Shreeniwas V Bidwai Adjunct Professor s IBS Mumbai PGPM– SEM III CLASS OF 2014

Shreeniwas V Bidwai Adjunct Professor s IBS Mumbai PGPM SEM III CLASS OF 2014

Syllabus: Vision, mission, Strategic intent-core Ideology and Values Corporate governance.

Strategic Purpose Expectations and Purposes:- A. Corporate Governance B.Business Ethics. C. Link to Strategic Purpose. D.Stakeholders E. Cultural Context B. The chain of Corporate Governance-typical reporting structure, Ethical Stance, C. Cultural Context D. Communicating Strategic Purposes

Strategic Purpose What Do We Want to Become? What Is Our Business? Importance of Vision and Mission Statements

EXPECTATIONS AND PURPOSES Expectations and purposes are influenced by four main factors: corporate governance, stakeholder expectations, business ethics and culture. Corporate governance Whom should the organization serve? How should purposes be determined? Business ethics Which purposes should be prioritised? Why? Strategic purpose Mission Vision Stakeholder * Whom does theorganization serve? Cultural context Which purposes are prioritised? Why?

CORPORATE EXPECTATIONS AND PURPOSES The most fundamental questions are whom should the organization be there to serve and how should the direction and purposes of an organization be determined? This is the province of corporate governance and the regulatory framework within which organizations operate. Whom the organization does actually serve in practice is the second important issue. This will be addressed through the concept of organizational stakeholders and the extent to which they are interested in, or able to influence, an organizations purposess

CORPORATE EXPECTATIONS AND PURPOSE Which purposes an organization should fulfill is influenced by ethical considerations. The ethical agenda is also concerned with corporate social responsibility to the various stakeholders particularly those with little formal power. Which purposes are actually prioritized above others is related to a variety, of factors in the cultural context in which the organization is operating of cultural web will make us understood culture at different levels

CORPORATE EXPECTATIONS AND PURPOSES The governance chain The issue of corporate governance has arisen for two main reasons. First, the practical need to separate ownership and management control of organization is now the norm except with very small businesses. The result has been that most organizations operate within a hierarchy or chain of governance, i.e. all those groups that have a right to influence an organizations purposes. The Exhibit illustrates a typical chain of governance for a publicly quoted company in the UK

Second, there has been an increasing tendency to make organizations more visibly accountable not only to owners (e.g. shareholders), but also to other stakeholder groups including the community at large. CORPORATE EXPECTATIONS AND PURPOSES

CORPORATE GOVERNANCE The governance framework describes whom the organization is there to serve and how the purposes and priorities of the organization should be decided. It is concerned with both the functioning of the organization and the distribution of power among different stakeholders. It will be seen that there are different traditions and frameworks in different countries. The corporate governance agenda in most countries tend to be more implicit than explicit.

CORPORATE GOVERNANCE Even in the simplified example of the Exhibit it can be seen that the managers who are driving strategy in the organization may be very remote from the ultimate beneficiaries of the companys performance. Given this degree of complexity in corporate governance, there are likely to be several conflicts of interest both between different groups and for individual managers or directors as they try to balance these various interests. This is a particular issue for boards of directors and has resulted in important developments in both the role of the board and the disclosure of information.

The chain of corporate governance: typical reporting structures Beneficiaries Trustees Investment managers Board Executive Directors Senior executives Managers Limited reports Limited investment performance reports Accounts Analysts reports Company briefings Budgets / qualitative reporting Budgets / other operating reports Reports received

The corporate governance arrangements determine whom the organization is there to serve and how the purposes and priorities should be decided. Corporate governance has become more complex for two main reasons: first, the separation of ownership and mangement control, and second, the increasing tendency to make organizations more visibly accountable to a wider range of stakeholders The chain of corporate governance: typical reporting structures

Stakeholders differ in terms of the power that they hold and the extent to which they are actively interested in the strategies that an organization is pursuing (or planning to pursue). Although they may be in agreement about the broad purposes of an organization, at a more detailed level there are usually different expectations amongst different stakeholders. Stakeholder mapping can help with understanding these differences.

