Business & Society
Ethics, Sustainability, and Stakeholder
Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning
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Chapter 5
Strategic
Management
and Corporate
Public Affairs
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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
enterprise-level strategy.
3. Explain corporate social performance reporting.
4. Identify the major activities of public affairs departments.
5. Highlight key trends with respect to the public affairs
function.
6. Link public affairs with the strategic management function.
7. Indicate how public affairs may be incorporated into every
manager’s job.
© 2012 South-Western, a part of Cengage Learning
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Chapter Outline
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The Concept of Corporate Public Policy
Four Key Strategy Levels
The Strategic Management Process
Public Affairs
Public Affairs as a Part of Strategic Management
The Corporate Public Affairs Function Today
Useful Public Affairs Concepts
Public Affairs Strategy
Incorporating Public Affairs Thinking into All Managers’ Jobs
Future of Corporate Public Affairs in 21st Century
Summary
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The Concept of Corporate Public
Policy
Affirmative Action
Environmental
Sustainability
Employee privacy
Corporate public policy
is a firm’s posture,
stance, strategy or
position regarding the
public, social, global,
and ethical aspects of
stakeholders and
corporate functioning
Sexual harassment
Product safety
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Corporate Public Policy and
Strategic Management
Strategic management
• Refers to the overall management process
that focuses on positioning the firm relative
to its market environment.
Corporate public policy
• The part of overall strategic management
that focuses specifically on the public,
ethical, and stakeholder issues the firm
faces.
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Relationship of Ethics to Strategic
Management
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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.
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The concept of corporate public policy and the
link 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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Four Key Strategy Levels
Enterprise-level strategy
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“What is the role of the organization in society?”
Corporate-level strategy
• “In what business should we be?”
Business-level strategy
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“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?”
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The Hierarchy of Strategy Levels
Enterprise-Level Strategy
Corporate-Level Strategy
Business-Level Strategy
Feedback
Functional-Level Strategy
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Emphasis on Enterprise-Level
Strategy
For what do we stand?
• Key Questions:
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What is the role of our organization in society?
How is our organization perceived by our
stakeholders?
What principles/values does our organization
represent?
What obligations do we have to society at
large, including the world?
What are the broad implications for our current
mix of businesses and allocation of resources?
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Manifestations of Enterprise-Level
Thinking
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Codes of ethics
Codes of conduct
Mission statements
Values statements
Corporate creeds
Vision statements
Policy-oriented codes and statements
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Core Values
Core Values
• The deeply ingrained principles that guide
all of a company’s actions and decisions.
• They serve as cultural cornerstones.
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Importance of Core Values
Apple’s Core Values
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Focus on making great products
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Innovation
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Focus on the few projects that are truly
meaningful
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Collaboration
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Never settle for less than excellence
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Enterprise-Level Strategic Thinking
Establishment of committees
• Public policy/issues
• Ethics
• Governance
• Social audit
• Corporate philanthropy
• Corporate citizenship
• Ad hoc committees
 Public affairs office
 Identification/analysis of social or public
issues
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The Strategic Management Process
1. Goal formulation
2. Strategy formulation
3. Strategy evaluation
4. Strategy implementation
5. Strategic control
6. Environmental analysis
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Strategic Management Process and
Corporate Public Policy
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Components of Strategy Formulation
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Strategic Corporate Social
Responsibility
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.
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Strategic Integration of Business
and Society
1. Identify the points of intersection.
2. Choose which social issues to address.
3. Create a corporate social agenda.
4. Integrate inside-out and outside-in
practices.
5. Create a social dimension to the value
proposition.
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Social Auditing and Performance
Reporting
Three Essential Steps
1. Set standards against which performance
may be compared.
2. Compare actual performance with planned
performance.
3. Take corrective action to bring actual and
planned performance into alignment.
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The Social Audit
A systematic attempt to identify, measure,
monitor, and evaluate an organization’s
performance with respect to its social efforts,
goals, and programs.
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The Social Audit (continued)
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Drivers for Social Performance
Reports
 Expectations from societal and public
interests groups
 Globalization
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Ceres
• A national network of investors,
environmental organizations and other
public interest groups working on
sustainability challenges.
 Has an annual award for Sustainability
Reporting.
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CorporateRegister.com
• A free directory of company-issued CSR,
Sustainability, and Environment reports
from around the world.
