MANAJEMEN S T R A T E G I

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STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGERCorporate Governance

Corporate Governance

The relationship among the board of directors, top management, and shareholders – determining the direction and performance of the corporation

Role of Board

– Monitor

– Evaluate and influence

– Initiate and determine

Board of Directors

Members --

– Inside directors• “management directors”• Officers or execs employed by the firm

– Outside directors• “non-management directors”• Execs of other firms not employed by the board’s

corporation

Agency Theory

Agency Problem –– Objectives of owners & agents in conflict– Difficult for owners to verify agent performance

Risk Sharing Problem –– Owners & agents risk assessment in conflict

Executives more motivated to act in best interest of the corporation than their own self-interests. Theory that over time, senior executives tend to view corporation as extension of selves.

Board of Directors

When Outsiders can be considered Insiders

– Affiliated Directors– Retired Directors– Family Directors

Board of Directors

Codetermination– The inclusion of a corporation’s employees on its board of

directors

Interlocking Directorates– Direct Interlocking– Indirect Interlocking

Nominations & Elections– Traditional Approach

• CEO invitation to membership• Shareholders approval in annual proxy statement• All nominees usually elected

– Staggered Board Approach• Staggered terms of service/election

Board of Directors

Sarbanes-Oxley– Code of Ethics– Audit, Nominating, and Compensation Committees all

outside directors

Organization of the Board– Size

• Charter & Bylaws Determination

Corporate Governance

– Review & shaping of strategy– Pressure for corporate performance– Demand for executive stock ownership– Outside directors increasing– Impact of Sarbanes-Oxley

Board of Directors

Transformational leaders– Change agents through vision for change

Successful CEO’s– Strategic vision– Passion for the company– Strong communication– charisma

Executive Leadership– Strategic vision– Role model– Communication of performance standards– Demonstrates confidence in abilities of followers

Strategic Management Process

Strategic Planning Staff– Supports top management & business units in the

strategic planning process– Identify & analyze company-wide strategic issues– Generate strategic alternatives– Facilitate business units in coordinating activities related

to strategic planning process