MGT499- W1 Post and Response
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Roth4_SM_Lecture_PPT_C02_Final.pptxCHAPTER 2
Strategic Leadership
Managing the Strategy Process
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Be sure to see the NEW Teacher’s Resource Manual located in the Connect Library under Instructor’s Resources.
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The AFI Strategy Framework
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Exhibit 1.3
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Learning Objectives
LO 2-1 Explain the role of strategic leaders and what they do.
LO 2-2 Outline how you can become a strategic leader.
LO 2-3 Describe the roles of corporate, business, and functional managers in strategy formulation and implementation.
LO 2-4 Evaluate top-down strategic planning, scenario planning, and strategy as planned emergence.
LO 2-5 Assess the relationship between stakeholder strategy and sustainable competitive advantage.
LO 2-6 Conduct a stakeholder impact analysis.
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What Is Strategic Leadership?
Successful use of power and influence
Directing the activities of others
Pursuing an organization’s goals
Enabling organizational competitive advantage
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In leading Facebook to become the most successful social network and one of the most valuable technology companies worldwide, Sheryl Sandberg has clearly demonstrated effective strategic leadership. As chief operating officer, Sandberg has tremendous position power because she is the second in command at Facebook and reports only to CEO Mark Zuckerberg. Sandberg’s business development skills are legend: She transformed a money-losing outfit into a titan of online advertising, with some $25 billion in annual revenues. She designed and implemented Facebook’s business model (how it makes money). In particular, Sandberg has attracted high-profile advertisers by demonstrating how Facebook can place precisely targeted and timed ads when it matches what it knows about each user, based on that person’s social networks, with the advertisers’ targets. Less quantifiable, but perhaps an even more valuable contribution, Sandberg provides “adult supervision and a professional face” for a firm populated by socially awkward computer geeks.
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Leaders Can Positively Impact Performance
Mark Zuckerberg – Facebook
Elon Musk – Tesla and SpaceX
Jeff Bezos – Amazon
Oprah Winfrey – HARPO
Sheryl Sandberg – Facebook
Angela Ahrendts – Apple
Mary Barra – General Motors
Howard Schultz - Starbucks
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Leaders Can Destroy Shareholder Value
Ken Lay – Enron
John Sculley – Apple
Bernard Ebbers – WorldCom
Richard Fuld – Lehman Brothers
Richard Wagoner – General Motors
Robert Nardelli – The Home Depot and Chrysler
Ron Johnson – JC Penney
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While the effect of strategic leaders may vary, they clearly matter to firm performance.
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What Do Strategic Leaders Do?
Exhibit 2.1
SOURCE: Data from O. Bandiera, A. Prat, and R. Sadun (2012), “Management capital at the top: evidence from the time use of CEOs,” London School of Economics and Harvard Business School Working Paper.
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CEOs spend most of their time “interacting—talking, cajoling, soothing, selling, listening, and nodding—with a wide array of parties inside and outside the organization.” Surprisingly given the advances in information technology, CEOs today spend most of their time in face-to-face meetings. They consider face-to-face meetings most effective in getting their message across and obtaining the information they need.
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How Do You Become a Strategic Leader?
Leadership actions reflect:
Age, education, and career experiences
Personal interpretations of situations
Strong leadership: innate abilities and learning
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Upper Echelon’s Theory
Organizational outcomes reflect the values of the top management team.
Outcomes include:
Strategic choices
Performance levels
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The theory states that strategic leaders interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences. Their leadership actions reflect characteristics of age, education, and career experiences, filtered through personal interpretations of the situations they face. The upper-echelons theory favors the idea that effective strategic leadership is the result of both innate abilities and learning.
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Great Companies
Based on the bestseller Good to Great
Written by Jim Collins
Over 1,000 companies were analyzed.
