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MBA - N.DINESH - VUCA - Unit 5 - Enotes

1. The document discusses issues in corporate governance including remuneration of directors, board responsibility for risk management, reliability of financial reporting, duties of directors, shareholder rights and responsibilities, and separation of CEO and chairperson roles. 2. It also covers strategic leadership, noting it involves influencing others to make long-term decisions that ensure organizational success. Strategic leaders must provide direction during change and build alignment. 3. Developing strategic leaders requires distributing responsibility, being open with information, creating paths for new ideas, making failure safe, providing access to other strategists, offering experience-based learning, and transformational hiring.

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0% found this document useful (0 votes)
64 views8 pages

MBA - N.DINESH - VUCA - Unit 5 - Enotes

1. The document discusses issues in corporate governance including remuneration of directors, board responsibility for risk management, reliability of financial reporting, duties of directors, shareholder rights and responsibilities, and separation of CEO and chairperson roles. 2. It also covers strategic leadership, noting it involves influencing others to make long-term decisions that ensure organizational success. Strategic leaders must provide direction during change and build alignment. 3. Developing strategic leaders requires distributing responsibility, being open with information, creating paths for new ideas, making failure safe, providing access to other strategists, offering experience-based learning, and transformational hiring.

Uploaded by

Rajesh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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D.N.R.

COLLEGE, (AUTONOMOUS): BHIMAVARAM


DEPARTMENT OF MANAGEMENT STUDIES

VUCA MANAGEMENT
III SEMESTER

Presented By
N.DINESH
Dept of Management Studies
D.N.R.College Bhimavaram- 534202
Phone: 08816-224119
E mail: [email protected]
Website: https://dnrcollege.org/en/
CP - 302, VUCA MANAGEMENT
(Effective from the admitted batch of 2019 -21)
MBA III SEMESTER eNOTES

UNIT V: Issues in Corporate Governance – Strategic Leadership – Developing core


competencies.

CORPORATE GOVERNANCE

Corporate Governance is the interaction between various participants (Shareholders, Board of


Directors and Company’s Management) in shaping corporations’ performance and the way it
is proceeding towards.
It is the technique by which companies are directed and managed.
In narrow sense corporate governance deals with maximizing the shareholders wealth.
In broader perspective, it considers the welfare of the all stakeholders and the society.
Need for Corporate Governance
 Better access to External Finance
 Lower costs of capital – Interest rates on loans
 Improved Company performance- sustainability
 Higher firm valuation and share performance
 Reduced risk of corporate crisis and scandals

Corporate Governance – PARTIES


1. Share - holders: those that own the company
2. Directors: guardians of the company’s assets for the shareholder
3. Manager: who use the company’s assets.

Issues in Corporate Governance


1. Remuneration and reward of directors:
Directors being paid excessive bonuses and salaries have been identified as significant
corporate abuses for a large number of years.
It is, however, unavoidable that the corporate governance codes have been targeted
these significant issues.

2. Boards responsibility for risk management and internal control

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 2


If the board does not arrange the regular meetings in order to consider the
organizational activities systematically show that the board is not meeting their
responsibilities.
It results in the poor system that may unable to report and measure the risks
associated with business.

3. Reliability of financial reporting and external auditors


Financial reporting and auditing issue are seen more critical to corporate governance
by the investors because of their main consideration in ensuring management
accountability.
It is the reason that they have been must debated and the focus of serious litigation.

4. Duties of directors
The corporate governance reports have aimed to build on the director’s duties as
defined in statutory and case law duties of directors
These include the fiduciary duties to act in the best interests of the company, use their
powers for a purpose, avoid conflicts of interest and exercise a duty of care.

5. Shareholders rights and responsibilities


Shareholders role and rights is subject of particular importance.
They should be informed about all that information that are material to them because
this information may influence their amount of investment.
They should also be given the right to vote on policies affecting the governance of
organization.

6. Separation of the roles of CEO and chairperson


It is now increasingly being realized that the practice of combining the role of chair
person with that of the CEO as is done in countries like the US and INDIA leads to
conflicts on decision making and too much concentration of power in one person
resulting in unsavoury consequences.

