Ch0221 - 18th Aug
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2-1
Chapter 2: Stakeholders and the Corporate Mission
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-2
Preview ✔Stakeholders ✔The Mission Statement ✔Corporate Governance and Strategy ✔Strategy and Ethics
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-3
Figure 2.1: Stakeholders and the Enterprise External Stakeholders • Customers • • • • •
Suppliers Governments Unions Local Communities General Public
The Firm Contributors Inducements
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-4
Figure 2.1: Stakeholders and the Enterprise External Stakeholders • Customers • • • • •
Suppliers Governments Unions Local Communities General Public
The Firm Contributors Inducements Contributors
Inducements
Internal Stakeholders • Stockholders • Employees • Managers • Board Members Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-5
Stakeholder Impact Analysis • Identify Stakeholders • Identify Stakeholders’ Interests and Concerns • Identify Resulting Claims Stakeholders Are Likely to Make • Identify Most Important Stakeholders (From Organization's Perspective) • Identify the Resulting Strategic Challenges Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-6
Mission Statement • Defined • Built Around Three Main Elements: – –
Overall “Vision” or “Mission” Key Philosophical Values Management Is Committed to and That Influence the Decisions They Make – Statement of Key Goals Necessary to Attain the Mission That Are Consistent With the Values Above Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-7
Mission Statement of Seattle City Light* Vision To be the most customer-focused, competitive, efficient, innovative, a nd environmentally responsible co mmunity owned utility in the Unite d States by the year 2000 *Adapted from Figure 2.2
Continued on next slide . . . Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-8
Mission Statement of Seattle City Light (Continued) Values ✔Customer First ✔Investment in Employees ✔Safety ✔Financial Responsibility
✔Accountabilit y ✔Community ✔Environmenta l Stewardship ✔Excellence ✔Integrity Continued on next slide . . . Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-9
Mission Statement of Seattle City Light (Continued) Goals ✔Customer Satisfaction ✔Employee Satisfaction ✔Safety ✔Financial Responsibility Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-10
The Mission Statement (Continued) • Vision or Mission • Strategic Intent • Customer Orientation and Business Definition • Consumer-oriented vs. Product-oriented
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-11
Figure 2.3: Abell’s Framework for Defining the Business Who is being satisfied?
What is being satisfied?
Customer Groups
Customer Needs
Source: Derek F. Abell, Determining the Business: the Starting Point of Strategic Planning (Englewood Cliffs, N.J.: PrenticeHall) 1980. p. 17.
Definition of Business
How are customer needs satisfied? Distinctive Competencies Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-12
The Mission Statement (Continued)
• Values
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-13
Johnson & Johnson Credo* • First Responsibility Is to Those Who Use J&J Products • Next Come Its Employees • Next, the Communities in Which the Employees Live and Work • Its Final Responsibility Is to Its Stockholders *Adapted from Figure 2.4 Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-14
The Mission Statement (Continued)
• Values • Goals
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-15
The Mission Statement (Continued) • Goal Characteristics – – – –
Precise and Measurable Address Important Issues Challenging, but Realistic Time Period Specified
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-16
The Mission Statement (Continued) • Maximizing Shareholder Returns • Short-Term Problem • Long-Term Goals
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-17
The Corporate Governance Problem • On-the-Job Consumption
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-18
The Corporate Governance Problem (Continued) • Excessive Pay
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-19
The Corporate Governance Problem (Continued) • Empire Building
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-20
Figure 2.5: Tradeoff Between Profitability and Growth Rate PMAX Profitability P1
P2
G0
G1
Growth Rate
G2
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-21
• Corporate Governance Mechanisms – Board of Directors
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-22
• Corporate Governance Mechanisms – Stock-Based Compensation
ST OC K
S T OC K Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-23
• Corporate Governance Mechanisms – Corporate Takeovers • Takeover Constraint • Corporate Raiders • Greenmail
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-24
• Corporate Governance Mechanisms
BO ND S
– Exchange of Equity for Debt in a Leveraged Buyout CK O ST
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-25
Strategy and Ethics • Purpose of Business Ethics • Shaping the Organization’s Ethical Climate • Thinking Through Ethical Problems
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-26
Figure 2.6: Model of Ethical Decision Making STEP 1 Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-27
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-28
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
STEP 3
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Establish Moral Intent
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-29
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
STEP 3
STEP 4
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Establish Moral Intent
Engage In Ethical Behavior
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-30
Strategy and Ethics (Continued) • Purpose of Business Ethics • Shaping the Organization’s Ethical Climate • Thinking Through Ethical Problems • Corporate Social Responsibility
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Chapter Summary
2-31
✔STAKEHOLDERS ✔THE MISSION ENETRNANCE EMO AT ST ✔CORPORATE G V AND STRATEGY ✔STRATEGY AND ETHICS
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Chapter 2: Stakeholders and the Corporate Mission
