Shifting the Focus of Strategy Analysis:

From the External to the Internal Environment

MBV

External

PESTEL
RBV OBV
Environmental turbulence
Internal Internal
Industry dynamics
Resources and capabilities Stakeholder analysis
Industry life cycle
The VRIO framework Power/interests matrix
Industry economic features
Organisation Mission,
Competitive advantages
Industry 5 forces Vision, Objectives
Key success factors SWOT analysis Organisational culture
Strategic groups Value chain Corporate social
responsibility and ethics
Competitor profiling
Customer and market
segmentation
 Revision: Stakeholders Drive CSR and Business Ethics
• The stakeholder perspective argues that businesses are citizens of society and
have certain obligations and responsibilities. It argues that businesses enjoy
certain benefits from society:

1. gain finance capital and employees from society

2. rely on the continuing support of customers, local communities, suppliers
and others
3. benefit from the goodwill of society as a stakeholder
In return, businesses should be ethical and socially responsible towards its
society
However, according to shareholder (as a stakeholder) perspective, businesses
exist primarily for their shareholders (conflicts of interest)
 Ethics and CSR - 1

• Ethics and Corporate Social Responsibility (CSR) are the standards and
conduct that an organisation sets itself in its business practices within the
organisation and outside with its environment: they need to be reflected
in the organisation’s mission statement.

• Ethics is the application of ethical values to business behaviour. It applies

to all aspects of business conduct and to every size of organisation.
 Ethics and CSR - 2

CSR is the attempt by organisations to meet the economic, legal, ethical, and
philanthropic demands of a given society at a particular point in time.

Ethics is particularly concerned with the basic standards for the conduct of
business affairs – for example, policy with regard to honesty, health and
safety and corrupt practice.

• Business ethics is doing things ethically (e.g. between right and wrong and
do the right thing).

• CSR is often about doing ethical thing (but “the right thing” means
different things to different stakeholders).
 Ethics and CSR - 3
CSR issues have become more prominent in
recent years as organisations have come to
recognise that they have a role beyond merely
delivering profits to shareholders (e.g.
sustainable investment and UN SDGs or Global
Goals).

The 2030 Agenda for Sustainable Development

was adopted by 193 UN member states at the
United Nations Sustainable Development
Summit in 2015 (United Nations, 2022). 15 Year
timeline (8 now…)
 Ethics and CSR - 4
• Four prime considerations in developing ethics and CSR:
– extent of scope (e.g. 17 SDGs)
– their financial cost and benefits
– the recipient of the responsibility
– The strategic cost/benefit from MBV,RBV & OBV
• There are numerous differences between organisations over what should
be covered under ethics, reflecting fundamentally different approaches to
doing business and to directing public sector organisations

• Fundamentally, ethics and CSR must be part of the organisation’s objective

based strategy and the development of its overall strategy
 TESCO and its
horsemeat scandal

• 60% horsemeat in
Spaghetti Bolognese
• Withdrawn bolognese
from the shelves
• Used of DNA testing to
resolute the origin in
meat(BBC,2013).
 From TESCO CSR Issues and Unethical
Business Practices to Turnaround strategy
Mission: “to help everyone
who shops with us enjoy a
better quality of life and an
easier way of living” (Tesco.
PLC. 2015)

Objectives:
• Regain, rebuild and protect
• Top employer
• Help tackle food waste
Former Tesco boss, Philip Clarke, will face no • Encourage health eating (Tesco. PLC.
charges from the Serious Fraud Office (SFO) over 2015)
a £326m accounting scandal at the company.

A huge hole emerged in the books when Clarke Vision: “serving Britain's shoppers a
was chief executive after the retailer artificially little better, every day” (Tesco. PLC.
enhanced its reported profits by forcing suppliers 2015)
to accept late payments for goods.
 TESCO CSR awards
• Guardian Sustainable Business Awards
• Grocer Gold Awards
• PR Week Global Award 2014
• Business Green Leaders Awards
• 2 Degrees Champions Awards 2014
• Benefactor of the year
• CSR polityki
• Britain’s Top Employers 2014

At best, bolted-on CSR and, at worst, profit maximization combined with

greenwashing.
Steps in Formulating Ethical/CSR
Strategies
Identify all ethical and CSR issues

Decide on organisation’s ethical stance

Evaluate issues in terms of extent/scope recipient

Estimate the financial cost of resolving an

ethical/CSR issue
Estimate strategic cost/benefit in terms of
MBV,RBV,OBV
Resolve issue or misconduct if benefit outweighs
cost
 Organisational Culture
• Organisational culture is the basic
assumptions and beliefs that are shared by
members of an organisation, that operate
unconsciously and define in a basic taken-
for-granted fashion an organisation’s view of
itself and its environment.
• Organisational Culture can both facilitate
or constrain the strategic development of
organisations.
• An understanding of the culture of an
organisation and its relationship to
organisational strategy can be gained by
using the cultural web.
 Steps in Cultural Web Analysis

