Now who are stakeholders in a company?Stakeholders are a person, group, organization, member or system who affects or can be affected by an organization's actionStakeholders are may be shareholder but share holder are not stake holder.
This relationship is 2 way relationship Stakeholder provide support to the organisation and contribte in many different way. In return organisation tries to satisfied the expectation of the stakeholders.
All the stake holders are not important to the organisation in terms of their power to influence strategy formulation their intrest in affairs of the organisation & the legitimacy they hold to affect the orgIn indiagovt consider highly imp stakeholder since it has power to influence has interest and hold legitimacy
After doing analysis noworganisation set the position of stakeholder. It shows wwhichcorderent is suitable for stakeholders.Now the basic question is this why org do analysis and mapping
There are 3 types of org1 profitable org – engagement is easier for the heigher profitability firmbecoz they have flexibility and capability2 average return earning organisation- comp will priorties the stake holder and engage more imp stake holder and neglect less imp once3 org not doing well- when the org not doing well it does not have the capacity and flexibility to satisfy their stake holder
They do analysis and mapping because The process of fostering an effective relationship with the stakeholder is termed as stakeholder engagement and it is most critical part of the stakeholder management.”Stake holders are imp part of organisation. How organisation do fair things in regarding stakeholder and bussiness.
Agency theory- When a person delegates the authority to another, an agency relationship is created.the person delegating athority is called the principleAnd whom the authority is delegated is called agent. This relationship known as agency relationship. Agency theory have critism that the theory assume managers to be self centered and irresponsiable causing them to act in a prejudicial manner.Stewards theory- an alternative approach to explaining the relationship between the owners and managers of the organization is called stewardship theory. This theory take a positive view of the managers, considering as stewards whose intrest are aligned with that of owner. It support and enpower managersAgency problem when managers do not act in the interest of owner.
Corporate governance is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. in recent years, corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officersThe demand of corporate governace was rised by rahulbajaj in 1997Kumar mangalambirla committee on Many others alsoAt that time NFCG national foundation of corporate governace was estb
Strategic management – it is the governance of an org that deals with the relationship of diff stakeholders, particullarly with 3 of thesm shareholder, directors on the board, managers. Corporate governance is concerned with the behaviour of the 3 major stakeholders toward each other as well as to the affairs of the org.Strategic intent- it deals with organisation vision and mission business defination, business model & objective. Corporate governace place an imp role in each of these aspect. If the director have particular perception of the future of the org than it must match to the managersStrategic formulation-CG mechanism are needed to reconcile the difference in the goals that the shareholders and managers try to achive.strategic implementation- strategy implementation isalmostly under the control of manager there is very less intervention of board of director and shareholder . Strategy implementation determines whether the strategies formulated achieve the desired success, if strategy is deviated then corporate governace mechanism is usedStrategy evaluation- In last phase CG come into the fore. The shareholder and directors have an effective role to play in helping the organisation evaluate the strategies. Board of director must ensure the accoompliishment of objective.
It is ultimate legal authorityElected by owner ,share holer , financial institution, holding comp and parent compThe board is responsible to them for governance to the org. as director the member of board are responsiable for providing guidance and establishing the directives according to which the manager of the org can operate
Owner of the organization i.e shareholders, controlling agencies, financial institution , holding company etc are elect and appoint
Legaly they have conform to various provision of companies act 1956Determine the company’s purpose & ethicsDecide the direction, that is, the strategyPlanMonitor and control managers and the CEOReport and make recommendations to shareholdersExact roles that the board should play in managing the affairs of the organisation or specially in its strategic management.
