MBT Learning Guide Supplement                        An Introduction                                            to        ...
Table of Contents   Why does the MBT integrate business and technology? ................ 3   What do we mean by ‘business’...
Why does the MBT integrate business and technology?With so many graduate business programs in the marketplace, why does UN...
Do non-commercial organisations engage in ‘business’?Some of you will no doubt work in the non-commercial world – in gover...
Why do we need to study technology?Few people today have had their working lives, or indeed their non-working lives,untouc...
Why the ‘T’ in the MBT?The following quote from Burgelman et al (2004, p. 4) may help us to define this:         Technolog...
What do we understand ‘technology’ to mean?Before we go on, let’s pause here and point out that many of the readings you w...
What are the key principles of corporate strategy?As you begin your MBT Program, it will be helpful if you have a basic un...
What are the different levels of strategy?Strategy can be developed at many levels – in a multi-layered organisation there...
What sorts of issues do we need to analyse?Before developing strategy and tactics, the decision makers of any organisation...
What about analysing the micro environment?Michael Porter, whom we have mentioned earlier, developed a number of widely us...
Broadening these questions out:How easy is it for a new competitor to enter the market? Is the potential threat of anew co...
What is Porter’s value chain?The other key concept that Porter advanced was the notion that organisations competeand gain ...
A quick summary of corporate strategyThis has been a very quick introduction to a number of concepts and frameworksaround ...
What do we mean by ‘corporate governance’?In this context, we will take corporate governance to mean oversight by people o...
What significant business concepts relate to corporate governance?In your MBT courses you will be exposed to the contempor...
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Corporate strategy

  1. 1. MBT Learning Guide Supplement An Introduction to Business and Technology By Craig Tapper The aim of this supplement is to provide a conceptual entry point for new MBT students into the key theories, models and management thinkers in contemporary business. It explains why ‘business’ and ‘technology’ are given equal prominence in the MBT; introduces the basics in relation to strategy: what it is and why organisations need to operate strategically; and briefly outlines how the rapid rate of technological change and development impacts on contemporary business. It is hoped that you find this introductory document valuable. It should provide you with a basic understanding of the key concepts that underpin all MBT learning, and thereby assist you in grasping the higher level material in the courses themselves. Craig is the Course Coordinator for the MBT capstone course GBAT9113 Strategic Management of Business and Technology. He has consulted to major companies and government departments and has lectured in a range of postgraduate programs in the areas of strategy, business planning, marketing and management.1-Dec-05
  2. 2. Table of Contents Why does the MBT integrate business and technology? ................ 3 What do we mean by ‘business’? .................................................. 3 Do non-commercial organisations engage in ‘business’? .............................. 4 Why do we need to study technology? .......................................... 5 Why the ‘T’ in the MBT?.......................................................................... 6 How is the ‘T’ integrated in the MBT? ....................................................... 6 What do we understand ‘technology’ to mean?............................. 7 What are the key principles of corporate strategy?....................... 8 Who is Michael Porter? ........................................................................... 8 What are the different levels of strategy?.................................................. 9 What is a strategic plan? ........................................................................ 9 What sorts of issues do we need to analyse? ............................................10 What about analysing the micro environment?..........................................11 What is Porter’s Five Forces Model?.........................................................11 What is Porter’s value chain? .................................................................13 A quick summary of corporate strategy ...................................... 14 What is corporate governance, and why is it important? ............ 14 What do we mean by ‘corporate governance’? ..........................................15 What does corporate governance involve?................................................15 What significant business concepts relate to corporate governance? ............16 Conclusion .................................................................................. 16 References ..........................................................................................16LG Supplement Page 2 of 16 An Introduction to Business and Technology
