Need report based on 9&10 chapters
Suresh-
CHAPTER9.pptx
STRATEGIC CONTROL AND CORPORATE GOVERNANCE
CHAPTER 9
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FLOW OF PRESENTATION
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“TRADITIONAL” AND “CONTEMPORARY” APPROACHES
STRATEGIC CONTROL MECHANISMS
INFORMATIONAL-CONTROL SYSTEMS
BEHAVIORAL-CONTROL SYSTEMS
CORPORATE GOVERNANCE
STRATEGIC CONTROL MECHANISMS
Strategic control involves monitoring performance toward strategic goals and taking corrective action when needed via effective systems.
Informational-control systems
Behavioral-control systems
Corporate governance
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A TRADITIONAL APPROACH TO STRATEGIC CONTROL
With a traditional approach to strategic control, goals and objectives are set, strategies are implemented, and performance is compared to the desired standards.
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A CONTEMPORARY APPROACH TO STRATEGIC CONTROL
Because business conditions typically change rapidly, information controls are needed that can quickly adjust. With contemporary controls, an organization’s assumptions, goals, and strategies are continuously monitored, tested, and reviewed.
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INFORMATIONAL CONTROL AND BEHAVIORAL CONTROL
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Informational control = Is the organization “doing the right things”?
Behavioral control = Is the organization “doing things right” in the implementation of its strategy?
Both types of control are necessary
Effectiveness (“doing the right things”) and efficiency (“doing things right”)
CREATING A RESPONSIVE BUDGET PROCESS
In many companies, budgeting involves a ten-week cycle. Praxair implemented a speedier and more comprehensive system to address this issue. The process begins with the company’s overall goal, articulated by top management and based on the big-picture environment in a maximum of 50 budget lines.
Praxair, Inc. is an American worldwide industrial gases company. It was the largest industrial gases company in North and South America, and the third-largest worldwide by revenue
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BEHAVIORAL CULTURE
Volkswagen was involved in a major scandal. It was revealed that VW had put in place software that would help the firm pass emission tests on their diesel vehicles even though the vehicles produced emissions over legal standards. the scandal cost the firm over $25 billion in fines.
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BEHAVIORAL REWARDS
Nucor Corporation is an American producer of steel. Steel mill workers earn weekly bonuses based on how many steel sheets.
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BOUNDARIES AND CONSTRAINTS
Improve efficiency and effectiveness through rule-based controls. Minimize improper and unethical conduct via:
Explicit rules
Anticorruption and anti-bribery policies
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CONTROL SYSTEM: CORPORATE GOVERNANCE
The strategic control mechanism corporate governance focuses on relationships among
Shareholders
Management (led by the CEO)
Board of Directors
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CORPORATE GOVERNANCE MECHANISMS
Corporate governance mechanisms: aligning the interests of owners and managers through:
A committed and involved Board of Directors
Shareholder activism & active engagement
Managerial rewards and incentives
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CORPORATE GOVERNANCE
David Larcker, who directs Stanford University’s corporate governance program, says companies can measure performance one of three ways: by stock price gains (with or without dividends added), by accounting measures (like profit gains) and by non-financial indexes like customer satisfaction and employee turnover.
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CEO Duality: Is it Good or Bad?
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CORPORATE GOVERNANCE: AN INTERNATIONAL PERSPECTIVE
The United States is characterized by a tradition of “outsider” governance through independent non-executive directors.
Japan and Germany are more stakeholder oriented, have a higher concentration of “insider” governance
Russia and China, on the other hand, are undergoing an insider/outsider mix.
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THANK YOU
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