1. BUS 411
DAY 14

2. Agenda Question? Assignment 4 Corrected Assignment 5 Due
1 A, 3 B’s, 2 C’s, 1 D & 1 F
Assignment 5 Due
Assignment 6 Posted
Due March 24
Assignment 6.pdf
Today 
Chapter 9 Strategy Review, Evaluation, and Control
Chapter 10 Business Ethics/Social Responsibility/ Environmental Sustainability

3. Pre Break Timeline March 20 March 24 March 27 March 28 @ Midnight
Finish Chapter 10 Business Ethics/Social Responsibility/Environmental Sustainability
Begin Chapter 11 Global Issues
Team Formation & Case Assignments
March 24
Finish Chapter 11 Global issues
How to Prepare and Present a Case Study
Midterm Assigned
March 27
Example Case Netflix presentation by Tony
March Midnight
Midterm Exam Due

4. Cases to be done NetFlix –Gauvin CVS Caremark Corporation
Walgreen Company
The McGraw Hill Companies, Inc. – Gauvin
Bank of America Corporation
E*TRADE Financial Corporation
Undecided
2 Student’s Choice Cases

5. Strategy Review, Evaluation, and Control
Chapter Nine

6. Chapter Objectives
Describe a practical framework for evaluating strategies.
Explain why strategy evaluation is complex, sensitive, and yet essential for organizational success.
Discuss the importance of contingency planning in strategy evaluation.
Discuss the role of auditing in strategy evaluation.
Discuss the Balanced Scorecard.
Discuss three twenty-first-century challenges in strategic management.

7. A Comprehensive Strategic-Management Model

8. The Nature of Strategy Evaluation
Strategy evaluation includes three basic activities:
examining the underlying bases of a firm’s strategy
comparing expected results with actual results
taking corrective actions to ensure that performance conforms to plans

9. Rumelt’s Criteria for Evaluating Strategies

10. Rumelt’s Criteria for Evaluating Strategies

11. The Nature of Strategy Evaluation
Consonance and advantage are mostly based on a firm’s external assessment
Consistency and feasibility are largely based on an internal assessment

12. A Few Big Company Household Names That Disappeared Over Past Years

13. Why Strategy Evaluation is More Difficult Today
A dramatic increase in the environment’s complexity
The increasing difficulty of predicting the future with accuracy
The increasing number of variables
The rapid rate of obsolescence of even the best plans

14. Why Strategy Evaluation is More Difficult Today
The increase in the number of both domestic and world events affecting organizations
The decreasing time span for which planning can be done with any degree of certainty

15. The Process of Evaluating Strategies
Strategy evaluation should initiate managerial questioning of expectations and assumptions, should trigger a review of objectives and values, and should stimulate creativity in generating alternatives and formulating criteria of evaluation

16. The Process of Evaluating Strategies
Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored
Successful strategies combine patience with a willingness to promptly take corrective actions when necessary

17. Reviewing Bases of Strategy
How have competitors reacted to our strategies?
How have competitors’ strategies changed?
Have major competitors’ strengths and weaknesses changed?
Why are competitors making certain strategic changes?

18. Reviewing Bases of Strategy
Why are some competitors’ strategies more successful than others?
How satisfied are our competitors with their present market positions and profitability?
How far can our major competitors be pushed before retaliating?
How could we more effectively cooperate with our competitors?

19. Key Questions to Address in Evaluating Strategies
Are our internal strengths still strengths?
Have we added other internal strengths? If so, what are they?
Are our internal weaknesses still weaknesses?
Do we now have other internal weaknesses? If so, what are they?

20. Key Questions to Address in Evaluating Strategies
Are our external opportunities still opportunities?
Are there now other external opportunities? If so, what are they?
Are our external threats still threats?
Are there now other external threats? If so, what are they?
Are we vulnerable to a hostile takeover?

