Assignment Question

I’m working on a management writing question and need the explanation and answer to help me learn. General Instructions – PLEASE READ THEM CAREFULLY The Assignment must be submitted on Blackboard (WORD format only) via the allocated folder. Assignments submitted through email will not be accepted. Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling in your information on the cover page. Students must mention the question number clearly in their answers. Late submissions will NOT be accepted. Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Course Learning Outcomes (CLOs): Recognize the basic concepts and terminology used in Strategic Management- CLO1 Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations- CLO2 Demonstrate how executive leadership is an important part of strategic management- CLO5 Communicate issues, results, and recommendations coherently, and effectively regarding appropriate strategies for different situations-CLO6 Assignment Questions: Discuss the following questions: How can value-chain analysis help identify a company’s strengths and weaknesses? According to Porter, what determines the level of competitive intensity in an industry? When does a corporation need a board of directors? Distinguish between the roles of the board of directors, shareholders, top manager, and CEO. What is the relationship between corporate governance and social responsibility? Briefly explain the statement, “Settling accounting standards is a political process”. Of Porter’s Five Forces, which force has the greatest influence on whether an industry would be profitable? Why?Give examples for the local market. Notes: Every question is out of 2.5 marks Maximum number of words for all questions: 1500 words. Using the terminology developed in the course of strategic management will be highly valued. Your answers MUST include at least 7 outside references (other than the slides and textbook) using a proper referencing style (APA). Using references from SDL will be highly valued. Good Luck

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Assignment Questions

1. How can value-chain analysis help identify a company’s strengths and weaknesses?

Value-chain analysis is a strategic tool used to dissect a company’s internal activities into primary and support activities. It can help identify a company’s strengths and weaknesses in the following ways:

• Identifying Core Competencies: Value-chain analysis highlights core competencies within a company. By recognizing what it does exceptionally well, a company can focus on leveraging these strengths in the market (Hill, Hult, & Wickramasekera, 2020).
• Cost Analysis: By analyzing the cost structure of each activity in the value chain, a company can pinpoint areas where it may have cost advantages or disadvantages. This helps in cost reduction strategies.
• Process Improvement: The analysis can uncover inefficiencies and bottlenecks in the value chain. Addressing these weaknesses can lead to improved operational efficiency.
• Competitive Benchmarking: By comparing its value chain with competitors, a company can identify areas where it lags behind or leads. This information is vital for strategy development.

2. According to Porter, what determines the level of competitive intensity in an industry?

Michael Porter’s Five Forces model determines the level of competitive intensity in an industry. The five forces are:

• Threat of New Entrants: The easier it is for new companies to enter the industry, the more competitive it becomes.
• Bargaining Power of Suppliers: If suppliers have significant power, they can drive up costs and reduce industry profitability.
• Bargaining Power of Buyers: Strong buyer power can lead to price wars and reduced profitability.
• Threat of Substitutes: The availability of substitute products or services can limit pricing power and profitability.
• Rivalry Among Existing Competitors: The number and strength of existing competitors in the industry determine competitive intensity (Porter, 2015).

3. When does a corporation need a board of directors? Distinguish between the roles of the board of directors, shareholders, top manager, and CEO.

• When a Corporation Needs a Board of Directors: A corporation typically needs a board of directors from its inception. It is a legal requirement in most jurisdictions. The board represents shareholders’ interests and oversees corporate affairs.
• Roles and Distinctions:
  • Board of Directors: The board is responsible for strategic decision-making, appointing and supervising the CEO, and ensuring the company’s long-term success.
  • Shareholders: Shareholders are the owners of the corporation. They elect the board of directors and may vote on major corporate decisions.
  • Top Management: Top management includes executives who oversee daily operations and implement the board’s strategies.
  • CEO (Chief Executive Officer): The CEO is the top executive, responsible for day-to-day operations and executing the strategic vision set by the board (Clarkson & Woods, 2018).

4. What is the relationship between corporate governance and social responsibility?

The relationship between corporate governance and social responsibility is dynamic and crucial in today’s business landscape. Corporate governance refers to the framework and mechanisms by which a company is directed and controlled, ensuring that it acts in the best interest of all stakeholders, including shareholders, employees, customers, and the broader society. On the other hand, social responsibility encompasses the ethical and moral obligations of a corporation to contribute positively to society, protect the environment, and uphold human rights beyond its primary goal of profit generation.