Strategic leadership provides the vision and direction for the growth and success of an organization. To successfully deal with change, all executives need the skills and tools for both strategy formulation and implementation
Corporate level managers – they are CEO , senior exective of comp. they manage the strategic management process for whole of the org.Business level managers- they are strategic leaders at the business or SBU levels. They manage strategic management process at the business levelFunctional level managers- strategic leaders of a specific function such as marketing or operationOperational level- in operational level there is manager who responsible for the implementation of strategies with in their assigned functional area
Style describe how top managers behave in leading and motivating their org to achive their desired end Ohio state university studies (initiating structure versus consideration style)Michigan studies (job centered and employee centered styles)
Role of chief executive officer- they perform all the strategic mang .Ceo plays imp in decision making and he is cheifly responsible for the execution of functionRole of senior managers – he is just below from chief executive. These managers are involved in varios aspect of strategic mamg. They are responsiable for implementing strategies and plans and periodic evaluation of performance.Role of business-level executives- they are profit center or divisional head are consider as chief executive of a specific business unitRole of functional and operational managers- they are the middle level managers . And not perform any active role in decision making.
Choice of future strategic – it is a very crucial decision to choose the future strategic leader becoz it depends the org future in public comp they choose strategiest on competitive basis, relying on experience an merit. in family business they choosen on family membersCareer planning and development- now a days comp have their own leadership and trainning institute to build and strenthen the quality of leadership internally egtata , satyam and infosys. For this various courses are also run for strategic management and business policy in these institute ADMINISTRATIVE STAFF COLLEGE OF INDIA and INDIAN INSTITUTE OF MANAGEMENT.Succession planning -it is a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.
The phenomenon that often distinguishes good organization from bad organization could be summed up as corporate culture.It has been clearly demonstrated that every corporation has a culture that exerts the powerful influences on the behaviour of managers.
First thing friend culture is a strength that can aslo be a weakness. Culture facilitates communication and helping in decision making and also helping to controls the corporate affairs.andaslo create cooperation and commitment for the goal.And when the coporate culture is a weakness then it may obstruct the smooth implementation of strategy by creating or augmenting resistance to change.it is chracterized as a weak when many subcultures exist within,few values and behaviouralnorms are shared and traditional are rare.
There are three factor that seems to contribute to the building up of a strong culture.A Founder or an influential leader who established desired values.A Sincere and dedicated commitment to operate the business of the organization according to these desirable values.And a genuine Concern for the well-being of the organization’s stakeholders.
In this we have to understood what constitutes corporate culture and how it affects corporate life.it is important to understand its relationship with strategy.Sometimes strategic options could also be limited by the culture of the organization.
Now here…strategist have four approaches to create a strategy-supportive culture.* It is followed wen it is nearly impossible to change the culture.this is advisable bcoz it is really difficult to change a nebulous phenomenon such as corporate culture.* It is easier to change implementation to suit the requirements of the corporate culture. This is possible bcoz the behavioural aspects of implementation offer a range of flexible alternatives to strategist, in terms of structure, system and process.* As mention earlier,It is extremely difficult to change the corporate culture but in some cases, it may be imperative. * Rather then changing the culture to suit a strategy ,it is better and more economical to consider the culture dimension while formulating the strategy in the first place.
Now corporate politics,it is also known as organisational politics. all corporate culture include a political component and,therefore all organisation are political in nature.organisational members bring with them their likes,dislikes,views and opinions,prejudices and inclinations when they enter organizations.managerialbehaviour can not be purely rational and an understanding is to be acquired of how corporate politics work and use of power is to be made for effective strategic management.
Power is defined as the ability to influence othersAccording to a classic categorization, managers derive power within an organization from five types of source.Reward Power arise from the ability of managers reward positive outcomesCoercive Power arises from the ability of managers to penalize negative outcomesLegitimate Power arises from the ability of manager to use position to influence behaviourReference Power arises from the ability of managers to create liking among subordinates due to charisma or personalityExpert Power arises from the managers’ competence, knowledge and expertise that is acknowledged by others.
Basically politics and power is the means to resolve conflicts and bridge genuine diffrences of opinion.It has two cannotations positive and negative.wen taken negative then power and politics are means for domination,manipulation and subjudication.and then there is always high level of deception and dishonest for achieving individual or group interest.and that leading to conflicts and dishharmony in the organisation.And when taken positively then power and politics are a means of achieving organisational objectives.It is a natural outcomes of people in the organisation.
Henry mintzberg is of the view that corporate politics is neither inherently good nor bad. Politics and power affect the way a strategy is formulated and implemented
Strategic use of power and politics may involves one or more of the tactics which are mention here.First of all,
The presence of politics and use of power are, perhaps, more visible than in other culture. this is due to first two factor.These means that while organization in India have adopted bureaucracy, the person-oriented nature of Indian society suggests an emphasizes on particularistic rather than universalistic treatment of employees, leading To reliance on personal characteristics in hiring, promoting and rewarding employee.Enviousness : a feeling of grudging admiration anddesire to have something that is posses by another.Pervasive:everywhere.In the organization managers do not have to deal with
A value is a view of life and a judgment of what is desirable, which is very much a part of a person's personality and a group's morale.Values are generally imparted by founder-entrepreneur
principles or standards of behaviour; Values can be defined as those things that are important to or valued by someone. That someone can be an individual or, collectively, an organization. Rockeach (1973) defines values as "a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence." Values provide a framework for making choices between desirable and undesirable responses.Ethics also important for all human beings. Bcozvalues determine what is right and what is wrong, and doing what is right or wrong is what we mean by ethics.Strategist are using the strategy are good but main issue is whether it is right to let them affect the consideration for strategy formulation and implementation.Opportunity ,Motive,Trust
In the reconciling divergent values strategist have to reconcile divergent values and modify values,ifneccessary.Typical case values divergence may arise while setting objectives and determinig the precedence of different objectives.Modification of values is frequently required for strategy implementation. Any perticular strategy like expansion,may be suboptimal if existing values do not conform to these requirements.In such cases, modification of values is necessary.
Social Responsibility towards different Interest groups: 1. Responsibility towards owners: Owners are the persons who own the business. They contribute capital and bear the business. Run the business efficiently Proper utilization of capital and other resources. Regular and fair return on capital invested. Responsibility towards Investors: Investors are those who provide finance by way of investment in shares, bonds, etc. Banks, financial institutions and investing public are all included in this category. Einstein College of Engineering 5 Ensuring safety of their investment Regular payment of interest. Responsibility towards employees: Business needs employees or workers to work for it. If the employees are satisfied and efficient, then the business can be successful. Timely and regular payment of wages and salaries. Opportunity for better career prospects. Proper working conditions Timely training and development Better living conditions like housing, transport, canteen and crèches. Responsibility towards customers: No business can survive without the support of customers. Products and services must be able to take care of the needs of the customers. There must be regularity in supply of goods and services. Price of the goods and services should be reasonable and affordable There must be proper after sales-service Grievances of the consumers if any must be settled quickly. Responsibility towards competitors: Competitors are the other businessmen or organization involved in a similar type of business. Not to offer to customers heavy/discounts and or free products in every sale. Not to defame competitors through false advertisements. Responsibility towards suppliers: Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. Giving regular orders for purchase of goods Availing reasonable credit period Timely payment of dues. 8. Responsibility towards Government: Business activities are governed by the rules and regulations framed by the government. Payment of fees, duties and taxes regularly as well as honestly Conforming to pollution control norms set up by government Not to indulge in restrictive trade practices. 9. Responsibility towards society: A society consists of individuals, groups, organizations, families etc. They all are the members of the society. To help the weaker and backward sections of the society. To generate employment. To protect the environment . To provide assistance in the field of research on education, medical science, technology etc.
