Slide 14.

Chapter Fourteen

Organisational Strategy, Ethics

and Responsibilities

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.2

The importance of strategy

‘(Strategy is)..The direction and scope of an

organisation over the long term, which
achieves advantage in a changing
environment through its configuration of
resources and competences with the aim of
fulfilling stake-holder expectations.’

Johnson et al.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.3

Explicit strategy

• Corporate strategy serves to describe an

organisation’s sense of purpose, and plans and
actions for its implementation.

• An explicit strategy for the business organisation

is necessary for the following reasons:
– The need for people to co-operate
– To adapt to changing environmental conditions

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.4

People and strategy

• The people dimension of strategy is
concerned with:

– People as a resource
– People and behaviour
– Organising people

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.5

The concept of synergy

Positive synergy Negative synergy

• Positive synergy • Negative synergy
results when the results when the
whole is greater than whole is less valuable
the sum of its than its component
component parts parts

• 2+2=5 • 2+2=3

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.6

Organisational goals
• The goals of an organisation are the reason for its
existence.
• A goal is a future expectation, some desired
future state.
• The goals of an organisation determine the
nature of its inputs and outputs, the series of
activities through which outputs are achieved and
interactions with its external environment.
• The extent to which an organisation achieves its
goals is a measure of its performance.
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.7

Effective goals

To be effective, goals need to:

• Be understandable
• Contain a time element
• Be carefully drawn
• Be subject to alignment

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.8

Formal and informal goals

Formal goals Informal goals

• Formal goals are • Informal goals are

officially stated individual, and based on
• They encompass the both perception and
reasons and purpose of personal motivation
the organisation • They may be inferred
from the actual decisions
made and actions taken
within the organisation

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.9

Compatibility of goals

Figure 14.1 Compatibility of goals within an organisation

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.10

Ideologies and principles

Brech related the ideology of an organisation to:

• Its ethical foundation
– Basic principles governing external and
internal relations
• Its organisational or operational foundation
– The structure, operation and conduct of
activities

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.11

Mission statements

Mission or Vision?

• Mission statements set out the purpose and

general direction for the organisation.

• Vision provides the overall frame of reference

within which mission statements are written
and goals selected.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.12

Objectives and policy

• Organisational goals are generally translated
into objectives and policy:
– Objectives set out more specifically the goals
of the organisation, the aims to be achieved
and the desired end-results.
– Policy is developed within the framework of
objectives and provides the basis for decision-
making and the chosen course of action.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.13

A systems view of goals and objectives

Figure 14.2 A systems view of organisational goals and objectives

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.14

The profit objective

• Three inextricably linked objectives exist for
business organisations:

– To survive
– To maintain growth and development
– To make a profit

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.15

Eight key areas for setting

objectives: Drucker
• Market standing • Profitability
• Innovation • Manager performance
• Productivity and development
• Physical and financial • Worker performance
resources and attitude
• Public responsibility

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.16

The balanced scorecard

• Combines qualitative and quantitative
indicators of performance which…
• Recognise the expectations of various
stakeholders and…
• Relate performance to a choice of strategy
• As a basis for evaluating organisational
effectiveness

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.17

Strategy, opportunities
and risks: Drucker
• Strategy should be based on the priority of
maximising opportunities.
• Risks should be viewed as limitations on actions.
• Selecting the right opportunities requires:
– A focus on maximising opportunities rather than on
minimising risks.
– Scrutinising the characteristics of major opportunities
collectively rather than in isolation.
– Understanding opportunities and risks in terms of the
appropriateness of their fit to the business.
– Striking a balance between immediate and easy
opportunities for improvement.
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.18

E-business strategies
• Kermally asserts that e-business strategy is
important because:
– information can be shared more quickly and easily.
– it facilitates human interaction.
– it enables organisational resources and capabilities to
be stretched strategically.
– it provides global reach in marketing.
– it allows consumers to shop 24 hours a day from any
location.
– it promotes economic growth.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.19

Corporate social responsibilities

‘(CSR refers to)…The comprehensive approach

organisations take to meet or exceed the
expectations of stakeholders beyond such
measures as revenue, profit and legal
obligations. It covers community investment,
human rights and employee relations,
environmental practices and ethical conduct.’

The All Party Parliamentary Group on Management

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.20

Organisational stakeholders
• Stakeholders can be considered under six
main headings:
– Employees
– Providers of finance
– Consumers
– Community and environment
– Government
– Other organisations and groups

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.21

Values and ethics

• Ethics is:
– To do with good and bad, or right and wrong
– It seeks to understand what makes some
things good and others bad
– In ways that can be generalised to other
cases
– Business ethics is an example of applied
ethics
– It seeks to explore the implications of general
ethics for the conduct of business

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.22

Ethics and corporate social

responsibility
Shareholder-centred view Stakeholder view

• Directors act as agents • A wide range of stakeholder

of the owners groups have an interest in
• There is a duty to the business
maximise owner wealth • These groups should be
• Other tests of ethical taken into account by a
behaviour include business
common decency and • Shareholders are just one
distributive justice such group
• A business may be
accountable to stakeholders
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.23

Business ethics

Ethical questions in business relate to:

• Behaviour towards customers, suppliers,
distributors, and competitors
• The way employees are treated
• The treatment of other stakeholder groups
• The effect on the natural environment
• Conduct in international operations

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.24

No single view of right or wrong

• Deontological ethics:
– emphasises duties, things that must be done
or refrained from, irrespective of the results.
– Goodness or badness is evident in the action
itself.
• Consequentialist ethics:
– The goodness or badness of an act is evident
only in the results.
– A ‘bad’ act can have ‘good’ results.
– The means can be justified by the end result.
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.25

Ethics – further approaches

• Virtue ethics
– based on an analysis of desirable human qualities that
lie between undesirable extremes.

• Ethical relativism
– holds that goodness and badness are largely or
entirely determined by the prevailing values of the day.

• Emotivism
– statements about ethics are essentially statements
about the speaker’s attitudes.
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.26

Codes of ethics

• Codes of Conduct
– Designed to cover the behaviour of members
of the organisation when acting on its behalf.

• Codes of Ethics
– Statements of ideals which relate to
organisational values.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.27

Related legislation
• Human Rights Act 1998
– Liberties enshrined in the European Convention on
Human Rights.
• Public Interest Disclosure Act 1998
– The ‘Whistleblower’s Act’ provides some protection to
those who expose organisational wrongdoing by their
employer.
• Local Government Act 2000
– Requires local authorities to promote high standards
of behaviour in public services.
• The Freedom of Information Act 2000
– Offers public access to information held by public
authorities: the ‘right to know’.
Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007
Slide 14.28

An integrated approach
• Descriptive approach
– draws attention to the values and beliefs of people
from different cultures.
• Normative approach
– identifies sets of values and beliefs as a basis for
making ethical decisions.
• Analytical approach
– attempts to explore the relationship between the
normative values and beliefs and other value systems
or ideologies.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007