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Article

Paul Strebel, Margaret Cording and Jialu Shan

Getting rid of the contradictions between financial and sustainability reports is not straightforward, owing to their disparate financial-, environmental- and…

Abstract

Purpose

Getting rid of the contradictions between financial and sustainability reports is not straightforward, owing to their disparate financial-, environmental- and people-related data. The purpose of this paper is to show how a big step toward integrating the reports can be made by focusing on extracted value and subtracting it from reported profits. Value extraction is defined as value captured from stakeholders by distorting the competitive market process.

Design/methodology/approach

Value extracted is identified by looking at three ways in which it is done: manipulating markets to enhance profits, exploiting market distortions to socialize costs and privatizing benefits. These categories are related to one consolidated bottom-line using the data from JPMorgan’s 2012 reports. Application to the Western oil majors shows how one bottom-line can be used to assess the risks posed by value extraction to the economic sustainability of a firm.

Findings

Conservatively estimated, JPMorgan’s value extracted in 2012 was 25 per cent of reported profits. From 2007-2009, the average annual value extracted by Exxon and Chevron was 17 and 16 per cent of reported profits, respectively, whereas for BP and Eni, it was 23 and 30 per cent, respectively. Higher value extraction by BP preceded the Deepwater Horizon explosion and, in Eni’s case, the political disruption of its activities.

Research limitations/implications

It is difficult to get precise numbers on the value extracted because sustainability costing and related data are often neither available nor standardized.

Social implications

Reported profits minus value extracted, defined as competitive profits, provide a proxy for one bottom line that integrates the financial and sustainability reports.

Details

Journal of Business Strategy, vol. 37 no. 2
Type: Research Article
ISSN: 0275-6668

Keywords

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Article

JOEL STERN and Paul Strebel

Corporate business portfolios, once bright with future stars, have darkened appreciably of late. With the economies of both North America and Europe moving from the growth…

Abstract

Corporate business portfolios, once bright with future stars, have darkened appreciably of late. With the economies of both North America and Europe moving from the growth of the 1960s to the stagflation of the late 1970s and early 1980s, the classification of business units into question marks, future stars, cash cows, or hopeless dogs has lost much of its relevance. There are simply not enough future stars to go around. Indeed, the life cycle of the market share—market growth matrix, pioneered by the Boston Consulting Group, has been more like that of an entertainment celebrity than a celestial star; it seems to be falling into disfavor, as a technique in corporate planning, almost as rapidly as it rose to prominence.

Details

Journal of Business Strategy, vol. 3 no. 3
Type: Research Article
ISSN: 0275-6668

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Article

Xavier Gilbert and Paul Strebel

Should one compete on the basis of product features or price? Both, say the authors. A successful strategy should be flexible enough to exploit market changes by making…

Abstract

Should one compete on the basis of product features or price? Both, say the authors. A successful strategy should be flexible enough to exploit market changes by making timely shifts back and forth.

Details

Journal of Business Strategy, vol. 8 no. 1
Type: Research Article
ISSN: 0275-6668

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Article

Paul Strebel and Anne‐Valérie Ohlsson

When top executives undertake big moves – dramatic shifts in strategic direction – their decisions can make or break a company. This paper aims to offer a methodology for

Abstract

Purpose

When top executives undertake big moves – dramatic shifts in strategic direction – their decisions can make or break a company. This paper aims to offer a methodology for cutting the risks of making a catastrophic misstep.

Design/methodology/approach

To avoid a corporate disaster and increase the chances of a smart and ultimately successful big move the paper raises six critical questions that must be answered honestly and unequivocally by managers.

Findings

The research indicates that there are five classic types of big move, each corresponding to a different position on the corporate performance curve: finding a new game; going for growth; getting into shape; relaunching growth; and restoring profitability.

Practical implications

The paper outlines the ego traps of each big move and how to avoid them.

Originality/value

By defining the critical six questions and revealing the ego traps and how to avoid them the paper provides a valuable learning guide and checklist for top management.

