Chap009 - Chapter Focus 83781 (Ex. 9.3)74Organizational...

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Transparency 74 (Learning Objectives) cy 75 (Ex. 9.1) Traditional Approach to Strategic… 76 (Ex. 9.2) Contemporary Approach to Strategic… y 77 (Ex. 9.3) Essential Elements of Strategic… arencies 78a, 78b (S.S. 9.4) Developing… cy 79 (Ex. 9.4) Action Plan for Objective #3 ncy 80 (Ex. 9.5) Organizational Control . . . cy 81 (Ex. 9.6) Summary of Relationships 82b, 82c (Ex. 9.7) Intel Corporation’s Exemplary… 83 (Ex. 9.8) The 2003 CalPERS Focus List 84 (Ex. 9.9) TIAA-CREF’s Principles … 85 (Ex. 9.10) Watchdogs for Corporate… Chapter 9 Strategic Control and Corporate Governance SUMMARY/OBJECTIVES The purpose of this chapter is to teach students how strategic control systems may be used to effectively implement strategies. As the first of the four chapters in Part 3 of the text, it introduces students to the issues surrounding implementation and leadership. It includes both traditional and contemporary approaches to control, and outlines informational (e.g., monitoring, performance milestones) as well as behavioral (e.g., rewards, culture, boundaries) techniques for achieving control as well as corporate governance. The chapter is organized into four sections: 1. Informational control: Describe contrasting approaches to information control. The first is termed “traditional” and emphasizes setting objectives and standards, and controlling by comparing performance to achievements. The second is “contemporary” in which conditions are continually monitored and strategy is modified in an interactive fashion to adapt to changing conditions. 2. Behavioral control: Introduce the role of cultures, rewards and incentives, and boundaries and how firms must achieve a proper balance between these forces in order to maintain strategic control. 3. The role of contingencies in determining which control system is appropriate. Emphasize there is no “one best way” to achieve control, but some approaches are likely to be more effective depending on conditions. Business-level and corporate-level strategies may require different approaches to strategic control. 4. The role of corporate governance in ensuring that managerial and shareholder (owner) interests are aligned. Examples of effective and ineffective governance are given and we address three mechanisms for effective governance: committed and involved board of directors, shareholder activism, and effective managerial rewards and incentives. We also propose several external control mechanisms: the market for corporate control, auditor, banks and analysts, the media, and public activists. LECTURE/DISCUSSION OUTLINE The introductory case is Tyco International—a company run by CEO Dennis Kozlowski that was focused on increasing revenues and profits at all costs (largely through acquisitions). The result was an aggressive culture and reward system that led to unethical behaviors and fraud. Use the Tyco case to illustrate that a firm’s control systems must match its overall mission and goals. If the goals are flawed, the outcomes
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This note was uploaded on 06/02/2011 for the course BUSN 412 taught by Professor Bernard during the Spring '11 term at Cornell College.

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Chap009 - Chapter Focus 83781 (Ex. 9.3)74Organizational...

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