Lec 03 Flashcards
What does strategy mean?
What business shoudl we be in?
What holds an organization together?
- Employees, managers, and shareholders must strive toward common goals
- By specifying strategic goals -> set priorities regarding which directions to achieve competitive advantage
- Strategic goal planning is based on external and internal analysis
- Strategic goals enable resource allocation
- Help members understand what they work for
- Measurement of performace
Hierarchy of Strategic goals?
- Vision: inspiring long term goal that evokes powerfull mental image
- Mission Statement: Goals that identify an organization’s purpose and basis of competitive advantage
- Strategic Objectives: Goals that operationalize the mission statement and which are measurable
What is the purpose of an organization?
Is to maximize long-term return to its shareholders
What is corporate governance?
The relationship among various participants in determining the direction and performance of corporations
Shareholders involvement in the company?
They participate in the profits without direct responsibility for operations
Corporate governance mechanisme?
- Management
- Shareholders (owners)
- Board of directors (Elected by shareholders to represent their interests)
to avoid opportunistic management:
- Committed Board of directors
- shareholder activism
- > separating ownership from control
What happens to managers who focus solely on shareholder interests?
Prone to make poor short term decisions with negative consequences for the long term performance
What are stakeholders?
Other actors, individuals or groups, inside or outside of the company, that have a stake in and can influence the organization’s performance
Why is identification and adequate management of key stakeholders essential for a company’s success?
The more actively organizations manage stakeholders (involve, observe, collaborate) the more valuable inputs they can gain from them (customer needs, supplier’s needs)
What do you do with these stakeholders?
