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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
1
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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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-2
Chapter 4 • Strategic Management and Corporate Public Affairs
2
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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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-3
Chapter 4 • Strategic Management and Corporate Public Affairs
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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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-4
Chapter 4 • Strategic Management and Corporate Public Affairs
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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-5
Chapter 4 • Strategic Management and Corporate Public Affairs
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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-6
Chapter 4 • Strategic Management 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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-7
Chapter 4 • Strategic Management and Corporate Public Affairs
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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-8
Chapter 4 • Strategic Management and Corporate Public Affairs
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
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Business and Society: Ethics and Stakeholder Management, 5E • Carroll & BuchholtzCopyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-9
Chapter 4 • Strategic Management and Corporate Public Affairs
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 . . .
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Four Key Strategy LevelsHierarchy of Levels
Enterprise-Level Strategy
Corporate-Level Strategy
Business-Level Strategy
Functional-Level Strategy
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Emphasis on Enterprise-Level Strategy
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
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Chapter 4 • Strategic Management and Corporate Public Affairs
Emphasis on Enterprise-Level Strategy
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Emphasis on Enterprise-Level Strategy
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 Affairs
Emphasis on Enterprise-Level Strategy
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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 Formulation
Strategy EvaluationStrategy
Evaluation
Strategy Implementation
Strategy Implementation
Strategic Control
Strategic Control
Organizational EnvironmentOrganizational Environment
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
Goal FormulationGoal formulation involves:
– Establishing goals– Setting priorities among goals
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Strategic Management Process
Strategy Formulation
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
Strategy Implementation
• Strategy• Structure• Systems• Style
• Staff • Skills• Shared values
McKinsey 7S Framework
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
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
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Strategic Management Process Strategic Control
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
Strategic Control
Social Auditing
Global Reporting Initiative (GRI) concerns developing standard measures for social reporting.
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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Strategic Management Process
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
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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Chapter 4 • Strategic Management and Corporate Public Affairs
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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
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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Chapter 4 • Strategic Management and Corporate Public Affairs
Public Affairs Activities
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Chapter 4 • Strategic Management and Corporate Public Affairs
Public Affairs Activities
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Chapter 4 • Strategic Management and Corporate Public Affairs
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
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New Public Affairs Organization
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Chapter 4 • Strategic Management and Corporate Public Affairs
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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Chapter 4 • Strategic Management and Corporate Public Affairs
Business Exposure and External Affairs Design
SocialEnvironment
External Affairs Design: Breadth, Depth, Influence and Integration
Consumer Products Company
Industrial Products Company
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Business Exposure and External Affairs Design
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Chapter 4 • Strategic Management and Corporate Public Affairs
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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Chapter 4 • Strategic Management and Corporate Public Affairs
• 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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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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Chapter 4 • Strategic Management and Corporate Public Affairs
Selected Key Terms(continued)
• Public affairs management• Social audit• Sociopolitical forecasting• Stakeholder environment• Strategic management• Strategy management process