A Minimal Effort B Keep Informed C Keep Satisfied D Key Players Low High Low High Power Stakeholder Mapping: The Power/Interest Matrix

THE ETHICAL STANCE The regulatory environment and the corporate governance arrangements for an organization determine the minimum obligations of an organization towards its various stakeholders. Therefore, a key strategic issue within organizations is the ethical stance which is taken regarding obligations to stakeholders. The ethical stance is the extent to which an organization will exceed its minimum obligations to stakeholders and society at large. Different organizations take very different stances and there is likely to be a strong relationship between the ethical stance and the character of an organization.

Four possible ethical stances Short term shareholder interests Longer term shareholders interests Multiple stakeholder obligations Shaper of society

Four possible ethical stances At one extreme there are organizations which have taken the narrow view that the only responsibility of business is the short term interests of shareholders. Their ethical stance is that it is the domain of government The ethical stance of category 2 is similar to that of the previous group, but it is tempered with a recognition of the long term financial benefit to the shareholder of well managed relationships with other stakeholders. ethical standards and behaviors in the organizations.

Four Possible Ethical Stance The third category is that stakeholder interests and expectations (wider than just shareholders) should be more explicitly incorporated in the organizations purposes and strategies, and usually they will go beyond the minimum obligations of regulation and corporate governance. They also argue that the Purposes are also influenced by the ethical stance taken by the organization about its relationships with the wider society within which it operates.

Four Possible Ethical Stance This stance may vary from a narrow view that the short term interests of shareholders should be paramount, through to some organizations that would see themselves as shapers of society. Within this broad stance, specific issues of corporate social responsibility will be important. There can also be ethical dilemmas for individuals within organizations if their personal values come into conflict with the organizational values.

Definitions Culture can be defined as the shared philosophies, ideologies, value, assumptions, beliefs, expectations, attitudes and norms that knit a community together. All of these interrelated psychological qualities reveal a groups agreement, implicit or explicit on how to approach decisions & problems. A groups culture can be characterized as follows A set of understandings or meanings shared by a group of people. The meanings are largely tacit among members, are clearly relevant to the particular group, and are distinctive to the group. Meanings are passed on to the new group members.

Three level model to innervate various views of culture Purposes are strongly influenced by cultural frames of reference at various levels. This ranges from the national culture, through the organizational field to the organizational culture and subcultures. All of these influence whether strategies are regarded as legitimate. Culture consists of layers of values, beliefs and taken for granted assumptions and ways of doing things in organizations. The cultural web is a useful concept for understanding how these connect and influence strategy It is useful to understand and characterise both the culture and the subcultures in an organization. This can help in understanding the ease or difficulty with which new strategies could be adopted.

Culture in three layers

Organizational culture It is useful to conceive of the culture of an organization as consisting of three layers Values may be easy to identify in an organization, and are often written down as statements about the organizations mission, objectives, or strategies. However, they tend to be vague, such as service to the community or equal employment opportunities. Beliefs are more specific, but again they are issues which people in the organization can surface and talk about. They might include a belief that the company should not trade with particular countries, or that professional staff should not have their professional actions appraised by managers. Taken for granted assumptions as the core of an organizations culture. They are the aspects of organizational life which people find difficult to identify and explain. Here they are referred to as the organizational paradigm. It will be seen below, in the discussion of the cultural web, that the paradigm is maintained and reinforced by the taken for granted ways of doing things in the organization.

Organizational culture As organizations increasingly make visible their carefully considered public statements of their values, beliefs and purposes for example, in annual reports, mission statements and business plans- there is a danger that these are seen as useful and accurate descriptions of the organizational paradigm. But they are likely to be at best only partially accurate, and at worst misleading.

The cultural web Trying to understand the culture at all of these levels is clearly important, but it is not straightforward. For example, it has already been noted that even when a strategy and the values of an organization are written down, the underlying assumptions which make up the paradigm are usually evident only in the way in which people behave day to day. To understand the taken for grantedness may mean being very sensitive to what is signified by the physical manifestations of culture evident in an organization. Indeed, it is especially important to understand these wider aspects because not only do they give clues about the paradigm, but they are also likely to reinforce the assumptions within that paradigm.

Cultural web

Frame of Reference The Individual Functional/div isional National(or Regional) Professional(O r Institutional) Industrial/Sec tor(Recipe) Organizationa l

Communicating Strategic Purposes

This section will look at ways in which organizations attempt to explicitly communicate purposes, for example through statements of mission, vision, intent and objectives. In some instances such statements may be a formal requirement of corporate governance. Despite this, it must be remembered that these statements may not be an accurate reflection of the priorities within the organization, for the political and cultural reasons.

