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Which stakeholder group includes suppliers and customers?
Which stakeholder group includes suppliers and customers?
In what way can community stakeholders influence an organization?
In what way can community stakeholders influence an organization?
What is the primary role of technological stakeholders in a business context?
What is the primary role of technological stakeholders in a business context?
Which of the following groups typically does NOT have a formal relationship with an organization?
Which of the following groups typically does NOT have a formal relationship with an organization?
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How might external stakeholders influence an organization’s strategy?
How might external stakeholders influence an organization’s strategy?
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Which type of stakeholders is likely to be especially influential in a public-sector context?
Which type of stakeholders is likely to be especially influential in a public-sector context?
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Which stakeholders are specifically mentioned as part of the economic group?
Which stakeholders are specifically mentioned as part of the economic group?
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What characteristic uniquely defines internal stakeholders?
What characteristic uniquely defines internal stakeholders?
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What is a key outcome of stakeholder mapping in coalition-building?
What is a key outcome of stakeholder mapping in coalition-building?
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Which type of companies are publicly quoted?
Which type of companies are publicly quoted?
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What is a responsibility of professional managers in publicly quoted companies?
What is a responsibility of professional managers in publicly quoted companies?
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What do family businesses typically prioritize over short-term profit maximization?
What do family businesses typically prioritize over short-term profit maximization?
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In stakeholder mapping, what does repositioning certain stakeholders aim to achieve?
In stakeholder mapping, what does repositioning certain stakeholders aim to achieve?
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In entrepreneurial businesses, how do founders maintain power?
In entrepreneurial businesses, how do founders maintain power?
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What is a common characteristic of state-owned enterprises compared to publicly quoted companies?
What is a common characteristic of state-owned enterprises compared to publicly quoted companies?
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What role do shareholders have in publicly quoted companies if they are dissatisfied?
What role do shareholders have in publicly quoted companies if they are dissatisfied?
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What is a potential conflict for family business owners when pursuing growth?
What is a potential conflict for family business owners when pursuing growth?
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What might be a consequence of expanding into mass markets?
What might be a consequence of expanding into mass markets?
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How does stakeholder mapping assist organizations?
How does stakeholder mapping assist organizations?
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What does the term 'power' refer to in the context of stakeholder mapping?
What does the term 'power' refer to in the context of stakeholder mapping?
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Which factor influences the attention that stakeholders give to certain issues?
Which factor influences the attention that stakeholders give to certain issues?
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What risk might arise from raising funds through going public?
What risk might arise from raising funds through going public?
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What relationship can exist between a local division of a multinational organization and its host country?
What relationship can exist between a local division of a multinational organization and its host country?
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What might be a negative consequence of focusing on specialist services in public services?
What might be a negative consequence of focusing on specialist services in public services?
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What are the main issues highlighted that influence the strategic position of an organization?
What are the main issues highlighted that influence the strategic position of an organization?
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What unethical practice did Cambridge Analytica engage in with Facebook user data?
What unethical practice did Cambridge Analytica engage in with Facebook user data?
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How did Facebook's share price perform in 2018 compared to the overall stock market?
How did Facebook's share price perform in 2018 compared to the overall stock market?
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What percentage of shares does Mark Zuckerberg hold compared to the voting rights he receives?
What percentage of shares does Mark Zuckerberg hold compared to the voting rights he receives?
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Which statement accurately describes stakeholders in an organization?
Which statement accurately describes stakeholders in an organization?
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What was a major ethical concern raised about Facebook in 2018?
What was a major ethical concern raised about Facebook in 2018?
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What role does formal governance play in an organization's strategy?
What role does formal governance play in an organization's strategy?
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Why must managers consider stakeholders in strategic decisions?
Why must managers consider stakeholders in strategic decisions?
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Which model describes the relationship between owners and managers in organizations?
Which model describes the relationship between owners and managers in organizations?
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What is a key stakeholder in corporate governance besides the owners?
What is a key stakeholder in corporate governance besides the owners?
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Which of the following is NOT identified as a governance issue in principal-agent theory?
Which of the following is NOT identified as a governance issue in principal-agent theory?
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What role do managers and stakeholders play in the governance chain?
What role do managers and stakeholders play in the governance chain?
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What challenge arises due to knowledge imbalances in the principal-agent relationship?
What challenge arises due to knowledge imbalances in the principal-agent relationship?
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In a small family business, what best describes the governance chain?
In a small family business, what best describes the governance chain?
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Why are misaligned incentives considered a problem in the principal-agent model?
Why are misaligned incentives considered a problem in the principal-agent model?
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Which type of business structure is less commonly associated with complex corporate governance issues?
Which type of business structure is less commonly associated with complex corporate governance issues?
