Lecture Business and society - Chapter 5: Strategic Management and Corporate Public Policy

Contents: The Concept of Corporate Public Policy, Four Key Strategy Levels The Strategic Management Process, Public Affairs as a Part of Strategic Management, The Corporate Public Affairs Function Today.

Chapter 5

Strategic Management and Corporate Public Policy

Learning Outcomes

1 Describe the concept of corporate public policy and

relate it to strategic management.

2 Articulate the four major strategy levels and explain

Chapter Outline

• The Concept of Corporate Public Policy

• Four Key Strategy Levels

• The Strategic Management Process

• Public Affairs as a Part of Strategic

Management

• The Corporate Public Affairs Function

Today

The Concept of Corporate Public

Policy

Corporate public policy is a firm’s posture, stance, strategy or position regarding the environmental, social, global, and ethical aspects of stakeholders and corporate functioning

Affirmative Action

Sexual harassment Product safety

Employee privacy

Environmental

Sustainability

Corporate Public Policy

and Strategic Management

Corporate public policy -

•Incorporates sustainability as that part of the overall strategic management of the

organization that focuses on the

environmental, economic, social and ethical stakeholder issues that are embedded in the decision processes of the firm

Relationship of Ethics

to Strategic Management -

• For business ethics to have any meaning

beyond pompous moralizing, it should be linked to corporate strategy.

• Corporate strategy can be revitalized

because the linkage permits addressing management issues in ethical terms.

• This linkage can be better understood

when we think about the:

• Four key strategy levels (decisions are

made at several levels)

• Steps in the strategic management

process

Four Key Strategy Levels

Enterpriselevel strategy

-• What is the role of our firm in society?

• For what do we stand?

-• How should we integrate subfunctional

activities and relate them to changes in our functional areas?

The Hierarchy of Strategy Levels

Emphasis on Enterprise-Level Strategy

For what do we stand?

• What is the role of our organization in

• 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?

Manifestations of Enterprise-Level Thinking -

• A positive, constructive, sensitive firm

response in a public crisis

• The use of:

Social Entrepreneurship -

• The social entrepreneurship has as its

reason for being a mission of societal

value creation

• The creation of wealth is a means to

achieve the goal of creating societal

value

• Social entrepreneurship’s central focus is

the alleviation of poverty, but it may

address a range of societal goals,

including education, the environment, and the arts

• The bottom-of-the-pyramid (BOP) is

term used to characterize the largest and poorest socio-economic group of people, those who live on less than $2/day

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The Benefit Corporation-

• Unlike the traditional corporation, the

Benefit Corporation has a broader mission that includes having a positive impact on

society

• The societal mission does not take a

backseat to shareholder wealth

maximization

• The Benefit Corporation offers managers,

investors and customers the opportunity to participate in or patronize businesses that promise to make social responsibility an

important goal

• 12 states now have laws permitting

companies to incorporate as Benefit

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The Importance of Core

Values

Core Values -

•Are the deeply ingrained principles that

guide all of a company’s actions and

decisions

•Serve as cultural cornerstones

•Having a set of core values that are not followed will do no good

•To be effective, firms need to weave core values into everything they do

•If a firm’s core values are not upheld, they become hollow, and do more harm than

good

Other Manifestations of Enterprise-Level Thinking -

Establishment of public-policy

committees

-•Sustainability

•Ethics

•Corporate philanthropy, etc

Establishment of a Public affairs Office

-•Included in strategic decision-making

Identification of social or public issues –

•Integrated into strategic management

processes

The Strategic Management

Strategic Management Process and Corporate Public Policy

Components of Strategy

Formulation

Strategic Corporate Social Responsibility (1 of 2)

CSR & Competitive Advantage -

•3 ways corporations intersect with society:

• Generic social issues (firm’s operations do

not affect society and issue is not material to firm’s long-term competitiveness)

• Value chain social impacts (a firm’s normal

operations significantly affect society)

• Social dimensions of competitive context

(social issues affect the underlying drivers of

a firm’s competitiveness)

•These categories divide into 2 modes of

corporate involvement:

Strategic Corporate Social Responsibility (2 of 2)

Responsive CSR

•Addresses generic social impacts

through good corporate citizenship and value chain social impacts by mitigating harm

Strategic CSR

•Transforms value chain social impacts into activities that benefit society while reinforcing corporate strategy

•Advances strategic philanthropy that leverages competitiveness.© 2015 Cengage Learning 20

Measuring Sustainable Corporate

• To achieve sustainability, the triple bottom line

must be reflected in every aspect of the firm’s

operation

• Sustainability reports (integrated reports – IR) reflect the extent to which the firm is creating

value in the triple bottom line

• Social Audits, Social Responsibility Reports

and Environmental Impact Reports focus on

Crisis Management

Public Affairs Management which is Part of

Enterprise-Level Strategy Environmental Analysis

The Corporate Public Affairs

4.The need to be more active in politics

outside traditional community-related

Public Affairs Defined -

The Public Affairs Council (PAC), the leading organization of executives who do the PA work of companies, defines PA as:

•“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.”

Public Affairs Activities &

Functions -

• Public Affairs (PA) began from isolated

company initiatives designed to handle

diverse activities, but was sometimes

managed by Public Relations staffers, but they are not the same

• Public relations focuses on selling a

product, while public affairs is designed to influence public policy

• PA activities may include lobbying, global

public affairs, social media, corporate

responsibility, campaign finance,

grassroots advocacy, crisis

Future of Corporate PA

• If the PA function is to be effective, it must have influence at the top management level

• Because of corporate ethical crises, PA

specialists have an ideal opportunity to help

transform business and society relationships There are 3 primary opportunities:

• Help develop value-based enterprises; and work cooperatively with them on social

issues

• PA executives can be thought leaders in their firms, and collaborate with those outside the firm on current issues

• Be mindful of global issues, including those which begin as domestic issues and migrate

• corporate public affairs

• corporate public policy

• public affairs management

• public affairs strategy

• shared value

• social audit

• social entrepreneurship

• social responsibility report

• strategic management strategic management processes

• sustainability report

• value shift

Key Terms