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Questions and Answers
What do corporate values primarily serve to guide within a firm?
What do corporate values primarily serve to guide within a firm?
How does corporate social responsibility alter the governance structure of a firm?
How does corporate social responsibility alter the governance structure of a firm?
What is a common argument against corporate social responsibility?
What is a common argument against corporate social responsibility?
What does the concept of corporate social responsibility extend beyond?
What does the concept of corporate social responsibility extend beyond?
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According to some authors, what risk does assuming social responsibility pose to firms?
According to some authors, what risk does assuming social responsibility pose to firms?
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What is the primary purpose of a company's vision?
What is the primary purpose of a company's vision?
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Which of the following accurately describes strategic objectives?
Which of the following accurately describes strategic objectives?
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How often should a company's vision be reviewed?
How often should a company's vision be reviewed?
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What role do values play in an organization?
What role do values play in an organization?
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What does the corporate vision help to establish within a firm?
What does the corporate vision help to establish within a firm?
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What are the three characteristics that classify a stakeholder as crucial?
What are the three characteristics that classify a stakeholder as crucial?
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How does legitimacy of a stakeholder's objective manifest?
How does legitimacy of a stakeholder's objective manifest?
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What characterizes an expectant stakeholder?
What characterizes an expectant stakeholder?
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What is the primary risk for management when balancing stakeholder objectives?
What is the primary risk for management when balancing stakeholder objectives?
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What does the separation of ownership and management in corporate governance primarily lead to?
What does the separation of ownership and management in corporate governance primarily lead to?
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Study Notes
The Firm's Future Direction
- Strategic management process defines four basic concepts: vision, mission, strategic objectives, and values. These guide operations.
- Vision describes long-term (5-10 years) goals. It should not be reviewed yearly.
- Mission outlines the company's future development.
- Strategic objectives are measurable, high-level goals with deadlines.
- Values are guiding principles for teams toward a common goal. This system requires participation from all members for successful achievement.
Corporate Vision
- Corporate vision defines a firm's future in the distant future.
- Criteria for the firm's path are defined.
- The firm's strategic purpose, intent, or project are defined.
Basic Requirements for a Vision
- A deep understanding of success is needed.
- The vision must be stable over time.
- The vision should reflect effort and commitment to achievement.
- The vision should be realistic, achievable, and desirable.
- The vision shouldn't be farfetched or unrealistic, considering practical circumstances.
Corporate Mission
- The mission statement defines the firm's identity (present and future).
- The firm's reason for existing is articulated.
- The firm's business understanding is defined.
- The mission is a statement of principles.
- It's a reference for the firm and its members to communicate its identity.
- It remains stable over time, though it evolves.
Strategic Objectives
- Strategic objectives create concrete outcomes for the short or medium-term.
- Well-defined objectives include measurable attributes, yardsticks, targets, and timeframes.
- These serve as a strategic control tool, allowing for correction of deviations.
- They serve as a reference for performance measurement and motivation.
Types of Strategic Objectives
- Financial objectives are related to profitability (e.g., higher profits, share prices).
- Non-financial objectives are related to competition (e.g., market share, cost-cutting).
- Objectives can be classified based on timeframe, level of precision, and scope.
Firm Performance: Value Creation
- Firm performance is an indicator of managerial success and organizational quality.
- Firms want to create value.
- Performance is measured through accounting and economic indicators.
- Accounting indicators, such as EBITDA and EBIT, are essential.
- Economic value added (EVA) is another measure of profitability.
- A firm's value is the capacity to create rents/earnings.
Corporate Stakeholders and Corporate Governance
- Stakeholders include shareholders, managers, employees, and other groups with interests in the firm.
- Conflict between stakeholder objectives may arise.
- Stakeholder analysis is crucial for effective management.
- Corporate governance systems ensure that the interests of shareholders and managers are aligned.
- Internal and external mechanisms are present to ensure proper control.
Corporate Social Responsibility
- Corporate social responsibility (CSR) is an approach to operations and stakeholder relations that considers societal impacts.
- CSR is a transformation of the classical governance model that integrates all stakeholders.
- CSR includes economic and social impacts on the community.
- It involves considerations of the firm's impact on the environment.
- CSR might conflict with maximizing profits.
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Description
This quiz covers essential concepts of strategic management, focusing on the components of corporate vision, mission, strategic objectives, and values. Understand how these elements guide a firm's future direction and foster participation among team members for successful outcomes.
