Strategic management, cg, sr, and ethics

1. STRATEGIC MANAGEMENT
CG, SR, AND ETHICS

2. Corporate Governance
CG involves the interaction of 3 groups…
Phantom>Rubber Stamp>Minimal Review>Nominal
Participation>Active Participation>Catalyst
30% (Active/Catalyst)
30% (Minimal/Nominal)
40% (Phantom/Rubber Stamp)

3. Boards of Directors
‘Inside’ and ‘Outside’ directors
Board composition: former CEOs and COOs, academicians,
lawyers, government officials, and bankers.
Financial institutions and investment companies as Board
Members: Germany, Denmark, Sweden, Belgium, and Italy
Agency theory
Holding Boards/Board Members accountable

4. Ethics and Management
Stakeholders – anyone who has a financial
interest, stake, or claim in an organization
and/or what it does
Shareholders, customers, employees, interest
groups, government, etc.

5. Stakeholders
What are a company’s responsibilities to its
owners/investors?
What are the company’s responsibilities to customers?
What are a company’s responsibilities to its employees?
Prioritize the three stakeholders above from most important
to least.

6. Group Task
Q: In order, list the most important stakeholder
to the least important e.g. 1,2,3,4 :
Government, employees, owners
(shareholders), customers
Be ready to support your ranking with sound
reasoning.

7. Ethics
Ethics – a code, usually belonging to a profession or
occupation, indicating what is right and wrong;
acceptable practices and behavior
Ethical behavior has to do with adhering to a code of
ethics

8. Social Responsibility ?
There is one and only one social responsibility
of business—to use its resources and engage in
activities designed to increase its profits so long
as it stays within the rules of the game, which is
to say, engages in open and free competition
without deception or fraud. –Milton Friedman

9. Carroll
4 Responsibilities
Economic (Must Do)
Legal (Have to Do)
Ethical (Should Do)
Discretionary (Might Do)

10. Morality
Morality has to do with adhering to principles of good versus bad
behavior; usually on the basis of philosophy or religious belief
Kohlberg’s Levels of Moral Development:
Pre-conventional
Conventional
Principled

11. Ethical Decision Making
“When in Rome…” (Moral Relativism)
The “American Express” Approach
Utilitarian
Individual Rights
Is there such a thing as universal truth?

12. Ethical Decision Making
Justice Approach
Distributive Justice
Retributive Justice
Compensatory Justice

13. Kant and Cavanaugh
Kant: A person’s action is ethical, only if he is willing to have that same action
taken by everybody else, who is in a similar situation.
A person should never treat another human being simply as a means, but
always as an end.
Cavanaugh:
Utility
Individual
Justice
Application: Adding false expenses to a company expense account.