LEARN. PERFORM. GROW.

5. The Strategic Position (III)

Corporate Strategy Master Degree

The Faculty of International Business and Economics,

ASE Bucharest

LEARN. PERFORM. GROW.

Detailed Course Contents:

1. Introducing Strategy
2. The Strategic Position The Environment; Strategic
Capability; Expectations & Purposes

3. Strategic choices (I) - Business-Level, Corporate-Level

and International Strategy

4. Strategic choices (II) ; Directions and Methods of

Development

5. Strategy into action Organising for Success; Enabling

Success & Managing Strategic Chance

LEARN. PERFORM. GROW.

Layers of business environment

The Organization
Competitors
Industry (or sector)
The macro-environment

LEARN. PERFORM. GROW.

Analising strategic position

a. External analysis > environment

b. Internal analysis > strategic capability

Expectations
& Purposes

LEARN. PERFORM. GROW.

The Strategic Position (III)

Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

Expectations and purposes

Corporate governance

Business ethics

Whom should the

organization serve?
How should purposes be
determined?

Which purposes should

be prioritized?
Why?

Organizational purposes
Corporate values
Mission

Goals & Objectives

Stakeholders
Whom does the
organization serve?

Cultural context
Which purposes are
prioritized?
Why?

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

Corporate governance
The governance framework describes whom the organization is there to
serve and how the purposes and priorities of the organization should be
decided

LEARN. PERFORM. GROW.

The chain of corporate governance: typical reporting structures

REPORTS / ACTIONS
Beneficiaries
Limited reports

Trustees of funds
Investment performance reports

Investment managers
Board

Accountants; Analysts reports

Company briefings; Buying / selling shares
Budgets/targets & Qualitative reporting

Executive directors
Budgets/targets & Qualitative reporting

Senior executives
Budgets/simplified targets & Operating reports

Managers

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

Stakeholder expectations
Stakeholders those individuals or groups who depend on the
organization to fulfill their own goals and on whom, in turn, the
organization depends

Stakeholder mapping identifies stakeholder expectations and power

and helps in understanding political priorities

Power the ability of individuals or groups to persuade, induce or coerce

others into following certain courses of action

LEARN. PERFORM. GROW.

Some common conflicts of expectations

In order to grow, short-term profitability, cash flow and pay levels may need to be
sacrificed
short - termism may suit managerial career aspirations, but preclude investment
in long term projects
When family business grow, the owners may lose control if they need to appoint
professional managers
New developments may require additional funding through share issue or loans.
In either case, financial independence may be sacrificed
Public ownership of shares will require more openness and accountability from
the management
Cost efficiency through capital investment can mean job losses
Extending into mass markets may require a decline in quality standards
In public services, a common conflict is between mass provision and specialists
services
In large multinationals organizations, conflict can result because of a divisions
responsibilities to the company and also to its host country

LEARN. PERFORM. GROW.

Groups of interest: balancing power

Employees
Managers

State

ORGANIZATION

Suppliers

Shareholders

Creditors

Customers
Society

LEARN. PERFORM. GROW.

Groups of interest - potential conflicts. Their expectations

Expectations
Groups of interest

Basic

Secondary

Shareholders

Financial advantages

Added value

Employees

Salary + other C&B

Work satisfaction,
Professional development

Customers

Products & Services

Quality

Creditors

Solvability

Paying in due time

Suppliers

Paying the invoices

Long term relations

Society

Protection & Security

Contributions to community

State

Respecting Laws

Higher competitiveness

LEARN. PERFORM. GROW.

Stakeholder mapping: the power/interest matrix

Level of interest
High

Low

Minimal effort

Keep informed

Power

High

Keep satisfied

Key players

LEARN. PERFORM. GROW.

Sources of power
Within organizations

Hierarchy (formal power),

e.g. autocratic decision making
Influence (informal power),
e.g. charismatic leadership
Control of strategic resources,
e.g. strategic products
Possession of knowledge and skills,
e.g. computer specialists
Control of the human environment,
e.g. negotiation skills
Involvement in strategy
implementation
e.g. by exercising discretion

For external stakeholders

Control of strategic resources,

e.g. materials, labor, money
Involvement in strategy implementation
e.g. distribution outlets, agents
Possession of knowledge or skills,
e.g. subcontractors, partners
Through internal links,
e.g. informal influence

LEARN. PERFORM. GROW.

Indicators of power
Within organizations

For external stakeholders

Status

Status

Claim on resources

Resource dependence

Representation

Negotiating arrangements

symbols

symbols

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

Business ethics and social responsibility

Ethical stance the extent to which an organization will exceed its

minimum obligations to stakeholders and society at large

Corporate social responsibility is concerned with the ways in which an

organization exceeds the minimum obligations to stakeholders specified
through regulation and corporate governance

LEARN. PERFORM. GROW.

