2. Unit 8 Feedback

3. WEEK 9 Read : Chapter 3, Corporate Social Responsibility and Business Ethics Chapter 13, Strategic Control Chapter 14, Innovation and Entrepreneurship Complete and upload the Final Project (200 Points) Respond to the Discussion Questions research recent innovations on the Web. Find a recent innovation that you would consider a breakthrough innovation. What breakthrough innovation did you select? Why? Describe the risk that was taken. What is the target audience for the innovation? Note the size of the company and any other details that you find are important. Preview of Reflection Paper (due week 10)

4. Final Project: Strategic Plan Choose a company and write a strategic plan for that organization Executive Summary: Start with an executive summary of your strategic plan. Company Background: Identify the organization that you have chosen for your strategic plan. Provide a brief background of this organization including its products, services and customers. Include the organization’s strategic planning model (including the history of successes and failures associated with the process). Mission Statement & Vision Statement: How does the mission, vision and values aid the organization in reaching its desired end state? Include the mission statement and vision statement and refer to it in your analysis. Internal Analysis & External Analysis: Write an assessment of the organization including their ability to accomplish goals and objectives as set in their previous strategic plan(s) and, their ability to respond to internal and external changes and challenges. SWOT analysis of your plan’s focus area(s): Incorporation of the SWOT findings into clearly stated goals and objectives for a 3-5 year period focusing on your strategic plan area(s). You will have 3-4 goals for each year with 3-4 measurable objectives for each goal. Outline your goals and objectives clearly and then provide a narrative explanation for each. Long Term Objectives: Designate the long term objectives in your strategic plan. Strategy Analysis and Choice: Choose the generic strategy and grand strategy. Then chosen and discuss why you have chosen each and how they will fit within the framework of the organization. Plan Goals and Implementation: Discuss the goals and implementation for the business strategy. Include in this discussion the organizational structure and the leadership and culture. Critical Success Factors: Describe the critical success factors. Controls and Evaluation: List and describe controls and evaluation methods.

5. Chapter 3 McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

6. Stakeholder Approach According to the Stakeholder Approach: In defining or redefining the company mission, strategic managers must recognize the legitimate rights of the firm’s claimants. In addition to stockholders and employees, these include outside stakeholders affected by the firm’s actions. 3-6

7. Perceived Stakeholders Customers Government Stockholders Employees Society 3-7

8. Steps to Incorporate Stakeholders: 1. Identification of stakeholders 2. Understanding stakeholders’ specific claims vis-à-vis the firm 3. Reconciliation of these claims and assignment of priorities 4. Coordination of the claims with other elements of the company mission 3-8

9. Dynamics of Social Responsibility Inside vs. Outside Stakeholders Duty to serve society plus duty to serve stockholders Flexibility is key Firms differ along : Competitive Position Industry Country Environmental Pressures Ecological Pressures 3-9

10. Ex. 3.2 Inputs to the Development of Company Mission 3-10

11. Types of Social Responsibility Economic – the duty of managers, as agents of the company owners, to maximize stockholder wealth Legal – the firm’s obligations to comply with the laws that regulate business activities Ethical – the company’s notion of right and proper business behavior. Discretionary – voluntarily assumed by a business organization. 3-11

12. CSR & Profitability Corporate social responsibility (CSR), is the idea that business has a duty to serve society in general as well as the financial interests of stockholders. The dynamic between CSR and success (profit) is complex. They are not mutually exclusive, and they are not prerequisites of each other. 3-12

13. Factors Complicating a Cost-Benefit Analysis of CSR: 1. Some CSR activities incur no dollar costs at all. In fact, the benefits from philanthropy can be huge. 2. Socially responsible behavior does not come at a prohibitive cost. 3. Socially responsible practices may create savings, and, as a result, increase profits. 4. Proponents argues that CSR costs are more than offset in the long run by an improved company image and increased community goodwill. 3-13

14. CSR Today Priority of American businesses Resurgence of Environmentalism Increasing Buying Power among Consumers Globalization of Business 3-14

15. Sarbanes-Oxley Act of 2002 CEO and CFO must certify every report containing company’s financial statements Restricted corporate control of executives, acting, firms, auditing committees, and attorneys Specifies duties of registered public acting firms that conduct audits Composition of the audit committee and specific responsibilities Rules for attorney conduct Disclosure periods are stipulated Stricter penalties for violations 3-15

