Verified Document

Business, The CEO Plays An Important Role Essay

¶ … business, the CEO plays an important role in decision making. One factor that the CEO uses for their decision making processes is commonly refered to as environmental scanning. Environmental scanning is the strategy of determining the overall economic environment of a business in order to make dynamic decisions and ensure continuous growth. This is one role that can only be done by the CEO who is privy to information from all departemnts and angles of the business. There are many factors that go into proper environmental scanning. For instance, the CEO must have pertinent network ties, both inside and outside the company. These ties keep the CEO grounded in a realistic view of the company and its current financial state. Network ties outside of the industry are especially important because those ties have an outside perspective and can assist the CEO in seeing all the extra-industry and socioeconomic trends.

In order to prove the importance of environmental scanning, the author attempted an experiment where certain keywords related to environmental scanning were detected and pulled from the annual reports of various businesses. The study found that there was a statistically signifigant positive relationship between CEO extraindustry network ties and focus of environmental scanning. In other words, the companies who were obviously and actively using environmental scanning had the highest amount of extraindustry network ties.

The article then goes on to discuss the fact that prudent CEO's use the information obtained from the environmental scanning to change and update their business to follow the growing needs and demands of their respective industry. The overall conclusions of the article are that environmental scanning allows CEO's to change their businesses keeping them dynamic and competitive in the continuously changing marketplace. Additionally, the quality of their overall analysis, rests of the types of contacts that the CEO has....

When CEO's have contacts outside of the both their company and their business, the reports are much more informed and broad and allow for greater flexability, interpretation, and change.
From this reading, I learned that it is vital to the success of a business to make connections outside of the company. The primary question that this article raised in my mind was as to the credibility of those network connections within a specialized industry. The author's primary question was regarding the importance of intrabusinsess connections with regard to the growth and transformation of a business.

Abebe, Michael, et al. (2010). Chief Executive Networks and Environmental Scanning Activities: An Emprical Examination. Strategic Management Review, 4(1), 30-43.

The business world can be a tricky place to maneuver, especially for those in executive positions whose entire income rests on the success of their company. In order to foster greater success, some companies such as Enron, stepped over the line and falsely reported their company's value in the annual reports. As a result, the company unexpectedly collapsed resulting in thousand's of employees losing their retirement accounts and the company going bankrupt. Those invovled in the misrepresentation were prosecuted for their actions to commit fraud. Even more, the government stepped in and enacted Sarbanes-Oxley to put stronger reings on the actions that businesses can take regarding their financial reports.

This article seeks to explore two hypothesis. First: "Does a high presence of institutional ownership foster an environment conducive to earnings management?" And second: How is prior positive organizational performance related to earnings management in an institutional heavy firm? In other words, what causes a business to…

Sources used in this document:
The question being raised in this study is which type of institutional ownership is positive and which is negative to the overall success of a company. The study revealed that insurance and banks have a negative effect on corporate political stratagies. The reason was that those agencies are very conservative and seek to ensure that only the most conservative decisions are made within the company. On the other hand, there was no corrolation found between other insider groups inculding employees, as some would vote against decisions and risks, while others were infavor of those risks.

Overall, the study confirmed that there is a link between a company's owners and the desire to appear a certain way to the media. It is always risky portraying the company to the public eye, so conservative investors tended to shy away from such a risk. However, the more risk-taking players within the businesses would often seek this outside reinforcement of business decisions and often enjoy the resulting success.

Ozer, M., Oneonta, S., Alakent, E. (2010). Institutional Ownership and Corporate Political Stratagies: Does Heterogeniety of Institutional Owners Matter? Strategic Management, 4(1), 18-29.
Cite this Document:
Copy Bibliography Citation

Related Documents

Human Resources Plays Crucial Role
Words: 555 Length: 2 Document Type: Professional Writing

Collaboration between HR and operational departments is essential to establish the right criteria for knowledge, skills, and abilities, previous performance, and other desirable objective traits in successful candidates. Collaboration between HR and operational managers must include the final candidate selection process. Managers are hiring according to apparent nationality and cultural biases. Slide #6 Legal Considerations The consequences of accusations or claims of discrimination could be damaging to the organization both financially and in terms of

Business Plan for Organic Fertilizer
Words: 3068 Length: 8 Document Type: Business Plan

We can use this opportunity to establish loyalty among our existing customers, develop referrals among our customers to their colleagues, and establish our brand and credibility as local suppliers of organic fertilizer of high quality and at a good price to our market. With this in place, it will be difficult for any new market entrants to displace us in our local area as the main suppliers of organic

Business Leaders Are Required to
Words: 3030 Length: 10 Document Type: Essay

Accounting Accounting professionals are not often thought of as leadership material, at least until they build a strong background in finance or another discipline. They possess valuable skills, but those skills are viewed more as a staff function, nice to have but not essential to developing competitive advantage and building shareholder value. The accounting skill sets include the ability to monitor and manage costs; in-depth knowledge of the regulatory environment; and the

Business Ethics in Volkswagen Emissions Scandal
Words: 2029 Length: 7 Document Type: Essay

Crisis Management in VW’s ‘Dieselgate’ Scandal Trust is the most important factor in the success of any organization. This trust extends to all levels of stakeholders. If customers feel that they cannot trust the company for any reason, they will not purchase their products. Stakeholders have to trust that the organization will make sound business decisions to keep profits high and manage value. This is becoming even more prominent in the

Role of Corporate Culture in
Words: 953 Length: 3 Document Type: Thesis

How do you design corporate social responsibility (CSR) efforts that are integrated with the business strategy? How do you measure social impact? How do you promote a corporate culture that embraces and supports your CSR strategy? The CSR programs need to be run at a senior level, not passed off to a director or manager level. The social responsibility of an organization should be rightly placed in the head office. There,

Business Ethics Dick Grasso Was
Words: 2791 Length: 10 Document Type: Research Proposal

The treatment of the undocumented workers has legal and economic implications, but is only an issue in the political arena. Companies that hire illegal immigrants are being socially responsible. The argument that illegals suppress wages is not based on sound evidence - the jobs illegals do would otherwise be unfilled. If anything, hiring illegals is socially responsible because it gives those people an opportunity to better themselves, something they otherwise

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now