Governance?
Corporate governance is
concerned with the structures and
systems of control by which
managers are held accountable to
those who have a legitimate stake
in an organisation.
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Exhibit 4.2 The Chain of
Corporate Governance
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Issues Highlighted
by the Governance Chain
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To whom are
executives
responsible?
Who are the
shareholders?
What is the role of
institutional investors?
What means of
scrutiny and control
exist?
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Reasons for Imperfect Operation
of the Governance Chain
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Lack of clarity on end beneficiaries
Unequal division of power
Different levels of access to inform
Self-interest among agents
Measures and targets reflect agent selfinterests rather than those of end
beneficiaries
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Exhibit 4.3 Benefits and Disadvantages of
Governance
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Guidelines for Boards
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Operate independently of management
(no old boys networking)
Be competent to scrutinize the activities
of management
Have time to do job properly
Behave appropriately given expectations
for trust, role fluidity, collective
responsibility, and performance
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Ownership Choices
Private or public ownership of equity
Sale of all or part
Acquisition
Mutual ownership and partnership
Privatisation
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What is
Corporate Social Responsibility?
Corporate social responsibility
(CSR) is concerned with the ways
in which an organisation exceeds its
minimum obligations to
stakeholders specified through
regulation.
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Stances on Social Responsibility
Laissez-faire
Enlightened
self-interest
Forum for stakeholder
interaction
Shaper of society
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BP and The Gulf Disaster
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Exhibit 4.6 TI’s Approach to Ethics
Is the action legal?
Does it comply
with values?
Will you feel bad?
How would it
look in newspaper?
Do you know
it is wrong?
Are you sure?
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Exhibit 4.7 Stakeholders of a
Large Organisation
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What is Stakeholder Mapping?
Stakeholder mapping identifies
stakeholder expectations
and power and helps in
understanding political priorities.
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Exhibit 4.9 The Power/Interest Matrix
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Questions Addressed with Stakeholder
Mapping
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In determining purpose and strategy, which
stakeholder expectations need to be most
considered?
Do the actual levels of interest and power reflect
the corporate governance framework?
Who are the key blockers and facilitators of
strategy?
Is it desirable to reposition certain stakeholders?
Can level of interest or power of key stakeholders
be maintained?
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What is Power?
Power is the ability of individuals
or groups to persuade, induce, or
coerce others into following certain
courses of action.
Different from management ???
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Sources of Power
Within Organisations
Hierarchy
Influence
Involvement
Control of
human
resources
Knowledge
possession
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Control of
strategic
resources
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Sources of Power
For External Stakeholders
Control of
strategic
resources
Knowledge
possession
Involvement
Informal links
to internal
power
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Indicators of Power
For Within Organisations
Status
Resource
claims
Symbols
Representation
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Indicators of Power
For External Stakeholders
Status
Resource
dependence
Symbols
Negotiating
arrangements
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Organisational Purposes
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Values
Mission statement
Vision statement
Objectives
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What are Core Values?
Core values are the
underlying principles that guide
an organisation’s strategy.
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What are Mission and Vision
Statements?
A mission statement provides
employees and stakeholders with clarity
about the overall purpose of the
organisation.
A vision statement is concerned with
what the organisation
aspires to be.
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Mission and Vison in practice
Find on the net
the mission and vision of
 A yemeni firm
 A US or UK firm
 A multinational
Do they underline this difference in
mission and vision ?
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What are Objectives?
Objectives are statements
of specific outcomes
that are to be achieved.
Objectives must be measurable.
Compare with course objectives !!!
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Chapter Summary (1)
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The purpose of an organisation will be influenced
by expectations of shareholders
Governance chains reveal the links between
ultimate beneficiaries and management
The shareholder model and the stakeholder model
are the two generic governance systems
Stakeholder analysis reveals the influence of
different stakeholders
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Chapter Summary (2)
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Ethical dimensions of organisational purpose are
expressed via organisational approach to
corporate social responsibility as well as by
individual resolution of ethical dilemmas
Managers must decide how the organisation
should express its strategic purpose through
values, vision, mission, and objectives
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Case Example:
Product Red and Gap (1)
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Case Example:
Product Red and Gap (2)
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(Red) was created by Bono and Bobby
Shriver, Chairman of DATA, to raise
awareness and money for The Global
Fund.
It seeks to do so by teaming up with the
world’s most iconic brands to produce
Red-branded products, a percentage of
which is then given to the Fund.
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Case Example:
Product Red and Gap (3)
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Gap is a brand participant. It seeks to
provide responsible sourcing of its
products, some of which are produced in
Red beneficiary areas.
In contrast, an article in The Times
criticised the promotion of shopping as a
response to societal issues, further asking
whether this was a good use of
shareholder funding.
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Case Example:
Product Red and Gap (4)
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What is the rationale of the founders of
Product Red?
What views might shareholders of Gap
have of Product Red?
Is Product Red an appropriate corporate
activity?
Apply a stakeholder analysis to assess
how you could convince management of
another company to join this initiative.
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