Business and Society: Ethics and Stakeholder Management, 5E ...

Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-1

Chapter 4 • Strategic Management and Corporate Public Affairs

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Strategic Management Strategic Management and Corporate Public and Corporate Public AffairsAffairs

Search the WebFor insights into GlaxoSmithKline corporate social policies, visit its web site at::

http://corp.gsk.com/community/workingwith.htm





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Chapter Four Objectives

• Explain the concept of corporate public policy• Identify the four major strategy levels and

enterprise-level strategy• Describe how a concern for social and ethical

issues fits into the strategic management• Relate the notion of social audits to strategic

control• Discuss the four major stages in environmental

analysis



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Chapter Four Objectives

• Identify the major functions of public affairs departments

• Highlight trends identified with respect to the public affairs function

• Link public affairs strategy and organizational characteristics

• Indicate how public affairs might be incorporated into every manager’s job



Chapter Four Outline

• The Concept of Corporate Public Policy• Four Key Strategy Levels• The Strategic Management Process• Corporate Public Affairs• Public Affairs as Part of Strategic Management• Evolution of the Corporate Public Affairs Function• Modern Perspectives of Corporate Public Affairs• Public Affairs Strategy• Incorporating Public Affairs Thinking into

Managers’ Jobs• Summary



Introduction to Chapter Four

The chapter provides a broad overview of how social, ethical, and public issues fit into the general strategic management process of corporate public policy and corporate public affairs



The Concept of CorporatePublic Policy

Corporate public policy is that part of the overall strategic management of the organization that focuses specifically on the firm’s posture, stance, strategy or position regarding the public, social and ethical aspects of stakeholders and corporate functioning

AIDSAIDS

Affirmative Affirmative actionaction

Sexual Sexual harassmentharassment

Product safetyProduct safety

Employee privacyEmployee privacy



Corporate Public Policy as Part of the Strategic Management Process

• Strategic management refers to the overall management process that focuses on positioning the firm relative to its environment

• Corporate public policy is the part of the strategic management process that focuses specifically on the public, ethical, and stakeholder issues the firm faces



Corporate Public Policy, Strategic Management,

and Ethics• For business ethics to have meaning it

must be linked to business strategy because the linkage permits management issues to be addressed in ethical terms.

• The concept of corporate public policy and the linkage between strategic management and ethics can be better understood in terms of:– Four key strategy levels– Steps in the strategic management process



Four Key Strategy Levels

• Enterprise-level strategy“What is the role of the organization in society?”

• Corporate-level strategy“What business are we in or should be in?”

• Business-level strategy“How should we compete in a given business or

industry?”

• Functional-level strategy“How should a firm integrate subfunctional

activities and relate them to its functional areas in finance, marketing, production?”

Each level poses a basic question . . .

Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-

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Four Key Strategy LevelsHierarchy of Levels

Enterprise-Level Strategy

Corporate-Level Strategy

Business-Level Strategy

Functional-Level Strategy


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Emphasis on Enterprise-Level Strategy

Key Questions to Consider• What is the role of our organization in society?• How is our organization perceived by our

stakeholders?• What principles or values does our organization

represent?• What obligations do we have to society at large?• What are the implications for our current mix of

business and allocation of resources?


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What are the manifestations of enterprise-level thinking?

Codes of ethicsCodes of conductMission statementsValues statementsCorporate creedsVision statements

Search the WebFor an example of enterprise-level strategy in action, visit Hewlett-Packard’s web site at: http://www.hp.com/hpinfo/community/main.htm

http://www.hp.com/hpinfo/community/main.htm

http://www.hp.com/hpinfo/community/main.htm


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Beliefs of Borg-Warner• We believe in the dignity of the individual• We believe in the responsibility to the

common good• We believe in the endless quest for

excellence• We believe in continuous renewal• We believe in the commonwealth of Borg-

Warner and its people


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Johnson and Johnson Credo• We are responsible to our doctors,

nurses and patients• We are responsible to our employees• We are responsible to our

communities• We are responsible to our

stockholders


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Chapter 4 • Strategic Management and Corporate Public AffairsStrategic Management Process and Corporate

Public PolicyStakeholder EnvironmentStakeholder Environment

(trends, events, issues, forecasts)Stakeholder EnvironmentStakeholder Environment

(trends, events, issues, forecasts)

Consumer

Social Activist

Governmental

Community

Owner

Employee

Environmental

Environmental AnalysisEnvironmental AnalysisGoal Formulation

Goal Formulation

Strategy Formulation


Strategy EvaluationStrategy

Evaluation

Strategy Implementation


Strategic Control

Strategic Control

Organizational EnvironmentOrganizational Environment


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Strategic Management Process

Goal FormulationGoal formulation involves:

– Establishing goals– Setting priorities among goals



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Strategy Evaluation

The need for continuing assessment of the firm’s current goals and strategy relative to proposed goals and strategic alternatives.