Great companies had things in common:
Sustained competitive advantage
Stock returns of almost 7x the general market
Consistent patterns of leadership
Summarized in the Level 5 Leadership Pyramid
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A lot has happened since the book was published over a decade ago. Today only a few of the original 11 stayed all that great, including Kimberly-Clark and Walgreens. Some fell back to mediocrity; a few no longer exist in their earlier form or at all. Anyone remember Circuit City or Fannie Mae? Let’s agree that competitive advantage is hard to achieve and even harder to sustain. But his study remains valuable for its thought-provoking observations.
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Level-5 Leadership Pyramid
Exhibit 2.2
(Adapted to compare corporations and entrepreneurs) SOURCE: Adapted from J. Collins (2001), Good to Great: Why Some Companies Make the Leap . . . And Others Don’t (New York: HarperCollins), 20.
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In the bestseller Good to Great, Jim Collins explored over 1,000 good companies to find 11 great ones. Collins found consistent patterns of leadership among the top companies, as pictured in the Level-5 leadership pyramid. Collins found that all the companies he identified as great were led by Level-5 executives. So if you are interested in becoming an ethical and strategic leader, the leadership pyramid suggests the areas of growth required.
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Progression of Leaders Through the Pyramid
Each level builds upon the previous one.
Prior levels must be mastered before moving on.
Each level helps individuals develop the capacity for greater success.
A Level-5 executive:
Works to help the organization succeed
Helps others reach their full potential
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As detailed in the Chapter Case, Facebook CEO Mark Zuckerberg highly values Sheryl Sandberg, the COO. Here he says why: “She could go be the CEO of any company that she wanted, but I think the fact that she really wants to get her hands dirty and work, and doesn’t need to be the front person all the time, is the amazing thing about her. It’s that low-ego element, where you can help the people around you and not need to be the face of all the stuff.”14 Clearly, Sandberg is a Level-5 executive: She builds enduring greatness at Facebook through a combination of skill, willpower, and humility.
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The Strategy Process
Strategy Formulation:
The choice of strategy
Where and how to compete
Strategy Implementation:
Organization, coordination, integration
How work gets done
The execution of strategy
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The Strategy Process Across Levels
Corporate Strategy
Where to compete?
Industry, markets, and geography
Business Strategy
How to compete?
Cost leadership, differentiation, or value innovation
Functional Strategy
How to implement a chosen business strategy?
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Formulation and Implementation Across Levels
Exhibit 2.3
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Although we generally speak of the firm in an abstract form, individual employees make strategic decisions—whether at the corporate, business, or functional level
Instructors:
The digital companion to this book McGraw-Hill Connect has an application exercise on this section of the textbook. It builds student confidence on strategy across levels.
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Corporate Strategy
Decide in which industries, markets, and geographies their companies should compete.
Corporate executives:
Create synergies across SBUs.
Decide whether to enter or exit industries and markets.
Set strategic objectives.
Allocate scarce resources among SBU.
Monitor performance.
Make adjustments to the portfolio as needed.
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Corporate executives at headquarters formulate corporate strategy. Think of corporate executives including Sheryl Sandberg (Facebook), Jeffrey Immelt (GE), Virginia Rometty (IBM), Mukesh Ambani (Reliance Industries), Ursula Burns (Xerox), or Marilyn Hewson (Lockheed Martin). Corporate executives need to decide in which industries, markets, and geographies their companies should compete.
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Business Strategy
Standalone division of corporate
Profit and loss responsibility
Work with corporate to determine business strategy
Cost leadership
Differentiation
Value innovation
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Example: Rosalind Brewer, CEO of Sam’s Club, pursues a somewhat different business strategy from the strategy of parent company Walmart. By offering higher-quality products and brand names with bulk offerings and by prescreening customers via required Sam’s Club memberships to establish creditworthiness, Brewer is able to achieve annual revenues of roughly $60 billion. This would place Sam’s Club in the top 50 in the Fortune 500 list. Although as CEO of Sam’s Club, Brewer is responsible for the performance of this strategic business unit, she reports to Walmart’s CEO, C. Douglas McMillon, who as corporate executive oversees Walmart’s entire operations, with close to $500 billion in annual revenues and over 11,000 stores globally.
