Chapter 6 - Purpose and stakeholders Flashcards
Purpose
Concerned with the value an organisation seeks to create for its stakeholders, potentially including vith financial and non-financial forms of value.
* Purpose defines what a strategy is for: in other words, what the organisation is trying to achieve with its strategy.
Stakeholders
The individuals or groups that depend on an organisation to fulfil their own goals and on whom, in turn, the organisation depends.
* Stakeholders vary in what they seek
* Effective governance is essential to keeping purpose and strategy aligned with the goals of the stakeholders upon which the organisation depends.
Economic stakeholders
Including suppliers, customers, distributors, banks and owners (shareholders). Economically orientated, concerned for profits, prices or similar values in centrum.
Social/political Stakeholders
Policy-makers, local councils, regulators and government agencies that may influence strategies and how they are formed. Complex and diverse values
Technological Stakeholders
Key adopters, standards agencies and ecosystem members supplying complementary products or services. Innovation and information-sharing values
Community and society stakeholders
Groups affected by organisations: those who live close to a facility
Internal stakeholders
specialised departments, local offices and factories, or employees at different levels in the hierarchy. Share values of society, but also an economic interest.
Stakeholder mapping
Identifies stakeholder power and attention in order to strategic priorities
Power
The ability of stakeholders to persuade, indice or coerce others into following particular strategies
Attention
How closely stakeholders monitor the activites of an organisation
Corporate Social Responsibility
is the commitment by organisations to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.
Laissez-faire view
An extreme CSR approach where organisations should focus on making profit and privide for the interests of shareholders. No direct responisbility to any other stakeholders beyond what is prescribed by law
Enlightened self-interest
A CSR approach, which is guided by recognition of the potential long-term financial benefit to the shareholder of well-managed relationships with other stakeholders. Social responsibility makes good business sense.
Forum for stakeholders interaction
CSR approach which incorporates multiple stakeholder interests and expectations rather than just shareholders as influences on organisational purposes and strategies.
Shapers of society
CSR approach where financial consideration is secondary importance. Visionary organisations seeking to transform society and social norms. NGOs, public sector organisations and social entrepreneurs who found new organisations that earn revenues but pursue a specific social purpose.
Hybrid organisations
Combines values and strucutres that would normally not go together
Virtuous circle model
A way that that hybrid organisations manage these combinations of valuse and structures. Making sure that financial objectives continue to serve social objectives
* Social and financial feed into each other in a self-reinforcing circle.
* Pursuit of social goals provide economic benefit (happier employees)
→ Generating more profits→ Can be invested into advancing social goals still further.
Dynamic balance model
A different way of balancing the challenges of hybridity, where strategy must balance between opposing values (social and financial), adjusting to circumstances over time. The model has three ways of managing the tensions between social and financial objectives:
1. Establishing organisational guardrails: top managers can install structures or systems that safeguard the social aspects of purpose.
2. Dynamic decision-making: decision makers recognise the importance of responding flexibly to changing circumstances, altering the balance between financial and social goals over time. Repeatedly readjusts as circumstances require.
3. Both/and leadership: leaders need to be committed to both social and financial aspects of organisational purpose, not the guardians of just one or the other. CPO (Chief Purpose Officer) both financial performance and social purpose.
Organisational governance
is concerned with the structuresand systems of control by which managers are held accountable to those who have a legitimate stake in an organisation. Organisations are held accountable for their purpose by systems of corporate governance
Governance chain
Shows the roles and reltaionships of different groups involved in the governance of an organisation
