CHAPTER-12 BEHAVIOURAL IMPLEMENTATION

1. Stakeholders and strategic management. Stakeholders are the individuals and groups who can affect, and are affected by, the strategic outcomes achieved and who have enforceable claims on a firm s performance. Stakeholders are: internal stakeholders such as shareholders / owners, managers or employees and external stakeholders such as customers, suppliers or government 2. Two-way stakeholder-organisation relationship: They have two-way relationship with the organisation. Stakeholders provide support to the organisation and contribute in many different ways. In return, the organisation tries to satisfy the expectations of the stakeholders and honour their legitimateclaims. 3. Why is stakeholders analysis done? This is to set the priority to be assigned by the organisation to its stakeholders. Another reason for creating prioritisation is the limitation on the ability of an organisation to satisfy its stakeholders. Organisation cannot satisfy all stakeholders equally. Often, the expectations and claims of the stakeholders are at variance. The organisation makes a trade-off by assigning priority to the stakeholders in terms of their power, interest, and legitimacy. 4. Mention a few engagement tactics used by organisations. There are a range of engagement tactics available to organisations to attract the interest of stakeholders and sustain it over time. Some large organisations have specific departments and personnel such as corporate communications or public relations assigned to this task. The range of activities used for engagement include disseminating information on the website and through other traditional means such as newsletters, posters, participation in public events, exhibitions, arrangement of corporate events such as seminars and conferences, and the like. 5. Agency theory and stewardship theory of stakeholder relationship. Agency theory states that when a person delegates decision-making authority to another an agency relationship is created. The person delegates is the principal and the person to whom the authority is delegated is the agent. So long as managers act in the interests of the owners, there is no conflict of interest. When managers do not act in their interest a conflict of interest is created. The solution here is corporate governance mechanisms. It is designed to exercise control and place restraints on the behaviour of managers so that they are required to act in the interests of the owners. Stewardship theory takes a positive view of the managers and consider them as stewards . Their interests are aligned with that of the owners. These managers identify with their organizations and derive satisfaction from behaviours that support the organisational interests

rather than their own. Stewardship theory, proposes corporate governance mechanisms that support and empower the managers behaviours rather than monitor and control them. 6. Corporate governance mechanisms used in India: The corporate governance mechanisms in India include both mandatory and voluntary regulations. The major legislations having provisions related to corporate governance are: The Companies Act, 1956; The Securities Contract (Regulations) Act 1956 and The Securities Contracts (Regulation) Amendment Act, 2007; The Securities and Exchange Board of India Act 1992; and The Depositories Act, 1996. Besides there is the listing agreements with stock exchanges that define the rules, processes, and disclosures that companies must follow to remain as listed entities. The annual report of any listed public company, disclose information such as : major share ownership and rights, information about the directors and top executives including their remuneration, and corporate governance structures and policies being implemented. Many organisations go beyond the mandatory requirement and disclose more information than required under the law to enhance transparency in their operations. 7. Corporate governance Vs. strategy formulation and strategy implementation. Corporate governance and strategy formulation Deciding on the specific corporate and business strategies of the organisation is the responsibility of the top management. They get guidance from the board of directors. They are also guided by the corporate objectives. Shareholders expect higher returns on their investment. Managers on the contrary may be interested in creating stable long-term employment. Corporate governance mechanisms are needed to reconcile the differences in the goals that shareholders and managers try to achieve. Corporate governance and strategy implementation The strategy implementation is fully under the control of the managers of the organisation. The board of directors or the shareholders will not intervene directly. There is a danger that managers might deviate in strategy implementation from what they committed. Corporate governance mechanisms must ensure that such deviation from commitments does not occur. 8. Functions that the board of directors: Their functions are: determine the company s purpose and ethics; decide the direction, that is, the strategy; plan; monitor and control managers and CEO; and report and make recommendations to shareholders. These functions are strategic in nature. In practice, the roles played by the board in various types of organizations vary because of the ownership patterns in public and private sector