16. New Corporate Governance Structure Restructuring governance structure in American corporations Heightened role of corporate internal auditors Auditors now routinely deal directly with top corporate officials CEO information provided directly by the company’s chief compliance and chief accounting officers 3-16

17. Ex. 3.8 The New Corporate Governance Structure 3-17

18. CSR’s Effect on Mission Statement The mission statement embodies what company believes Managers must identify all stakeholder groups and weigh their relative rights and abilities to affect the firm’s success 3-18

19. Social Audit A social audit is an attempt to measure a company’s actual social performance against its social objectives. The social audit may be used for more than simply monitoring and evaluating firm social performance. 3-19

20. Satisfying Corporate Social Responsibility Conflicting pressures on executives The CSR Debate: centuries old There are mutual advantages to using Collaborative Social Initiatives (CSIs) 3-20

21. Ex. 3.10 Continuum of Corporate Social Responsibility Commitments 3-21

22. Five Principles of Successful CSIs 1. Identify a Long-Term Durable Mission 2. Contribute “What We Do”* *This is the most important principle 3. Contribute Specialized Services to a Large-Scale Undertaking 4. Weigh Government’s Influence 5. Assemble and Value the Total Package of Benefits 3-22

23. The Limits of CSR Strategies Some companies have embedded social responsibility and sustainability commitments deeply in their core strategies. Larger companies must move beyond the easy options of charitable donations but also steer clear of overreaching commitments. CSR strategies can also run afoul of the skeptics—the speed of information on the Internet makes this an issue with serious ramifications. 3-23

24. The Future of CSR CSR is firmly and irreversibly part of the corporate fabric Corporations will face growing demands for social responsibility contributions far beyond simple cash or in-kind donations The public’s perception of ethics in corporate America is near its all-time low Even when groups agree on what constitutes human welfare, the means they choose to achieve it may differ 3-24

25. Management Ethics The Nature of Ethics in Business: Belief that managers will behave in an ethical manner is central to CSR Ethics – the moral principles that reflect society’s beliefs about the actions of an individual or a group that are right and wrong Ethical standards reflect the end product of a process of defining and clarifying the nature and content of human interaction 3-25

26. Approaches to Questions of Ethics Utilitarian Approach Moral Rights Approach Social Justice Approach Liberty Principle Difference Principle Distributive-Justice Principle Fairness Principle Natural-Duty Principle 3-26

27. Code of Business Ethics To help ensure consistence in the application of ethical standards, an increasing number of professional associations and businesses are establishing codes of ethical conduct. The following all have ethics codes: Chemists Funeral directors Law Enforcement Agents Hockey Players Librarians Physicians 3-27

28. Major Trends in Codes of Ethics 1. Increased interest in codifying business ethics has led to both the proliferation of formal statements by companies and to their prominence among business documents. 2. Such codes used to be found solely in employee handbooks. 3. Companies are adding enforcement measures to their codes. 4. Increased attention by companies in improving employees’ training in understanding their obligations under the company’s code of ethics. 3-28

29. Chapter 13 McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

30. Establishing Strategic Controls Strategic control is concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments Characterized as a form of “steering control” 13-30

31. Types of Strategic Control Premise control Strategic surveillance Special alert control Implementation control 13-31

32. Ex. 13.1 Four Types of Strategic Control 13-32

33. Ex. 13.1 (contd.) Characteristics of the Four Types of Strategic Control 13-33

34. Premise Control Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid Environmental factors Industry factors 13-34

35. Strategic Surveillance Strategic surveillance is designed to monitor a broad range of events inside and outside the firm that are likely to affect the course of its strategy Strategic surveillance must be kept as unfocused as possible Despite its looseness, strategic surveillance provides an ongoing, broad-based vigilance in all daily operations 13-35

36. Special Alert Control A special alert control is the thorough, and often rapid, reconsideration of the firm’s strategy because of a sudden, unexpected event A drastic event should trigger an immediate and intense reassessment of the firm’s strategy and its current strategic situation Crisis teams Contingency plans 13-36

37. Implementation Control Implementation control is designed to assess whether the overall strategy should be changed in light of the results associated with the incremental actions that implement the overall strategy The two basic types of implementation control are: Monitoring strategic thrusts Milestone reviews 13-37

38. The Balanced Scorecard Methodology An alternative approach linking operational and strategic control, developed by Harvard Business School professors Robert Kaplan and David Norton, is a system they named the balanced scorecard The balanced scorecard is a management system (not only a measurement system) that enables companies to clarify their strategies, translate them into action, and provide meaningful feedback 13-38