  3. 3. Why does the MBT integrate business and technology?With so many graduate business programs in the marketplace, why does UNSW offerpostgraduate level education in ‘business and technology’? Why are so many peopleenrolling in the MBT Program? Why is it important to recognise the role of bothbusiness and technology in management education?The answers lie not in what is ‘wrong’ with alternative business courses, but in whatthey typically don’t adequately address – how the rapidly changing technologicalenvironment so significantly influences the management of business today, and will doso into the future.Let’s start by being clear about what we mean by these two terms – ‘business’ and‘technology’.What do we mean by ‘business’?Many people confuse the study of business with the study of commerce. ‘Commerce’ isthe term applied to organising and managing transactions that involve the exchange ofgoods and services in return for money, where the goal or intent of the organisationsthat establish themselves in the market is to attract and engage in enough of theseexchanges to make ‘profits’ that will help them achieve financial success. In acommercial organisation, the profits are then used to repay investors and shareholders,pay creditors, and invest in further developing the organisation to achieve its goals andpurpose into the future.So if business does not equate to commerce, then what is it? At this point we might turnto some renowned management thinkers to help us.Peter F Drucker (1910- 2005), considered to be one of the world’s leadingmanagement gurus, believed that the purpose of business is to create and then retainsatisfied customers. Although firms have to make money, Drucker argued that makingmoney is a necessity, not a purpose: rather, it is the end result, a desirable outcome, ofcreating a satisfied customer.A similar sentiment is expressed by Theodore Levitt (1925-), a Harvard BusinessSchool professor, who explains this by an analogy with human beings: all human beingshave to eat to survive, but eating is not their purpose. Furthermore, making money doesnot provide a legitimate reason for society to support the money-making enterprise. Asociety supports business because business serves society’s members by catering totheir needs to leave them satisfied. Dissatisfy enough customers, and not only will thesespecific customers stop buying from your organisation, but society at large willcondemn the organisation and may even penalise it – to the point of its extinction (Shethet al 1999, pp. 11-12).So, perhaps we can summarise that the purpose of business is to create and retainsatisfied customers – and in order to do so, a ‘commercial organisation’ must makeenough money to keep doing so into the future, in the same way as a human must findenough to eat to survive into the future.An Introduction to Business and Technology LG Supplement Page 3 of 16
  4. 4. Do non-commercial organisations engage in ‘business’?Some of you will no doubt work in the non-commercial world – in government, semi-government and not-for-profit organisations. So why study business? Clearly, thepurposes of your organisations and the focus of their major activities are not commerce(money-making transactions). So how do the Drucker and Levitt quotes relate?If, instead of using the term ‘customers’ we use ‘stakeholders’, how would that sit? Ifinstead of saying that the purpose of business is to create and then retain satisfiedcustomers we were to say that the purpose of business is to create and then retainsatisfied stakeholders, then all organisations do in fact engage in ‘business’.The study of business that we adopt in the MBT Program enables you to developknowledge and skills that will better equip you to help your organisation create and thenretain satisfied stakeholders (government ministers, clients, donors, voters, supporters,users, employees, funding bodies, the wider community, etc.)A number of the disciplines and courses that you will study may have commenced theiracademic life focusing heavily on the money-making world of commerce. However, itwas quickly recognised that all courses need to be just as relevant to managing wheresuccess is determined by measurements other than money – by client satisfaction,environmental sustainability targets, improved outcomes for key stakeholders, limitingor preventing harm, and many other outcomes.In the same way that the commercial world post-Enron, One-Tel and Parmalat, etc.increasingly recognises that there is much to learn from the values and practices of not-for-profit and government agencies, so too managers and decision makers in not-for-profit and government organisations (as well as large and small commercial ones) needto understand the core management competencies, including:• managing people• managing the organisation• developing and implementing strategy• managing innovation and change• managing projects• managing quality• managing finance• managing information and knowledge• managing information and communication technologies• managing marketing• managing risk & OHS• managing resources• managing sustainability• managing legal responsibilities• managing manufacturing• promoting ethical and socially responsible business practicesLG Supplement Page 4 of 16 An Introduction to Business and Technology