21. A Strategy-Evaluation Framework
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

22. Measuring Organizational Performance
Strategists use common quantitative criteria to make three critical comparisons:
Comparing the firm’s performance over different time periods
Comparing the firm’s performance to competitors’
Comparing the firm’s performance to industry averages

23. Problems with Quantitative Criteria
Most quantitative criteria are geared to annual objectives rather than long-term objectives
Different accounting methods can provide different results on many quantitative criteria
Intuitive judgments are almost always involved in deriving quantitative criteria

24. Additional Key Questions
How good is the firm’s balance of investments between high-risk and low-risk projects?
How good is the firm’s balance of investments between long-term and short-term projects?
How good is the firm’s balance of investments between slow-growing markets and fast-growing markets?

25. Additional Key Questions
How good is the firm’s balance of investments among different divisions?
To what extent are the firm’s alternative strategies socially responsible?
What are the relationships among the firm’s key internal and external strategic factors?
How are major competitors likely to respond to particular strategies?

26. Corrective Actions

27. The Balanced Scorecard
How well is the firm continually improving and creating value along measures such as innovation, technological leadership, product quality, operational process efficiencies, and so on?

28. The Balanced Scorecard
How well is the firm sustaining and even improving upon its core competencies and competitive advantages?
How satisfied are the firm’s customers?

29. The Balanced Scorecard
The Balanced Scorecard approach to strategy evaluation aims to balance long-term with short-term concerns, to balance financial with nonfinancial concerns, and to balance internal with external concerns.

30. An Example Balanced Scorecard

32. Characteristics of an Effective Evaluation System
Strategy evaluation activities must be economical
too much information can be just as bad as too little information
too many controls can do more harm than good
Activities should be meaningful
should specifically relate to a firm’s objectives

33. Characteristics of an Effective Evaluation System
Activities should provide timely information
Activities should be designed to provide a true picture of what is happening
Activities should not dominate decisions
should foster mutual understanding, trust, and common sense

34. Contingency Planning
If a major competitor withdraws from particular markets as intelligence reports indicate, what actions should our firm take?
If our sales objectives are not reached, what actions should our firm take to avoid profit losses?

35. Contingency Planning
If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand?
If certain disasters occur, what actions should our firm take?
If a new technological advancement makes our new product obsolete sooner than expected, what actions should our firm take?
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

36. Effective Contingency Planning
Identify both beneficial and unfavorable events that could possibly derail the strategy or strategies.
Specify trigger points.
Assess the impact of each contingent event.
Develop contingency plans.

37. Effective Contingency Planning
Assess the counter-impact of each contingency plan.
Determine early warning signals for key contingent events.
For contingent events with reliable early warning signals, develop advance action plans to take advantage of the available lead time.

38. Auditing
Auditing
“a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users”

39. Twenty-First-Century Challenges in Strategic Management
Deciding whether the process should be more an art or a science
Deciding whether strategies should be visible or hidden from stakeholders
Deciding whether the process should be more top-down or bottom-up in their firm

40. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

41. Business Ethics/ Social Responsibility/ Environmental Sustainability
Chapter Ten

42. "A business that makes nothing but money is a poor kind of business."
Henry Ford (1863–1947), founder of Ford Motor Company
“In the next decade, the most successful companies will be those that integrate sustainability into their core businesses” – Jim Owens, CEO Caterpillar
“We do not inherit the earth from our ancestors; we borrow it from our children” Chief Seattle
Nemo vir est qui mundum non reddat meliorem
Old latin saying

43. Chapter Objectives
Explain why good ethics is good business in strategic management.
Explain how firms can best ensure that their code of business ethics guides decision making instead of being ignored.
Explain why whistle-blowing is important to encourage in a firm.
Discuss the nature and role of corporate sustainability reports.

44. Chapter Objectives (cont.)
Discuss specific ways that firms can be good stewards of the natural environment.
Explain ISO and
Discuss recent trends in bribery law.

