Summary MNG4801 CHAPTER 2 (KEY ELEMENTS FOR SUSTAINABLE GROWTH)
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Course
MNG4801 - Strategic Management (MNG4801)
Institution
University Of South Africa (Unisa)
Book
Strategic Management
It is a simplified summary document that focuses much into the key elements that are of pivotal impact to the sustainability of organisations in different sectors.
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Table of Contents
KEY ELEMENTS OF SUSTAINABLE ORGANISATION. ................................................ 3
Managers do not have a mandate from shareholders for social responsibility. .................... 3
Shift from short to long-term strategising. ............................................................................. 4
Shifting from shareholders to stakeholders. ........................................................................... 5
Power. ............................................................................................................................... 7
Shared value and inclusive business. ................................................................................... 11
Porter and Kramer three dimensions of creating shared value: ......................................... 12
Re-conceiving products and markets. ............................................................................... 13
The process of embedding context in strategy. .................................................................... 14
Measuring and reporting on progress................................................................................... 15
Strategic focus: ................................................................................................................ 16
Connectivity of information: ............................................................................................ 16
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KEY ELEMENTS OF SUSTAINABLE ORGANISATION.
An organisation is a group of people that commit to working together to achieve
certain objectives according to Louw and Venter (2018).
The objectives can be diverse and sometimes even at odds with each other depending
with the industry where the company is operating in.
Strategy is a way of prioritising and aligning objectives that have the same wave
length and share near completion goals.
The purpose of an organisation is the primary reason for the organisation’s existence.
For businesses, it is important to note that, by assumption, the key purpose is of profit
maximisation.
The idea that businesses exist primarily for profit attainment for investors has not
always been so dominant.
One of the reasons it has become prevalent is the work of an influential economist,
Milton Friedman.
In 1970 he argued that asking managers to address social causes is misguided for at
least two reasons.
Managers do not have a mandate from shareholders for social responsibility.
From this perspective, shareholders expect financial returns above everything.
Second, he argued that managers are not trained or well equipped to address social
issues.
This means that, such issues should be led to governments and civil society
organisations.
One of the challenges in answering this question is that Friedman’s argument might
be interpreted in different ways.
For instance, a manager of a fertiliser manufacturing company may be faced with the
decision to invest in a new, cleaner production system in order to reduce water
pollution of a nearby river. However, this investment will reduce profits and because
there is little enforcement of pollution laws, the manager will be motivated to avoid
this investment and continue polluting the river.
On the other hand, it may be argued that polluting the river will create negative
consequences for the business and so the manager may be motivated to reduce
pollution for other reasons.
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