Corporate Ethics and Strategy

2 key reasons why a firms strategy should be ethical

a) Unethical strategy in part or wholedamages firms reputation.
b) Ethical strategy is good for the biz at large and for stakeholders. Pursuing
unethical strategy can put the business fortunes of the firm at risk.
Many firms have officially adopted a code of conduct & statement of core values
that it communicates to all stakeholders. It is upto the senior management to
ensure that compliance procedures are in place to ensure ethical conduct in
strategy execution. The litmus test involves 2 broad parameters
1) Is the strategy fully compliant with the code of conduct? Is there any
conflict?
2) Is the strategy consistent with the core values of the firm?
Attention should be paid to linking strategy to ethical principles & core values at all
levels of management to enable ethics and values to be part of corporate culture.
Corporate strategy & Social responsibility
Strategies operated by a firm should not be detrimental to the stakeholders or the
environment & community at large. It should look to promote overall betterment of
society at large through its decisions and actions.
Socially responsible behavior should strive to balance benefits of strategic actions
to shareholders without adverse impact to employees, suppliers, customers, local
communities and environment.
Socially responsible strategy should involve.
1) Firms strategy is ethical and respects codes of acceptable conduct while
observing firms core values and compliances.
2) That firm makes donations to charitable causes and utilizes employee time
for community service to reach out to the dis-advantaged.
3) Actions that protect infact enhances environment.
4) Actions that create good work environment and culture that enhances the
lives of its employees making the firm a great place to work for.
5) Actions that promote workforce diversity.

For eg: STARBUCKS commitment to strategic CSR stems from its operating tagline
in iots Vision Mission statement Giving back to the community is the way we do
business. The top management makes the theme come alive by
a) Giving a fantastic experience to the paying customer.
b) Giving management time and commitment to community building.
c) Making sure that coffee growers in developing nations get a fair price for
their produce and ensure welfare programs for their families.
d) Re-cycling and environment protection activities
e) STARBUCKS FOUNDATION that promotes philanthrophy.

BUILDING ORGANISATIONAL CAPABILITIES - KEY TO STRATEGIC

EXECUTION
Putting a strategy in place and getting an organization as a whole to execute it can
often prove challenging. Crafting strategy is mainly market driven while executing
strategy is operational and revolves around people and biz processes.
Successful strategy creation depends on biz vision, competitive analysis and
shrewd market positioning while execution depends on working with teams,
creating and strengthening competitive capabilities while motivating and rewarding
people performance.
Companies dont execute strategy, people do. Most strategies fail due to poor
execution. While crafting strategy is the onus of the top management, executing
strategy is the job of the entire organization hence the process effects every level
of the firms hierarchy. Managements handling of the implementation process is
considered successful only if firm achieves the targeted strategic and financial
performance.
The organizational capabilities around people and resources required to execute a
low cost provider strategy are radically different from those required to execute a
high end differentiation strategy. Hence the key organizational and management
components which are key to the strategic execution process are:
1) Building a capable organization

Staffing the organization by putting together a strong management team

with the right intellectual capital and technical skills

Building core competencies & competitive capabilities that will enable efficient
strategy execution and create increased potential for competitive advantage. The
best way to SCA is to perform value chain activities consistently in a more superior
fashion than the rivals by building and fortifying core competencies, resource
strengths & organizational capabilities that rivals find hard to match.
2) Matching organizational structure and strategy
- Decide which value chain activities are critical and outsource non core
-

activities.
Make internally performed value chain activities having direct bearing on

strategic outcome as the main building blocks of the organization.

Deciding on span of control, levels of delegation and decentralization.
Facilitate cross department and cross unit co-ordination.
Collaborate with strategic allies and supply chain partners to integrate

strategic vision.
3) Allocation of budgets to enable strategic execution
A firms ability to marshal its resources needed to support a new strategic
initiative and steer them towards various units has a direct impact on the
success of the execution process.
Often clear actions based on changes in market dynamics are required to
reallocate operating resources and people to catalyse the implementation
process.
4) Institute policies and procedures to facilitate execution
- Provide top down guidance to align actions and corporate behavior in line
-

with strategic requirements.

Create SOPs and set compliance procedures that ensure positive work
climate to facilitate strategy execution.

5) Adopting dynamically best industry practices through benchmarking to

advance strategy execution while striving for continuous improvement.
6) Installing state of the art IT support systems that gives the firms business
intelligence capabilities a competitive edge that rivals find difficult to match.

7) Tying rewards and incentives to mobilize organizational commitment to

successful strategic execution.
8) Building a strong culture shaped on core values, beliefs, biz principles,
traditions and operating styles.