Four possible ethical stances

Short-term
shareholder
interest

Longer-term
shareholder
interest

Ethical stances

Multiple
stakeholder
obligations

Shaper of
society

LEARN. PERFORM. GROW.

Should organizations be responsible for

INTERNAL ASPECTS:
Employee welfare?
providing medical care, assistance with housing finance, extended sick leave,
assistance for dependants, etc?

Working conditions?
job security, enhancing job surroundings, social and sporting clubs, aboveminimum safety standards, training and development, etc?

Job design?
designing jobs to the increased satisfaction of workers rather than just for
economic efficiency? This would include issues of work / life balance?

Intellectual property?
respecting the private knowledge of individuals and not claiming corporate
ownership?

LEARN. PERFORM. GROW.

Should organizations be responsible for

EXTERNAL ASPECTS (I):

Environmental issues?

reducing pollution to below legal standards if competitors are not doing so?
energy conservation?

Products?

dangers arising from the careless use of products by consumers?

Markets and marketing?

deciding not to sell in some markets?

advertising standards?

Suppliers?

fair terms of trade?

blacklisting suppliers?

LEARN. PERFORM. GROW.

Should organizations be responsible for

EXTERNAL ASPECTS (II):

Employment

positive discrimination in favor of minorities?

maintaining jobs?

Community activity?

sponsoring local events and supporting local good works?

Human rights?

respecting human rights in relation to: child labor, workers and union rights,
oppressive political regimes? Both directly and in the choice of markets, suppliers
and partners?

LEARN. PERFORM. GROW.

AGENDA for TODAY

Course 5:
The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

The cultural context

National (or regional) cultures

Functional /
Divisional
subcultures

The
individual

Organizational
field

Organizational culture

LEARN. PERFORM. GROW.

The cultural context

Organizational field a community of organizations that partake of a common

meaning system and whose participants interact more frequently with one
another than with those outside the field

Organizational culture the basic assumptions and beliefs that are shared by
members of an organization, that operate unconsciously and define in a basic
taken-for-granted fashion an organizations view of itself and its environment

Paradigm set of assumptions held relatively in common and taken for granted in
an organization

LEARN. PERFORM. GROW.

Organizational culture in four layers

VALUES
BELIEFS
BEHAVIORS
Paradigm
Taken-for-granted
assumptions

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

VMV system & organizational purposes

VMV system Vision, Mission, Values

Vision Where?

Value Proposition Why are we on the market?

Mission Why?
Values What?

Organizational purposes / Strategic goals Which are

the milestones?

LEARN. PERFORM. GROW.

VMV system & organizational purposes

VISION (Strategic Intent) - Desired future state: the aspiration of the organization

MISSION Overriding direction and purpose of an organization in the line with

the values or expectations of stakeholders

VALUES the principles that guide an organizations actions

GOAL General statement of aim or purpose

OBJECTIVE statements of specific outcomes that are to be achieved

STRATEGIES long-term direction

LEARN. PERFORM. GROW.

Criteria for developing vision

5 criteria that may support elaborating vision:

Anticipation
Deepness
Dimension
Unique
Consensus
Feasibility

LEARN. PERFORM. GROW.

How are the objectives settled?

Specific
Measurable
Achievable
Realistic
Time related

Challenging, dar always SMART

LEARN. PERFORM. GROW.

AGENDA for TODAY

5.The Strategic Position (III)
- Expectations & Purposes

Corporate governance
Stakeholder expectations
Business ethics and social responsibility
The cultural context
VMV system & organizational purposes

LEARN. PERFORM. GROW.

Summary (I)
The Five Phases of Strategy
Phase One
Strategic
Intelligence
Gathering
and
Analysis

Phase Two

Strategy
Formulation

Phase
Three
Strategy
Implementa
tion
Planning

Phase Four
Strategy
Implementa
tion

Phase Five
Strategy
Monitoring
and
Updating

What is our strategic time frame? (How far into the future do we want to look?)

> What are our assumptions about the external business environment during this
time frame?

Economy
Regulation
Labor
Society
Technology

Market
Competition
Supply/Suppliers
Parent corporation if
subsidiary

LEARN. PERFORM. GROW.

Summary (II)
> What are our most significant external threats during this time frame?
> What are our most significant external opportunities during this time frame?

> What are currently our most significant strengths?

> What are currently our most significant weaknesses?
> What are our Basic Beliefs (core values/guiding principles)?

Customers
Employees
Shareholders
Competitors

Suppliers
Environment
Society / Community
Ethics

How would you grade your top teams thinking and documentation of Phase 1
(Strategic Intelligence Gathering and Analysis)?

LEARN. PERFORM. GROW.

Thank you!

For more information:

Cosmin Jolde
cosmin.joldes@achieveglobal.ro