Strategic Management Essays, The quality of your answer is much more important than its quantity. You do not need to use in-text citation, nor reference in answering the questions.
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Module5StakeholdersandGovernancev3.pdf
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Strategic position and analysis
Strategic position/ analysis
The environment
Strategic capability
Purposes and expectations
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Modules 2-3
Module 4
Module 5
Opening Case The Australian Grand Prix Corporation and Grand Prix Melbourne 2020
The 2020 Australian Formula 1 Grand Prix was abruptly cancelled on 13 March, the day that was scheduled to be officially opened
https://www.abc.net.au/news/2020-03-13/australian- formula-1-grand-prix-cancelled-over-coronavirus/12052142
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Opening case The Australian Grand Prix Corporation and Grand Prix Melbourne 2020
It was expected to attract about 320,000 fans and generated $1.5 billion for the national economy.
While the Australian GP Corporation was very adamant about the opening of this event, the public was very concerned with the mass gathering that can accelerate the spread of COVID-19.
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Opening Case Melbourne Grand Prix Internal and External Stakeholders
External Stakeholders Funding Bodies
Sponsors State Government
Suppliers/Value Chain Partners Catering
-Ticketing
Regulators State Government Department of Health
Media Broadcasting and TV Customers
Sports Fans, Spectators
General public
Internal Stakeholders
Employees F1 Teams Coaches Managers
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Key questions to be addressed
Who are the stakeholders for this event?
Which stakeholders are powerful?
Which stakeholders have motivation/interest to be involved?
How should these stakeholders be managed?
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Learning objectives
On successful completion of this Module, students will be able to
Undertake a stakeholder analysis to identify their power and interest and manage them accordingly understand corporate governance, key mechanisms, and the role of board of directors Describe corporate social responsibility and link it to stakeholder management
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Three factors influence on strategic purpose
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Who are stakeholders?
Stakeholders are those individuals or groups who depend on an organisation to fulfil their own goals and on whom, in turn, the organisation depends.
Stakeholders are often project- or issue-specific. Different projects or issues usually have a different set of
stakeholders
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What are key stakeholders to organisations?
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Stakeholders can be grouped in several ways
Stakeholders can be grouped by the type or nature of the relationship they have with the organisation and how they affect success and failure
Economic: managers, owners, banks, suppliers, customers Social: Communities, public Environmental: Community, government
Most commonly grouped as internal and external stakeholders
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Internal and external stakeholders
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Internal
Employees
Manager
Owners
Founders
External
SocietySupplier Customer
Government
Creditors
Investors
Advisors
How stakeholders influence strategy?
Stakeholders influence the Purpose of the organisation ( Vision, Mission, Values, Objectives), Formal governance mechanisms Ethical considerations (and CSR)
Which will influence the purpose of the organisation and its strategy
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How to manage stakeholders? Stakeholder Mapping (1/2)
Stakeholder mapping identifies stakeholder power and interest and helps in understanding political priorities.
Power is the ability of individuals or groups to persuade, induce or coerce others into following certain courses of action.
Coercive (regulatory), utilitarian (resources), and normative power
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Sources of power
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How to manage stakeholders? Stakeholder Mapping (2/2)
Interest is often related to the level of effect by the project/issue, financially, environmental or psychologically
Stakeholder interest/motivation includes: Financial stake/interest Environmental interest Emotional interest
Who are the strongest supporters, who are the biggest naysayers?
Attitude: Positive vs negative effect
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Stakeholder mapping: the power/attention (level of interest) matrix
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Stakeholder Mapping More managerial implications
Who are the key blockers or facilitators of strategy?
Do the actual levels of Power and Interest reflect the corporate governance framework?
Is it desirable to try to reposition certain stakeholders?
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Corporate governance
Corporate governance is concerned with the structures and systems of control by which managers are held accountable to those who have a legitimate stake in an organisation.
The growing importance of governance The separation of ownership and management control Corporate failures and scandals (e.g. AMP) Increased accountability to wider stakeholder interests and the need for corporate social responsibility (e.g. green issues)
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The governance chain
The governance chain shows the roles and relationships between different groups involved in governance of an organisation.
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The principal-agent model
Governance can be seen in terms of the principal agent model
Principals pay agents to act on their behalf (e.g. beneficiaries/trustees pay investment managers to manage funds, Boards of Directors pay executives to run a company).
Agents may act in their own self interest Agency theory.
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Main governance mechanisms
Three internal governance mechanism Ownership concentration
Large block shareholders have a high level of motivation to monitor managers behaviour
Executive compensation Linking e ecutives remuneration package (salar , bonus, share options) to the stakeholder s objectives.
Board of directors
External governance mechanism Market for corporate control
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The role of boards
O e a e inde enden l of the management the role of non- executives is crucial.
Be competent to Monitor and control the activities of managers. Offer advice to CEOs Help provide resources to the organisation due to their interlocking directorate
Have time to do their job properly.
Behave appropriately given expectations for trust, role fluidity, collective responsibility, and performance.
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Corporate social responsibility
Corporate social responsibility (CSR) is the commitment by organisations to behave ethicall and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and societ at large .
CSR is concerned with the ways in which an organisation exceeds its minimum obligations to stakeholders specified through regulations.
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Key aspects of CSR
Narrow CSR perspective Environmental Social Economic
Broader CSR perspective Social Environmental Economic Governance
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Questions of CSR
Should organizations be responsible for the following internal aspects
Employee welfare? Working conditions? Job design? Intellectual property?
Should organizations be responsible for the following external aspects
Environmental issues? Products? Markets and marketing? Suppliers? Employment? Community activity? Human rights?
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CSR stances and stakeholder relationships
Laissez- Stance Unilateral
Enlightened Self Interest Interactive
Forum for Social Interaction Partnership
Shaper of Society Multi- 0rganisation Alliances
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Corporate social responsibility stances
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Module Summary (1)
The purpose of an organisation will be influenced by the expectations of its stakeholders.
Stakeholders are those individuals or groups who depend on an organisation to fulfil their own goals and on whom, in turn, the organisation depends.
Stakeholder relationship can be managed using stakeholder mapping
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Module Summary (2)
Corporate social responsibility (CSR) is the commitment by organisations to behave ethicall 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 . Organisations adopt different stances on corporate social responsibility depending on how they perceive their role in society. Individual managers may face ethical dilemmas relating to the purpose of their organisation or actions it takes.
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Next Week
Module 6 Business Strategy Read Textbook Chapter 7
Relevant Assignment 2 task Task 2: Strategy identification
Approach 1: Using value chain analysis emerging strategy Approach 2: Locating organisation s strateg statement intended strategy
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