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Functional Strategy
Within each strategic business unit:
Accounting
Finance
Human resources
Product development
Operations
Manufacturing
Marketing
Customer service
Functional managers are responsible for decisions and actions within the function.
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Each functional manager is responsible for decisions and actions within a single functional area. These decisions aid in the implementation of the business-level strategy, made at the level above.
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Three Approaches to Organizational Strategy
Strategic planning
A formal, top-down planning approach
Scenario planning
A formal, top-down planning approach
Strategy as planned emergence
Begins with a strategic plan, but is less formal
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This order also reflects how these approaches were developed. The prosperous decades after World War II resulted in tremendous growth of corporations. As company executives needed a way to manage ever more complex firms more effectively, they began to use strategic planning.
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Top Down Strategic Planning (1 of 2)
Data-driven strategy process
Top management attempts to program future success through
Analysis of:
Prices
Costs
Margins
Market demand
Head count
Production runs
Five year plans and correlated budgets
Performance monitoring
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Top-Down Strategic Planning (2 of 2)
Exhibit 2.4
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Top-down strategic planning more often rests on the assumption that we can predict the future from the past. The approach works reasonably well when the environment does not change much.
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Shortcomings of the Top-Down Approach
May not adapt well to change
Formulation separate from implementation
Information flows one-way
Leaders’ future vision can be wrong
Example: Apple
Steve Jobs predicted customers needs
Apple didn’t engage in market research
Since Cook took over, their planning process has evolved
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Under its co-founder and long-time CEO, Steve Jobs, Apple was one of the few successful tech companies using a top-down strategic planning process. Jobs felt that he knew best what the next big thing should be. Under his top-down, autocratic leadership, Apple did not engage in market research, because Jobs firmly believed that “people don’t know what they want until you show it to them.” This traditional top-down strategy process served Apple well as it became the world’s most valuable technology company. Since Jobs’ death, however, Apple’s strategy process has become more flexible under CEO Tim Cook, and the company is now trying to incorporate the possibilities of different future scenarios and bottom-up strategic initiatives. Isaacson, W. (2011), Steve Jobs (New York: Simon & Schuster). See also: Isaacson, W. (2012), “The real leadership lessons of Steve Jobs,” Harvard Business Review, April.
Jobs, S., “There is sanity returning,” BusinessWeek, May 25, 1998. “CEO Tim Cook pushes employee-friendly benefits long shunned by Steve Jobs,” The Wall Street Journal, November 12, 2012.
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Scenario Planning (1 of 2)
Asks “what if” questions:
Top management envisions different scenarios
Then they derive strategic responses
Optimistic and pessimistic futures planned
Considerations can include:
New laws
Demographic shifts
Changing economic conditions
Technological advances
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Scenario Planning (2 of 2)
Exhibit 2.5
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To model the scenario-planning approach, place the elements in the AFI strategy framework in a continuous feedback loop, where analysis leads to formulation to implementation and back to analysis. This image conveys the dynamic and iterative method of scenario planning.
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Approaches to Scenario Planning
Obtain input from different levels and functions
R&D, manufacturing, and marketing and sales
Determine how to compete situationally
Example: UPS
What if the price of a barrel of oil was $35, or $100, or even $200?
Attach probabilities to different future states:
Highly likely vs. unlikely
85% vs. 2% likely
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Black Swan Events
The high impact of a highly improbable event.
In the past, most people assumed that all swans were white.
When they first encountered swans that were black, they were surprised.
Examples:
Security breach of an IT system
Accounting Scandals: Enron
Real Estate Bubble: 2008 financial crisis
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Questions to Ask in Scenario Planning
What resources and capabilities do we need to compete successfully in each scenario?
What strategic initiatives should we put in place to respond to each scenario?
How can we shape our expected future environment?
