Strategic Management (Week 02 - Students)

Welcome to
Strategic Management
(MGT523)
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.

Strategic Management and Business Policy:
Globalization, Innovation and Sustainability
Sixteenth Edition, Global Edition
Chapter 3
Social Responsibility
and Ethics in Strategic
Management
Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Learning Objectives
3.1 Discuss the relationship between social responsibility
and corporate performance
3.2 Explain the concept of sustainability
3.3 Conduct a stakeholder analysis
3.4 Explain why people may act unethically
3.5 Describe different views of ethics according to the
utilitarian, individual rights, and justice approaches

Social Responsibilities of Strategic
Decision Makers
• Social responsibility
– proposes that a private corporation has
responsibilities to society that extend beyond making
a profit

Friedman’s Traditional View of Business
Responsibility
• Argues against the concept of social responsibility
• Primary goal of business is profit maximization not
spending shareholder money for the general social
interests

Carroll’s Four Responsibilities of
Business (1 of 2)
1. Economic responsibilities
– produce goods and services of value to society so
that the firm may repay its creditors and increase the
wealth of its shareholders
2. Legal responsibilities
– defined by governments in laws that management is
expected to obey

Carroll’s Four Responsibilities of
Business (2 of 2)
3. Ethical responsibilities
– follow the generally held beliefs about behavior in a
society
4. Discretionary responsibilities
– purely voluntary obligations a corporation assumes

Figure 3-1
Responsibilities of Business
Source: Suggested by Archie Carroll in A. B. Carroll, “A Three Dimensional Conceptual

Model of Corporate Performance,” Academy of Management Review (October 1979), p p.
497–505; A. B. Carroll, “Managing Ethically with Global Stakeholders: A Present and
Future Challenge,” Academy of Management Executive (May 2004), p p. 114–120; and A.
B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral
Management of Organizational Stakeholders,” Business Horizons (July–August 1991), p
p. 39–48.
Why to Engage in CSR
• Social capital
– the goodwill of key stakeholders that can be used for
competitive advantage
– opens doors in local communities
– enhances reputation with consumers
• Can you think of any other benefits that encourage

companies to engage in CSR?

Why to Engage in CSR
There are numerous benefits of Being Socially Responsible
including:
• May enable firm to charge premium prices and gain brand loyalty
• May help generate enduring relationships with suppliers and
distributors
• Can attract outstanding employees
• More likely to be welcomed into a foreign country
• Can utilize the goodwill of public officials for support in difficult times
• More likely to attract capital from investors who view reputable firms
as desirable long-term investments

CSR
Please read the case study of

Purbani Group and share
your reflections

Sustainability
Sustainability should be broadened to include all of these
concerns.
• Environmental
• Economic
• Social

Sustainability
Read the case study and share your reflections

Corporate Stakeholders
• Stakeholders
– have an interest in the business and affect or are
affected by the achievement of the firm’s objectives
• Enterprise strategy
– an overarching strategy explicitly articulating the firm’s
ethical relationship with its stakeholders
– https://www.youtube.com/watch?v=uKozswXz7qM
– https://www.youtube.com/watch?v=gc55hPIFW8w&t=
12s
Stakeholder Management or Engagement or
Stakeholder Engagement Management?
https://www.youtube.com/watch?v=-tNHplQ_-hw
Stakeholder Analysis (1 of 4)
• Stakeholder analysis
– the identification and evaluation of corporate
stakeholders
– usually done in a three-step process

• The first step in stakeholder analysis is to identify
primary stakeholders.
• Primary stakeholders
– those who have a direct connection with the
corporation and who have sufficient bargaining power
to directly affect corporate activities
– include customers, employees, suppliers,
shareholders, and creditors

• The second step in stakeholder analysis is to identify the
secondary stakeholders
• Secondary stakeholders
– have an indirect stake in the corporation but are also
affected by corporate activities
– includes N G Os, activists, local communities, trade
associations, competitors, and governments

