2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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 and Corporate Public Affairs Search the Web For insights into GlaxoSmithKline corporate social policies, visit its web site at:: http://corp.gsk.com/community/workingwith. htm

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-3 Chapter 4 Strategic Management and Corporate Public Affairs 2 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

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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 Corporate Public 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 AIDS Affirmative action Sexual harassment Product safety Employee privacy

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©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...

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-10 Chapter 4 Strategic Management and Corporate Public Affairs Four Key Strategy Levels Hierarchy of Levels Enterprise-Level Strategy Corporate-Level Strategy Business-Level Strategy Functional-Level Strategy

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-11 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?

13. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-12 Chapter 4 Strategic Management and Corporate Public Affairs Emphasis on Enterprise-Level Strategy What are the manifestations of enterprise- level thinking? Codes of ethics Codes of conduct Mission statements Values statements Corporate creeds Vision statements Search the Web For 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

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-13 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

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-14 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

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-15 Chapter 4 Strategic Management and Corporate Public Affairs Emphasis on Enterprise-Level Strategy

17. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-16 Chapter 4 Strategic Management and Corporate Public Affairs Strategic Management Process and Corporate Public Policy Stakeholder Environment Stakeholder Environment (trends, events, issues, forecasts) Consumer Social Activist Governmental Community Owner Employee Environmental Environmental Analysis Goal Formulation Strategy Formulation Strategy Evaluation Strategy Implementation Strategic Control Organizational Environment

18. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-17 Chapter 4 Strategic Management and Corporate Public Affairs Strategic Management Process Goal Formulation Goal formulation involves: –Establishing goals –Setting priorities among goals

19. Strategic Management Process Strategy Formulation 4-18

20. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-19 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.

21. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-20 Chapter 4 Strategic Management and Corporate Public Affairs Strategic Management Process Strategy Implementation Strategy Structure Systems Style Staff Skills Shared values McKinsey 7S Framework

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-21 Chapter 4 Strategic Management and Corporate Public Affairs Strategic Management Process Strategic Control Three 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

23. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-22 Chapter 4 Strategic Management and Corporate Public Affairs Strategic Management Process Strategic Control Social 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 Web For an example of a social audit, go to: http://www.the-body- shop.com/global/values/index.asp Search the Web For an example of a ranking of social audits, go to www.sustainability.com www.sustainability.com

24. Strategic Management Process Strategic Control 4-23

25. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-24 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.

26. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-25 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

27. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-26 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

28. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-27 Chapter 4 Strategic Management and Corporate Public Affairs Public Affairs Management: Relationships Enterprise-Level Management Strategic Management Process Environmental Analysis Corporate Public Policy Issues Management Crisis Management Public Affairs Management Part of which is

29. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-28 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

30. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-29 Chapter 4 Strategic Management and Corporate Public Affairs Public Affairs Activities

31. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-30 Chapter 4 Strategic Management and Corporate Public Affairs Public Affairs Activities

32. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-31 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

33. New Public Affairs Organization 4-32

34. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-33 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

35. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-34 Chapter 4 Strategic Management and Corporate Public Affairs Business Exposure and External Affairs Design Social Environment External Affairs Design: Breadth, Depth, Influence and Integration Consumer Products Company Industrial Products Company

36. Business Exposure and External Affairs Design 4-35

37. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-36 Chapter 4 Strategic Management and Corporate Public Affairs Public Affairs Thinking Manager Make Public Affairs Truly Relevant Make Public Affairs Truly Relevant— Operating managers should know the way in which their decisions might impact the stakeholder environment. Develop a Sense of Ownership of Success Develop a Sense of Ownership of Success—Operating managers should participate in the planning and goal setting of public affairs endeavors. Make It Easy for Operating Managers Make It Easy for Operating Managers—Train them to see the relevance of PA initiatives. Show That Public Affairs Makes a Difference Show That Public Affairs Makes a Difference—Keep a “scorecard” of successes so manager’s see the potential of the PA function.

38. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-37 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

39. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 4-38 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