Vision Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firms success.

Comprehensive Mission Statement Vision Clear Business Vision

Developing Vision & Mission Clear mission is needed before alternative strategies can be formulated and implemented

Vision & Mission Shared vision creates a community of interests

Vision Statement What do we want to become? Mission Statement What is our business? Key Terms

Mission statements A mission statement is a generalized statement of the overriding purpose of an organization. It can be thought of as an expression of its raison detre. If there is substantial disagreement within the organization or with stakeholders as to its mission, it may well give rise to real problems in resolving the strategic direction of the organization. Mission statements usually attempt to address some of the following issues: A vision that is likely to persist as a beacon in the distance

Mission statements Hamel and Prahalad prefer the term strategic intent to that of vision or mission; they see it as an animating dream. They argue that a powerful strategic intent is one that encapsulates the desired future state or aspiration of an organization the sense of discovery and destiny that motivates managers and employees alike throughout the organization. The view taken here is that, in practice, mision, vision, and strategic intent are used fairly interchangeably by managers.

Mission statements Describe the organizations main activities and the position it wishes to attain in its industry. Many statements talk about being the leader or the best Be a statement of the key values of the organization, particularly regarding attitudes towards stakeholder groups and the ethical agenda discussed earlier.

Mission statements This stance may vary from a narrow view that the short term interests of shareholders should be paramount, through to some organizations that would see themselves as shapers of society. Within this broad stance, specific issues of corporate social responsibility will be important. There can also be ethical dilemmas for individuals within organizations if their personal values come into conflict with the

Questions For Forming A Mission Statement Why are you in this Business? Who are your Customers? What image you want to convey? What role do you and the employees play? How do you differ from your competitors? What level of service you provide?

Developing Vision & Mission Participation from diverse managers is important in developing the mission

How to write a mission statement ? Make it Short. Make it Memorarizable. Make it Audible. Make it Unique.

Mission Components Customers Markets Employees Public Image Self-Concept Philosophy Survival, Growth, Profits Products or Services Technology

Good mission statements can improve an institutions Mission promotes unity. Mission provides direction. Mission helps to move from ideas to action. Mission establishes culture.

Characteristics Elicits an emotional, motivational response in employees. Be easily understood and be transferred into individual action Is a measurable and tangible goal. Is rooted in the competitive environment

Importance of Mission Mission Resource Allocation Unanimity of Purpose Organizational Climate Focal Point for Work Structure Benefits from a strong mission

Broad in scope Generate strategic alternatives Not overly specific Reconciles interests among diverse stakeholders Finely balanced between specificity & generality Broad in scope Generate strategic alternatives Not overly specific Reconciles interests among diverse stakeholders Finely balanced between specificity & generality Effective Missions

Arouse positive feelings & emotions Motivate readers to action Generate favorable impression of the firm Arouse positive feelings & emotions Motivate readers to action Generate favorable impression of the firm Effective Missions

Reflect future growth Provide criteria for strategy selection Basis for generating & evaluating strategic options Are dynamic in nature Reflect future growth Provide criteria for strategy selection Basis for generating & evaluating strategic options Are dynamic in nature Effective Missions

Anticipates customer needs Identifies customer needs Provides product/service to satisfy needs Mission & Customer Orientation An Effective Mission Statement

Lets have a look at a few illustrations

HCL Infosystems VISION : Together we will create the enterprise of tomorrow MISSION : To provide world class information technology solution and services to enable our customers to serve their customers better.

Polaris Polaris Our mission is to be a reliable and responsive Techno-Business solutions provider in the areas of Banking, Financial Services, Insurance, and Retail; will provide cost-effective and timely solutions, meeting customers expectations through continuous process improvement and win- win relationships.

CAF COFFEE DAY To be the best caf chain in the country by offering a world class coffee experience at affordable prices.

LIC Housing Finance Provide Secure Housing Finance At An Affordable Cost, Maximizing Shareholders Value With Higher Customer Sensitivity.

ZEE TELEFILM To establish the company as the creator of entertainment and infotainment products and services to feast the viewers and advertisers. Through these sellers we intend to become an integral part of global market. As a corporation, we will be profitable,productive,creative,trend setting and financially rugged with care and concern for all stake holders.

