Transcript Slide 1

Week 1
CBM
CORPORATE AND BUSINESS
MANAGEMENT
Susan Simei-Cunningham
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STRATEGIC PURPOSE AND
CORPORATE GOVERNANCE
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Learning Outcomes
• By the end of this session the student will be
able to:
• Discuss and assess the importance of
developing a strategic purpose and an
appropriate corporate governance
framework.
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A Strategic Purpose
• A Strategic Purpose should create a clear
road map to orient and direct an
organisation’s decisions and actions.
• When devising a purpose, companies should
strive to make it descriptive and not
prescriptive; in “visual” language.
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Resetting the Base
• This will be an opportunity to reset the base
for organizational performance.
• However, this new focus for a Strategic
Purpose will only be effective if:
• It answers the fundamental ordering
question, “What business are we in?”
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Resetting the Base
• It creates the context for organisational
action.
• It outlines the core principles which will guide
the organisation.
• It is compelling and enduring over a
significant period of time.
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ROLE OF STRATEGIC
PURPOSE
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The Organisation’s Purpose
• The organisation's purpose outlines why the
organisation exists; it includes a description
of its current and future business
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The Organisation’s Purpose
• Organisational purpose gives your business
it's reason for existence. It serves as a
guiding force upon which every other
decision is rooted.
Organisation purpose sets the tone for who
your business exists to serve.
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Organisational Purpose
• It Energizes You To Move Forward.
A clearly defined organisational purpose is
contingent upon finding that thing that
naturally energizes, excites, motivates,
and inspires your business to move
forward.
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Organisational Purpose
• It dictates how you will use your time,
attention, and resources to serve your
niched market better than anyone else.
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Organisational Purpose
• It Empowers Your Passion
• Intense organisational power is achieved
when you are able to marry your passion
to sound strategy, and focus all of your
attention and energies on navigating your
company towards success .
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Organisational Purpose
• It Frees Resources.
• Successful business learn how to grow their
business by focusing on what they do best,
then, if possible they outsource the rest.
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Organisational Purpose
• It helps with differentiation.
Businesses that sustain a successful path
creates a carefully crafted position that
distinguishes them from their
competition.
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Organisational Purpose
• Influences your view of the competition.
• Any organisation with a strategic
organisational purpose has a broad view of
what the competition could be.
• Any entity that resolve their customers
issues is considered the competition.
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Organisational Purpose
• It Helps You To Find a Way To View Your
Competition As A Potential Value-Added
Partner.
• Successfully sustaining businesses
understand the important role of the
competition and their relationship has
more to do with the collective value they
offer to their customers.
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Organisational Purpose
• It Helps You To Focus On Your Actual
Greatest Threat.
• looking beyond their competition when trying
to identify their greatest threat is the route to
success.
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Organisational Purpose
• It Helps You Continually Evolve.
• Business must evolve to stay competitive .
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Task – Name Possible Threats
• This should be based on what we have just
discussed as mentioned in slide 17.
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Video on Strategic Purpose
http://www.youtube.com/watch?v
=mSz7vRbgJc8
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CORPORATE GOVERNANCE
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What is Corporate Governance?
The governance framework determines
whom the organisation is there to serve and
how the purposes and priorities of the
organisation should be decided.
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What is Corporate Governance?
Corporate governance aims to protect
shareholder rights, enhance disclosure and
transparency, facilitate effective functioning of
the board and provide an efficient legal and
regulatory enforcement framework.
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What is Corporate Governance?
There is no ‘one size fits all’ approach to
corporate governance. A number of countries
in continental Europe tend to adopt an
inclusive ‘stakeholder’ approach. This is where
companies are considered ‘social institutions’
with responsibilities and accountability – not
just to shareholders.
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Why is CG important?
Corporate governance is a key element in
enhancing investor confidence, promoting
competitiveness, improving economic growth.
It is at the top of the international development
agenda as emphasised by James Wolfensohn,
President of the World Bank:
‘The governance of companies is more
important for world economic growth than the
government of countries.’
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Principles of Corporate
Governance
• There is global appreciation of the OECD’s
generic corporate governance principles of:
• Responsibility
• Accountability
• Transparency
• Fairness
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RELATIONSHIP BETWEEN CG
AND STRATEGIC PURPOSE
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Business Ethics
• Organisational purposes are concerned with
the expectations of stakeholders
• Which purposes are regarded as more
important than others and why?
• Two related issues:
– the ethical context
– the cultural context
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Ethical Stance
• Corporate governance arrangements
determine the minimum obligations of an
organisation towards its various stakeholders
• Ethical stance is the extent to which an
organisation will exceed its minimum
obligations to stakeholders
• Ethical stance is a key strategic issue
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Four Possible Ethical Stances
Short-term shareholder interests
Longer-term shareholder interests
Multiple stakeholder obligations
Shaper of society
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Influences On Organisational Purposes
Corporate Governance
Who should the organisation
serve?
How should purposes be
determined?
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Business Ethics
Which purposes should
be prioritised?
Why?
Organisational Purposes
Mission
Objectives
Stakeholders
Whom does the organisation
serve?
Cultural Context
Which purposes are prioritised?
Why?
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Additional reading
• Strategic Purpose
• http://sites.maxwell.syr.edu/measuringADR/p
df/purpose.pdf
• Corporate Governance
• http://www.nysscpa.org/cpajournal/2004/120
4/essentials/p46.htm