Key Topic
Ch 5 & 6
© 2015 Cengage Learning
1
Case Discussion…
• Make sure to follow the format (e.g., single space)
– Visit the instruction one the class website
• It is a group assignment. Make sure to discuss each case as a
group. Otherwise, I will ask you to discuss online thru
Blackboard.
• Make sure to answer all questions. For example, question # 1
consists of two sub-questions.
• Also, make sure to discuss specifically. The first question of Q1
must be discussed specifically based on four responsibilities.
• See instructor answer on the website
– Group 4 and 7
© 2015 Cengage Learning
2
The Body Shop (A)
• TBS is the unusual firm, operated by the unusual
business woman (future top management??).
• She is more like social activist than manager and the
firm seems like one of the government organizations.
– Kind of EPA
• Unusual marketing strategy
• Unusual hiring process
– Possibly illegal
© 2015 Cengage Learning
3
New Type of Grocery Store
• Amazon Go (1:49)
• Post information age phenomenon
– Retail, medical, army, etc.
• Not happen over night, Based on
accumulation and collection of advanced IT
– AWS (so, easier than others)
– What if a competitor subscribing service?
– Technology Ethics Report
© 2015 Cengage Learning
4
Business & Society Concerns
• Where do we draw a line when it comes to disruptive
technologies gradually replacing human labor?
• Should governments take measures to protect our
job market (and citizens)
• Or just turn a blind eye allowing ‘free-market’ forces
to take over and dominate?
• Is Amazon worse than Walmart?
– Labor practice
– Fair competition
– Sustainability
© 2015 Cengage Learning
5
CSR of Amazon
Responsibility
Societal
Expectation
Examples
Economic
Required
Be profitable. Maximize sales,
minimize costs.
Legal
Required
Obey laws, adhere to
regulations
Ethical
Expected
Avoid questionable practices.
Do what is right, fair, and just
Philanthropic
Desired/
Expected
Be a good corporate citizen.
Give back. (smile.amazon.com)
© 2015 Cengage Learning
6
Key Topics
•
•
•
•
•
•
•
•
Strategic Management and Corporate Public Policy
Strategic Management Process
Public Affairs as a Part of Strategic Management
The Corporate Public Affairs Function Today
Issue Management
Risk Management
Crisis Management
The Relationship Between Issue, Risk, and Crisis
Management
• The Body Shop (B) & (C) Case Study
© 2015 Cengage Learning
7
Strategic Management
• Highest level of overall planning
• is the continuous planning, monitoring,
analysis and assessment of all that is
necessary for an organization to meet its goals
& objectives and to position a firm to succeed
in its market environment.
• Thus, SM incorporates environmental
(sustainability), ethical and social concerns,
with the realization that the long-term viability
of a corporation is linked with its impact on the
economy, society, and the environment.
© 2015 Cengage Learning
8
Corporate Public Policy
• 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.
• Thus, it must be fit into strategic management.
•
Must be developed as one of functional areas (e.g.,
finance, MKTG)
• Coca-Cola example (website)
© 2015 Cengage Learning
9
Relationship of Ethics in Corporate Public
Policy to Strategic Management
•
To promote business ethics in corporate
public policy, it should be linked to corporate
strategy.
•
This linkage can be better understood when
we think based on:
•
Four key strategy
•
Strategic management process
© 2015 Cengage Learning
10
Four Key Strategy Levels
Enterprise-level strategy •
•
What is the role of our firm in society?
Corporate public policy must be embedded
Corporate-level strategy • What business should we be in?
Business-level strategy •
How should we compete in this business or
industry?
Functional-level strategy • How should we integrate subfunctional
activities and relate them to changes in our
functional areas?
© 2015 Cengage Learning
11
Emphasis on
Enterprise-Level Strategy
• What is the role of our organization in
society?
• How is our organization perceived by our
stakeholders (e.g., reputation)?
• What principles or values does our
organization represent?
• What obligations do we have to society at
large, including to the world?
• What are the broad implications for our
current mix of businesses and allocation of
resources?
© 2015 Cengage Learning
12
The Hierarchy of Strategy Levels
Enterprise-Level Strategy
Corporate-Level Strategy
Business-Level Strategy
Feedback
Functional-Level Strategy
© 2015 Cengage Learning
13
Strategic Management Process
• is defined as the way an organization defines
its strategy.
• It is a continuous process in which the
organization decides to implement a selected
few strategies, details the implementation
plan and keeps on appraising the progress &
success of implementation through regular
assessment.