STATE BANK OF INDIA To retain the banks position as the premier Indian financial services group, with the world class standards and significant global business, committed to excellence in the customer, shareholder and the employee satisfaction, and to play a leading role in the expanding and diversifying financial services sector, while continuing emphasis on its development banking role.

Google's mission is to organize the world's information and make it universally accessible and useful. As a first step to fulfilling that mission, Google's founders Larry Page and Sergey Brin developed a new approach to online search that took root in a Stanford University dorm room and quickly spread to information seekers around the globe. What's a Google? "Googol" is the mathematical term for a 1 followed by 100 zeros.1 followed by 100 zeros Google's play on the term reflects the company's mission to organize the immense amount of information available on the web

Googles Philosophy Ten things Google has found to be true Focus on the user and all else will follow It's best to do one thing really, really well. Fast is better than slow Democracy on the web works You don't need to be at your desk to need an answer You can make money without doing evil There's always more information out there The need for information crosses all borders You can be serious without a suit Great just isn't good enough

Coke Mission To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference

Coke Vision People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization.

Toyota To sustain profitable growth by providing the best customer experience and dealer support Yahoo To connect people to their passions, communities, and the worlds knowledge

Vision and Mission of ITC Vision Sustain ITCs position as one of the Indias most valuable corporations through world class performance, creating growing value for the Indian economy & Companys stakeholder Mission To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

ITC: Exemplary Contribution to Sustainable and Inclusive Growth Inspired by an overarching Vision to always serve a larger national purpose, driven by unshakable values of trusteeship and Ethical Conduct, powered by its vitality to create enduring growth in all its businesses, ITC forges ahead creating global benchmarks in sustainable value creation. Mr Y C Deveshwar, Chairman, ITC

Vision and Mission of ITC ITC: Exemplary Contribution to Sustainable and Inclusive Growth Inspired by an overarching Vision to always serve a larger national purpose, driven by unshakable values of trusteeship and Ethical Conduct, powered by its vitality to create enduring growth in all its businesses,ITC forges ahead creating global benchmarks in sustainable value creation. ITC: Triple Bottom Line Performance the only company in the world of comparable size to be; 1.Water Positive- (9years) creating 2 times rainwater harvesting potential than its consumption 2.Carbon Positive (6years) -sequestering 2 times its emissions 3 Solid Waste Recycling Positive (4Years) recycling waste generated within its units as well as using post consumer waste as raw material ITC: created livelihood for 5million people below poverty line & total shareholders returns, measured in terms of increase in market capitalisation & dividents,grew at compound rate of 25- 6% in 15 years. Padmabhushan Y C Deveshwar, Chairman, ITC

ITCs Sustainability Initiatives : Scale and Impact ITCs e-Choupals have empowered over 4 million farmers in 40000 villages. ITCs Social and Farm Forestry Programme has created over 56 million person days of employment and has greened over 125,000 hectares. ITCs Watershed Development Programme covers nearly 90,000 hectares of moisture stressed areas. ITCs livestock Development Programme has reached out to over 300,000 milch animals. ITCs Women Empowerment Programme has benefitted 40,000 rural woman. ITCs supplementary Education Programme has covered nearly 270,000 children.

Wipro Limited In Brief Who are they; A USD 7 Billion Indian enterprise with a market capitalization of over USD 26 Billion.Headquartered at Bengaluru,-50 plus 0ffices & centres of excellence in 54 countries across globe. They employ 120,000 professionals & serve 900 corporations which include some Fortune 500 customers. Their solutions enable their clients to deploy new products faster,enter new markets, gain better customer insight and reduce operational costs.

Wipro Limited In Brief What drives Wipro: Vision:To be among the Top 10 Global IT and Business Process Outsourcing(BPO) Service Companies. Mission: Be a trusted partner to our clients by providing transformation and System Integration (SI) services. Achieve thought leadership in emerging technology areas. Be perceived as a leader by relevant stakeholders among global IT service and BPO providers.

Wipro Limited -Values Values : The values on which Wipro is built are called the Spirit of Wipro. These values are the guiding principles for the culture and behavior at Wipro. They bind us together and inpire us to achieve excellence in whatever we do. Our values are : Intensity to win -Make customers successful - Team,innovate,excel Act with sensitivity -respect for the individual -Thoughtful and responsible Unyielding integrity -Delivering on commitments -Honesty and fairness in action

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Shreeniwas V Bidwai Adjunct Professor s IBS Mumbai PGPM– SEM III CLASS OF 2014