The Interplay Between Corporate Governance and Social Responsibility

1. Alignment of Interests: Effective corporate governance plays a pivotal role in aligning a company’s interests with those of society. It ensures that the board of directors and top management are accountable for making decisions that not only maximize shareholder value but also consider the broader impact on the environment and communities.
2. Transparency and Accountability: Good corporate governance practices, such as transparent financial reporting and independent board oversight, promote accountability. This accountability extends to a company’s social and environmental initiatives. Shareholders and stakeholders expect transparency in reporting on sustainability efforts and ethical conduct.
3. Stakeholder Engagement: Corporate governance structures should encourage stakeholder engagement. Engaging with various stakeholders, including environmental groups, local communities, and NGOs, allows companies to understand societal concerns and integrate them into their strategies. For example, a mining company may engage with environmental organizations to develop sustainable mining practices that mitigate environmental harm.
4. Risk Management: Social responsibility issues, such as environmental disasters or labor disputes, can pose significant risks to a company’s reputation and financial stability. Effective corporate governance includes risk management strategies that identify, assess, and mitigate these non-financial risks, safeguarding the company’s long-term viability.
5. Long-Term Perspective: Corporate governance frameworks are designed to ensure that decisions consider the long-term sustainability of the business. This aligns with social responsibility, where companies commit to making sustainable choices that benefit future generations rather than focusing solely on short-term profits.

Examples of the Relationship

1. The Role of Ethical Boards: Companies with strong corporate governance often have boards of directors that include members with diverse backgrounds, including expertise in environmental, social, and governance (ESG) issues. These boards prioritize ESG considerations, ensuring that the company integrates social responsibility into its strategic decisions.
2. Sustainability Reporting: Many well-governed companies publish sustainability reports alongside their financial reports. These reports detail the company’s social and environmental performance, demonstrating the link between corporate governance and social responsibility. For instance, a global technology company may report its progress toward achieving carbon neutrality.
3. Proxy Voting and Shareholder Activism: Shareholders, driven by concerns related to social responsibility, often engage in proxy voting and activism. Well-governed companies actively communicate with shareholders on ESG matters and address their concerns. This collaboration helps balance governance with social responsibility goals.

In conclusion, corporate governance and social responsibility are interconnected facets of modern business practices. An effective corporate governance framework not only ensures that companies operate with integrity and accountability but also facilitates the integration of social responsibility into their core strategies. As businesses navigate an evolving global landscape with growing expectations for ethical behavior, the synergy between governance and social responsibility will continue to shape corporate behavior and impact society positively.

5. Briefly explain the statement, “Settling accounting standards is a political process”.

The statement, “Settling accounting standards is a political process,” underscores the intricate relationship between accounting standards and various stakeholders who influence their development and adoption. It highlights that accounting standards are not solely determined by technical or objective criteria but are subject to political pressures, negotiations, and compromises.

Key Aspects of Accounting Standard-Setting as a Political Process

1. Involvement of Diverse Stakeholders: The process of setting accounting standards involves a wide range of stakeholders, including accounting professionals, regulators, standard-setting bodies (e.g., FASB in the United States, IASB globally), industry representatives, and governmental bodies. These stakeholders have varying interests and perspectives on financial reporting.
2. Political Influence: Stakeholders often engage in lobbying efforts to shape accounting standards in ways that align with their interests. For example, industry groups may advocate for accounting rules that are favorable to their sectors, while investor groups may push for standards that enhance transparency.
3. Standard-Setting Bodies: Standard-setting bodies are influenced by political pressures, as they aim to strike a balance between different stakeholder interests. They conduct extensive consultations and deliberations to develop accounting standards that are acceptable to a broad spectrum of constituents.
4. Regulatory Oversight: Governments and regulatory authorities play a critical role in overseeing the accounting standard-setting process. They may exert political influence to ensure that accounting standards align with national economic objectives and regulatory frameworks.
5. Global Harmonization: In an increasingly interconnected global economy, the political process extends to international negotiations for harmonizing accounting standards. Achieving convergence between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) exemplifies this political dimension.