© 2015 Cengage Learning
14
Strategic Management Process (con’t)
Components of Strategic Management Process
• Strategic Management Process (4:35)
• Website: Strategic Management Process
© 2015 Cengage Learning
15
Public Affairs Defined -
•
•
“Public affairs represents an
organization's efforts to monitor and
manage its business environment.
It combines government relations,
communications, issues management
and corporate citizenship strategies to
influence public policy, build a strong
reputation and find common ground
with stakeholders.”
© 2015 Cengage Learning
16
Public Affairs
As a Part of Strategic Management
Strategic Management Process
Public Affairs Management (1:35)
Enterprise-Level Strategy
Corporate Public
Policy
Part of
which is
Environmental Analysis
Issues
Management
© 2015 Cengage Learning
Crisis
Management
17
Issue, Risk & Crisis Management
• Issue Mgmt. – a gap between a firm’s
actions and stakeholder expectations
•
Important of all and confusing of all
• Risk Mgmt. – a potential issue that may or
may not occur
• Crisis Mgmt. – an issue that has escalated
to a critical state
•
Managerial decision-making processes should
include Issue Management, Risk
Management, and Crisis Management.
© 2015 Cengage Learning
18
Relationships Between Issue, Risk,
and Crisis Management (1 of 2)
Goal: To be effective, issue, risk and crisis
management, firms must close the gap between the
firms’ situation and its stakeholders’ expectations.
•
Many of the crises firms face arise out of issue
categories (so, firms should be monitoring and
prioritizing through issue management systems).
•
Effective issue management may enable the firm to
avoid a crisis, or minimize its impact, and is vital to
post-crisis management.
•
Risk Management may keep issues from arising
© 2015 Cengage Learning
19
Issue Definition • A gap between what stakeholders expect
and what the firm is doing.
• The gap typically involves debate,
controversy, or differences of opinion that
must be resolved.
• At some point, the organization must make a
decision on the matter, but that does not
mean the issue can be resolved 100%.
• Once an issue becomes public, its resolution
becomes increasingly more difficult.
• Issues are ongoing, and require ongoing
responses.
© 2015 Cengage Learning
20
Issue Management •
•
is a process by which organizations:
•
identify issues in the stakeholder environment,
•
analyze and prioritize them in terms of their
relevance to the organization,
•
plan responses to the issues, and then
•
evaluate and monitor the results.
It is helpful to think of issue management in
connection with strategic management process,
enterprise-level strategy, and corporate public
policy.
© 2015 Cengage Learning
21
Issue Management: Two Approaches
1. Conventional Approach -
•
•
•
•
•
Narrowly focused.
Issues fall within the domain of public policy or public affairs
management.
Issues have a public policy or public affairs orientation.
An issue is any trend, event, controversy, or public development that
might affect the corporation.
Issues originate in social, political, regulatory, or judicial
environments.
2. Strategic Management Approach • Broadly inclusive.
• IM is typically the responsibility of senior line management or
strategic management staff.
• Issues identification is more important than it is in the
conventional approach.
• Issues management is seen as an approach to the anticipation
and management of external and internal challenges to the
company’s strategies, plans, and assumptions.
© 2015 Cengage Learning
22
Model of Issues Management Process
Identification of Issues
Analysis of Issues
Prioritization of Issues
Formulation of Issue Responses
Implementation of Issue Responses
Evaluation, Monitoring, and Control of Results
© 2015 Cengage Learning
23
Relationships Between Issue, Risk,
and Crisis Management
….will be able to develop better understanding of
both definition and relationships
• Difference Between Issues & Crisis
Management? (2:40)
• How to manage risks and issues (2:10)
•
Watch later………
© 2015 Cengage Learning
24
The Nature of Crises
•
•
•
Many definitions of crisis; here are two:
A crisis is an extreme event that may threaten
your very existence. At the very least, it causes
substantial injuries, deaths, and financial costs, as
well as serious damage to your reputation.
An organizational crisis is a low-probability, highimpact event that threatens the viability of the
organization and is characterized by ambiguity of
cause, effect, and means of resolution, as well as
by a belief that decisions must be made swiftly.
© 2015 Cengage Learning
25
Types of Crises
Economic
Physical
Personnel
Criminal
Information
Reputational
Natural disasters
© 2015 Cengage Learning
26
Successful Crisis Management (1 of 2)
Be prepared for a crisis:
•
Example: After Hurricane Katrina, both
Walmart and Home Depot stood out for
their preparedness and assistance.