• Has the most comprehensive data on social
performance reports.
 The number of corporate reports issued is
on the rise.
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Global Reporting Initiative
• Established in 1997 by Ceres.
• Mission to establish global standardized
guidelines for reporting on economic,
environmental, and social performance of
corporations, governments, and NGOs.
• The Sustainability Reporting guidelines are
the first global framework for sustainability
reporting.
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Public Affairs
Public Affairs
• The management processes that focus on
the formalization and institutionalization of
corporate public policy.
Embraces
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Corporate public policy
Issues and crisis management
Governmental relations
Corporate communications
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Public Affairs Management:
Relationships
Strategic Management Process
Public Affairs Management
Enterprise-Level Strategy
Corporate
Public Policy
Part of
which is
Environmental Analysis
Issues
Management
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Crisis
Management
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The Corporate Public Affairs
Function Today
1. The growing magnitude and impact of
government.
2. The changing nature of the political
system.
3. The recognition by business that it was
being outflanked by interests counter to its
own.
4. The need to be more active in politics
outside traditional community-related
aspects.
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PAC’s Definition of Public Affairs
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.
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Public Affairs Activities
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Influence on Corporate Strategy
Public Affairs:
 Identifies/prioritizes public policy issues.
 Comments on strategic and business plans for
sensitivity to emerging political/social trends.
 Provides a forecast of political/social trends.
 Implements the strategic and business
planning process.
 Is represented on corporate planning
committee.
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Important Public Affairs Concepts
 Looking out and looking in
 Buffering and bridging
 Tools and techniques
 Ethical guidelines
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Looking Out and Looking In
The public affairs function serves as a
window
• Looking out, the organization can observe
the changing environment.
• Looking in, the stakeholders in that
environment can observe, try to
understand, and interact with the
organization.
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Buffering and Bridging
Two types of corporate public affairs
activities
1. Activities that buffer the organization from
the social and political environment.
2. Activities that bridge the organization with
that environment.
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Tools and Techniques
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Environmental monitoring/scanning
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Working with the grassroots
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Constituency building
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Issue advertising
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Lobbying
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Political action committees
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Corporate social audits
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Web activism
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Coalitions and alliances
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Community investment
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Stakeholder management
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Ethical Guidelines for Public Affairs
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Global Public Affairs
The global dimension of public affairs
has expanded
• Companies expanding into new markets
• Changes in sales in existing markets
• Changes in CEO priorities
• Changes in regulatory burden
• Acquisition of new business units
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Competencies for International Public
Affairs
Development of intercultural competence
Knowing the impact of societal factors on public affairs
Understanding local public policy institutions and processes
Nation state-specific applications of PA functions
Language skills
Understanding global business ethics
Managing international consultants, alliances, and issue partners
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Public Affairs Strategy
Best corporate social performance
• Institution oriented management
philosophies
• Collaborative/problem-solving strategy
Worst corporate social performance
• Organizations that operate as
independent economic franchises
• Individual/adversarial external affairs
strategy
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Mile’s Model of Corporate Social
Performance
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Other Initiatives in Public Relations
Strategy
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Integrating public affairs into corporate
strategic planning
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Using strategic management audits for public
affairs
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Building a balanced performance scorecard for
public affairs
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Managing the corporation’s reputation
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Using core competencies to manage
performance
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Respond to industry differences
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Issue life cycle challenges
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Public Affairs Thinking
Make public affairs
relevant to all managers
Make it easy for
operating managers
Help managers develop a sense
of ownership of success
Show how public affairs
makes a difference
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The Future of Public Affairs
1. Public affairs can help to develop valuebased enterprises.
2. Public affairs executives can assert
themselves as thought leaders.
3. Public affairs specialists have the
opportunity to seek alternative arenas of
resolution globally and domestically.
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Key Terms
• Business-level strategy
• Collaborative/problemsolving strategy
• Core values
• Corporate-level strategy
• Corporate public affairs
• Corporate public policy
• Enterprise-level strategy
• Global Reporting
Initiative
• Individual/adversarial
external affairs strategy
• Issues and crisis
management
• Public affairs (PA)
• Public affairs
department
• Public affairs
management
• Public affairs strategy
• Public relations (PR)
• Social audit
• Social performance
report
• Strategic management
Strategic management
processes
• Value shift
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