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STRATEGIC MANAGEMENT,TERMS & CONCEPTS,

BUSINESS ETHICS

Those actions (or by default,

inactions) which determine thelong term future of anorganization.

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CHARACTERISTICS OFSTRATEGIC ACTIONS AND

DECISIONS

Infrequent

ConsequentialPrecedent -- and policy -- setters

Multifunctional

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SOME EXAMPLES

Miller Beer and Philip Morris

Lockheed and the Electra

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HIERARCHY OF STRATEGY

Corporate

Business

Functional

Ideally, these play togetherRealistically, theres often

conflict

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SOME EXAMPLES OFCONFLICT

Clara Peller and Wendys

Ford, Kawasaki, and socialresponsibility

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WHAT IS THE PURPOSE OF ABUSINESS?

Profit?

Revenue?

Jobs?

Meet societys needs?

Something else?

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JAMES INVESTMENTRESEARCH, INC.

Firm Objectives

Provide highest quality service to our clients Good performance

Lots of communications

Provide economic or such other advice/assistance as possible

Provide good work environment for our employees Compensate staff at high levels

Stable and growing client base

Low expenditures except for salaries

High firm profits to be shared with employees

Technological leadership in investment research State of the art equipment

Emphasis on innovation and creativity

Strong professional reputation of the firm and its personnel Honesty and integrity

Competence

Quality of work

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THE CONCEPT OFSTAKEHOLDER

Old view: maximize stockholder value

New view: one maximizes stockholder

value over the long run by balancing thebenefits to all stakeholders:

customers neighbors

employees stockholders

management vendors

government competitors

& more . . .

Some examples . . .

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STRATEGIC DECISIONMAKERS

Boards of Directors

Senior management

Roles, skills, tasks

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BOARD OF DIRECTORS

Elected by shareholders

Mission:

Protect interests of owners Hire -- and fire -- top management

Approve management initiatives

Trends: Codetermination

Board responsibility

Board activism

Strong owners, e.g., mutual funds

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MANAGEMENT TASKSDIFFER WITH LEVEL

Supervisor Manager CEO

Technical

Interpersonal

Conceptual

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STRATEGIC PLAN: A VITALTOOL

Seven parts:Evaluate current performance

Scan external environment: Identifyopportunities and threats

Scan internal environment: Identify

strengths and weaknesses

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SEVEN PARTS (cont.)

Analyze strategic factors: SWOT

Develop and select alternativestrategies

Implement the strategy

Evaluate and control the strategy

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BUSINESS ETHICS

Is this just something taught in schools?

Some real life cases: Fords Pinto

Manvilles asbestos

Financial houses: Barings, Saloman Brothers

Tobacco

Handguns

International Fabricating Corporation

Impacts? Financial? People?

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WHY BE ETHICAL?

1. Moral reasons

2. Self-interest3. Financial well-being

4. Retain autonomy

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AN ETHICAL MODEL

From The Power of EthicalManagement, by Peale andBlanchard:1. Is it legal?

2. Is it balanced?

3. How does it make you feel aboutyourself?

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MOVING FROM INDIVIDUALTO CORPORATE

1. Hire correctly

2. Set standards

3. Model, or What you can learnfrom your dog.

4. Talk

5. Institutionalize into decision-making

6. Reward, and sanction