Unit 8 Feedback

WEEK 9Read : Chapter 3, Corporate Social Responsibility

and Business Ethics Chapter 13, Strategic Control Chapter 14, Innovation and Entrepreneurship

Complete and upload the Final Project (200 Points)Respond to the Discussion Questions

research recent innovations on the Web. Find a recent innovation that you would consider a breakthrough innovation.

What breakthrough innovation did you select? Why? Describe the risk that was taken. What is the target audience for the innovation? Note the size of the company and any other details that you find are important.

Preview of Reflection Paper (due week 10)

Final Project: Strategic Plan Choose a company and write a strategic

plan for that organization Executive Summary:

Start with an executive summary of your strategic plan.

Company Background: Identify the organization that you have chosen

for your strategic plan. Provide a brief background of this

organization including its products, services and customers.

Include the organization’s strategic planning model (including the history of successes and failures associated with the process).

Mission Statement & Vision Statement: How does the mission, vision and values aid the

organization in reaching its desired end state? Include the mission statement and vision

statement and refer to it in your analysis. Internal Analysis & External Analysis:

Write an assessment of the organization including their ability to accomplish goals and objectives as set in their previous strategic plan(s) and, their ability to respond to internal and external changes and challenges.

SWOT analysis of your plan’s focus area(s): Incorporation of the SWOT findings into clearly

stated goals and objectives for a 3-5 year period focusing on your strategic plan area(s).

You will have 3-4 goals for each year with 3-4 measurable objectives for each goal. Outline your goals and objectives clearly and then provide a narrative explanation for each.

Long Term Objectives: Designate the long term objectives in your

strategic plan. Strategy Analysis and Choice:

Choose the generic strategy and grand strategy. Then chosen and discuss why you have chosen each and how they will fit within the framework of the organization.

Plan Goals and Implementation: Discuss the goals and implementation for the

business strategy. Include in this discussion the organizational structure and the leadership and culture.

Critical Success Factors: Describe the critical success factors.

Controls and Evaluation: List and describe controls and evaluation

methods.

Chapter 3

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Stakeholder Approach

According to the Stakeholder Approach: In defining or redefining the company

mission, strategic managers must recognize the legitimate rights of the firm’s claimants.

In addition to stockholders and employees, these include outside stakeholders affected by the firm’s actions.

3-6

Perceived Stakeholders

Customers Government Stockholders Employees Society

3-7

Steps to Incorporate Stakeholders:1. Identification of

stakeholders 2. Understanding

stakeholders’ specific claims vis-à-vis the firm

3. Reconciliation of these claims and assignment of priorities

4. Coordination of the claims with other elements of the company mission

3-8

Dynamics of Social Responsibility

Inside vs. Outside Stakeholders

Duty to serve society plus duty to serve stockholders

Flexibility is key Firms differ along:

Competitive Position Industry Country Environmental Pressures Ecological Pressures

3-9

Ex. 3.2 Inputs to the Development of Company Mission

3-10

Types of Social Responsibility

Economic – the duty of managers, as agents of the company owners, to maximize stockholder wealth

Legal – the firm’s obligations to comply with the laws that regulate business activities

Ethical – the company’s notion of right and proper business behavior.

Discretionary – voluntarily assumed by a business organization.

3-11

CSR & Profitability Corporate social

responsibility (CSR), is the idea that business has a duty to serve society in general as well as the financial interests of stockholders.

The dynamic between CSR and success (profit) is complex. They are not mutually exclusive, and they are not prerequisites of each other.

3-12

Factors Complicating a Cost-Benefit Analysis of CSR:

1. Some CSR activities incur no dollar costs at all. In fact, the benefits from philanthropy can be huge.

2. Socially responsible behavior does not come at a prohibitive cost.

3. Socially responsible practices may create savings, and, as a result, increase profits.

4. Proponents argues that CSR costs are more than offset in the long run by an improved company image and increased community goodwill.