Local Market Example

In the United States, the process of settling accounting standards has been influenced by political dynamics. For instance, debates over the expensing of stock options, lease accounting, and fair value measurement have involved significant political lobbying and negotiations among stakeholders. The Financial Accounting Standards Board (FASB), as the primary standard-setter in the U.S., has had to navigate these political pressures to issue accounting standards that strike a balance between competing interests.

In conclusion, the statement emphasizes that accounting standards are not created in a vacuum but are the result of complex political interactions among stakeholders with divergent interests. Acknowledging this political nature of accounting standard-setting is essential for understanding how financial reporting rules evolve and adapt to changing economic and societal dynamics.

6. Of Porter’s Five Forces, which force has the greatest influence on whether an industry would be profitable? Why? Give examples for the local market.

Porter’s Five Forces model assesses the competitive intensity of an industry, and among these forces, the Bargaining Power of Buyers often exerts the greatest influence on industry profitability.

Bargaining Power of Buyers

• Definition: This force represents the ability of buyers (customers) to influence prices, demand better quality or services, or seek alternatives. When buyers have substantial bargaining power, they can drive down prices, which can reduce industry profitability.
• Local Market Example: Let’s consider the local telecommunications industry. In many regions, buyers (individual and business customers) have a considerable degree of bargaining power. They can easily switch between competing providers, demand competitive pricing, and expect high-quality service. As a result, telecommunications companies must continually innovate and offer attractive pricing to retain customers and maintain profitability.
• Factors Influencing Bargaining Power: The bargaining power of buyers is influenced by factors such as the number of available suppliers, the uniqueness of the product or service, and the cost of switching between providers. In markets with many providers offering similar services, buyers tend to have more significant bargaining power.
• Impact on Profitability: When buyers have substantial bargaining power, companies may experience margin pressure, reduced pricing flexibility, and a need to invest in customer retention strategies. This can impact industry profitability, especially if companies cannot differentiate themselves through quality, innovation, or other factors.

In summary, while all of Porter’s Five Forces are essential for assessing industry competitiveness, the Bargaining Power of Buyers often stands out as a dominant force that can significantly affect whether an industry is profitable. Industries with weaker buyer bargaining power may have more control over pricing and profitability, while those with strong buyer influence must adapt and compete effectively to maintain their financial health.

References

Clarkson, M. B., & Woods, A. (2018). The Basics of Compliance and Ethics. Wiley.

Hill, C. W. L., Hult, G. T. M., & Wickramasekera, R. (2020). Global Business Today. McGraw-Hill Education.

Porter, M. E. (2015). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.

FAQs

1. How can I effectively use value-chain analysis to identify a company’s strengths and weaknesses?

• Answer: Value-chain analysis involves examining a company’s primary and support activities to pinpoint areas of competitive advantage and areas that require improvement. By assessing each activity in the value chain, you can identify where the company excels and where it may face weaknesses. This analysis helps in devising strategies to enhance overall performance.

2. According to Michael Porter, what are the determinants of competitive intensity in an industry?

• Answer: Michael Porter’s Five Forces framework identifies five factors that determine competitive intensity in an industry: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products or services, and the rivalry among existing competitors. Understanding these forces is essential for assessing the attractiveness and profitability of an industry.

3. When is it necessary for a corporation to have a board of directors?

• Answer: A corporation typically establishes a board of directors when it transitions from being privately held to publicly traded or when it reaches a certain size and complexity. The board of directors is responsible for overseeing the company’s management, ensuring accountability, and making strategic decisions. It becomes particularly crucial as the company’s ownership and operations expand.

4. What are the distinct roles of the board of directors, shareholders, top management, and the CEO in a corporation?

• Answer: The board of directors is responsible for providing governance and strategic guidance, shareholders own the company’s stock and have voting rights, top management executes day-to-day operations, and the CEO (Chief Executive Officer) is the highest-ranking executive responsible for overall management. Each of these entities has specific roles and responsibilities within a corporation’s structure.

5. How does corporate governance relate to social responsibility in a business context?

• Answer: Corporate governance and social responsibility are interconnected as they both address ethical and responsible business practices. Effective corporate governance ensures that a company considers societal and environmental impacts in its decision-making processes, aligning with social responsibility principles. This alignment fosters transparency, accountability, and ethical conduct within the organization.