Corporate board Flashcards
4 Phases of Strategic Management
Basic financial planning
Forecast-based planning
Externally-oriented planning
Strategic management
Basic financial planning
(Time horizon: 1 year)
Forecast-based planning
(Time horizon: 3 – 5 years)
Externally-oriented planning
(by expert planners)
Strategic management
(constructed with the inputs and
commitments of lover lever managers too)
Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national
markets
Electronic Commerce
Use of the Internet to conduct business transactions.
The basis for competition on a more strategic level rather than the traditional focus on product features and costs
When Outsiders can be considered Insiders
–Affiliated Directors
–Retired Directors
–Family Directors
Codetermination
–The inclusion of a corporation’s employees on its
board of directors
Interlocking Directorates
–Direct Interlocking
–Indirect Interlocking
Nominations & Elections
–Traditional Approach
–Staggered Board Approach
–Traditional Approach
- CEO invitation to membership
- Shareholders approval in the annual proxy statement
- All nominees usually elected
–Staggered Board Approach
•Staggered terms of service/election
Sarbanes-Oxley
–Code of Ethics
–Audit, Nominating, and Compensation Committees all outside directors,
–Stronger criminal penalties for fraud,
–Prohibit public accounting firms from serving as a consultant to firms they audit, and
–Legislate other means to protect investors and others
Corporate Governance
–Review & shaping of strategy –Pressure for corporate performance –Demand for executive stock ownership –Outside directors increasing –Impact of Sarbanes-Oxley
Transformational leaders
–Change agents through vision for change
Change can come from within an individual or
organization, but it is far more likely to come from without.
Transformational leaders 2
In an open system, the economic environment can bring new opportunities as well as added competitive pressures;
technology can change how we live and earn our living;
the political environment may create freedom as well as limits to individual and organizational discretion; and the social environment can place more, or different, expectations on appropriate conduct.
Successful CEO’s
–Strategic vision
–Passion for the company
–Strong communication
–charisma
Executive Leadership
–Strategic vision
–Role model
–Communication of performance standards
–Demonstrates confidence in abilities of followers
HOW DO YOU EVALUATE TOP MANAGEMENT ?
Jackson Martindell
‘‘Excellently Managed Companies’’
Ten Criteria
- The economic function of a company
- The organizational structure of a company
- The health of a company’s earnings growth
- The fairness of a company’s practices to stockholders
- A company’s research and development practices
- The value contributed by a company’s board of directors
- A company’s fiscal policies
- A company’s productive efficiency
- A company’s sales organization
- The abilities of a company’s executives.
Primary Measures of Performance
Balanced Scorecard Approach
Is a measurement tool that uses goals set by managers in four areas to measure a company’s performance.
Is intended to emphasize that all of these areas are important to an organization’s success and that there should be a balance among them
four areas to measure a company’s performance
•Financial
How do we appear to shareholders?
•Customer
How do customers view us?
•Internal processes (internal business perspective)
What we must excel et?
•People / innovation and learning / growth assets
Can we continue to improve and create value?
Corporate Stakeholders:
Affect or are affected by the achievement
of the corporation’s objectives