3-13

CSR Today Priority of American businesses Resurgence of Environmentalism Increasing Buying Power among

Consumers Globalization of Business

3-14

Sarbanes-Oxley Act of 2002 CEO and CFO must certify every

report containing company’s financial statements

Restricted corporate control of executives, acting, firms, auditing committees, and attorneys

Specifies duties of registered public acting firms that conduct audits

Composition of the audit committee and specific responsibilities

Rules for attorney conduct Disclosure periods are stipulated Stricter penalties for violations

3-15

New Corporate Governance Structure Restructuring governance structure in

American corporations Heightened role of corporate internal

auditors Auditors now routinely deal directly with

top corporate officials CEO information provided directly by the

company’s chief compliance and chief accounting officers

3-16

Ex. 3.8 The New Corporate Governance Structure

3-17

CSR’s Effect on Mission Statement

The mission statement embodies what company believes

Managers must identify all stakeholder groups and weigh their relative rights and abilities to affect the firm’s success

3-18

Social Audit

A social audit is an attempt to measure a company’s actual social performance against its social objectives.

The social audit may be used for more than simply monitoring and evaluating firm social performance.

3-19

Satisfying Corporate Social Responsibility

Conflicting pressures on executives

The CSR Debate: centuries old There are mutual advantages

to using Collaborative Social Initiatives (CSIs)

3-20

Ex. 3.10 Continuum of Corporate Social Responsibility Commitments

3-21

Five Principles of Successful CSIs

1. Identify a Long-Term Durable Mission2. Contribute “What We Do”*

*This is the most important principle

3. Contribute Specialized Services to a Large-Scale Undertaking

4. Weigh Government’s Influence 5. Assemble and Value the Total Package of

Benefits

3-22

The Limits of CSR Strategies Some companies have embedded

social responsibility and sustainability commitments deeply in their core strategies.

Larger companies must move beyond the easy options of charitable donations but also steer clear of overreaching commitments.

CSR strategies can also run afoul of the skeptics—the speed of information on the Internet makes this an issue with serious ramifications.

3-23

The Future of CSR CSR is firmly and irreversibly part of the

corporate fabric Corporations will face growing demands

for social responsibility contributions far beyond simple cash or in-kind donations

The public’s perception of ethics in corporate America is near its all-time low

Even when groups agree on what constitutes human welfare, the means they choose to achieve it may differ

3-24

Management EthicsThe Nature of Ethics in Business: Belief that managers will behave in an

ethical manner is central to CSR Ethics – the moral principles that reflect

society’s beliefs about the actions of an individual or a group that are right and wrong

Ethical standards reflect the end product of a process of defining and clarifying the nature and content of human interaction

3-25

Approaches to Questions of Ethics Utilitarian Approach Moral Rights Approach Social Justice Approach

Liberty Principle Difference Principle Distributive-Justice Principle Fairness Principle Natural-Duty Principle

3-26

Code of Business Ethics To help ensure consistence in the

application of ethical standards, an increasing number of professional associations and businesses are establishing codes of ethical conduct.

The following all have ethics codes: Chemists Funeral directors Law Enforcement Agents Hockey Players Librarians Physicians

3-27

Major Trends in Codes of Ethics 1. Increased interest in codifying business

ethics has led to both the proliferation of formal statements by companies and to their prominence among business documents.

2. Such codes used to be found solely in employee handbooks.

3. Companies are adding enforcement measures to their codes.

4. Increased attention by companies in improving employees’ training in understanding their obligations under the company’s code of ethics.

3-28

Chapter 13

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Establishing Strategic Controls Strategic control is concerned with

tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments

Characterized as a form of “steering control”

13-30

Types of Strategic Control

Premise controlStrategic surveillanceSpecial alert controlImplementation control

13-31

Ex. 13.1 Four Types of Strategic Control

Chapter 13 exhibit 1.CLP

13-32

Ex. 13.1 (contd.) Characteristics of the Four Types of Strategic Control

Chapter 13 exhibit 2.CLP

13-33

Premise Control

Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid

Environmental factors Industry factors

13-34

Strategic Surveillance

Strategic surveillance is designed to monitor a broad range of events inside and outside the firm that are likely to affect the course of its strategy

Strategic surveillance must be kept as unfocused as possible

Despite its looseness, strategic surveillance provides an ongoing, broad-based vigilance in all daily operations

13-35

Special Alert Control

A special alert control is the thorough, and often rapid, reconsideration of the firm’s strategy because of a sudden, unexpected event

A drastic event should trigger an immediate and intense reassessment of the firm’s strategy and its current strategic situation

Crisis teams Contingency plans

13-36

Implementation Control Implementation control is designed

to assess whether the overall strategy should be changed in light of the results associated with the incremental actions that implement the overall strategy

The two basic types of implementation control are:

Monitoring strategic thrusts Milestone reviews

13-37

The Balanced Scorecard Methodology An alternative approach linking

operational and strategic control, developed by Harvard Business School professors Robert Kaplan and David Norton, is a system they named the balanced scorecard

The balanced scorecard is a management system (not only a measurement system) that enables companies to clarify their strategies, translate them into action, and provide meaningful feedback

13-38

Ex. 13.5 Integrating Shareholder Value and Organizational Activities across Organizational Levels

13-39

Balanced ScorecardFour perspectives:1. The learning and growth perspective: How

well are we continuously improving and creating value?