Learn from Crises:
•
CEOs coping with Katrina learned:
•
Take care of your employees
•
Keep communication lines open
•
Get ready for the next disaster
© 2015 Cengage Learning
27
Successful Crisis Management (2 of 2)
•
Schwan’s was notified of a possible salmonella
outbreak involving its products.
•
It immediately shut down, halted all sales and
production, and invited the state health department,
the department of agriculture, and the FDA in to the
plant to investigate.
•
Within 24 hours, it set up a hotline to answer
consumer questions, contacted employees and
managers to staff the hotline, prepared for a product
recall, and began working with its insurer.
•
Medical treatment was given, bills paid and losses
reimbursed to those affected, and after one year,
most claims were resolved. The source of
contamination was discovered, (a supplier), and
Schwan’s began preparing to prevent a reoccurrence.
© 2015 Cengage Learning
28
Risk Management (1 of 2)
• How to manage risks and issues (2:10)
• Risk management concerns potential
issues; it addresses an issue that has not
yet occurred, and tries to keep the issue
from arising.
• A “rules” approach to risk management can
help prevent internal risks, but not those
that stem from firm strategy or risks in the
external environment.
© 2015 Cengage Learning
29
Risk Management (2 of 2)
• A new framework for Risk management
divides it into three categories:
• Preventable risks – internal risks that
offer no strategic benefit (breakdown of
CSUB’s admission processes).
• Strategic risks – risks taken to achieve
greater returns (BP’s deep drilling)
• External risks – external risks that cannot
be controlled (natural disasters and
economic shocks)
© 2015 Cengage Learning
30
The Body Shop
Case 3: The Body Shop (B)
•
Skip questions 2 and 3
Case 4: The Body Shop (C)
•
Skip questions 2, 3, and 4
• Review of (A) (end @ 2:19)
• Details of issue Management continues
• From next slide…
© 2015 Cengage Learning
31
Identification of Issues (1 of 2)
Scan the environment
Identify emerging issues and trends
© 2015 Cengage Learning
32
Identification of Issues (2 of 2)
• Five Leading forces as predictors of social
change:
•
•
•
•
•
Events
Authorities or advocates
Literature
Organizations
Political jurisdictions
• If these five forces are monitored closely,
impending social change can be identified,
and sometimes predicted.
© 2015 Cengage Learning
33
Examples of Forces Leading Social Change
© 2015 Cengage Learning
34
Analysis of Issues • Who (which stakeholder) is affected by the
issue?
• Who has an interest in the issue?
• Who is in a position to exert influence?
• Who has expressed opinions on the issue?
• Who ought to care about the issue?
To help with issue analysis:
• Who started the ball rolling? (Historical view)
• Who is now involved? (Contemporary view)
• Who will get involved? (Future view)
© 2015 Cengage Learning
35
Ranking or Prioritization of Issues
Two essential questions 1. How likely is the issue to affect the
organization?
2. How much impact will the issue have?
• Once these questions are answered, it is
necessary to prioritize them as to their
importance or relevance to the organization.
• Those listed at the top will receive the most
attention and resources; those at the bottom
may be removed from consideration.
© 2015 Cengage Learning
36
Other Issues: Ranking Techniques
Polls / Surveys
Expert panels
Content analysis
Delphi Technique
Trend extrapolation
Scenario building
Use of precursor events or bellwethers
© 2015 Cengage Learning
37
Formulation and
Implementation of Response
Formulation •
The response design process.
Implementation •
The action design process.
• Clarity of the plan
• Resources needed to implement the plan
• Top management support
• Organizational structure
• Technical competence
• Timing
© 2015 Cengage Learning
38
Evaluation,
Monitoring, and Control
• Companies should continually evaluate the
results of their responses to issues.
• Ensure that actions are kept on track.
•
Includes careful monitoring of stakeholder
opinions.
•
A form of stakeholder audit (similar to a
social audit) can be used.
• Information from this stage helps firms to
make adjustments to the process as needed.
© 2015 Cengage Learning
39
Issue Development Process
Issues Development Process • The growth process or life cycle of an issue helps
management recognize when an event or trend is
becoming an issue.
• The process has five stages:
1. Early
2. Emerging
3. Current
4. Crisis
5. Dormant
© 2015 Cengage Learning
40
Issues Development Life Cycle Process
© 2015 Cengage Learning
41
Issue Management in Practice
• Companies that adopt issues
management processes:
• Develop better overall reputations
• Develop better issue-specific
reputations
• Perform better financially
© 2015 Cengage Learning
42