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Typical scenario planning addresses both optimistic and pessimistic futures. For instance, strategy executives at UPS identified a number of issues as critical to shaping its future competitive scenarios: (1) big data analytics; (2) being the target of a terrorist attack, or having a security breach or IT system disruption; (3) large swings in energy prices, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; (4) fluctuations in exchange rates or interest rates; and (5) climate change. Managers then formulate strategic plans they could activate and implement should the envisioned optimistic or pessimistic scenarios begin to appear.
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Strategy as Planned Emergence
Top Down and Bottom Up
Bottom-up strategic initiatives emerge
Evaluated & coordinated by management
Relies on data, plus:
Personal experience
Deep domain expertise
Front line employee insights
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Example: many changes have occurred in the online retail industry
Some companies have flourished: Amazon and eBay
Others have been forced to adjust: Best Buy, Home Depot, JCPenney
Others are now out of business: Circuit City and Radio Shack
Instructors:
The digital companion to this book McGraw-Hill Connect has an interactive case exercise on this section of the textbook. It builds student confidence on emergent strategy using a short case about 3M (LO 2-6).
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Key Points About Strategy
Intended strategy
The outcome of a rational and structured top-down strategic plan
Realized strategy
Combination of intended and emergent strategy
Emergent strategy
Any unplanned strategic initiative
Bubbles up from the bottom of the organization
Can influence and shape a firm’s overall strategy
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Intended vs. Realized Strategy
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Exhibit 2.6. This figure illustrates how parts of a firm’s intended strategy are likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.
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Strategic Initiatives
Any activity a firm pursues to explore and develop
New products and processes
New markets
New ventures
Can bubble up from deep within a firm through:
Autonomous actions
Serendipity
Resource-allocation process (RAP)
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For example, the new delivery-by-drone project at Amazon.com was conceived of and invented by a low-level engineer. Even relatively junior employees can come up with strategic initiatives that can make major contributions if the strategy process is sufficiently open and flexible.
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Autonomous Actions, Serendipity, and the Resource Allocation Process (RAP)
Autonomous Actions
Strategic initiatives undertaken by employees
In response to unexpected situations
Serendipity
Random events, surprises, coincidences
Has an effect on strategic initiatives
Resource-Allocation Process (RAP)
How a firm allocates resources based on policy
Helps shape realized strategy
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There are dozens of examples where serendipity had a crucial influence on the course of business and entire industries. The discovery of 3M’s Post-it Notes or Pfizer’s Viagra, first intended as a drug to treat hypertension, are well known.35 Less well known is the discovery of potato chips.36 The story goes that in the summer of 1853, George Crum was working as a cook at the Moon Lake Lodge resort in Saratoga Springs, New York. A grumpy patron ordered Moon resort’s signature fried potatoes. These potatoes were served in thick slices and eaten with a fork as was in the French tradition. When the patron received the fries, he immediately returned them to the kitchen, asking for them to be cut thinner. Crum prepared a second plate in order to please the patron, but this attempt was returned as well. The third plate was prepared by an annoyed Crum who, trying to mock the patron, sliced the potatoes sidewise as thin as he could and fried them. Instead of being offended, the patron was ecstatic with the new fries and suddenly other patrons wanted to try them as well. Crum later opened his own restaurant and offered the famous “Saratoga Chips,” which he set up in a box and some customers simply took home as a snack to be eaten later. Today, PepsiCo’s line of Frito-Lay’s chips are a multibillion-dollar business.
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Companies with Good Strategy Are Valuable
Companies with a good strategy:
Provide products or services to consumers at an affordable price
Make a profit
Can provide benefits such as:
Education, infrastructure, public safety, health care, clean water and air
Strategic failure is expensive
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Example of how Strategic failure can be expensive: once a leading technology company, Hewlett-Packard was known for innovation, resulting in superior products. The “HP way of management” included lifetime employment, generous benefits, work/life balance, and freedom to explore ideas, among other perks. However, HP has not been able to address the competitive challenges of mobile computing or business IT services effectively. As a result, HP’s stakeholders suffered. Shareholder value was destroyed massively. The company also had to lay off tens of thousands of employees. Its customers no longer received the innovative products and services that made HP famous.
