BU481 Chapter Notes - Chapter 7: The Roots
Document Summary
In assessing the link between management preferences and strategy, we need to address on what basis management can and should prefer a particular strategy. The general manager"s role is to create capture, and distribute value. Understanding the various stakeholders reveals the alignment, or lack thereof, between strategy and stakeholder interests. Companies that embrace stakeholders, rather than just shareholders perform better. The discussion of reconciling stakeholders interests with respect to the creation and distribution of value centres on employees, customers, and shareholders. Without any of these three key stakeholders, the firm will not survive. Assuming that managers can assess the appropriate balance, the concern remains that they may act in a self-interested fashion, essentially tipping the balance in favour of their own interests. Although there should be many checks and balances in the operations of the firm, the ultimate responsibility for the direction and performance of the organization rests with the board of directors whose mandate is corporate governance.