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Study Notes
Business Strategy - 2024/2025
- Course presenter: Sandra Ramos
- Course timeframe: 2024/2025
The Strategic Position
- Focus: Stakeholders and Governance
- Discussion on organizational missions, visions, values, and objectives
- Key stakeholders' wishes define an organization's purpose
- Governance and ethical considerations guide translation of purpose into strategy
Introduction
- Stakeholders, governance, and ethics are key to understanding organizational purpose
- Stakeholders' desires define an organization's purpose
- Formal governance mechanisms and ethical considerations transform purpose into strategy
- Facebook's (2018) scandals highlight ethical, governance, and strategic concerns
- Facebook's strategy centers on collecting user data for advertising
- This data is vulnerable to misuse
- Cambridge Analytica (2018) used Facebook data to influence US presidential and UK Brexit campaigns
- Acknowledged data leak involving 50 million users
- Facebook's share price underperformed the stock market by 20% in 2024
- Governments raised questions about Facebook's data protection and usage practices
- Concerns regarding Mark Zuckerberg's governance power and CEO ability, given size and market value of Facebook
Stakeholders
- Stakeholders are individuals or groups dependent on organizations to achieve their goals
- Managers must consider stakeholder expectations in strategic decisions
- Stakeholder demands can vary, especially in the short-term
- Examples: owners and maximizing profit might conflict with customers wanting quality and employees needing good jobs
- Stakeholders in a large organization include: government, shareholders/owners, activist groups, suppliers, customers, competitors, trade associations, employees, and managers
Stakeholder Groups (continued)
- Economic stakeholders (e.g., customers, banks, shareholders)
- Social/political stakeholders (e.g., policy-makers, local councils, regulators)
- Technological stakeholders (e.g., key adopters, standard agencies)
- Community stakeholders (e.g., residents living near businesses)
- Internal stakeholders (e.g., employees, departments)
Stakeholder Mapping
- Identifies stakeholder power and attention to understand political priorities
- Organisations involve political coalitions of stakeholders, each with differing power and attention levels
Stakeholder Mapping (continued)
- Power: ability of individuals or groups to persuade, induce, or coerce others to follow certain courses of action
- Not derived from hierarchical position in organization or formal corporate governance
- Internal stakeholders gain power through hierarchy, influence, resource control, knowledge, and skill
- External stakeholders' power comes from depending on resources and through relationships with internal stakeholders, knowledge, and skills
Stakeholder Mapping (continued)
- Stakeholders' attention levels influenced by issue criticality, quality of information channels, and cognitive capacity.
- Power/Attention Matrix: categorizes stakeholders based on power and attention levels (High/High, High/Low, Low/High, Low/Low) to help with strategy and decision-making for how best to engage with stakeholders
Stakeholder Mapping (continued)
- Building stakeholder coalitions important for effective strategy
- Stakeholder mapping aids strategy by identifying blockers and facilitators of strategic success and assessing proper responses
Owners
- Publicly quoted companies: Shares traded on exchanges; owners (shareholders) do not typically manage daily operations.
- Managers generate financial returns for shareholders. Dissatisfied shareholders can sell shares or push for leadership changes.
- State-owned enterprises: Wholly or majority owned by national or regional governments; politicians delegate control to professional managers; must create profit while pursuing government policy goals.
- Entrepreneurial businesses: Controlled by founders; prioritize business knowledge and control; bring in managers and investors as they grow.
- Family businesses: Control passed down family lines, retain majority control, but bring in professional managers; prioritize long-term goals - minimizing risk, and succession over short-term profit maximization
- Other variants exist (e.g., non-profit, partnerships, employee-owned firms)
Ownership, Management, and Purpose
- Visual representation of relationships between various ownership and management styles
Corporate Governance
- Structures and systems by which managers are held accountable to stakeholders (typically owners, and other groups like employee representatives)
- Linking stakeholder interests with management actions a crucial aspect of strategic development
Governance Chain
- Managers and stakeholders linked through governance chain
- Shows roles and relationships of different groups in organization governance
- Small family business, example: Simple governance chain; family shareholders, board w/ family members, and managers (some possibly family too)
Governance Chain (continued)
- Principal-agent model: Principals employ agents to act on their behalf; principal (owner) and agent (manager) are linked
- Complex in large public companies: Multiple principals and agents at all organizational levels
Governance Chain (continued)
- Governance issues (principal-agent theory) arise from knowledge imbalances, monitoring limits, and misaligned incentives.
Handbook
- Resource for further reading - Exploring Strategy text and cases, 11th edition, Pearson Education
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Description
Explore the significance of stakeholders, governance, and ethics in defining an organization's mission and strategy in the Business Strategy course for 2024/2025. The focus is on how key stakeholder interests shape organizational purpose and the ethical considerations that govern strategic decisions, illustrated by case studies like Facebook's data management practices.