• The third step in stakeholder analysis is to estimate the
effect on each stakeholder group from any particular
strategic decision
• https://www.youtube.com/watch?v=gY8KxMrMNzk
• https://www.youtube.com/watch?v=BkUCcJwwvAQ

Stakeholder Input
• Once stakeholder impacts have been identified,
managers should decide whether stakeholder input
should be invited into the discussion of the strategic
alternatives
• A group is more likely to accept or even help implement
a decision if it has some input into which alternative is
chosen and how it is to be implemented

Ethical Decision Making
• Thirty percent of employees state they have witnessed
misconduct at work in the past 12 months
• seventy-six percent reported the misconduct
• fifty-three percent reported retaliation against them for
reporting the misconduct
• Can you think why do employees engage in unethical
behavior?

Reasons for Unethical Behavior (1 of 2)
• Unaware that behavior is questionable
• Lack of standards of conduct
• Different cultural norms and values
• Rule-based or relationship-based governance systems
• Different values between business people and key
stakeholders

Reasons for Unethical Behavior (2 of 2)
Seventy percent of executives from 111 different national
and multinational corporations report bending the rules to
attain objectives. The three most common reasons given
were;
1. Organizational performance required it: 74%
2. Rules were ambiguous or out of date: 70%
3. Pressure from others and everyone does it: 47%

Strategic Management and
Business Policy 15e, Global Edition
Chapter 4
Environmental
Scanning and
Industry Analysis
Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.

Learning Objectives (1 of 2)
4-1 List the aspects of an organization’s environment that
can influence its long-term decisions
4-2 Identify the aspects of an organization’s environment
that are most strategically important
4-3 Conduct an industry analysis to explain the competitive
forces that influence the intensity of rivalry within an
industry
4-4 Discuss how industry maturity affects industry
competitive forces
4-5 Categorize international industries based on their
pressures for coordination and local responsiveness
4-
Learning Objectives (2 of 2)
4-6 Identify key success factors and develop an industry
matrix
4-7 Construct strategic group maps to assess the
competitive positions of firms in an industry
4-8 Develop an industry scenario as a forecasting
technique
4-9 Use publicly available information to conduct
competitive intelligence
4-10 Be able to construct an EFAS Table that summarizes
external environmental factors

4-25
4-26
Environmental Scanning
•Environmental scanning
–the monitoring, evaluation, and dissemination
of information relevant to the organizational
development of strategy

4-27
Identifying External
Environmental Variables (1 of 4)
•Natural environment
–includes physical resources, wildlife, and
climate that are an inherent part of existence
on Earth
–form an ecological system of interrelated life

4-28
•Societal environment
–humankind’s social system that includes
general forces that do not directly touch on
the short-run activities of the organization, but
that can influence its long-term decisions
–factors: economic, technological, political-
legal, sociocultural

4-29
•Task environment
–those elements or groups that directly affect a
corporation and, in turn, are affected by it
–government, local communities, suppliers,
competitors, customers, creditors,
employees/labor unions, special-interest
groups, and trade associations

4-30
•Industry analysis
–an in-depth examination of key factors within
a corporation’s task environment

4-31
Scanning the Societal Environment:
STEEP (or PESTEL) Analysis
•STEEP analysis
–monitoring trends in the societal and natural
environments
–sociocultural, technological, economic,
ecological, and political-legal forces
–Can you share some examples? Lets get into
groups and figure out? Five examples for
each category?

