BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Lecture Week 7 Purpose and Culture (Readings –Chapters 4 & 5 – see handbook for details)

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Expectations and Purposes - Outline Corporate governance – a brief overview Organisational stakeholders Stakeholder mapping Organisational Culture and the Cultural web Vission, Mission & Strategic Objectives Communication of organisational purposes

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Complex role that people play in strategy development Strategy is about –what people expect an organisation to achieve –what influence people can have over an organisation’s purposes Role of People

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Expectations and Purposes Exhibit 4.1

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Vision, Mission, Objectives & Strategies A model showing how Vision and Mission fit in with the strategy process (Thomson J.L – See Strategist Download Chapter 2)

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 What is Path Dependency? Path dependency is where early events and decisions establish policy paths that have lasting effects on subsequent events and decisions.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Exhibit 5.3 Path Dependency and Lock-In

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Communicating Organisational Purposes Corporate Values –Core values, the principles guiding actions Vision/Mission –Statement of overriding direction and purpose of organisation Objectives –Statement of specific outcomes to be achieved Financial, market-based Sometimes measurable Relevant

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 What are Mission and Vision Statements? A mission statement provides employees and stakeholders with clarity about the overall purpose of the organisation. A vision statement is concerned with what the organisation aspires to be.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Strategic Vision Although less popular than mission statements firms may also produce a “Vision Statement” --- intended to reflect the firms vision of some future state. A lack of published vision statement does not necessarily indicate a lack of vision. The inputs to Vision are, the standards of behaviour and values and beliefs which define and drive the organisation (Thomson 2001 & 2006). Entrepreneurs often have a vision for the organisation, but which may not be articulated.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Mission A ‘Mission’ is a general expression of the overriding premise of the organisation, and should be in line with the values and expectations of major stakeholders. It is likely to be concerned with the overall purpose of the organisation, its scope and its boundaries. It is sometimes referred to in terms of the apparently simple, but actually quite challenging question: ‘What business are we in?'.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 To be useful Mission Statements: Should be visionary and likely to exist for a significant period of time. It should form the backcloth against which more detailed objectives and strategies can be developed, delivered and changed over time. Should clarify the main purposes of the organisation, and the reasons why the organisation exists. Should describe the organisation's main activities and the position it wishes to attain in its industry. There should be a statement of the key values, particularly regarding attitudes towards stakeholder groups. The organisation should have the intention and capability to live up to the mission statement.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Strategic and Financial Objectives It is usual for companies to set objectives in the following two main ways: 1. Financial Objectives, –e.g. earnings per share, return on shareholders' funds (quantified). 2. Strategic Objectives, –e.g. market share increase (quantified), higher product quality (quantified), greater customer satisfaction (partially quantified), employee job satisfaction (supported by research survey but not necessarily quantified). Conflicting Objectives/Expectations, –Often there is conflict between objectives – for example, growth objectives are often in conflict with the short-term requirement to provide returns to shareholders, the owners of the company. –Taking money out of the business today will not provide the investment for the future. Objectives therefore need to reach a compromise between short and long-term.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 What 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. External vs. Internal Stakeholders

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Conflict of Expectations Short-term profitability versus growth Family control versus professional managers Financial independence versus share/loan funding Public share ownership demands openness and accountability Cost efficiency may mean job losses Mass markets may compromise quality Mass public service provision versus specialist services Multinational division loyalty versus host country loyalty

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 What is Stakeholder Mapping? Stakeholder mapping identifies stakeholder expectations and power and helps in understanding political priorities.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Use of Stakeholder Mapping Do actual levels of interest and power reflect corporate governance framework? Who are key blockers and facilitators of a strategy? Is repositioning of stakeholders desirable/feasible? Which are the key stakeholders whose interest and power must be maintained to support the strategy?

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Sources and Indicators of Power Within organisationsExternal stakeholders Status Claim on resourcesResource dependence RepresentationNegotiating arrangements Symbols See exhibit 4.10 in Johnson et al. (2008) for Sources of power- internal and external

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Business Ethics – the Social expectations of organisations Macro level – from Laissez Fair to shapers of society Ethical stance of the organisation in society Corporate social responsibility (CSR) is concerned with the ways in which an organisation exceeds its minimum obligations to stakeholders specified through regulation.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Four Possible Ethical Stances Exhibit 4.7

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 BP and The Texas City Disaster

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 What is Path Dependency? Path dependency is where early events and decisions establish policy paths that have lasting effects on subsequent events and decisions.

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Exhibit 5.3 Path Dependency and Lock-In

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Organisational Culture “The basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisation’s view of itself and its environment” Schein 1997 “The basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisation’s view of itself and its environment” Schein 1997

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Exhibit 5.4 Cultural Frames of Reference The Individual National Organisational field Functional/ divisional Organisational

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Organisational Field Organisations within a filed have –Common business environment –Common norms and values –Shared set of assumptions A recipe of organisational purpose & shared vision –Dangers Institutional managers may be blinkered Transitions between sectors diffciult – why? –Legitimacy Need to meet the expectations in terms of assumptions, behaviours and strategies

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Exhibit 5.5 Culture in Four Layers

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Exhibit 5.7 The Cultural Web of an Organisation Stories Symbols Structures Power structures Control systems Rituals/ routines Paradigm

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 The Cultural Web: some useful questions Exhibit 4.12

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Further readings Further readings in workbbok – also Blackboard and essential readings in chapters 5 and 6 of exploring corporate strategy

BLB PJConsidine Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008/2011 Key Points Expectations and purposes influenced by: –Corporate governance, stakeholder expectations, business ethics and culture Stakeholders’ power and influence –Stakeholder mapping Ethical stance –Corporate social responsibility Culture –Levels of cultural frames of reference –Layers of values, beliefs, behaviours and taken-for-granted assumptions –Cultural web Communication of organisational purposes –Values, mission, objectives – see Strategist download chapter 6