Instructors:
The digital companion to this book McGraw-Hill Connect has an application exercise on this section of the textbook. It builds student confidence on stakeholders (LO 1-4).
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Stakeholders
Organizations, groups, and individuals
Can affect or are affected by a firm’s actions
Have an interest in the performance and survival of the firm
Internal stakeholders:
Stockholders, employees (including executives, managers, and workers), and board members
External stakeholders:
Customers, suppliers, alliance partners, creditors, unions, communities, media, and governments at various levels
©McGraw-Hill Education.
All stakeholders make specific contributions to a firm, which in turn provides different types of benefits to different stakeholders. Employees contribute their time and talents to the firm, receiving wages and salaries in exchange. Shareholders contribute capital in the hope that the stock will rise and the firm will pay dividends. Communities provide real estate, infrastructure, and public safety. In return, they expect that companies will pay taxes, provide employment, and not pollute the environment. The firm, therefore, is embedded in a multifaceted exchange relationship with a number of diverse internal and external stakeholders.
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Internal and External Stakeholders in an Exchange Relationship with the Firm
Exhibit 2.8
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If any stakeholder withholds participation in the firm’s exchange relationships, it can negatively affect firm performance. The aerospace company Boeing, for example, has a long history of acrimonious labor relations, leading to walk-outs and strikes. This in turn has not only delayed production of airplanes but also raised costs. Borrowers who purchased subprime mortgages are stakeholders (in this case, customers) of financial institutions. When they defaulted in large numbers, they threatened the survival of these financial institutions and, ultimately, of the entire financial system.
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Stakeholder Strategy
An integrative approach to managing a diverse set of stakeholders to gain and sustain competitive advantage
Stakeholder management benefits firm performance
Stakeholders more cooperative
Lower business transaction cost
Greater adaptability and flexibility
More predictable returns
Stronger reputation
©McGraw-Hill Education.
Satisfied stakeholders are more cooperative and thus more likely to reveal information that can further increase the firm’s value creation or lower its costs.
Increased trust lowers the costs for firms’ business transactions.
Effective management of the complex web of stakeholders can lead to greater organizational adaptability and flexibility.
The likelihood of negative outcomes can be reduced, creating more predictable and stable returns.
Firms can build strong reputations that are rewarded in the marketplace by business partners, employees, and customers.
Example: Target Corporation has gathered numerous awards that reflect its strong relationship with its stakeholders. It has been named on lists such as best places to work, most admired companies, most ethical companies, best in class for corporate governance, and grassroots innovation. Since its founding, Target has contributed 5 percent of its profits to education, the arts, and social services in the communities in which it operates and reached the milestone of contributing $4 million per week in 2012. To demonstrate its commitment to minorities and women, Target launched a program to bring minority- and women-owned businesses into its supply chain. Volunteerism and corporate giving strengthen the relationship Target has with its employees, consumers, local communities, and suppliers. These actions, along with many others, can help Target gain competitive advantage as a retailer as long as the benefits Target accrues from its stakeholder strategy exceed the costs of such programs.
Kapner, S., L. Stevens and S. Germano, “Wal-Mart and Target take fight to Amazon for holiday sales,” The Wall Street Journal, November 28, 2014.
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Stakeholder Impact Analysis (1 of 2)
A decision tool
Helps strategic leaders can recognize, prioritize, and address the needs of different stakeholders.
Important stakeholder attributes:
Power: control over actions
Legitimacy: valid concerns
Urgency: require immediate attention
©McGraw-Hill Education.
A stakeholder has power over a company when it can get the company to do something that it would not otherwise do.
A stakeholder has a legitimate claim when it is perceived to be legally valid or otherwise appropriate.