Ya friend for corporate sector Corporate social responsibility is not a new concept in india.it is well establized traditional in the corporate sector,perticularly in the family-owned organisation that have had a strong social orientation towards community through charity and philanthropic activities that we understand by four different models..Gandhian modelNehruvian modelMilton-friedman modelFreeman model
Custom animation effects: text rebound(Intermediate)To reproduce the text effects on this slide, do the following:On the Home tab, in theSlides group, click Layout, and then click Blank.On the Insert tab, in the Text group, click TextBox. Drag to draw a text box on the slide.In the text box, enter text and select it.On the Home tab, in the Font group, do the following:In the Font list, select Corbel.In the FontSize box, enter 50. Click Bold.On the Home tab, in the Paragraph group, click Center. Select the text box on the slide. Under DrawingTools, on the Format tab, in the WordArtStyles group, click MoreWordArt, and then under Appliesto All Text in Shape click Fill - Accent 1, Plastic Bevel, Reflection (first row, fifth option from the left).To reproduce the animation effects on this slide, do the following:On the View tab, in the Zoom group, click Zoom, and then in the Zoom dialog box, select 66%.On the Animations tab, in the Animations group, click CustomAnimation. On the slide, select the text box. In the CustomAnimation task pane, do the following:Click AddEffect, point to Entrance, and then click MoreEffects. In the AddEntranceEffects dialog box, under Subtle, click Fade.Select the animation effect (fade effect for the text box). Under Modify: Fade,do the following:In the Start list, select WithPrevious.In the Speed list, select Fast. ClickAddEffect, point to MotionPath, point to DrawCustomPath, and then click Freeform. Press and hold SHIFT, and then do the following to draw the freeform line on the slide:Click the first point in the center of the text box.Click the second point on the right edge of the text box.Double-click the third and final point 2” beyond the left edge of the slide.In the Custom Animation task pane, select the custom path effect. Under Modify: Custom Path,do the following:In the Start list, select WithPrevious.In the Speed list, select Medium. On the slide, right-click the motion path on the slide, and select ReversePathDirection.To reproduce the background effects on this slide, do the following:Right-click the slide background area, and then click Format Background. In the Format Background dialog box, click Fill in the left pane, select Gradient fill in the Fill pane, and then do the following:In the Type list, select Radial.Click the button next to Direction, and then click From Center (first row, second option from the left). Under Gradient stops, click Add or Remove until two stops appear in the drop-down list.Also under Gradient stops, customize the gradient stops that you added as follows:Select Stop 1 from the list, and then do the following:In the Stop position box, enter 0%.Click the button next to Color, and then under ThemeColors click White, Background 1 (first row, first option from the left). Select Stop 2 from the list, and then do the following: In the Stop position box, enter 100%.Click the button next to Color, click MoreColors, and then in the Colors dialog box, on the Custom tab, enter values for Red: 200, Green: 209, and Blue: 218.
Opening Case Opening case Opening case
“several aspect of behavioural implementationthat works behind the scenes adding to itsreputation as a company that is respectedglobally for its value and corporategovernance”
INFOSYS CORPORATE GOVERNANCE TransparencySatisfying the spiritClear communication to outside world of howcompany run internally
Facts company developed guideline for corporategovernanceRated highly on C.G. By national credit ratingagency8 independent director out of 15 directors7 internal directors are all the founders
Succession planning nomination committee of the board doessuccession planning all 7 founders are professionalAppointment of strategic leaders is based onprofessional standard rather than familyrelationship.4th time ranked as most admirable companyIt operates the behavior of strategist
Stakeholder and strategicmanagement“Stakeholder are the individuals and groupwho can affect and are affected by, strategicoutcomes achieved and who are enforceableclaim on a firm performance.”
Functions of stakeholder• It give support to the strategic management oforganization• Oppose the top of management in strategyformulation and implementation“ managing stakeholder relationships isimportant and critical for the strategicmanagement of an organisation”
ProfitableOrg.Averagereturnearningorg.Organization notDoing well
Engagement tactics forstakeholder“The process of fostering an effectiverelationship with the stakeholder is termed asstakeholder engagement and it is most criticalpart of the stakeholder management.”
Agency theory and stewardship theory• Agency theory- When a person delegates theauthority to another, an agency relationship iscreated.• Stewards theory- an alternative approach toexplaining the relationship between theowners and managers of the organization iscalled stewardship theory.
