2. © 2005 by Nelson, a division of Thomson Canada Limited. 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. © 2005 by Nelson, a division of Thomson Canada Limited. 2 Chapter Four Objectives Explain the concept of corporate public policy Identify the four major strategy levels and enterprise-level strategy Describe how social and ethical issues fit into strategic management Relate social audits to strategic control Discuss the four major stages in environmental analysis

4. © 2005 by Nelson, a division of Thomson Canada Limited. 3 Chapter Four Objectives Identify the major functions of public affairs departments Highlight trends identified with the public affairs function Link public affairs strategy and organizational characteristics Indicate how public affairs can be incorporated into every manager’s job

5. © 2005 by Nelson, a division of Thomson Canada Limited. 4 Chapter Four Outline 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 Management Summary

6. © 2005 by Nelson, a division of Thomson Canada Limited. 5 Introduction to Chapter Four A broad overview of how social, ethical, and public issues fit into the strategic management process of corporate public policy and corporate public affairs

7. © 2005 by Nelson, a division of Thomson Canada Limited. 6 The Concept of Corporate Public Policy The overall strategic management of the organization that focuses 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. © 2005 by Nelson, a division of Thomson Canada Limited. 7 Corporate Public Policy and The Strategic Management Process Strategic management --focuses on positioning the firm relative to its environment Corporate public policy --focuses specifically on the public, ethical, and stakeholder issues

9. © 2005 by Nelson, a division of Thomson Canada Limited. 8 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. Corporate public policy and the linkage between strategic management and ethics can be better understood in terms of: - Four key strategy levels

10. © 2005 by Nelson, a division of Thomson Canada Limited. 9 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 do we compete in a given business or industry?” Functional-level strategy “How a firm integrates subfunctional activities and relates them to finance, marketing, and production?”

11. © 2005 by Nelson, a division of Thomson Canada Limited. 10 Four Key Strategy Levels Hierarchy of Levels Enterprise-Level Strategy Corporate-Level Strategy Business-Level Strategy Functional-Level Strategy

12. © 2005 by Nelson, a division of Thomson Canada Limited. 11 Emphasis on Enterprise-Level Strategy Key Questions to Consider What is the role of our organization in society? How is our organization perceived? What principles or values do we 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. © 2005 by Nelson, a division of Thomson Canada Limited. 12 Emphasis on Enterprise-Level Strategy 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. © 2005 by Nelson, a division of Thomson Canada Limited. 13 Emphasis on Enterprise-Level Strategy Beliefs of Borg-Warner We believe in the dignity of the individual -- the responsibility to the common good -- the endless quest for excellence -- continuous renewal -- the commonwealth of Borg-Warner and its people

15. © 2005 by Nelson, a division of Thomson Canada Limited. 14 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. © 2005 by Nelson, a division of Thomson Canada Limited. 15 Emphasis on Enterprise-Level Strategy

17. © 2005 by Nelson, a division of Thomson Canada Limited. 16 Strategic Management 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. © 2005 by Nelson, a division of Thomson Canada Limited. 17 Strategic Management Process Goal Formulation Goal formulation involves: Establishing goals Setting priorities among goals

19. © 2005 by Nelson, a division of Thomson Canada Limited. 18 Strategic Management Process Strategy Formulation

20. © 2005 by Nelson, a division of Thomson Canada Limited. 19 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. © 2005 by Nelson, a division of Thomson Canada Limited. 20 Strategic Management Process Strategy Implementation Strategy Structure Systems Style Staff Skills Shared values McKinsey 7S Framework

22. © 2005 by Nelson, a division of Thomson Canada Limited. 21 Strategic Management Process Strategic Control Three Essential Steps Set standards which may be compared to performance Compare actual performance with planned performance Take corrective action to bring actual and planned performance in sync

23. © 2005 by Nelson, a division of Thomson Canada Limited. 22 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 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. © 2005 by Nelson, a division of Thomson Canada Limited. 23 Strategic Management Process Strategic Control Social Auditing Global Reporting Initiative (GRI) concerns developing standard measures for social reporting.

25. © 2005 by Nelson, a division of Thomson Canada Limited. 24 Strategic Management Process Environmental Analysis Environmental analysis links the organization and stakeholder environment Four stages of environmental analysis –Scanning –Monitoring –Forecasting –Assessing

26. © 2005 by Nelson, a division of Thomson Canada Limited. 25 Corporate Public Affairs Corporate public affairs 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

27. © 2005 by Nelson, a division of Thomson Canada Limited. 26 Public Affairs Management: Relationships Enterprise-Level Management Strategic Management Process Environmental Analysis Corporate Public Policy Issues Management Crisis Management Public Affairs Management

28. © 2005 by Nelson, a division of Thomson Canada Limited. 27 Evolution of the Corporate Public Affairs Function Includes The growing impact of government The changing political system The increase of stakeholders over business The belief that business should be more politically active

29. © 2005 by Nelson, a division of Thomson Canada Limited. 28 New Public Affairs Organization Manages ongoing public affairs 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 Continually aligns the organization’s values and strategies with the public’s interests Focuses both proactively on helping the organization compete

30. © 2005 by Nelson, a division of Thomson Canada Limited. 29 Designing the Corporate External and Social Performance Function Institution oriented versus economic franchise Collaborative/problem-solving strategy versus individual/adversarial strategy

31. © 2005 by Nelson, a division of Thomson Canada Limited. 30 Business Exposure and External Affairs Design Social Environment External Affairs Design: Breadth, Depth, Influence and Integration Consumer Products Company Industrial Products Company

32. © 2005 by Nelson, a division of Thomson Canada Limited. 31 Business Exposure and External Affairs Design

33. © 2005 by Nelson, a division of Thomson Canada Limited. 32 The Public Affairs Thinking Manager Make Public Affairs Truly Relevant— Operating managers should know how their decisions impact the stakeholder environment. 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—Train them to see the relevance of PA initiatives. Show That Public Affairs Makes a Difference—Keep a “scorecard” of successes so manager’s see the potential.

34. © 2005 by Nelson, a division of Thomson Canada Limited. 33 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 Individual/adversarial external affairs strategy Issues and crisis management Public affairs Selected Key Terms

35. © 2005 by Nelson, a division of Thomson Canada Limited. 34 Selected Key Terms (cont’d) Public affairs management Social audit Sociopolitical forecasting Stakeholder environment Strategic management Strategy management process