CHAPTER 9: Control of Global Business
INTRODUCTION
Global corporations in their strategy formulation often need to define their
commitments to corporate shareholders vis-a-vis stakeholders.
while “success” in terms of dollar profits may be relatively easy to manage and
control, how is success measured in other areas, such as corporate social
responsibility
Formulating different strategic approaches and control mechanisms for different
countries where they operate in the world is an important challenge facing
successful global businesses
STRATEGY FORMULATION
In formulating strategy, global businesses formulate their overall goals. Often this is done
initially in a corporate mission statement. One major strategic goal formulation is whether
to adopt an overall shareholder or stakeholder orientation. Shareholders are the owners of
the given business/corporation. Stakeholders are individuals or groups that have a vested
interest or “stake” in the business/corporation even though they are not owners of it.
Typical stakeholders include the company’s employees, customers, and the general
communities where it operates
Most global businesses have a concept of their general purpose that they express in
a mission statement
Mission statement
A written statement of why the company exists and what it strives to
accomplish.
It provide general guidelines for the given company’s strategy formulation
and decision making.
Corporate mission statements in a sense provide a blueprint for companies in
their strategy formulation and control functions.
As the company conducts business, its executives can monitor performance
against its stated mission and goals.
One critical difference among mission statements of different companies is
the extent to which they express an orientation toward shareholders versus
stakeholders or vice versa.
Shareholders versus Stakeholders
1. Shareholder model of strategy formulation
Operates from the basic premise that the key strategic purpose of a business
is to maximize financial returns for its owners or shareholders.
The late Nobel Laureate economist, Milton Friedman, a proponent of this
viewpoint, summarized it by once stating that the overriding strategic goal of
, corporate officers should be “to make as much money for their shareholders as
possible.”
2. stakeholder model of strategy formulation
Believes businesses exist to benefit not just their shareholders, but also all the
various groups that arguably have a meaningful stake in their operations.
Such groups, for example, might include a company’s employees, customers,
and the general communities where it operates.
Understanding the differences between shareholder and stakeholder orientations in
strategy formulation is important in determining appropriate “control systems” for
the given global business.
STRATEGY IMPLIMENTATION
INTRODUCTION
Global corporations in their strategy formulation often need to define their
commitments to corporate shareholders vis-a-vis stakeholders.
while “success” in terms of dollar profits may be relatively easy to manage and
control, how is success measured in other areas, such as corporate social
responsibility
Formulating different strategic approaches and control mechanisms for different
countries where they operate in the world is an important challenge facing
successful global businesses
STRATEGY FORMULATION
In formulating strategy, global businesses formulate their overall goals. Often this is done
initially in a corporate mission statement. One major strategic goal formulation is whether
to adopt an overall shareholder or stakeholder orientation. Shareholders are the owners of
the given business/corporation. Stakeholders are individuals or groups that have a vested
interest or “stake” in the business/corporation even though they are not owners of it.
Typical stakeholders include the company’s employees, customers, and the general
communities where it operates
Most global businesses have a concept of their general purpose that they express in
a mission statement
Mission statement
A written statement of why the company exists and what it strives to
accomplish.
It provide general guidelines for the given company’s strategy formulation
and decision making.
Corporate mission statements in a sense provide a blueprint for companies in
their strategy formulation and control functions.
As the company conducts business, its executives can monitor performance
against its stated mission and goals.
One critical difference among mission statements of different companies is
the extent to which they express an orientation toward shareholders versus
stakeholders or vice versa.
Shareholders versus Stakeholders
1. Shareholder model of strategy formulation
Operates from the basic premise that the key strategic purpose of a business
is to maximize financial returns for its owners or shareholders.
The late Nobel Laureate economist, Milton Friedman, a proponent of this
viewpoint, summarized it by once stating that the overriding strategic goal of
, corporate officers should be “to make as much money for their shareholders as
possible.”
2. stakeholder model of strategy formulation
Believes businesses exist to benefit not just their shareholders, but also all the
various groups that arguably have a meaningful stake in their operations.
Such groups, for example, might include a company’s employees, customers,
and the general communities where it operates.
Understanding the differences between shareholder and stakeholder orientations in
strategy formulation is important in determining appropriate “control systems” for
the given global business.
STRATEGY IMPLIMENTATION
