Strategic Business Plan Report

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4/12/2016

MONASH BUSINESS SCHOOL

MGF/B3684 Business Strategy

From Shareholders to Stakeholders

Dr Sarah Lindsay

MONASH BUSINESS SCHOOL

Challenging business strategy and the

sustainable competitive advantage

Technology

Size Shareholders

MONASH BUSINESS SCHOOL

http://www.news.com.au/technology/apple/apple-still-strong-at-40-but-are-the-best-years-behind-it/news-story/95a73a32f3c6357be4730f9286927d0a

Globalisation Innovation

Stakeholders – shareholders, customers, suppliers, employees, local communities and governments

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MONASH BUSINESS SCHOOL

The Tracker ID on the Thankyou product enables buyers to see the exact details of the project the product is assigned to fund.

thankyou gives 100% of the profits from their products to helping people in need – nearly $4m since 2008

social enterprise: a business that trades for positive social impact

MONASH BUSINESS SCHOOL

A sustainable enterprise through the triple bottom line

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”

http://www.sellingsustainabilitysolutions.com/what‐is‐sustainability/ and www.ey.com

MONASH BUSINESS SCHOOL

Fastest growth in the investment sector…

http://probonoaustralia.com.au/news/2013/07/responsible‐investment‐funds‐top‐performers/ http://responsibleinvestment.org/wp‐content/uploads/2015/08/2015_Benchmark_Factsheet_AUST_FINAL.pdf

2014 RIAA $650b+

invested in responsible

funds in Australia

Deliver equal to but mostly

better returns than the average mainstream

fund in Australia

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MONASH BUSINESS SCHOOL

A fashion revolution – shoppers want to feel good about what they buy

https://theconversation.com/ethical‐fashion‐shoppers‐are‐scorned‐by‐others‐and‐the‐headlines‐dont‐help‐54403

Some consumers want to be ignorant about their purchases, in this case jeans and a backpack, and they also negatively judge those who do seek out ethical products. Ohio State University research

Fashion is a social activity—purchases are made with an awareness of 'fitting in' by wearing attire appropriate for the situation and to coincide with one's social group.

By enhancing the distinction between 'ethical' and 'non‐ethical', consumers not only have to consider their own personal image but also how these distinctions align with their social group

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Melbourne Ethical and Sustainable Fashion Show on December 5–6

http://www.sostella.com.au/

"I've been growing and building this labour of love for 12 years," “building the label, getting the right clientele, and promoting the difference between So Stella — a hand‐made ethical label — as opposed to something mass‐produced," she said. Michelle said in today's "throw‐away" society, she would like to see more of a focus on sustainability in the fashion industry.

http://www.abc.net.au/news/2015‐10‐26/michelle‐kent‐so‐stella‐ethical‐fashion/6882120

http://www.teenvogue.com/story/emma‐watson‐sustainable‐style‐green‐carpet‐challenge

The green carpet challenge

Locally made

http://ethicalclothingaustralia.org.au/

MONASH BUSINESS SCHOOL

• Ethics concerns principles of right or wrong conduct

• Business Ethics

The application of general ethical principles to the actions and decisions of

businesses and the conduct of their personnel.

• Business ethics are not materially different from ethical principles in

general because business actions have to be judged in the context of

society’s standards of right and wrong.

Business Ethics

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The Drivers of Unethical Strategies and Business Behaviour

Unethical Strategies and

Business Behaviors

Faulty Oversight and Self Dealing

Pressure for Short‐term Performance

A Weak or Corrupt Ethical

Environment/Culture

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Consequences of Ethically Questionable Strategies

Sizable civil fines and

stockholder lawsuits

Devastating image and

public relations hits

Sharp stock price drops as investors lose confidence

Criminal indictments

and convictions

When Strategies Fail Ethical Standards

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Costs of Ethical Wrongdoing

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• The Moral Case for an Ethical Strategy:

Because a strategy that is unethical is morally wrong and reflects

badly on the character of the firm’s personnel.

• The Business Case for Ethical Strategies:

Because an ethical strategy can be both good business and serve the

self‐interest of shareholders.

Why Should Company Strategies Be Ethical?

