CBM Week 1 CORPORATE AND BUSINESS MANAGEMENT Susan Simei-Cunningham

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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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• 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.

The Organisation’s Purpose

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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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• It dictates how you will use your time, attention, and resources to serve your niched market better than anyone else.


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• 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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• 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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• 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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• 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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• 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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• 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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• 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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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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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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Short-term shareholder interests

Longer-term shareholder interests

Multiple stakeholder obligations

Shaper of society

Four Possible Ethical Stances

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Business EthicsCorporate Governance

Organisational Purposes

Stakeholders Cultural Context

Who should the organisation serve?How should purposes bedetermined?

Which purposes should be prioritised?

Why?

MissionObjectives

Which purposes are prioritised?

Why?Whom does the organisation serve?

Influences On Organisational Purposes

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Additional reading

• Strategic Purpose• http://sites.maxwell.syr.edu/measuringADR/

pdf/purpose.pdf

• Corporate Governance• http://www.nysscpa.org/cpajournal/

2004/1204/essentials/p46.htm

Documents

CBM Week 1 CORPORATE AND BUSINESS MANAGEMENT Susan Simei-Cunningham