(i)
Stakeholder refers to a person who has
an interest in business. Therefore, stakeholders refer to groups of people,
organizations, or individuals that are directly affected by business
activities.
(ii)
Stockholder (shareholder) refers to a
group of individuals, individual, or an organization holding one or more shares
in a company. The share certificate is issued in the name of the stockholder.
The difference between
a stakeholder and a stockholder is that a stakeholder has an interest in the
affairs of the company although they may not be owners while stockholders are
holders or owners of the stock within a corporation, organization, or a
company.
2. What process does a company go
through to respond to stakeholder concerns? What are the steps of this process?
A
company goes through a collaborative process in which they research, debate,
and discuss the concerns raised by the stakeholders thus determining some of
the concerns which need to be addressed. However, there is a process the
company goes through while responding to the stakeholder concerns. Below are
the steps:
(i)
Identifying – Listing all the relevant
stakeholders and their concerns
(ii)
Analyzing – Comprehensively
understanding stakeholders concerns
(iii)
Mapping – Visualizing the relationships
between the concerns and the company
(iv)
Prioritizing – Ranking the relevance of
stakeholders’ concerns and identifying issues
3. What is the agency problem? What
are the governance mechanisms that can be put in place to defend from this
problem?\
The
agency problem simply refers to the conflict of interest common in a
relationship where one of the parties is expected to act in the other party’s
best interest. However, in corporate finance, the agency problem is the
conflict of interest between the management of a company and the stakeholders
of that particular company. The company’s manager (stakeholders’ agent) should
make comprehensive decisions geared towards maximizing shareholders’ wealth
even though it will be in the best interest of the manager to maximize his
wealth. Some of the governance mechanisms of defending from this problem are
putting measures such as:
(i)
Tough screening processes
(ii)
Rewarding good behaviors and punishing
bad behaviors
(iii)
Instituting watchdog bodies
Agency problem cannot
be defended completely since the costs of defending against the problem sooner
or later the benefits of the defense
4. Describe internal controls and
strategies that can be implemented to ensure ethical behavior within a company.
(i)
Setting a good example at the top – The
management and board of directors of the organizations should demonstrate the
importance of ethical values thus supporting internal control through their
actions, behaviors, and directives.
(ii)
Establish standards of conduct – The
organization needs to establish standards of conduct and ensure they all levels
of the organization understand them well.
(iii)
Implementing processes of assessing
adherence to the standards of conduct and how different teams and individual
are performing against the organization’s expected standards of conduct.
CHAPTER 12 QUESTIONS
1. How can organizational design
contribute to competitive advantage?
Organizational
design is a framework in which an organization integrates the most important
elements of the organization such as people, technology, and information. This
integration contributes to competitive advantage by providing clarity in
reporting relationships, work processes, information flows, and
decision-making. Everyone in the organization knows their responsibilities, who
they report to, and the responsibilities of their coworkers. Additionally, it
prepares the company to utilize growth opportunities and adapt to the market
conditions and industry trends.
2. Describe how a strong
organizational culture leads to transparency, ethics, and to competitive
advantage within a company.
A
strong organizational culture gives employees in an organization insight into
how a company is being operated and its future. Additionally, it governs how
employees are given a voice while within the company and most of all the
company’s trust. Features such as all-hands meetings, giving employees a
suggestion platform and letting employees stay connected which improves
transparency. Strong organizational culture helps in integrating organizational
members and in the process they know ways of relating and working together
effectively as well as behaving within the norms of the organization. On the
other hand, organizational culture helps the employees of an organization to
know and understand their functions. In the process, it improves the way in
which organization performs in the market and industry. Such and knowledge and
performance thus help the organization to gain a competitive advantage over
their competitors.
3. How do corporations develop
strategic plans for single or multidivisional structures? What are some
advantages and problems in implementing a multidivisional structure?
Developing
strategic plans for single or multidivisional structures may seem overwhelming.
However, when it is broken down, it is easy. While developing the strategic
plan, the organization should determine they are by conducting an internal and
external audit to clearly understand the marketplace, the competitive
environment, and the organization’s competencies. The organization should then
identify what is important for the organization currently and in the future.
The organization should then define what they want to achieve and the expected
objectives which address priority issues. Having done that, the organization
should then determine the person accountable by allocating time, human capital,
and money to different people in the organization to address the priority
issues thus achieving the defined objectives. To ensure the strategic plans are
successful, the organization should review the process. Advantages of
multidivisional structures:
(i)
It suits well organizations with
different lines of products and services
(ii)
It enables specialization in products or
services which enable maximum utilization of human resources
(iii)
It enables people concerned to direct their attention
to certain products or services
(iv)
Product service managers become
accountable for their products and services
The
problem with multidivisional structure is that it might be hard to scale.
Additionally, the organization may finally end up with duplicate resources
since the different divisions strive for autonomy.
4. How do companies implement
strategies at a global level? What organizational structures help them develop
competitive advantage?
Implementing
strategies at the global level requires skill, and it is a challenging task.
However, organizations implement the strategies by following a success route
used separately or together:
(i)
The organizations employ effective
global managers
(ii)
The organizations form strategic
alliances
(iii)
Employ matrix type structures
There are three
organizational structures which help organizations develop competitive
advantage which are functional structure, divisional structure, and matrix
structure.
Sherry Roberts is the author of this paper. A senior editor at Melda Research in nursing paper writing services if you need a similar paper you can place your order for Medicine Essay Writing.
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