7. Corporate social responsibility and business ethics


The lack of mutual decision and sense of responsibility for businesses and
stakeholders has unavoidably turned out the business ethics and social responsibility a
significant part of corporate governance debate.

STRATEGIC LEADERSHIP

Strategic Leadership is the ability of influencing others to voluntarily make decisions that
enhance the prospects for the organization’s long-term success while maintaining long-
term financial stability. Different leadership approaches impact the vision and direction of
growth and the potential success of an organization. To successfully deal with change, all
executives need the skills and tools for both strategy formulation and implementation.

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 3


Managing change and ambiguity requires strategic leaders who not only provide a sense of
direction, but who can also build ownership and alignment within their workgroups to
implement change.

1.Distribute responsibility: Strategic leaders gain their skill through practice, and practice
requires a fair amount of autonomy. Top leaders should push power downward, across the
organization, empowering people at all levels to make decisions. Distribution of
responsibility gives potential strategic leaders the opportunity to see what happens when
they take risks. It also increases the collective intelligence, adaptability, and resilience of
the organization over time, by harnessing the wisdom of those outside the traditional
decision- making hierarchy.

2.Be honest and open about information: The management structure traditionally
adopted by large organizations evolved from the military, and was specifically designed to
limit the flow of information. In this model, information truly equals power. The trouble is,
when information is released to specific individuals only on a need-to-know basis, people
have to make decisions in the dark. They do not know what factors are significant to the
strategy of the enterprise; they have to guess. And it can be hard to guess right when you
are not encouraged to understand the bigger picture or to question information that comes
your way. Moreover, when people lack information, it undermines their confidence in
challenging a leader or proposing an idea that differs from that of their leader.

3.Create multiple paths for raising and testing ideas: Developing and presenting ideas is
a key skill for strategic leaders. Even more important is the ability to connect their ideas to
the way the enterprise creates value. By setting up ways for people to bring their innovative
thinking to the surface, you can help them learn to make the most of their own creativity.
This approach clearly differs from that of traditional cultures, in which the common
channel for new ideas is limited to an individual’s direct manager. The manager may not
appreciate the value in the idea, may block it from going forward and stifle the innovator’s
enthusiasm. Of course, it can also be counterproductive to allow people to raise ideas
indiscriminately without paying much attention to their development. So many ideas, in so
many repetitive forms, might then come to the surface that it would be nearly impossible to
sort through them. The best opportunities could be lost in the clutter.
DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 4
4.Make it safe to fail: You must enshrine acceptance of failure and willingness to admit
failure early in the practices and processes of the company, including the appraisal and promotion
processes. For example, return-on-investment calculations need to assess results in a way that reflects
the agreed-upon objectives, which may have been deliberately designed to include risk. Strategic
leaders cannot learn only from efforts that succeed; they need to recognize the types of failures that
turn into successes. They also need to learn how to manage the tensions associated with uncertainty,
and how to recover from failure to try new ventures again.

5.Provide access to other strategists: The first step is to find them. Strategic leaders may
not be fully aware themselves that they are distinctive. But others on their team, and their
bosses, tend to recognize their unique talents. They may use phrases like “she just gets it,”
“he always knows the right question to ask,” or “she never lets us get away with thinking
and operating in silos” to describe them. A good way to learn about candidates is to ask,
“Who are the people who really seem to understand what the organization needs — and
how to help it get there?” These may be people who aren’t traditionally popular; their
predisposition to question, challenge, and disrupt the status quo can unsettle people,
particularly people at the same level.