Corporate governanceAccording NFCG “it is concerned with theextent to which organizations are managed inan open and honest manner. The corporategovernance mechanisms are designed tocreate conditions that support the stakeholderof an organization being managed in an openand honest manner”
Corporate governance• Key aspect of good corporate governance ,according NFCG1. Transparency of corporate structures and operations2. The accountability of managers and the board toshareholder3. Corporate responsibility towards employees, creditors,suppliers and local communities where the corporationoperates
Corporate governanceThe burgeoning literature on corporategovernance and practice around the worldsuggest several mechanisms that are beingused to ensure good corporate governance.Among these are organisational mechanism
Corporate governance• Having an effective board of directors• Fostering transparency through disclosure ofinformation related to the organisation’sfinancial and operational performancnce• Framing a code of governance and committingthe organisation to its implementation
Corporate governance• Designing sound internal control systems• Instituting effective auditing and evaluationsystem within the organization• Having proper risk management procedures inplace• Designing fair compensation polices formanagers
Role of board of directors• Ultimate Legal authority of organization vestwith the board of directors• Members of board are responsible forproviding guidance and establishing thedirectives according to which the organizationcan operate
Board of directors & strategicmanagement• Determine the company’s purpose & ethics• Decide the direction, that is, the strategy• Plan• Monitor and control managers and the CEO• Report and make recommendations toshareholders
Beliefs are considered to be assumptionsabout reality and are derived and reinforcedby experience.Values are considered to be assumptionsabout ideals that are desirable and worthstriving for.Norms are expected standards of behavior.
Impact of culture on corporate lifeAs a strength: facilitates communication decision making and control create cooperation and commitment
Building of a strong cultureFounder or an influential leader whoestablished desired values.Sincere and dedicated commitment.Concern for stakeholders.
To ignore corporate culture To adapt strategy implementation to suite corporateculture To change the corporate culture to suit strategicrequirements To change the strategy to fit the corporate culturesApproaches to create a strategy-supportive culture:
Strategic use of power and politicsAccept the inevitability of politics beingthere in the organizationUnderstanding the power structureLead strategyBe sensitive and alert to political signalsReward organizational commitmentUse openness and honesty
Corporate politics and power in theIndian contextNature of Indian societyHigher level of enviousnessPervasive enviousness
Personal valuesPersonal values refers to a conception ofwhat an individual or group regards asdesirable.
Business ethicsIt is the study of how personal moral normsapply to activities and goals of a commercialenterprise.It is concerned primarily with the relationshipof business goals and techniques to specifyhuman ends.
Personal values and business ethicsA major task of leadership is to inculcatepersonal values and impart a sense ofbusiness ethics to the organizationalmembers.Personal values and business ethics seek toprevent an indiscriminate use of powerpolitics within organization.
Values : Principles or standards of behavior.Ethics :The rules of conduct recognized in respect to a particular class of human actions or a particular group,culture.Strategy : Strategists take strategic decisions on thebasis of values and ethics.
Advantage of business ethics andvaluesCompetitive advantageAttraction of investment and human capitalRetention of valuable employees
Inculcating values and ethicsTransparency in the recruitment andselectionTraining and educational programsCommunication of values and ethicsConsistent nurturing of valuesPaying special attention to ethically-sensitive activities
Reconciling Divergent Values. Modifying Values to Create Consistency.
Social responsibilitySocial responsibility is an organizations obligation tobenefit society in ways that transcend the primarybusiness objective of maximizing profits. Responsibility towards owners Responsibility towards Investors Responsibility towards employees Responsibility towards customers Responsibility towards competitors Responsibility towards suppliers Responsibility towards Government
Models of CSR Operating In IndiaGandhian model: voluntary commitment topublic welfare based on ethical awarenessof social needs.Nehruvian model: state-driven policiesincluding state ownership and extensiveregulation and administration
Contd… Milton-friedman model: corporateresponsibility primarily focused on ownersobjectivesFreeman model: stakeholders responsivenesswhich recognizes direct and indirectstakeholders interests.