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• Strategy• Structure• Systems• Style

• Staff • Skills• Shared values

McKinsey 7S Framework


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Strategic ControlThree Essential Steps

• Set standards against which performance may be compared

• Compare actual performance with planned performance

• Take corrective action to bring actual and planned performance in sync


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Strategic ControlSocial audit is a systematic attempt to identify, measure, monitor, and evaluate an organization’s performance with respect to its social efforts, goals, and programs.

Search the WebFor an example of a social audit, go to:

http://www.the-body-shop.com/global/values/index.asp

Search the WebFor an example of a ranking of social audits, go to www.sustainability.com



http://www.sustainability.com/

Strategic Management Process Strategic Control

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Strategic Control

Social Auditing

Global Reporting Initiative (GRI) concerns developing standard measures for social reporting.


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Environmental Analysis• Environmental analysis is the linking

pin between the organization and the stakeholder environment

• Four stages of environmental analysis– Scanning– Monitoring– Forecasting– Assessing


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Corporate Public Affairs

• Corporate public affairs is the management process that focuses on the formalization and institutionalization of corporate public policy.

• Corporate public affairs also embraces:– Corporate public policy– Issue management– Crisis management – Governmental affairs– Corporate Communications


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Public Affairs Management: Relationships

Enterprise-Level ManagementEnterprise-Level Management

Strategic Management ProcessStrategic Management Process

Environmental AnalysisEnvironmental Analysis

Corporate Public Policy

Corporate Public Policy

Issues Management

Issues Management

Crisis Management

Crisis Management

Public Affairs Management Part of which is


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Evolution of the Corporate Public Affairs Function

Includes• A growing magnitude and impact of

government• A changing nature of the political

system• An increasing number of stakeholders

outflanking business• An expanding recognition that

business should be more politically active


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Public Affairs Activities


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Public Affairs Activities


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New Public Affairs Organization

• Manages public affairs as an ongoing process both internally and externally

• Cultivates and harvests the capability to build, develop, and maintain stakeholder relationships

• Recognizes the importance of managing the grassroots

• Communicates in an integrated manner• Aligns the organization’s values and strategies

with the public’s interests on a continuous basis• Focuses both systematically and proactively on

helping the organization compete

New Public Affairs Organization

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Design of the Corporate External Affairs Function and

Corporate Social Performance Function

• Institution oriented versus economic franchise

• Collaborative/problem-solving strategy versus individual/adversarial external affairs strategy


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Business Exposure and External Affairs Design

SocialEnvironment

External Affairs Design: Breadth, Depth, Influence and Integration

Consumer Products Company

Industrial Products Company

Business Exposure and External Affairs Design

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Public Affairs Thinking Manager

Make Public Affairs Make Public Affairs Truly RelevantTruly Relevant— Operating managers should know the way in which their decisions might impact the stakeholder environment.

Develop a Sense of Develop a Sense of Ownership of SuccessOwnership of Success—Operating managers should participate in the planning and goal setting of public affairs endeavors.

Make It Easy for Make It Easy for Operating Operating ManagersManagers—Train them to see the relevance of PA initiatives.

Show That Public Show That Public Affairs Makes a Affairs Makes a DifferenceDifference—Keep a “scorecard” of successes so manager’s see the potential of the PA function.


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• Benchmarking• Business-level strategy• Collaborative/problem

solving strategy• Corporate-level strategy• Corporate public policy• Enterprise-level strategy• Environmental forecasting• Environmental monitoring

• Environmental scanning

• Functional-level strategy

• Global Reporting Initiative (GRI)

• Individual/adversarial external affairs strategy

• Issues and crisis management

• Public affairs

Selected Key Terms


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Selected Key Terms(continued)

• Public affairs management• Social audit• Sociopolitical forecasting• Stakeholder environment• Strategic management• Strategy management process

Business and Society: Ethics and Stakeholder Management, 5E ...

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