Details

Strategy & Leadership, vol. 37 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article

Paul Strebel

The purpose of this paper is to show how boards can get in touch with their value critical stakeholders, those who can make or break the company.

Abstract

Purpose

The purpose of this paper is to show how boards can get in touch with their value critical stakeholders, those who can make or break the company.

Design/methodology/approach

The paper first develops the hypothesis that boards often are out of touch with reality. It then introduces the concept of value critical stakeholders and proposes that boards introduce an outreach program to get in touch with them. For each of the proposed five elements in an outreach program, the paper reviews what boards already are doing to be in touch.

Findings

The review of existing practice shows that for each of the elements in an outreach program, there is enough practice available for boards to develop a comprehensive approach to get in touch with the value critical stakeholders.

Social implications

To prevent a future governance crisis, get in touch and promote long‐term value creation, boards need an explicit program of reaching out beyond the boardroom, not only to the immediate stakeholders, but also the societal stakeholders, who can make or break the company. This paper shows how it can be done.

Originality/value

The paper introduces the new concept of value critical stakeholders and describes how it can be used to help boards get in touch with reality.

Details

Corporate Governance: The international journal of business in society, vol. 11 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

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Article

Reviews the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

Abstract

Purpose

Reviews the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

Design/methodology/approach

Scans the top 400 management publications in the world to identify the most topical issues and latest concepts. These are presented in an easy‐to‐digest briefing of no more than 1,500 words.

Findings

Nardelli's change initiatives at Home Depot were successful because they considered and added all the vital ingredients: hard data, speed, communication, enthusiasm and above all, a brave determination to see a vision through.

Practical implications

Provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Originality/value

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to digest format.

Details

Strategic Direction, vol. 22 no. 9
Type: Research Article
ISSN: 0258-0543

Keywords

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Abstract

Details

The TQM Magazine, vol. 13 no. 1
Type: Research Article
ISSN: 0954-478X

Keywords

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Abstract

Details

Comprehensive Strategic Management
Type: Book
ISBN: 978-1-78714-225-1

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Article

Steven R. Ferraro and Darrol J. Stanley

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in…

Abstract

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in the Wall Street Journal’s “Dartboard” contest 1990‐1996, four randomly selected shares and the Dow Jones Industrial Average. Finds the analysts’ portfolio has the highest average returns and standard deviation; and that although some individual analysts have excellent scores in the contest, this is inversely related to the number of times they participate. Suggests that they do not significantly outperform other portfolios, but that contest winners’ tips have significant effects on the market, especially for non‐listed shares. Assesses the implications of the results for the efficient market hypothesis and the share prices of firms with higher asymmetric information.

Details

Managerial Finance, vol. 26 no. 6
Type: Research Article
ISSN: 0307-4358

Keywords

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Article

Willy A. Sussland

The author's original approach helps to understand the executives and their decision‐making process.

Abstract

Purpose

The author's original approach helps to understand the executives and their decision‐making process.

Design/methodology/approach

The complexity of today's business requires the board of directors (BoD) to go beyond its traditional role of referee, and to become involved as appropriate with the business and with its top managers. The BoD should apply the 3<P>of governance: namely the official policies that tell it what to do and what not to do; a comprehensive process of governance that ensures the effectiveness of its activities; and, last but not least, basic psychology to understand the possible quirks of the top managers. This article complements the author's earlier contribution on the process of governance, and focuses on how the directors can monitor the behavioral patterns of the top managers and assess the impact on their decision making.

Findings

The author recommends that the BoD uses the methodology of “Creating Business Value” described in this article. By providing transparency over the whole business system, it brings out the proficiency of the top management, and reveals dysfunctional attitudes.

Practical implications

The advocated approach contributes to the effectiveness of the directors as they interact with the executive on critical issues.

Originality/value

The author presents an application of “creating business value”, an original and holistic methodology that enables all concerned to see where, why, how, and how much business value has been, or will likely be, added or destroyed throughout the enterprise.

Details

Corporate Governance: The international journal of business in society, vol. 5 no. 1
Type: Research Article
ISSN: 1472-0701

Keywords

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