  5. 5. Why do we need to study technology?Few people today have had their working lives, or indeed their non-working lives,untouched by the changes that technology has wrought. Technology brought us theinvention of the steam engine in the 18th century; the light bulb and internal combustionengine at the end of the 19th century; the discovery of antibiotics in the 1930-1940s;microwave cooking in the 1960s; rapid changes in material science (Teflon, carbon-fibre, etc) in the 1970s and 1980s; and rapid changes in communication and informationtechnology in the last quarter of the 20th century.Consider everyday activities such as how people do their banking, use public transport,pay tolls on major roads, purchase consumer goods, prepare meals, check sports resultsand stock market share prices, etc. Consider also the importance of drug therapies fortransplant patients, the effect of genetically modified crops on world food production,the benefits of digitisation and miniaturisation for surgical implants, etc.Technology has continued to play a profound and ever-increasing role in daily lifethroughout the developed and developing world – as well as within organisations in theway that work is performed.Indeed, many business and social commentators of the last half of the 20th century werekeen to highlight that the speed with which technology was changing and impacting onlife and work was rapidly increasing: using the analogy that it was changing from aslow moving river to a fast flowing river – and by the turn of the millennium may havereached the ‘white water’!Let’s take the introduction of the mobile phone as a simple example. Consider that inthe late 1980s these were seen as specialist devices likely to be owned and used only fortechnical purposes. However, by 2005 in Australia there were as many mobile phonesas fixed line phones and, indeed, it appears increasingly likely that for many people andmany organisations the fixed line, wire network telephone is becoming redundant.Consider also the impact of digitisation on the camera industry – such a fundamentalchange that within a decade or two of the digital camera’s introduction and widespreadadoption, the giant Kodak Corporation that once dominated the world of photography isstruggling to survive!And with the digitisation of music, Apple, formerly a computer company, now makes asmuch from selling its ubiquitous iPods as it does from selling PCs, and is rapidlymoving to dominate sales of recorded music, threatening the dominance of companieslike Sony, EMI, HMV and so on.Clearly the speed of innovation and technical change is revolutionising all sorts ofindustries, and the contemporary manager who is not able to understand and applyeffective knowledge of how technology management and business managementinteract is perhaps jeopardising the future of the organisation.An Introduction to Business and Technology LG Supplement Page 5 of 16
  6. 6. Why the ‘T’ in the MBT?The following quote from Burgelman et al (2004, p. 4) may help us to define this: Technology is a resource that, like financial and human resources, is pervasively important in organisations. Managing technology is a basic business function. This implies the need to develop a technology strategy, analogous to financial and human resource strategies.Technology is now considered to be as important as any of the traditional areas ofbusiness learning. It is as significant to the success of the modern organisation –commercial, government, not-for-profit, large and small – as finance, human resources,strategy, etc. are.Simply from your own observation, you should be in little doubt that most markets andindustries are increasingly dependent on the important role that technology plays as akey driver or enabler of ‘the way things are done’. So much so, in fact, that for manyorganisations today – perhaps even most – any lack of understanding of how tointegrate technology effectively into the organisation’s strategy and operationspotentially limits its ongoing success, or possibly even questions its long-term survival.How is the ‘T’ integrated in the MBT?In the MBT, we recognise explicitly that for many managers in many organisationsunderstanding how the business management practices interface and integrate with themanagement of technology is vital. Recognising the powerful impact of these two areason an organisation’s success and survival requires they are given additional attention tothat offered in more traditional graduate business programs.By studying MBT courses, you have the opportunity to develop a broader range ofessential management competencies. The MBT offers you a unique opportunity tocustomise your program to focus on improving your business management ANDtechnology management competencies and knowledge.In your final year we offer two alternative capstone courses uniquely designed toensure that you understand how the business management and technology managementfocuses come together. You can either integrate these through the lens of corporatestrategy via the course Strategic Management of Business and Technology, or throughthe lens of innovation in Management of Innovation and Technological Change. Youare, in fact, encouraged to take both capstone courses, wherever possible.LG Supplement Page 6 of 16 An Introduction to Business and Technology