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-2
Preview ✔Stakeholders ✔The Mission Statement ✔Corporate Governance and Strategy ✔Strategy and Ethics
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-3
Figure 2.1: Stakeholders and the Enterprise External Stakeholders • Customers • • • • •
Suppliers Governments Unions Local Communities General Public
The Firm Contributors Inducements
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-4
Figure 2.1: Stakeholders and the Enterprise External Stakeholders • Customers • • • • •
Suppliers Governments Unions Local Communities General Public
The Firm Contributors Inducements Contributors
Inducements
Internal Stakeholders • Stockholders • Employees • Managers • Board Members Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-5
Stakeholder Impact Analysis • Identify Stakeholders • Identify Stakeholders’ Interests and Concerns • Identify Resulting Claims Stakeholders Are Likely to Make • Identify Most Important Stakeholders (From Organization's Perspective) • Identify the Resulting Strategic Challenges Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-6
Mission Statement • Defined • Built Around Three Main Elements: – –
Overall “Vision” or “Mission” Key Philosophical Values Management Is Committed to and That Influence the Decisions They Make – Statement of Key Goals Necessary to Attain the Mission That Are Consistent With the Values Above Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-7
Mission Statement of Seattle City Light* Vision To be the most customer-focused, competitive, efficient, innovative, a nd environmentally responsible co mmunity owned utility in the Unite d States by the year 2000 *Adapted from Figure 2.2
Continued on next slide . . . Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-8
Mission Statement of Seattle City Light (Continued) Values ✔Customer First ✔Investment in Employees ✔Safety ✔Financial Responsibility
✔Accountabilit y ✔Community ✔Environmenta l Stewardship ✔Excellence ✔Integrity Continued on next slide . . . Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-9
Mission Statement of Seattle City Light (Continued) Goals ✔Customer Satisfaction ✔Employee Satisfaction ✔Safety ✔Financial Responsibility Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-10
The Mission Statement (Continued) • Vision or Mission • Strategic Intent • Customer Orientation and Business Definition • Consumer-oriented vs. Product-oriented
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-11
Figure 2.3: Abell’s Framework for Defining the Business Who is being satisfied?
What is being satisfied?
Customer Groups
Customer Needs
Source: Derek F. Abell, Determining the Business: the Starting Point of Strategic Planning (Englewood Cliffs, N.J.: PrenticeHall) 1980. p. 17.
Definition of Business
How are customer needs satisfied? Distinctive Competencies Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-12
The Mission Statement (Continued)
• Values
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-13
Johnson & Johnson Credo* • First Responsibility Is to Those Who Use J&J Products • Next Come Its Employees • Next, the Communities in Which the Employees Live and Work • Its Final Responsibility Is to Its Stockholders *Adapted from Figure 2.4 Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-14
The Mission Statement (Continued)
• Values • Goals
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-15
The Mission Statement (Continued) • Goal Characteristics – – – –
Precise and Measurable Address Important Issues Challenging, but Realistic Time Period Specified
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-16
The Mission Statement (Continued) • Maximizing Shareholder Returns • Short-Term Problem • Long-Term Goals
1
#
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-17
The Corporate Governance Problem • On-the-Job Consumption
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-18
The Corporate Governance Problem (Continued) • Excessive Pay
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-19
The Corporate Governance Problem (Continued) • Empire Building
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-20
Figure 2.5: Tradeoff Between Profitability and Growth Rate PMAX Profitability P1
P2
G0
G1
Growth Rate
G2
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-21
• Corporate Governance Mechanisms – Board of Directors
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-22
• Corporate Governance Mechanisms – Stock-Based Compensation
ST OC K
S T OC K Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-23
• Corporate Governance Mechanisms – Corporate Takeovers • Takeover Constraint • Corporate Raiders • Greenmail
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
The Corporate Governance Problem (Continued)
2-24
• Corporate Governance Mechanisms
BO ND S
– Exchange of Equity for Debt in a Leveraged Buyout CK O ST
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-25
Strategy and Ethics • Purpose of Business Ethics • Shaping the Organization’s Ethical Climate • Thinking Through Ethical Problems
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-26
Figure 2.6: Model of Ethical Decision Making STEP 1 Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-27
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-28
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
STEP 3
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Establish Moral Intent
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-29
Figure 2.6: Model of Ethical Decision Making STEP 1
STEP 2
STEP 3
STEP 4
Evaluate Decision From Ethical Standpoint. Identify Affected Stakeholders. Are Stakeholder Rights Violated
Evaluate Decision From Ethical Standpoint. Moral Principles
Establish Moral Intent
Engage In Ethical Behavior
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
2-30
Strategy and Ethics (Continued) • Purpose of Business Ethics • Shaping the Organization’s Ethical Climate • Thinking Through Ethical Problems • Corporate Social Responsibility
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Chapter Summary
2-31
✔STAKEHOLDERS ✔THE MISSION ENETRNANCE EMO AT ST ✔CORPORATE G V AND STRATEGY ✔STRATEGY AND ETHICS
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
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