Importance of Narratives in Business, Management, and Economics (Term Paper Sample)

Leading and Managing in Global Environment
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Importance of Narratives in Business, Management, and Economics
Economists have long relied on data to interpret the various aspects of business, management and economics. This was further enhanced through the belief that data was used to provide an accurate interpretation of the existing status being investigated. However, the technique of narrative is being adopted in the business, management, and economics sector due to some of the importance attached to its use. Various scholars in these fields have supported the use of narratives in driving the message home to the audience or the stakeholders involved. Some of the importance of narrative technique will be highlighted in regard to its use in business, management and economics.
Shiller (2019), explores how narrative impacts economic events through stories going viral and having a direct impact on the economy. In the article, he highlights some of the events that led to the Great Depression of 1930s which was largely fuelled by stories of overnight success by many people. To some extent, the narratives which were being passed around at the time led to people acting out on them thus causing the markets to peak which eventually led to the markets crashing. In another instance, Shiller highlights how Ronald Reagan used the narrative technique to connect to most Americans as an actor and later used the same platform in promoting free markets as a president whose economics impacts are still felt up to today. Donald J. Trump also used the narrative of a self-made billionaire who has mastered the art of deal making and was elected as president in 2016. His presidency has had significant impact on the economy at all levels and its effects are expected to be felt in coming years. Based on Shiller’s assertions, narratives play a significant role in economics as they influence people in making decisions that eventually impact on the various aspects of economics. He specifically identifies the cases of the Great Depression of 1930s, Reagan’s and Donald J. Trump presidency. The use of narratives is also used in convincing investors to invest in a company where the leaders have demonstrated success through their personal narratives in the business ventures. According to Shiller (2019), narrative economics demonstrate how popular stories impact various economic outcomes including recession, depression, and other important economic phenomena. Economists are encouraged to take into considerations the many conflicting popular narratives and the various ideas that are relevant to economic decisions, regardless of whether they are factual or fallacious. Use of these narratives is important in providing economic forecasts that not only relies on data but also what people think of the economy.
Denning (2006) explores the importance of narratives in business by identifying some of the ways in which various organizational objectives can be achieved. Business leaders are encouraged to adopt the narrative technique in promoting different goals for their organizations. In the business world, the use of narrative is central to addressing most of the challenges in leadership including articulating the risks and opportunities, scenario analysis, dilemma resolution among others. Denning (2006) identifies eight different narrative patterns that can be used in guiding businesses towards their objectives. The springboard stories are used to initiate the audience into action which meets the organizational objectives. Narratives can also be used by leaders in sharing their personal stories that positively impact the audience. In another instance, narratives can be used in transmitting values within an organization that aligns to its objectives. In efforts of branding, narratives have been found to impact the audience by encouraging them to relate more to products and services offered. Encouraging collaboration is important in business and narratives have been used to enhance business collaborations. In other instances within an organization, narratives can also be used in sharing of knowledge, lead people into the future, and taming the grapevine. Therefore, all the patterns of narratives identified by Denning (2006) highlights the roles that narrative play in the running of business and guiding all the involved stakeholders towards meeting the organizational objectives. However, for effective integration of narratives in business, it requires some training by a specialist for effective outcomes. Leaders that have the natural ability of using narratives have benefited from this technique in driving their organizations towards success by meeting the set objectives using the different patterns.
Narratives are also important in investment decisions when taking into consideration how company reports influence investor’s decisions in regards to a specific company. Financial analysts as well as investors rely on the narrative technique in achieving their end goal. Financial analysts use the narrative technique in providing an assessment of the financial performance of a company. On the other hand, investors use the company reports to make decisions on whether to invest or not in companies based on the analysis of their performance. This technique is also useful for stock analysts who develop a narrative in their analysis and use data mining process to find data that support their narrative. In the compilation of a company report, analysts use the narrative technique to inform of the company’s current status and forecast on its future performance. Effective use of this technique by financial analysts allows their message to be received effectively by their audience and have an expected impact. Therefore, narrative as a tool is important in the investment field as both stock analysts and financial analysts use it in their reporting of the market performance. It is recommended for effective narrative techniques to be adopted in the investment field as prerequisite in decision making.
In conclusion, the art of narrative has grown over the years and is slowly being integrated into the fields of economics, business, and management. Various scholars have supported the use of narrative in positively impacting the involved stakeholders towards success. The eight narrative techniques identified by Denning are crucial in organizational leadership, while Shiller’s assertion on narrative use in economic forecasts highlights some of its importance. In investment, narratives are also relied by both investors and financial analysts in making decisions about the company’s financial performance.
References
Denning, S. (2006). Effective storytelling: strategic business narrative techniques. Strategy & Leadership.
Leins, S. (2018) “Chapter 6: Construction of an Investment Narrative”, Stories of Capitalism: Inside the Role of Financial Analysts, University of Chicago Press
Shiller, R. J. (2019). Narrative economics: How stories go viral and drive major economic events. Princeton University Press.
Unilever Annual Report Analysis
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Unilever Company is one the largest and oldest consumer-based business which operates in more than 190 countries with more than 2.5 billion people globally using their products on a daily basis. The company has a large portfolio of more than 400+ household brands that range from home products, food and beverage industry, beauty products and much more. The company’s success has led to its continued expansion in operations over the years and has become one of the most profitable companies in the world (Unilever Annual Report, 2019). The company is a public and is listed in global stock market, where investors have the chance to buy its shares and become part of its shareholders. Based on the ownership of the company, a set of directors are appointed to manage the daily operations of the company which are aimed at meeting the objectives of all the involved stakeholders (Haldane, 2015). Annual reports are released by the company which is used to inform investors of the performance of the company and its projected performance.
As a public company that is traded in the stock markets, one of the primary targets is increasing the value for their shareholders in all their operations and decisions. The shareholders are critical stakeholders in the company as they provide the required funds and resources for the company to achieve its various goals (Jones, & Nisbet, 2011). Therefore, Unilever’s operations are primarily directed towards creating value for shareholders in order to continue receiving their support in their various endeavors. Based on the continued growth of Unilever, it is evident that their primary goal is to increase the value of the company that will in turn benefit the shareholders. This is usually the case in companies whose ownership is public and, therefore, need to maintain and attract more investors through their better performance (Jones, & Nisbet, 2011). This is evident on the financial targets that are set by the company annually which if attained are to increase the value of the company. On the other hand, regardless of ownership, any company that is for profit will always work towards increasing their profits margins for better operations and delivery of their services and products.
Based on the annual report of 2019 released by the company and the statements from both the Chairman and CEO, it is clear that the primary goal of the company is increasing value of for its shareholders through increased financial performance. While addressing the investors, the top positions in the company assured them of the continued com...