  7. 7. What do we understand ‘technology’ to mean?Before we go on, let’s pause here and point out that many of the readings you will findin your MBT courses may focus on information and communication (I&C) technologiesand, particularly those written in the last few years, on the Internet.These technologies are relevant to all MBT participants, regardless of their industry orprofession. Whilst it is also possibly true that I&C technologies are essential elementsof the operational and strategic actions of most organisations, let’s be clear thattechnology is not only I&C technology.• In the health care, veterinary care, pharmaceutical, agricultural and food production industries, for example, biological and gene technologies are already considered to be having as great an impact as – and perhaps even greater than – I&C technology. There are in fact some suggestions that gene technology may also revolutionise energy, transport and a whole host of other non-medical industries.• Composite materials technology has revolutionised the construction industry, vehicle manufacturing, sporting goods such as skis, diving gear and golf clubs, motor racing, boats and a myriad of other applications.These are but two examples of the broader impact of technologies beyond the focus onIT and telecommunications that has predominated in the popular media.So, while some of the focus in your courses may be on I&C technology due to thebroader interest in this area of many MBT students, don’t fall into the trap ofequating ‘technology’ with I&C technology only.Technology – in whatever form it may impact on or exist within your organisation – isan essential element in your organisation’s success.Now that we have acknowledged that technology is more than just I&C technology,perhaps we could best employ the following definition, that technology: … refers to the theoretical and practical knowledge, skills, and artefacts that can be used to develop products and services as well as their production and delivery systems. (Burgelman et al 2004, p. 4)An Introduction to Business and Technology LG Supplement Page 7 of 16
  8. 8. What are the key principles of corporate strategy?As you begin your MBT Program, it will be helpful if you have a basic understanding ofwhat corporate or organisational strategy is all about. First, let’s start by getting anunderstanding of some key concepts. What is strategy? What does strategy mean?The Macquarie Dictionary (1999, p. 793) defines strategy as “skilful management ingetting the better of an adversary or attaining an end”. A tactic, on the other hand (p.820), is defined as “a plan or procedure for achieving a desired end”.So, following on from these definitions:• A corporate strategy is the set of management decisions – designed by executives, the board, senior management team or whoever are the final decision makers in the organisation – that are meant to get the better of adversaries or attain the organisations ‘ends’.• Tactics are the plans or procedures that they adopt to implement these strategic decisions.Who is Michael Porter?Amongst the most significant authors on strategy of recent decades is the Harvardacademic, business guru, strategist and author, Michael Porter (1947-).As well as developing a number of specific tools and frameworks for analysis, Porterhighlighted that the purpose of strategy was to gain and defend some form ofcompetitive advantage – which in our definition of strategy fits quite neatly with theidea of “getting the better of an adversary”.Porter said in his groundbreaking books in 1980 (Competitive Strategy) and 1985(Competitive Advantage) that these are really only three forms of competitiveadvantage: 1. Cost Leadership – having lower costs than any other competitor enables either superior profits or a capacity to offer lower prices. 2. Differentiation – being able to offer customers something different to anyone else in the market, as long as it is something that customers value and will prefer. 3. Focus – being acknowledged as a specialist and having expertise and knowledge of particular customers or activities and processes that are highly prized.So, from Porter’s perspective, the purpose of a corporate, business unit or functionalstrategy would be to develop, refine, defend and exploit one of these three sources ofcompetitive advantage.LG Supplement Page 8 of 16 An Introduction to Business and Technology
  9. 9. What are the different levels of strategy?Strategy can be developed at many levels – in a multi-layered organisation there maybe:• Corporate level strategy – decisions made for the whole corporation or organisation to gain the better of adversaries or attain ends.• Business unit or divisional strategy – decisions made for the business unit or division to gain the better of adversaries or attain the business units end.• Functional strategies – such as marketing/finance/human resources/IT/technology/ operational/production/etc. strategies. There would be marketing decisions (or finance or HR decisions, etc) designed to get the better of an adversary or attain a marketing/finance, etc, end.So what do we mean by ends? Other terms that are frequently used here for the sameconcept are goals or missions or visions.Organisations typically have (or should have) a set of goals, desired outcomes or a viewof their purpose (mission), or their future achievements and positions (visions) in mind.Ideally these are clearly articulated and understood by everyone in the organisation.When these ends (goals, mission, vision) are clearly understood, then the board,management, staff and partners of the organisation are able to ‘develop’ strategy toachieve these.What is a strategic plan?A plan, whether strategic, tactical, operational, marketing, finance – or whatever – isreally just a set of decisions that have been captured in some form (document, webpage, PowerPoint presentation, video, etc) that set out the answer to three key questions: 1. Where are we now? 2. Where are we going? 