2. The business process perspective: What are our core competencies and areas of operational excellence?

3. The customer perspective: How satisfied are our customers?

4. The financial perspective: How are we doing for our shareholders?

13-40

DashboardA user interface that organizes and

presents information from multiple digital sources simultaneously in a user-designed format on the computer screen

13-41

Chapter 14

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Innovation Invention is the creation of new

products or processes through the development of new knowledge or from new combinations of existing knowledge

Innovation is the initial commercialization of invention by producing and selling a new product, service, or process

Product innovation Service innovation Process innovation

14-43

Incremental Innovation Incremental innovation refers to

simple changes or adjustments in existing products, services, or processes

Continuous improvement, what in Japanese is called kaizen, is the process of relentlessly trying to find ways to improve and enhance a company’s products and processes from design through assembly, sales, and service

14-44

Incremental Innovation Toyota’s CCC21: construction of cost

competitiveness for the 21st century

Six Sigma is a rigorous and analytical approach to quality and continuous improvement with an objective to improve profits through defect reduction, yield improvement, improved consumer satisfaction, and best-in-class performance

14-45

10 Essential Elements that Lead to Incremental Innovation

1. Define quality and customer value

2. Develop a customer orientation

3. Focus on the company’s business processes

4. Develop customer and supplier partnerships

5. Take a preventive approach

6. Adopt an error-free attitude

7. Get the facts first8. Encourage every

manager and employee to participate

9. Create an atmosphere of total involvement

10.Strive for continuous improvement

14-46

Breakthrough Innovation

A breakthrough innovation is an innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of those ways

Breakthrough approaches to innovation are inherently more risky than incremental innovation approaches

14-47

Ex. 14.3 From Idea to Profitable Reality

14-48

Idea Factors

Need spotting Solution spotting Mental inventions Random events Market research Trend following

14-49

Risks Associated with Innovation Innovation involves creating something

that doesn’t now exist Long odds for success Market risk Technology risk

14-50

Ex. 14.4 Risks Associated with Innovation

14-51

Treacy’s Useful Points about Managing Risks The point of innovation is growth Get the most from the minimum innovation Incremental product innovations can lock

in existing customers Incremental business process innovations

can generate more revenue gain or cost savings with less risk than radical ones

Radical innovations are often too radical The time to launch breakthrough

innovations is when they are essential to the marketplace

14-52

Ways to Lower Risk

Product teams Cross-functional groups Joint ventures Cooperation with lead users “Do it yourself” innovation Acquiring innovation Outsourcing innovation

14-53

Ideagoras

A web-enabled, virtual marketplace which connects people with unique ideas, talents, resources, or capabilities with companies seeking to address problems or potential innovations in a quick, competent manner.

14-54

Ex. 14.7 Who is the Entrepreneur?

14-55

Entrepreneurship Entrepreneurship is the process of

bringing together creative and innovative ideas and actions with the management and organizational skills necessary to mobilize the appropriate people, money, and operating resources to meet an identifiable need and create wealth in the process

Inventors Promoters Administrators Entrepreneurs

14-56

Three Elements Central to Entrepreneurial Process

1. Opportunity

2. Entrepreneurial Teams

3. Resources

14-57

Resources1. Debt financing is generally obtained

from a commercial bank to pay for property, equipment, and maybe provide working capital

2. Equity financing is usually obtained from one or more of three sources: friendly sources, informal venture investors, or professional venture capitalists

14-58

Intrapreneurship Intrapreneurship, or entrepreneurship

in large companies, is the process of attempting to identify, encourage, enable, and assist entrepreneurship within a large, established company so as to create new products, processes, or services that become major new revenue streams and sources of cost savings for the company

14-59

Pinchot’s 10 Freedom Factors

1. Self-selection2. No hand-offs3. The doer

decides4. Corporate

“slack” 5. End the

“home run” philosophy

6. Tolerance of risk, failure, and mistakes

7. Patient money8. Freedom from

turfness9. Cross-functional

teams10.Multiple options

14-60