Strategic Purpose

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4 – STRATEGIC PURPOSE 4.1 Introduction The example of Lehman Brothers show that there is a failure of both strategy and governance. In this chapter we will able to : * Consider appropriate ways to express the strategic purpose * Identify the components of the governance chain of an organisation * Understand differences in governance structures * Identify differences in the corporate responsibility * Undertake Stakeholder analysis 4.2 Organisational purpose: values, mission, vision and objectives * Statements of mission, vision and value Harvard University’s Cynthia Montgomery argues that the purpose of the organization is an important thing to understand the strategy of a company, moreover for…show more content…
* Corporate failures and scandals such as Enron in 2001 and Lehman Brothers in 2007. Those scandals have fuelled public debate about how different parties in the governance chain should interact and influence each other. * Increased accountability to wider interests has also been increasingly advocated, in particular the argument that the corporation need to be more visibly accountable. * The governance chain The governance chain shows the roles and relationships of different groups involved in the governance of an organisation. In family business there I not really big corporate governance chain, the organisation is simple. But in big company the chain of corporate governance seems like this : Beneficiaries Beneficiaries Managers Managers Senior executives Senior executives Executive directors Executive directors Board Board Investment funds Investment funds Limited reports Accounts, analysts’ reports, company briefings, Buying/ selling shares Budgets/targets, qualitative reporting Budgets/targets, qualitative reporting Budgets/simplified targets, operating reports The relationships in such governance chains can be understood in terms of the principal-agent model. Principals pay agents to act on their behalf, just as homeowners employ estate agents to sell their homes. Principal-agent theory assumes that agents will not work
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