3. How will we get there?Accordingly, a plan is formed by:• analysing the existing and expected future trends and factors affecting the organisation/business unit, etc• setting down clear statements of the outcomes that will help to achieve the ends that the organisation has set itself (these statements of outcomes are commonly called objectives)• describing some tactics and actions that will lead to achieving the outcomesAn Introduction to Business and Technology LG Supplement Page 9 of 16
  10. 10. What sorts of issues do we need to analyse?Before developing strategy and tactics, the decision makers of any organisation need toanalyse and understand the forces and trends in a range of key environments that impacton the strategic options or choices available to it. These are generally summed up as the:• internal environment• external macro environment• external microenvironmentThe macro environment is the nation, region, society and community within which theorganisation and its micro environment or industry ‘sit’. Some organisations such astransnational and global corporations/bodies (eg, IBM, Qantas, World Bank, UN, RedCross, Médecins Sans Frontières, etc) operate in many macro environments; others mayoperate in only one or two (in Sydney, or Sydney and Melbourne, or Australia andHong Kong, etc).During your MBT studies, you will be exposed to a wide range of tools and frameworksdesigned to assess all three environments. We don’t want to pre-empt all the possibletechniques that you will be exposed to in the wide range of courses that you will study,however, there are a number of particular tools that you will potentially cover that wewill touch on here.PESTLE analysis a tool for examining the macro environment. Whether operating inonly one, a number or many such countries/markets/communities, etc, a set of keyfactors or forces are said to impact on an organisation’s strategy.These are summarised by the acronym PESTLE which stands for: Political forces and issues Economic trends and forces Socio-cultural changes and trends Technological changes and trends Legal and regulatory issues and forces Environmental changes and forces (ie, the natural environment)Not all of these aspects are of equal importance or have an equal weight for everyorganisation.For instance, for an insurance company or agricultural products company, the naturalenvironmental (flood, fire, storm, drought, etc) may have great significance; whereas fora telecommunications company it will have less significance. For an aged care provideror health service, socio-cultural changes such as the ageing of the population, increasedrate of divorce and family breakdown, change in the ethnic and cultural mix of apopulation would have greater significance than for an air conditioning manufacturer.Consequently, while all these forces must be considered, it does not mean that for allorganisations they will be equally significant.LG Supplement Page 10 of 16 An Introduction to Business and Technology
  11. 11. What about analysing the micro environment?Michael Porter, whom we have mentioned earlier, developed a number of widely usedand highly regarded analysis tools for understanding the micro environment. You willencounter two of these in particular in a number of your courses in the MBT:• Five Forces model• the Value ChainWhat is Porter’s Five Forces Model? Potential Entrants Threat of new entrants Bargaining Power Bargaining Power of Suppliers of Buyers Suppliers Industry Buyers Competitors Rivalry among existing firms Substitutes Threat of substitute products or services (Porter 1980, p. 4)What Porter illustrates is that the dynamics of how a competitive advantage is gained,maintained and deployed depends on the balance or relative impact of five forces: 1. bargaining power of suppliers 2. bargaining power of customers (buyers) 3. threat of new entrants 4. threat of substitutes 5. competitive rivalry between existing firmsand, in particular:• What is the nature of competitive rivalry?• How many competitors are there?• How large is each competitor?• On what basis do they compete (lower costs, differentiation, or focus)?An Introduction to Business and Technology LG Supplement Page 11 of 16