39. Ex. 13.5 Integrating Shareholder Value and Organizational Activities across Organizational Levels 13-39

40. Balanced Scorecard Four perspectives: 1. The learning and growth perspective: How well are we continuously improving and creating value? 2. The business process perspective: What are our core competencies and areas of operational excellence? 3. The customer perspective: How satisfied are our customers? 4. The financial perspective: How are we doing for our shareholders? 13-40

41. Dashboard A user interface that organizes and presents information from multiple digital sources simultaneously in a user-designed format on the computer screen 13-41

42. Chapter 14 McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

43. Innovation Invention is the creation of new products or processes through the development of new knowledge or from new combinations of existing knowledge Innovation is the initial commercialization of invention by producing and selling a new product, service, or process Product innovation Service innovation Process innovation 14-43

44. Incremental Innovation Incremental innovation refers to simple changes or adjustments in existing products, services, or processes Continuous improvement, what in Japanese is called kaizen, is the process of relentlessly trying to find ways to improve and enhance a company’s products and processes from design through assembly, sales, and service 14-44

45. Incremental Innovation Toyota’s CCC21: construction of cost competitiveness for the 21st century Six Sigma is a rigorous and analytical approach to quality and continuous improvement with an objective to improve profits through defect reduction, yield improvement, improved consumer satisfaction, and best-in-class performance 14-45

46. 10 Essential Elements that Lead to Incremental Innovation 1. Define quality and customer value 2. Develop a customer orientation 3. Focus on the company’s business processes 4. Develop customer and supplier partnerships 5. Take a preventive approach 6. Adopt an error-free attitude 7. Get the facts first 8. Encourage every manager and employee to participate 9. Create an atmosphere of total involvement 10. Strive for continuous improvement 14-46

47. Breakthrough Innovation A breakthrough innovation is an innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of those ways Breakthrough approaches to innovation are inherently more risky than incremental innovation approaches 14-47

48. Ex. 14.3 From Idea to Profitable Reality 14-48

49. Idea Factors Need spotting Solution spotting Mental inventions Random events Market research Trend following 14-49

50. Risks Associated with Innovation Innovation involves creating something that doesn’t now exist Long odds for success Market risk Technology risk 14-50

51. Ex. 14.4 Risks Associated with Innovation 14-51

52. Treacy’s Useful Points about Managing Risks The point of innovation is growth Get the most from the minimum innovation Incremental product innovations can lock in existing customers Incremental business process innovations can generate more revenue gain or cost savings with less risk than radical ones Radical innovations are often too radical The time to launch breakthrough innovations is when they are essential to the marketplace 14-52

53. Ways to Lower Risk Product teams Cross-functional groups Joint ventures Cooperation with lead users “Do it yourself” innovation Acquiring innovation Outsourcing innovation 14-53

54. Ideagoras A web-enabled, virtual marketplace which connects people with unique ideas, talents, resources, or capabilities with companies seeking to address problems or potential innovations in a quick, competent manner. 14-54

55. Ex. 14.7 Who is the Entrepreneur? 14-55

56. Entrepreneurship Entrepreneurship is the process of bringing together creative and innovative ideas and actions with the management and organizational skills necessary to mobilize the appropriate people, money, and operating resources to meet an identifiable need and create wealth in the process Inventors Promoters Administrators Entrepreneurs 14-56

57. Three Elements Central to Entrepreneurial Process 1. Opportunity 2. Entrepreneurial Teams 3. Resources 14-57

58. Resources 1. Debt financing is generally obtained from a commercial bank to pay for property, equipment, and maybe provide working capital 2. Equity financing is usually obtained from one or more of three sources: friendly sources, informal venture investors, or professional venture capitalists 14-58

59. Intrapreneurship Intrapreneurship, or entrepreneurship in large companies, is the process of attempting to identify, encourage, enable, and assist entrepreneurship within a large, established company so as to create new products, processes, or services that become major new revenue streams and sources of cost savings for the company 14-59

60. Pinchot’s 10 Freedom Factors 1. Self-selection 2. No hand-offs 3. The doer decides 4. Corporate “slack” 5. End the “home run” philosophy 6. Tolerance of risk, failure, and mistakes 7. Patient money 8. Freedom from turfness 9. Cross-functional teams 10. Multiple options 14-60