1) Use the cultural web 2) What would be the

Identify the
to analyze current org. new cultural web that
differences
culture fits with the proposed
between 1 and 2
strategy

Manage change by changing

elements of cultural web Prioritize changes on
& cultural web , and develop a
Manage effected stakeholders plan to address them

Implementing cultural changes is not simple: it involves re-moulding values, beliefs and behaviour, and it’s a major
change management challenge, taking a great deal of time and hard work from everyone involved.
 Why Cultural Web Analysis?
Healthy Cultures That Aid
Good Strategy Execution

Performance

Good Strategy
Execution

High-Performance Adaptive
Cultures Cultures

Commitment to
achieving stretch Willingness to accept change
objectives and and take on challenges
accountability
 Why Cultural Web Analysis?
Unhealthy Cultures That Impede
Good Strategy Execution

Insular, inwardly focused

Change-resistant cultures
cultures

Unhealthy
Cultures

Politicized Unethical and greed-driven

cultures cultures

Incompatible Subcultures
• BrewDog was founded in 2007 by James Watt and
Martin Dickie. Fifteen years later, it has become one of
the sector’s leaders.

• Overall revenues grew by 10%, online sales by 900%

and the gross profit margin to 48% in 2020. The
company is currently valued at close to £2b and
employs more than 1,600 people globally.

BrewDog’s Shareholders
• BrewDog sells 22% of firm to private equity house – a
deal worth £213m and James and Martin have netted
more than $100 million from the deal. 25%
James
31% TSG Consumer Partners
Martin
Equity Punks

• Brewdog and its CEO have received criticism for the 22%
22%

treatment of employees - BrewDog’s ethical status at

risk over allegations of ‘rotten culture’.
 Ethical issues
BrewDog sought to become “the best employer in the world” and refers to
their employees as “our people”, “the beating heart of our business” and “the
reason we exist” (Mission statement).

However, allegations of bullying culture was made by current and former

employees in 2021 with an open letter signed by more than 300 former and
current workers.

They accused the company of creating a “rotten culture” in which growth is

pursued at all costs and employees are left feeling burnt-out, miserable and
afraid to speak out.
 The Costs of Ethical Wrongdoing

Hypocritical behaviour (private jets, glacier water)

Failure to follow through on social claims
Questionable branding (Pink IPA)
Brewing beer on a plane 38,000 Ft. in the Sky

These all have negative ethical implications but James, the CEO, said “as a fast-
growing business, we have always tried to do the best by our team — we do
have thousands of employees with positive stories to tell as a result,”.
 The Costs of ‘Rotten Culture’
In May 2022, James announced that he would donate a fifth of his personal
shares to an employee trust providing share options to around 750 of its 2,200
staff to radically build a new type of company:

• Regain and rebuild trust and reputation

• Equity punks –minority shareholders
• Two-way feedback loops inside the firm
• The First Carbon Negative Beer Business

Who are Brewdog's main stakeholders and how has the firm prioritised them?
Do you think that BrewDog is motivated by shareholder value maximisation, or
profit combined with a broader purpose?
 Strategy Implementation
Steps to Take in Changing a Problem Culture
  Reading lists
BBC, (2013) Horsemeat scandal: Tesco reveals 60% content in dish. Available at:
http://www.bbc.co.uk/news/uk-21418342 (Accessed: 23 Oct 2022).  

Miles, R. E. (1978) Organizational Strategy, Structure, and Process, Academy of Management Review, 3(3), pp. 546-563.
Makortoff, K and Rob Davies, R. (2021) Former BrewDog staff accuse craft beer firm of culture of fear
Available at: https://www.theguardian.com/business/2021/jun/10/brewdog-staff-craft-beer-firm-letter: (Accessed: 23
Oct 2022).  

Page, S. B., Stone, M. M., Bryson, J. M. and Crosby, B. C. (2018) Coping with Value Conflicts in Interorganizational
Collaborations, Perspectives on Public Management and Governance, 1(4), pp. 239-255.

United Nations, (2022) Department of Economic and Social Affairs Sustainable Development: Available at:
https://sdgs.un.org/goals -(Accessed: 23 Oct 2022).  

Villela, M. (2022) Less leadership, more democracy: lessons from a craft brewer’s management crisis: Available at:
https://theconversation.com/less-leadership-more-democracy-lessons-from-a-craft-brewers-management-crisis-185351
(Accessed: 23 Oct 2022).