  12. 12. Broadening these questions out:How easy is it for a new competitor to enter the market? Is the potential threat of anew competitor real enough for existing competitors in the industry to have to factorthis into their strategic decisions? Or are there so many, or such significant barriers toentry of new competitors that the existing competitors can operate on the basis of onlyneeding to be concerned about who is competing in the industry now?Are there substitutes or alternative products that act like competitors in themarket? For example, glass bottle manufacturers need also to consider the threat fromplastic bottles and containers, aluminium cans, tetra packs and casks, etc. Taxi operatorsneed to consider the threat not only from other taxis but also from hirecars/limousines/public transport/parking stations (use of own cars) etc.Are there any dominant suppliers whose products are so central and important tothe organisation’s operations that they affect the way competitive advantage iscreated, maintained and applied? For example, to computer manufacturers such asToshiba, Compaq, Sony and Acer etc, the products available from Intel and Microsoftgreatly influence the nature of their competitive advantage. In the airline industry,because fuel costs make up much of the total cost of running airlines, their competitiveadvantage is greatly impacted by changes in oil prices. Because Internet-based strategieshave become so significant to banks and airlines, the broadband speed and capabilitiesof ISPs greatly impact on their ability to create, maintain and defend their competitiveadvantage in their markets.Finally, there may be particular customers or buyers whose purchasing or preferencesare so significant that they are able to change what forms of competitive advantagework. For example:• In the period 2003-2005, the world price of iron ore, minerals, steel, other metals, oil and gas rose substantially because of demand from China and India. Indeed at various times demand has outpaced supply. The strategies of mining companies have been greatly dependent on the pace and continuing needs of growth from both these ‘customers’ – China in particular. And the strategies of other steel mills, energy companies and manufacturers have had to adjust to the impact of the increasingly demanding Chinese and Indian ‘customer’ bidding up the prices and taking much of the raw material in the market.In other examples:• In military aircraft manufacturing, the strategic decisions of the US Department of Defence, People’s Liberation Army/Navy/Air Force, Russian military and NATO alliance are so significant that aircraft developments are effectively determined by these four key ‘buyers’.• In the pharmaceuticals and health industry in Australia, the Commonwealth Government through the Pharmaceutical Benefits Scheme (PBS) acts as a key ‘buyer’ – the willingness of decision makers (buyers) in charge of the PBS to buy or not buy a particular drug, and the price they are willing to pay, has a huge impact on the industry.LG Supplement Page 12 of 16 An Introduction to Business and Technology
  13. 13. What is Porter’s value chain?The other key concept that Porter advanced was the notion that organisations competeand gain competitive advantage through the differences that they offer in the way thatthey create and deliver ‘value’ to customers. This is often known also as their ‘business’model. Porter suggests that each organisation makes decisions about how it arrangesand manages the activities that produce the value it offers to its customers or clients.Take the example shown here: Strategy and Leadership Corporate Services (eg, IT, Finance, HR) Margin Purchasing raw Inbound Sales & Outbound Production materials Logistics marketing logistics & suppliesWhat Porter is suggesting is that how one organisation arranges its purchasing of rawmaterials and supplies, or its sales and marketing, or its strategy and leadership, maygive it a competitive advantage through (as mentioned earlier):• Cost leadership (greater efficiency)• Differentiation (creates a customer valued difference)• Focus (gains a reputation for expertise or superior knowledge)So, Porter proposed that by comparing and contrasting each competitor’s Value Chain,a strategist could understand the relative strengths and weaknesses of each, and identifyways to develop a competitive advantage through finding actions in the value chain thatcould be the source of such an advantage.An Introduction to Business and Technology LG Supplement Page 13 of 16
  14. 14. A quick summary of corporate strategyThis has been a very quick introduction to a number of concepts and frameworksaround corporate strategy. Throughout your MBT career you will be exposed to a widerange of perspectives and frameworks designed to help you answer the three keyquestions related to strategy that we noted earlier: 1. Where are we now? 2. Where are we going? 3. How will we get there?Remember though, that the purpose of all these tools and techniques is to equip you as amanager to identify strategies that help you in “getting the better of an adversary orattaining an end”.What is corporate governance, and why is it important?Having read to this point you will be aware of a number of key concepts, particularlythat: Organisations exist for a purpose in addition to making money.Managers are required to make decisions that affect a whole range of internal andexternal stakeholders: employees, shareholders, customers, users, supporters, theenvironment, donors, suppliers, the community at large, and many more.What you also need to be aware of is that sometimes the interests of the managers andthose of some of these stakeholders come into conflict.High profile organisational collapses and failures such as HIH in Australia, Enron andWorldCom in the United States, Parmalat in Italy – and many, many more – highlightthe fact that in an effective business system there is a clear need for oversight of theactions of the managers of the organisation.Failures such as these do not just happen in the commercial sector however. Considerthe outcomes of recent government enquiries into the operations of the CommonwealthDepartment of Immigration in relation Cornelia Rau (Australian citizen incarcerated ina detention centre) and Vivian Alvarez (Australian citizen wrongfully deported to thePhilippines); NSW Railways in the wake of the Waterfall train crash, and many more.Clearly, the issue of effective corporate governance is vital to the efficient andsuccessful long-term operation of any organisation – and indeed, any society oreconomy.LG Supplement Page 14 of 16 An Introduction to Business and Technology