companies. Private sector companies which are family owneddiffer from multinationals. Further, professionally managed, family-owned companiesmay differ from family-managed, family-owned concerns. 9. Five important tasks that strategic leaders perform: The five more important tasks that strategic leaders perform are: y determining strategic direction, y effectively managing the organisational resources portfolio, y sustaining an effective organisational culture, y emphasising ethical practices, and y establishing balanced organizational controls. 10. Enumerate the major insights developed by leadership theory to help strategists in leadership implementation. The style adopted by the strategists matters. Several of the leadership theories have been developed. Kurt Lewin classified democratic, autocratic, and laissez-faire styles. Another theory of leadership is that of contingency approach. In this approach, the leadership style is related to the situation the leadership is exercised. Eg. Fiedler s contingency theory states the leadership style and the appropriateness of the style is determined by the situation. Among the contingency factors, the cultural/national context could be an important variable. In the Indian context, for instance, a purely authoritarian or a purely participative style may not be effective. Further leadership theory points out that a strategy creates certain competency requirements that should be fulfilled by the leadership style adopted. If this is done, then there is a higher likelihood of strategy being effective. 11. What is meant by the phrase appropriate style of leadership ? Different strategies cannot be implemented by adopting similar leadership styles. Effective implementation of a strategy requires a leader with a style that has characteristics consistent with the competencies required by the strategy. 12. The choice of future strategists through succession planning help in their development Choosing future strategic leaders is a crucial decision. In the public sector enterprises, multinational, family-owned, and professionally-managed private companies, and in nongovernmental organisations differ in their policies and practices with regard to developing strategic leaders. In the government, the officers of the central and state administrative services handle the public sector enterprises though professionals outside the government system too are increasingly being encouraged to take up top positions. In the family-owned private sector companies the family members are chosen. In professionally-managed and multinational companies choose the strategists on a competitive basis relying on a mix of experience and merit. Generally, talented individuals are spotted early in their careers to be groomed for top positions.

13. Strategists done through career planning and development programmes by Indian companies? Both formal and informal means are adopted to put in place the career planning and development for future strategic leaders. Executive assistants are appointed at a young age to assist the CEOs and other senior managers in various ways such as helping in strategic planning and decision-making by providing critical information inputs. Executives have the benefit of studying integrative courses such as strategic management and business policy. Training institutions such as the Administrative Staff College of India and Indian Institutes of Management offer preparatory courses for middle-level managers to take up strategic management responsibilities in the future. Family-owned organisations may use these approaches to develop the heirs to take up top positions in future. A combination of formal and informal means may also be used where the potential executives may be exposed to training and development programmes followed by individual guidance and counselling by senior executives in the organisation. 14. Major roles Plyed by CEOs in strategic management. The CEO plays major roles in all the process of strategic management. He is the chief strategist. He or she is is chiefly responsible for the execution of functions which are of strategic importance to the organisation. CEO performs the strategic tasks: actions which are necessary to provide a direction to the organisation so that it achieves its purpose. He plays a pivotal role in setting the mission of the organisations, deciding the objectives and goals, formulating and implementing the strategy and, in general, seeing to it that organisation does not deviate from its predetermined path designed to move it from the position it is in to where it wants to be. In short, a CEO is primarily responsible for all aspects of the strategic management of the organisation. 15. Corporate culture: Culture in organisations exists at two levels of visible artifacts and observable behaviour such as ceremonies, stories, slogans, behaviours, dress, and physical settings, and the deeper values embedded in the minds of people in the form of values, assumptions, beliefs, and thought processes. 16. Values-related and ethical considerations affect behavioural implementation Personal values and business ethics occupy centre stage in management. ethical practices in business is nery important. Business ethics is being identified as a major source of competitive advantage. Ethically run organisations are able to attract investment and human capital, retain talent, differentiate themselves in the market, and create a perception of being customerfriendly. Consistency among the personal values and business ethics is extremely essential today. This is done through inculcating the right set of values, reconciling divergent values, and modifying values that are not consistent with the strategy. 17.Personal values and business ethics. Personal values and ethics are important for all human beings. They are especially important for strategists as they are custodians of immense economic power vested in business

organizations by society. Personal values and a sense of business ethics can help a strategist to distinguish between moral and amoral use of politics and power as a means to attain organisational goals. 18. Social responsibility a contentious issue The issue of social responsibility is a contentious issue . At one end, opinion clearly does not favour including social responsibility in business considerations. At the other extreme, it is imperative for businesses to be socially responsible. In between the two extreme views, it is opined that social responsibility should be discharged in such a manner that corporate competence acts as a limitation, and the scope of social responsibility is limited to those areas where the business organisation can achieve its self-enlightened interest. 19. Predominant thinking presently regarding the social responsibility of business There is an opinion that all business organisations should not attempt to solve all, or any, types of social problems. Rather, social responsibili-ty should be discharged in such a manner that corporate competence acts as a limitation, and the scope of social responsibility is limited to those areas where the business organisation can achieve its self enlightened interest. In other words, the economic goals and social responsibility objectives need not be contradictory to each other and should be achieved simultaneously. 20.Strategic management to social responsiveness Social responsiveness is the level of interest exhibited by an organisation in discharging social responsibility. Generally the top management takes the major decisions regarding the choice of social concerns to be addressed, definition of the scope of social responsibility activities, and resource allocation to social responsibility programmes. These decisions are based on the views, opinions, personal values, and the disposition towards business ethics of the top management. The top management should seek to align its social responsiveness with strategic management. By such an alignment is meant the reflection of social responsiveness in all the phases of strategic management. Thus, the role of strategists in strategic intent and hierarchy of objectives, strategy formulation, strategy implementation, and strategy evaluation will all be affected by social responsiveness.