45. A Comprehensive Strategic-Management Model

46. Social Responsibility, Environmental Sustainability
actions an organization takes beyond what is legally required to protect or enhance the well-being of living things
Sustainability
the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment

47. Business Ethics Business ethics
principles of conduct within organizations that guide decision-making and behavior

48. Seven Principles of Admirable Business Ethics

49. Code of Business Ethics
To ensure that the code of ethics is read, understood, believed, and remembered, periodic ethics workshops are needed to sensitize people to workplace circumstances in which ethics issues may arise

50. An Ethics Culture Whistle-blowing
refers to policies that require employees to report any unethical violations they discover or see in the firm

51. An Ethics Culture
Ethics training programs should include messages from the CEO or owner of the business emphasizing ethical business practices, the development and discussion of codes of ethics, and procedures for discussing and reporting unethical behavior
“Trees die from the top”  Peter Drucker page 313

52. Bribes
Bribery
the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty
is a crime in most countries of the world, including the United States
Foreign Corrupt Practices Act

53. Love Affairs at Work
Wall Street Journal article on current American standards regarding boss-subordinate love affairs at work: 
Five percent of sampled firms had no restrictions on such relationships.
80 percent of all firms sampled have policies that prohibit relationships between a supervisor and subordinate.
Four percent of firms strictly prohibited such relationships.
39 percent of firms had policies that required individuals to inform their supervisors whenever a romantic relationship begins with a coworker.
24 percent of firms required the two persons to be in different departments.
In Europe, romantic relationships at work are largely viewed as private matters and most firms have no policies on the practice.
A recent Bloomberg Businessweek article reports that in the sluggish job market, employees are filing sexual harassment complaints as a way to further their own job security.

54. Social Responsibility
Ralph Nader proclaims that organizations have tremendous social obligations
Milton Friedman asserts that organizations have no obligation to do any more for society than is legally required

55. Social Policy Social policy
concerns what responsibilities the firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups
Firms should strive to engage in social activities that also have economic benefits

56. Environmental Sustainability
Employees, consumers, governments, and society are especially resentful of firms that harm rather than protect the natural environment
Conversely people today are especially appreciative of firms that conduct operations in a way that mends, conserves, and preserves the natural environment

57. Wendell Berry
“We have lived our lives by the assumption that what was good for us would be good for the world. We have been wrong. We must change our lives so that it will be possible to live by the contrary assumption, that what is good for the world will be good for us. And that requires that we make the effort to know the world and learn what is good for it.”
― Wendell Berry, The Long-Legged House

58. The Top 20 Companies in the World on Sustainability

59. Lack of Standards Changing
Uniform standards defining environmentally responsible company actions are rapidly being incorporated into our legal landscape
It has become more and more difficult for firms to make “green” claims when their actions are not substantive, comprehensive, or even true

60. Managing Environmental Affairs in the Firm
Environmental strategies can include:
developing or acquiring green businesses
divesting or altering environment-damaging businesses
striving to become a low-cost producer through waste minimization and energy conservation
pursuing a differentiation strategy through green-product features

61. Reasons Why Firms Should “Be Green”
Consumer demand for environmentally safe products and packages is high.
Public opinion demanding that firms conduct business in ways that preserve the natural environment is strong.
Environmental advocacy groups now have over 20 million Americans as members.
Federal and state environmental regulations are changing rapidly and becoming more complex.

62. Reasons Why Firms Should “Be Green”
More lenders are examining the environmental liabilities of businesses seeking loans.
Many consumers, suppliers, distributors, and investors shun doing business with environmentally weak firms.
Liability suits and fines against firms having environmental problems are on the rise.

63. Be Proactive, Not Reactive
A proactive policy views environmental pressures as opportunities and includes such actions as developing green products and packages, conserving energy, reducing waste, recycling, and creating a corporate culture that is environmentally sensitive.

64. ISO 14000/14001 Certification
The ISO family of (voluntary) standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance.

65. ISO 14000/14001 Certification
ISO is a set of standards adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manner
Results in an environmental management system

66. Major Requirements of an EMS
Show commitments to prevention of pollution, continual improvement in overall environmental performance, and compliance with all applicable statutory and regulatory requirements

67. Major Requirements of an EMS
Identify all aspects of the organization’s activities, products, and services that could have a significant impact on the environment, including those that are not regulated

68. Major Requirements of an EMS
Set performance objectives and targets for the management system that link back to three policies:
(1) prevention of pollution,
(2) continual improvement, and
(3) compliance

69. Major Requirements of an EMS
Meet environmental objectives that include training employees, establishing work instructions and practices, and establishing the actual metrics by which the objectives and targets will be measured

70. Major Requirements of an EMS
Conduct an audit operation of the EMS
Take corrective actions when deviations from the EMS occur

71. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall