Corporate Stakeholder Management Analysis Tools: A Review

-- Shashank Shah and A Sudhir Bhaskar

In recent times, the objectives of many corporations are focused mainly on shareholders' wealth maximization. This has resulted in activities being undertaken by some of them that have, in the long run, not been very conducive to the health and reputation of the organization. The debacles in the corporate world over the last decade, all across the globe, provide testimony to this short-sightedness and narrow focus of corporate organizations. As a social entity, the corporate organization should, along with its long-term growth and success, take upon itself the responsibility of ensuring the welfare of all its constituents to the extent possible. The need for a change in the corporate organizations' approach towards corporate stakeholder management, and to ensure the Pareto optimization of the welfare of all the stakeholders of a corporate organization is the highest now than ever before. Based on a preliminary literature review, this paper highlights four major tools of stakeholder management implementation and analysis. These tools facilitate the appropriate application of this concept into corporate organizations. An attempt has been made to state the apparent benefits and drawbacks of these tools. The paper concludes with gaps in the existing body of knowledge, which would facilitate and guide further research in this field.

© 2007 IUP . All Rights Reserved.

Organization Structure and Inter-Organizational Dependency: The Environmental Imperative

-- Eldos Mathew Punnoose

Contingency theory and Systems theory are the two dominant theories that bring out the link between organization structure and the environment. Systems theory has evolved over time and undergone several transitions. This study tries to provide a more meaningful understanding about closed and open systems by linking with the object-observer model from physics. Additionally, the paper gives a finer view of the implications of the environment on the organization. It also captures several other areas like the role of environment on leadership, measuring the environment, etc. It acknowledges the role of perceptions of the managers in the process of adaptation. This study attempts to discuss the possibility of a perfectly closed system which is commercially oriented. It draws a conclusion on the imperative of environment on inter organizational network and interdependency. The paper, being conceptual in nature, broadens the current understanding and opens doors to several areas of empirical researches, which can take off from the propositions framed in the study.

© 2007 IUP . All Rights Reserved.

Value-Based Management Strategy: An Alternative Approach to Executive Compensation at TCS

-- Koustubh Kanti Ray

Executives (agents) who are not hired by shareholders (principals) may perform in ways, which do not maximize shareholder wealth. For example, executives may differ from shareholders in their outlook towards risk. Shareholders can spread their investments over many firms and thereby lower the risk from any one investment. Conversely, shareholders may want executives to commit to added risky projects (for higher returns). Executives, on the other hand, cannot diversify their risk because of their close association with the firm. An executive can hold only one job, and is most likely to be risk-averse with respect to that job. The Economic Value Added (EVA)-based compensation system is one of the most accepted variable compensation systems being used in the corporate world. Popularized by Stern, Stewart & Co. during the 1980s, EVA is widely accepted as a measure of corporate performance. By definition, the market value of a company will increase with the sustained increase in EVA. This approach is effectively implemented in all types of organizations including growth companies to turnarounds. This is because the continuous improvement in EVA increases shareholder's wealth (based on solid economic benefit) not only the level of share price (which is more on market sentiment). This paper looks at the implementation process of EVA at Tata Consultancy Services (TCS) by drawing parallels to the Stern Stewart's Four M model that covers the measurement, management, motivation and mindset of managers to establish the link between EVA and executive compensation. Information for the paper was collected from secondary sources, including annual reports and research reports of the company and all publicly available data obtained from Stern Stewart & Co. In order to investigate the experiences of EVA at TCS, some part of the study has been composed after a brief interaction with TCS employees, who are practically working on the EVA platform.

© 2007 IUP . All Rights Reserved.

Strategic Approach to Power Loom Business: An Empirical Evaluation

-- L Manivannan,
M G Saravanaraj, R Gopan and C Manivannan

This paper attempts to study the future prospects of the power loom entrepreneurs and visualize the problems faced by the power loom entrepreneurs in the Namakkal District of Tamil Nadu, thereby helping the entrepreneurs in the formulation of a Successful Business strategy. For this purpose, the Interview schedule was administered on the entrepreneurs. The data, collected through interviews, were analyzed, and the interpretations, plotted. Through the results obtained, the ways and means to overcome the problems are suggested. This is an ongoing study, which may be extended to the entrepreneurs of other sectors.

© 2007 IUP . All Rights Reserved.

Philosophy and Strategy: Learnings from the Great Thinkers

-- Subhadip Roy and Saptarshi Purkayastha

The field of business strategy has been enriched by learnings from various disciplines of knowledge. The greatest influence can be credited to economics, in spite of the conflicts between strategists and economists. This paper attempts to find out whether we can draw object lessons from the great thinkers of philosophy and whether they can be applied for betterment in the field of strategic management. A lot of learning can actually be taken up from philosophy. For example, Heraclitus, considered to be the most prolific thinker among the philosophers of Pre-Socrates era, had said that the universe is in a flux and "you can't step in the same river twice". Relating this to strategy, we can say that the same strategy will not work for a firm infinitely. We cannot take anything for granted and from time to time, it is necessary to change strategy. Object lessons like this can be drawn from the tenets of philosophy into strategic management. Some striking similarities can also be found in the writings of the gurus of strategy and philosophers. This paper tries to develop an idea to bring the disciplines of philosophy and strategic management together, so as to raise the interest for further studies in this field.

© 2007 IUP . All Rights Reserved.