INTRODUCTION TO THE COURSE

Let’s define a few words we’ll be using frequently in this class:

Define Strategy

Strategy is about winning.

It is the pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.

Define Goals

State what is to be achieved an when results are to be accomplished, but they do not state how the results are to be achieved.

All organizations have multiple goals existing from a complex hierarchy: from value objectives, which express the broad value premises toward which the company is to strive

(Go to Board, List traditional type of hierarchical org. chart)

1. The performance of the organization will be measured by its totality as an economic unit. It should provide jobs, stabilize the economy, and grow.

2. Quality of internal operations.

3. Nature and severity of external environment within the corporation. Will the corporation survive as a private/public institution?

4. Are we preparing ourselves for nonexistent careers?

· The answer is not as obvious as a lot of people would have you believe.

· A lot of people today are looking very critically at public and private companies.

· There are books such as Civilization’s Decline by Tom Bock, by Brizner, Civilization In a Decline, and The Twilight of Capitalism

Let’s Spend some time this morning preparing yourself for a business organization, be it private or public, rather than a university or government organization after you graduate.

My hopes today are to stimulate and contribute to your thinking about the future role of business organizations and their managers. So far, you have taken courses in management, marketing, finance, accounting, IDS, business writing, etc.

Although you should do well in these specific subjects and your studies are important, today, I’d like to skip over all these subjects and talk about some general concepts which transcend these specific techniques and terminologies of management. Let’s talk for a while about the corporation because it is a marvelous adaptable structure and just as very significant changes in the role of business managers are taking place in the past 25 years so will the same type of changes take place in the next 25 years.

One of the purposes of your education is to help you perceive future and with this in mind, let’s talk about some of the different questions you should have about the future perhaps I will share with you some of my own personal views on the answers to some of these questions.

Not because I believe my views are defining or my answers complete. On the contrary, both the questions and answers are dynamic and will change.

Your perception and those of others like you to these and similar questions as they evolve and change during the few years ahead will be important, not only to the future of business organizations and free market system, but also important to your overall careers.

You are all studying to be business managers. Let me begin with some questions:

1) To what purpose do you expect to manage??

2) Who do you expect to serve??

Since the answer to these questions in part depend on what company you join after you graduate, let me quickly add several related questions:

3) What is the purpose of the corporation?

4) Whom should the corporation serve?

5) Who really owns the large corporation?

6) Is it really a quasi-public institution?

7) How should strategy and goals be established?

I believe the fundamental purpose of a corporation is to serve its own immediate constituents effectively.

When I speak of the constituents of a company, what do I mean? Will it be different from the US to Europe, and Brazil. Define immediate constituents and show different when you have a plant or corporation in Brazil, Indonesia, or Thailand.

By all the constituents, we’re talking about customers, employees, shareholders, lending institutions, suppliers, government (US & foreign), countries in which they operate, local plants, communities, and public at large.

Those are the principal groups upon which the corporation depends and which depends on the corporation.

If each corporation serves its own immediate constituents. Well then all corporations together will make an effective contribution to that abstraction we call society.

The central job of top management is to learn the needs and expectations of all of their constituents to meet their needs and expectations in a reasonably balanced way to resolve conflicts between their needs and to ensure that they know how and why and to what extent their needs are being met.

Understanding these needs and expectations and projecting them into the future is essential to the strategic planning and goal setting of a successful corporation.

If they are to be stable goals and strategies, whether qualitative of quantitative, financial or non-financial, they must be reasonably satisfactory to all constituents.

Another of the central responsibilities of top management of any other institution for that matter is to define the ethical standards and principles which will govern its operations and to vigorously enforce the application of these standards and principles.

These standards and principles must rest on principles which must be shared at least to a reasonable degree by all the corporation constituents. It is obvious from recent publicity about serious breaches in corporate ethics that this task has not always been adequately performed.

The point of balance between the needs and interests of corporate constituents will change with time and with political economic and social trends.

The values of top management of a corporation and its constituents will also change. This means that goals must be continually reexamined and reaffirmed or modified as the environment both inside and outside the corporation. The willingness and the capacity to adapt to meeting these changing conditions becomes a barometer of success for the corporations.

In this process it is necessary to know the credible alternatives to separate the achievables from the impossible to limit risk to an acceptable level and to distinguish what can be controlled from that which cannot.

You must appreciate both the strengths and weaknesses of your organization and its components know the availability of resources and their limits and constantly gauge the threats and opportunity found in economic uncertainty, new technology, new government regulations and new actions by competitors. The entire process must be in the context and with a clear perception of the evolving political, social and economic environment.

The distinction must be made between what is possible and what is necessary between what can be done and what should be done. Wisdom must accompany imagination.

How will the constituents of a corporation measure the performance?

How will they judge if the job being done by the management is satisfactory?

How does one judge whether a corporation is meeting its social responsibility?

Performance of a corporation will increasingly be measured by in its totality. It is convenient to examine the total impact at three distinct levels.

At the first level by its performance as an economic unit. At the second level by the quality of its internal operations and at the third level to the nature and sensitivity of its external affairs.

“In accessing the performance of a corporation as an economic unit, we must answer such questions as : How many jobs do you provide?

Do we provide stability and growth in employment?

Is our productivity increasing?

Are we profitable enough to pay shareholders and employees fairly and to finance growth?

Is our capital structure of high quality?

What is the quality of our goods and services?

What is our contribution to the economy of the countries in which we operate?

In assessing the quality of our internal operations we must ask ourselves:

1- Are we sufficiently sensitive?

The corporation will survive because its constituents will support its legitimacy. If a good job is done by managers in understanding their separate needs and serving them effectively and explaining how their interests and voices contribute to the planning and control of the enterprise as a whole.

But the corporations constituents will not remain strong in their support oif the corporations and corporate managers stand still. Or if corporations fail to recognize that many improvements are in fact needed and promoted with vigor and courage. Or if corporate managers fail to recognize their own enormous potential for continuing adaptation in the interest of their adaptations.

I believe the corporation should serve its constituencies effectively - all of them - not just one or two. By constituents, I mean customers, employees, shareholders, lending institutions, unions, etc. Government in countries, the public at large. How should the goals of a corporation be established. If a corporation serves its own constituents well, then all corporation together will make an effective contribution to society.

Central job of top management is to learn the needs and expectations in a reasonable balance. To resolve the conflict between their needs and to ensure that they know how and why and to what extent their needs are being met. Understanding the needs and expectations and projecting them into the future is essential to strategic planning and goals and strategies.

Another central responsibility of a corporation is to define ethical standards and principles which will govern its operations and vigorously enforce!

How will the constituents of a corporation measure its performance?

How will they judge?

How do you judge whether a corporation is meeting its social responsibility?

I for one would regret the passing of the conception of private ownership or the end of free market systems, and I believe that most Americans likewise would regret such a tragedy. I hope all of you who plan a career in business are alert to this issue!

I think they are wrong! because they give too little credit to the demonstrated of a Business Organization to adapt to the interest of their constituents and to responsive, innovative and enterprising BUSINESS LEADERS

Deeply rooted in the foundation of our political system and social structure the private business system is indispensible to our personal liberties and freedom. Democracy and the free market system are inextricably interwoven.

The private enterprise system is the best mechanism yet devised for the constructive exploitation of surplus, but it is not certain that it works as well in times of scarcity. A better alternative is not available.

The problems facing corporations are small when compared with those facing political institutions. First, the most qualified people are not always directed into government. Secondly, the selection process imposes a 2 to 6 year horizon on elected officials whish is not possible in the real world.