A stakeholder has an urgent claim when it requires a company’s immediate attention and response.
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Stakeholder Impact Analysis (2 of 2)
Exhibit 2.9
©McGraw-Hill Education.
Examples:
Boeing opened a new airplane factory in South Carolina to move production away from its traditional plant near Seattle, Washington. South Carolina is one of 28 states in the United States that falls under the right-to-work law in which employees in unionized workplaces are allowed to work without being required to join the union. In contrast to its work force in Washington state, the South Carolina plant is nonunionized, which should lead to fewer work interruptions due to strikes and Boeing hopes to higher productivity and improvements along other performance dimensions (like on-time delivery of new airplanes). In 2014, Boeing announced that its new 787 Dreamliner jet would be exclusively built in its nonunionized South Carolina factory.
Many companies incentivize top executives by paying part of their overall compensation with stock options. They also turn employees into shareholders through employee stock ownership plans (ESOPs). These plans allow employees to purchase stock at a discounted rate or use company stock as an investment vehicle for retirement savings. For example, Alphabet, Coca-Cola, Facebook, Microsoft, Southwest Airlines, Starbucks, Walmart, and Whole Foods all offer ESOPs
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The Pyramid of Corporate Social Responsibility
Exhibit 2.10
SOURCE: Adapted from A. B. Carroll (1991), “The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders,” Business Horizons, July-August: 42.
©McGraw-Hill Education.
Philanthropic responsibilities are often subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society. Over the years, Microsoft’s corporate philanthropy program has donated more than $3 billion in cash and software to people who can’t afford computer technology.
Instructors:
The digital companion to this book McGraw-Hill Connect has an application exercise on this section of the textbook. It builds student confidence on corporate and societal responsibilities (LO 1-5).
According to the CSR perspective, managers need to realize that society grants shareholders the right and privilege to create a publicly traded stock company. Therefore, the firm owes something to society. Moreover, CSR provides managers with a conceptual model that more completely describes a society’s expectations and can guide strategic decision making more effectively. For an insightful but critical treatment of this topic, see the 2003 Canadian documentary film The Corporation.
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Appendices Descriptions of Visual Graphics to Support Student Accessibility Needs
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Appendix 1 The AFI Strategy Framework
The important inside circle is titled "Gaining and Sustaining a Competitive Advantage" that is at the very center of the image, with five different circles on the outside of it. Arrows go back and forth from the center circle to each of the five outer circles. The five outer circles are labeled: (1) Getting Started, (2) External and Internal Analysis, (3) Formulation: Business Strategy, (4) Formulation, Corporate Strategy, and (5) Implementation.
Each of these outer five circles have a brief description beside them to explain what the circle means:
Under the first outer circle titled "Getting Started," it says: Part 1, Strategy Analysis, "What is Strategy (Chapter 1)" and "Strategic Leadership: Managing the Strategy Process (Chapter 2)."
Under the second outer circle titled "External and Internal Analysis," it says: Part 1, Strategy Analysis, "External Analysis: Industry Structure, Competitive Forces and Strategic Groups (Chapter 3)," "Internal Analysis: Resources, Capabilities and Core Competencies (Chapter 4)," and "Competitive Advantage, Firm Performance, and Business Models (Chapter 5)."
Under the third outer circle titled "Formulation: Business Strategy," it says: Part 2, Strategy Formulation, "Business Strategy: Differentiation, Cost Leadership and Integration (Chapter 6)" and "Business Strategy, Innovation and Entrepreneurship (Chapter 7)."
Under the fourth outer circle titled "Formulation: Corporate Strategy," it says: Part 2, Strategy Formulation, "Corporate Strategy: Vertical Integration and Diversification (Chapter 8)," "Corporate Strategy: Strategic Alliances, Mergers and Acquisitions (Chapter 9)," and "Global Strategy: Competing Around the World (Chapter 10)."
