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BusinessPolicyNotes11 - Chapter 11 Corporate Performance,...

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Unformatted text preview: Chapter 11 Corporate Performance, Governance, and Business Ethics 272 STRATEGIC MANAGEMENT Lecture 11 Dr. John Kraft Opening Case :Nike: The Sweatshop Debate The Causes of Poor Performance :Poor management Sheer incompetence Neglect of core business Insufficient number of good managers Dominant, autocratic chief executive with passion for empire-building Autocratic manager who tries to do it all in the face of complexity and change The Causes of Poor Performance (cont'd) :High cost structure Low labor productivity Low capital productivity Inadequate financial controls :Inadequate differentiation Poor product quality Lack of compelling product attributes 3 1 3 3 3 5 273 The Causes of Poor Performance :Poor management (cont'd) Lack of balanced expertise at the top Lack of strong middle management Lack of succession planning Failure by board to monitor strategic decisions Unethical behavior The Causes of Poor Performance (cont'd) :Overexpansion Empire-building that adds little value Loss of control Declining profitability :Structural shifts in demand and new competitors Technology Economic or political conditions Social and cultural norms 3 2 3 3 1 The Causes of Poor Performance (cont'dl :Organizational inertia Distribution of power and influence in the organization Organization culbJre Preconceptions about the appropriate business model ~.~~-=..'*'),f"Jl,~ 3 7 Strategic Change: Improving Performance :Changing the leadership New leader is often from outside the company New leader must make difficult decisions, motivate, listen, and delegate :Changing the strategy Redefine strategic focus Divest unwanted assets Improve profitability Make acquisitions 3 Stakeholders and Corporate Performance Stakeholders and the Enterprise Stakeholders are individuals or groups with an interest, claim, or stake in the company, what it does, and how well it performso sta o In .n exchange ~ relationship with the company .bIL Contributions: they supply the- organizationwith important resources Inducements: in exchangethey expecttheir intereststo by satisfied Companies should pursue strategies that maximize long-run shareholder value and must also behave in an ethical and socially responsible manner. _0e:-om... .Su~S Credmn. t Gcivenimero '~Uritcifta~r. '," ~ l ::-~ ~ ~ _ ln d u w ~ n ts----- ------- ;.- Conlributians .~ __ :~Stoci:bOldon <~-':: ~BOard members . "-:-.-::,,-- 3 3 '0 Strategy in Action :BiII Agee at Morrison Knudsen 3 " 274 Strategy in Action :Price Fixing at Sotheby's and Christie's 3 '2 2 The Challenge for Principals Confronted with agency problems, the challenge for principals ;s to: 1. Shape the behavior of agents so that they act in accordance with goals set by principals 2. Reduce infonnation asymmetry between agents and principals...
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BusinessPolicyNotes11 - Chapter 11 Corporate Performance,...

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