4-32
Table 4-1: STEEP Analysis: Monitoring Trends
in the Societal and Natural Environments

4-33
Current Sociocultural Trends
• Increasing environmental awareness
• Growing health consciousness
• Increasing diversity of workforce and markets
• Expanding seniors market
• Impact of millennials/Gen Y (1981-1996), Gen Z
(1996-2012), Whats next?
• Declining mass market
• Changing pace and location of life
• Changing household composition
4-34
Technological Breakthroughs
• Portable information devices and electronic
networking
• Alternative energy sources
• Virtual personal assistants
• Smart, mobile robots

4-35
https://www.futurenetzero.com/2021/04/30/volkswagen-commits-to-carbon-neutrality-by-2050-at-the-latest/

Figure 4-1: Scanning the External Task
Environment

4-38
Figure 4-2: Forces Driving Industry
Competition

4-39
https://www.youtube.com/watch?v=Dfp23xSqpdk

Threat of New Entrants
•Threat of new entrants
–new entrants to an industry bring new
capacity, a desire to gain market share and
substantial resources
•Entry barrier
–an obstruction that makes it difficult for a
company to enter an industry

4-41
Barriers to Entry
Some of the possible barriers to entry are:
• Economies of scale
• Product differentiation
• Capital requirements
• Switching costs
• Access to distribution channels
• Cost disadvantages independent of size
• Government policies

4-42
Rivalry Among Existing Firms (1 of 2)
• In most industries, corporations are mutually

dependent.
• A competitive move by one firm can be expected
to have a noticeable effect on its competitors and
thus may cause retaliation.

4-43
Rivalry Among Existing Firms (2 of 2)
According to Porter, intense rivalry is related to
the presence of several factors, including:
• Number of competitors
• Rate of industry growth
• Product or service characteristics
• Amount of fixed costs
• Capacity
• Height of exit barriers
• Diversity of rivals
4-44
Rivalry Among Existing Firms

Threat of Substitute Products or
Services
•Substitute product
–a product that appears to be different but can
satisfy the same need as another product
• The identification of possible substitute products
means searching for products that can perform
the same function, even though they have a
different appearance.

4-46
The Bargaining Power of Buyers
(1 of 2)
•Buyers affect an industry through their
ability to force down prices, bargain for
higher quality or more services, and play
competitors against each other.

4-47
The Bargaining Power of Buyers
(2 of 2)
•Bargaining power of buyers:
–Large purchases
–Alternative suppliers
–Low cost to change suppliers
–Product represents a high percentage of
buyer’s cost: Incented to shop around
–Buyer earns low profits: Cost/service sensitive
–Product is unimportant to buyer

4-48
The Bargaining Power of Suppliers
(1 of 2)
•Suppliers can affect an industry through
their ability to raise prices or reduce the
quality of purchased goods and services.

4-49
The Bargaining Power of Suppliers
(2 of 2)
A buyer or a group of buyers is powerful if some of the
following factors hold true:
• Industry is dominated by a few companies
• Unique product or service
• Substitutes are not readily available
• Unimportance of product or service to the industry
• https://www.youtube.com/watch?
v=mYF2_FBCvXw
4-50
Industry Evolution
• Fragmented industry
– no firm has a large market share and each
firm only serves a small piece of the total
market in competition with other firms e.g.
Coffee shops, Universities
• Consolidated industry
– domination by a few large firms, each
struggles to differentiate products from its
competition e.g. Etisalat and Du.

4-51
Using Key Success Factors
• Key success factors (or ‘must haves’)

– Variables that can significantly affect the overall
competitive positions of companies within any
particular industry
• Strategic Focus (Leadership, Management, Planning)
• People (Personnel, Staff, Learning, Development)
• Operations (Processes, Work)
• Marketing (Customer Relations, Sales, Responsiveness)
• Finances (Assets, Facilities, Equipment)

4-52
THANK YOU FOR
YOUR ATTENTION

53

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Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.

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Source: Suggested by Archie Carroll in A. B. Carroll, “A Three Dimensional Conceptual

• Can you think of any other benefits that encourage

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Please read the case study of

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Copyright © 2018 Pearson Education, Ltd. All Rights Reserved.

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• In most industries, corporations are mutually

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• Key success factors (or ‘must haves’)

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