Under the fifth outer circle titled "Implementation," it says: Part 3, Strategy Implementation, "Organizational Design: Structure, Culture and Control (Chapter 11)," and "Corporate Governance and Business Ethics (Chapter 12)."
©McGraw-Hill Education.
Appendix 2 What Do Strategic Leaders Do?
This image is of a pie chart, which shows that CEOs typically spend, on average, 67 percent of their time in meetings, 13 percent working alone, 7 percent on e-mail, 6 percent on phone calls, 5 percent on business meals, and 2 percent on public events such as ribbon-cutting for a new factory.
©McGraw-Hill Education.
Appendix 3 Level-5 Pyramid
This image shows a pyramid that progresses from Level 1 at the lowest part of the pyramid to Level 5 at the highest part of the pyramid. The levels as they progress are
Level 1: Highly Capable Individual
Level 2: Contributing Team Member
Level 3: Competent Manager
Level 4: Effective Leader
Level 5: Executive
©McGraw-Hill Education.
Appendix 4 Strategy Formulation and Implementation Across Levels
This image shows several boxes in an organization-chart format. At the top level, is "Headquarters Corporate Strategy: Where to Compete?," below that box are three different boxes, Option 1 Cost Leadership, Option 2 Differentiation, Option 3 Value Innovation, each of which say "Business Strategy, How to Compete?." After choosing one of these options, the next level is labeled Business Function 1, Business Function 2, and Business Function n 4. Each of these four boxes say "Functional Strategy: How to Implement Business Strategy?"
©McGraw-Hill Education.
Appendix 5 Top-Down Strategic Planning
This image depicts three boxes. The top box is titled "Analysis" and contains three bullets titled Vision, Mission, and Values, External Analysis, and Internal Analysis. The middle box is titled "Formulation" and contains three bullets titled Corporate Strategy, Business Strategy, Functional Strategy. The bottom box is titled "Implementation" and contains two bullets titled Structure, Culture and Control, and Corporate Governance and Business Ethics.
©McGraw-Hill Education.
Appendix 6 Scenario Planning
The elements in the AFI strategy framework are placed in a continuous feedback loop, where Analysis leads to Formulation to Implementation and back to Analysis. This image elaborates on this simple feedback loop to show the dynamic and iterative method of scenario planning.
©McGraw-Hill Education.
Appendix 7 Intended vs. Realized Strategy
This image shows a big arrow along a line that follows three phases of Analysis, Formulation and Implementation. At the beginning of this line is a box that says "Intended Strategy" which is a top-down strategic plan. Coming out of the intended strategy is unpredictable events, and feeding into the strategy is bottom-up emergent strategy including autonomous actions, serendipity, and the resource allocation process. This activity results in the realized strategy at the end of the graphic.
©McGraw-Hill Education.
Appendix 8 Internal and External Stakeholders in an Exchange Relationship with the Firm
The graphic shows the flow of the relationship between stakeholders and the firm.
The external stakeholders are customers, suppliers, alliance partners, creditors, unions, communities, governments, and media
The internal stakeholders are employees, stockholders, and board members.
Benefits flow from the frim to both of these groups of stakeholders as the firm receives contributions from both.
©McGraw-Hill Education.
Appendix 9 Stakeholder Impact Analysis
The graphic lists the steps of stakeholder impact analysis.
Step 1: Who are our stakeholders?
Step 2: What are our stakeholders’ interests and claims?
Step 3: What opportunities and threats do our stakeholders present?
Step 4: What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders.
Step 5: What should we do to effectively address the stakeholder concerns?
©McGraw-Hill Education.
Appendix 10 The Pyramid of Corporate Social Responsibility
The pyramid’s is economic responsibilities: gain and sustain competitive advantage.
The next level is legal responsibilities: laws and regulations are society’s codified ethics; define minimum acceptable standard.
The next level is ethical responsibilities: do what is right, just, and fair.
The tip of the pyramid is philanthropic responsibilities: corporate citizenship.
©McGraw-Hill Education.