6.Develop opportunities for experience-based learning: The vast majority of


professional leadership development is informative as opposed to experiential. Classroom-
based training is, after all, typically easier and less expensive to implement; it’s evidence of
short-term thinking, rather than long-term investment in the leadership pipeline. Although
traditional leadership training can develop good managerial skills, strategists need
experience to live up to their potential.
7.Hire for transformation: Hiring decisions should be based on careful considerations of
capabilities and experiences, and should aim for diversity to overcome the natural tendency
of managers to select people much like themselves. Test how applicants react to specific, real-
life situations; do substantive research into how they performed in previous organizations; and
conduct interviews that delve deeper than usual into their psyche and abilities, to test their empathy,
their skill in reframing problems, and their agility in considering big-picture questions as well as
analytical data.

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 5


8.Bring your whole self to work: Strategic leaders understand that to tackle the most
demanding situations and problems, they need to draw on everything they have learned in
their lives. They want to tap into their full set of capabilities, interests, experiences, and
passions to come up with innovative solutions. And they don’t want to waste their time in
situations (or with organizations) that doesn’t align with their values.

9.Find time to reflect: Strategic leaders are skilled in what organizational theorists Chris
Argyris and Donald Schön call “double-loop learning.” Single-loop learning involves
thinking in depth about a situation and the problems inherent in it. Double-loop learning
involves studying your own thinking about the situation — the biases and assumptions you
have, and the “undiscussables” that are too difficult to raise.

10.Recognize leadership development as an ongoing practice: Strategists has the


humility and intelligence to realize that their learning and development is never done,
however experienced they may be. They admit that they are vulnerable and don’t have all
the answers. This characteristic has the added benefit of allowing other people to be the
expert in some circumstances. In that way, strategic leaders make it easy for others to share
ideas by encouraging new ways of thinking and explicitly asking for advice.

DEVELOPING CORE COMPETENCIES:

A core competency is a concept in management theory introduced by C. K. Prahalad and


Gary Hamel. It can be defined as "a harmonized combination of multiple resources and
skills that distinguish a firm in the marketplace".

Core competencies fulfill three criteria:


1. Provides potential access to a wide variety of markets.

2. Should make a significant contribution to the perceived customer benefits of the


end product.
3. Difficult to imitate by competitors.

For example, a company's core competencies may include precision mechanics, fine
optics, and micro- electronics. These help it build cameras, but may also be useful in
making other products that require these competencies.

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 6


Core Competencies in Business
A business can choose to be operationally excellent in a number of different ways. Below are
common core competencies found in business:

1. Greatest Quality Products: This core competency means the company's products are
most durable, long-lasting, and most reliable. The company will likely have invested
in the strongest quality control measures, technically proficient workers, and high-
quality raw materials.
2. Most Innovative Technology: This core competency means the company is an
industry leader in its sector. The company will likely have invested heavy amounts of
capital into research & development, holds many patents, and hires experts in
respective fields.
3. Best Customer Service: This core competency means customers have the greatest
experience during (and after) their purchase. The company will likely have invested in
training for staff, large numbers of customer service representatives, and processes to
manage exceptions or issues as they arise.
4. Largest Buying Power: This core competency leverages a company's economy of
scale. This company will likely have invested in mergers or acquisitions and have
built up strong relationships with vendors to gain favorable pricing or service.
5. Strongest Company Culture: This core competency promotes the internal
atmosphere of the business. The company aims to attract the best talent by investing
heavily in employee recognition, development, or collaborative, fun events.
6. Fastest Production or Delivery: This core competency means the company is able to
make or ship items the fastest. The company will likely have invested in connected
software systems as well as production processes and distribution relationships.
7. Lowest Cost Provider: This core competency means the company charges the lowest
price among comparable goods. The company will likely have invested in the most
efficient processes the reduce labour or material input.
8. Highest Degree of Flexibility: This core competency allows the company to quickly
pivot in response to business opportunities or challenges. The company will likely
have invested in cross-training across employees or nimble software solutions.

Model Questions from UNIT -V

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 7


I. Short Notes

1. Define Corporate Governance


2. Strategic Leadership
3. Core Competencies

II. Essays

1. What are the issues in Corporate Governance?


2. Discuss in detail about developing Core Competencies.
3. Explain Strategic Leadership detail.

DNR COLLEGE DEPT OF MANAGEMENT STUDIES Page 8

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