  15. 15. What do we mean by ‘corporate governance’?In this context, we will take corporate governance to mean oversight by people orbodies charged with ensuring that the interests of key stakeholders are notcompromised. Who the stakeholders are in each case is typically set by legislation, andby legal principles and precedents from the findings and interpretation of courts.In a commercial organisation, the board of directors is typically charged with the keyresponsibility for corporate governance – protecting the rights of shareholders andcreditors, ensuring contractual obligations and regulatory compliance.In the public sector, the elected government is typically responsible for corporategovernance, and in semi-government and statutory bodies like State Rail, SydneyWater, the Australian Broadcasting Authority, the University of NSW, etc – and in not-for-profit organisations – governments will usually mandate a body similar to a board ofdirectors with the responsibility for corporate governance.What does corporate governance involve?In a recent article, Gomez & Korine (2005, pp. 739-752) propose that: Corporate governance can be understood as a set of contracts that defines the relationships among the three principal actors in the corporation.To simplify what this actually means, corporate governance is the set of relationshipswhere:• A key stakeholder whom they refer to as the sovereign (in the case of commercial organisations this would be the shareholders; in the case of public sector agencies, the elected government; for not-for-profit organisations this is often the ‘members’ or other key stakeholders as defined by legislation)• sets in place a governing body (eg, board, council, senate, etc) with responsibility for overseeing the actions of• the governed (management, staff, employees, volunteers, players, etc)Increasingly, societies and governments are reacting to a rapidly changing worldsurrounding them, and modifying the regulations affecting ‘corporate governance’accordingly. The numbers and interests of stakeholders who are affected by the actionsof organisations is expanding. Organisations are being seen to impact on:• the economy• the natural environment• society through opportunities for work and employment• conditions of work• family life, etcConsequently, there are increasingly complex expectations placed on organisations ofall sizes to consider and take responsibility for decisions and actions beyond simplytheir ‘money making’ or other purposes and goals.An Introduction to Business and Technology LG Supplement Page 15 of 16
  16. 16. What significant business concepts relate to corporate governance?In your MBT courses you will be exposed to the contemporary business concepts of:• Triple Bottom Line – organisations being responsible for financial, environmental and social ‘bottom lines’• Balanced Scorecard – accountability for a range of outcomes including financial, customer, organisation and employees• and many othersYou will also be exposed to the effect and requirements of various pieces of legislationin the areas of workplace safety, intellectual property rights, contractualobligations, consumer protection, and many others.Perhaps most significant of all is the issue of organisational ethics – setting andcomplying with values and principles that should guide and regulate the standards ofbehaviour of everyone within the organisation.All of these things impact on the environment of corporate governance. You should bebeginning to understand that this goes beyond simply complying with legislation andsatisfying shareholders!Indeed, it is apparent that sustainable organisations are those that, among other things,have the best and most effective corporate governance.ConclusionWe hope that this introduction to business and technology will assist you in gaining ageneral understanding of some of the key concepts and principles that underpin many ofthe courses you will study in your MBT Program.We wish you the very best of luck as you commence this most fascinating journey intomastering the ‘white water’ rapids where business management and technologyconverge!ReferencesBurgelman RA, Christensen CM & Wheelwright SC, 2004, Strategic Management of Technology andInnovation, 4th edn, McGraw-Hill, Boston,Gomez PY & Korine HK, 2005, ‘Democracy and the evolution of corporate governance’, CorporateGovernance, vol. 13, no. 6,Macquarie Essential Dictionary, 1999, Macquarie Library Pty Ltd.Porter ME, 1980, Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press,New York.Sheth JN, Mittal B & Newman BI, 1999, Customer Behavior: Consumer Behavior and Beyond, DrydenPress, Orlando.LG Supplement Page 16 of 16 An Introduction to Business and Technology

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