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Ethical Standards

The School of Ethical Universalism

Integrated Social Contracts Theory

The School of Ethical Relativism

Sources for Ethical Standards

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• Ethical Universalism

Holds that common understandings across multiple cultures and countries about

what constitutes right and wrong give rise to universal ethical standards that

apply to all societies, all firms, and all businesspeople.

• Effect on Business Ethics

Whether a business‐related action is right or wrong is judged by universal

standards.

School of Ethical Universalism

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• Ethical Relativism

Holds that differing beliefs, customs, and behavioural norms across countries and

cultures give rise to multiple sets of standards of what is ethically right or wrong.

• Effect on Business Ethics

Whether business‐related actions are right or wrong depends on local ethical

standards.

School of Ethical Relativism

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Examples of Ethical Relativism Issues

The Use of Underage Labor

The Payment of Bribes and Kickbacks

Relativism Equates to Multiple Sets of Standards

The Use of Local Morality to Guide Ethical

Behavior

Variations in Ethical Standards

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• Provides a middle‐ground balance between universalism and relativism.

• Posits that the collective views of multiple societies form universal (first order)

ethical principles that all persons have a contractual duty to observe in all

situations.

• Within the contract, cultures or groups can specify locally ethical (second‐order)

actions.

• Effects on Ethical Standards:

– Adherence to universal ethical norms takes precedence over local norms.

– A local custom is not ethical if it violates universal ethical norms.

– Application of codes of ethics should first follow universal standards with

allowance for local ethical diversity and influence.

Integrative Social Contracts Theory

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Is a firm’s duty to operate in an honourable manner, provide good

working conditions for employees, encourage workforce diversity, be a

good steward of the environment, and actively work to better the

quality of life in the local communities where it operates and in society

at large.

• https://www.ahri.com.au/awards/ahri‐awards/hall‐of‐fame2/2013/2013‐

organisational‐winners/ian‐kiernan‐award‐for‐corporate‐social‐responsibility

Corporate Social Responsibility (CSR)

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The 5 Components of CSR Strategy

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The Triple Bottom Line

2 1

ProfitProfit PeoplePeople

PlanetPlanet

https://www.facebook.com/HP/app_338708549522319

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• Sustainability

Is the relationship of a firm to its environment and its use of natural resources.

• Sustainable Business Practices

Are those practices of a firm that meet the needs of the present without

compromising the ability to meet the needs of the future.

Sustainability & Sustainable Business Practices

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• Environmental Sustainability Strategy

– Consists of the firm’s deliberate actions to:

• Protect the environment.

• Provide for the longevity of natural resources.

• Maintain ecological support systems for future generations.

• Guard against ultimate endangerment of the planet.

Sustainability and Sustainable Business Practices

Pursuing a Sustainable CSR Strategy in the Firm’s Value Chain Activities

Business Case: Competitive Advantage

Moral Case: Stakeholder

Benefits

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The Moral Case for CSR and Environmentally Sustainable Business Practices

Operate ethically and legally

Provide good work conditions for employees

Be a good environmental

steward

Display good corporate citizenship

The Implied Social Contract: “To Do the Right Thing”

http://www.unilever.co.uk/sustainable‐living‐2015/

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• Increased reputation and buyer patronage

• Reduced risk of reputation‐damaging incidents

• Lower turnover costs and enhanced employee recruiting and workforce

retention

• Increased revenue enhancement opportunities due to support of CSR and

sustainability

• CSR and sustainability best serve long‐term interests of shareholders

• * Porter, M.E., & Kramer, M. R. (2006). Strategy and Society the link between Competitive

Advantage and Corporate Social Responsibility. Harvard Business Review, December, 78‐92.

The Business Case for CSR and Environmentally Sustainable Business Practices

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United Nations Global Compact

https://www.unglobalcompact.org/what‐is‐gc/mission/principles

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• Established in July 2000, the United Nations Global Compact is both a policy

platform and a practical framework for businesses that are committed to aligning

their operations and strategies with ten universally accepted principles in the areas

of human rights, labour, environment and anti‐corruption.

• 70% of Global Compact companies are taking action to advance broader United

Nations goals and issues – utilizing core business, social investment, advocacy and

partnership strategies.

• 8,000 companies world‐wide + 4,000 non‐businesses (including Monash)

United Nations Global Compact