Types of Capitalism
This type of structure relies on investors who provide capital and are the company's legal owners.
What is shareholder capitalism?
What is the term for the problem that emerges wh4en individuals, companies, or nations pursue their own self-interest without considering society's well-being?
The tragedy of the commons
Spell out what ESG stands for
Environmental, social and governance.
What are the four key areas of the balanced scorecard approach
Customer, value creation/business process, Internal core competencies, shareholders
These are organizational and managerial skills that help a company orchestrate a diverse set of resources to deploy them strategically
Capabilities
This framework proposes that strategic leaders maintain a dual focus on economic value creation and societal needs.
What is shared value creation framework?
What is the difference between CSV and CSR?
CSV has a purpose-driven mission and seeks to be an integral part of a company's competitive strategy, while CSR focuses on isolated parts of the company that may be more externally focused.
What are the three components we use to evaluate any good or service?
Value (V), Price (P) and Cost (C)
Name two advantages of the balanced scorecard approach.
1) Communicate and link strategic value to responsible people in the org
2) Translate vision into operational goals
3) Design and plan business processes
4) Enable continuous improvement -- modify and adapt strategic goals when necessary
Name Porter's five competitive forces.
1) threat of entry, 2) power of suppliers, 3) power of buyers, 4) threat of substitutes, 5) rivalry among existing competitors
What are three challenges to traditional capitalism?
Is H&M's efforts to prevent use of child labor in its manufactoring an example of CSV or CSR?
It's CSR because it is just one part of the process, and seeks to create a positive image externally but does not address the larger issues.
What is the "formula" for economic value?
Difference between a buyer's willingness to pay for a good or service and the firm's cost to produce it (V - C)
Name one disadvantage of the balanced scorecard approach.
1) Limited guidance is available to determine which metrics to choose
2) Is only as good as the managers who use it
3) Does not provide guidance about what to do if metrics deviate from their goals
4) Does not help companies formulate a competitive strategy--this must be done ahead of time
These define the ethical standards and norms that should govern the behavior of individuals within a company.
Core values
Why does your text say that traditional shareholder capitalism is in crisis? Provide one real world example
Erosion of trust between corporation and society -- unethical or immoral behavior. Examples: Eonron, global financial cirsis, Purdue Pharma, etc.
How is Patagonia's decision to move to 100% organic cotton a demonstration of its CSV approach?
It transformed its entire supply chain to increase quality while reducing its environmental footprint.
Why is it challenging to measure an organization's performance solely on its total financial return to shareholders? Name one reason
1) Stock prices are volatile, 2) Macroeconomic factors can impact stock prices (e.g., unemployment rate, etc.) or 3) stock prices can vary based on investors' "mood" (low or high)
What are the three aspects of TBL -- list and explain.
People -- social dimension (well-being, care etc.), Profit--economics dimension (must make a profit and use money responsibly including community support), Planet - environmental dimension (relationship between business and natural environment)
A firm who can outperform its competitors or the industry average over a prolonged period has _________.
A sustainable competitive advantage
Maximizing shareholder value depends on which three assumptions?
Free markets are perfectly efficient, individual freedom is society's primary goal, and managers are agents of shareholders.
What are three things that Porter believes strategic leaders should focus on in the shared value creation framework?
1) Expand the customer base to bring in those from the lowest socioeconomic group, 2) Include more nontraditional partners such as NGOs, 3) Create new regional clusters
What is the primary reason companies choose to "go public"? On the flip side, what is a primary reason a successful company might choose to "stay private?"
To fund future growth. To pursue goals as they please and maintain control.
What is the link between competitive advantage and TBL?
When used correctly -- this can prompt an organization to innovate in terms of its processes, products/services, and business model. This might help the organization develop into new markets.
What is the three-part strategy framework?
Analysis, Formulation, Implementation