Strategic Management and Corporate Public Policy

February 28, 2012 Alayssa P. Silva

The Concept of Corporate Public Policy

Affirmative Action
Corporate Public Policy is a firms posture, stance, strategy or position regarding the public, social, global, and ethical aspects of stakeholders and corporate functioning

Employee Privacy

Environment al Sustainability

AIDS in Workplace

Sexual Harassment

Product Safety

Corporate Public Policy and Strategic Management

Strategic Management
The overall management process that focuses on positioning the firm relative to its market environment

Corporate Public Policy

The part of the strategic management process that focuses specifically on the public, ethical, and stakeholder issues the firm faces

Relationship of Ethics to Strategic Management

For business ethics to have meaning it must be linked to 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 2. Steps in the strategic management process

1.

Four Key Strategy Levels

Enterprise-Level Strategy What is the role of the society of the organization in society?

Corporate-Level Strategy

What business(es) are we in or should be in?

Business-Level Strategy

How should we compete in a given business or industry? How should a firm integrate a subfunctional activities and relate them to its functional areas?

Functional-Level Strategy

Emphasis on Enterprise-Level Strategy

Freeman proposes that enterprise-level strategy needs to address the overriding questions, What do we stand for?. Thus, at the enterprise level of setting strategic direction involves understanding the role of a particular firm as a whole and its relationships to other social institutions.
Key Questions
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

Emphasis on Enterprise-Level Strategy

Manifestations of Enterprise-Level Thinking Codes of Ethics Codes of Conduct Mission Statements Values Statements Corporate Creeds Vision Statements Policy-oriented codes and statements

Strategic Management Process

Six-step process identified by Hofer and Schendel: 1. Goal Formulation 2. Strategy Formulation 3. Strategy Evaluation 4. Strategy Implementation 5. Strategic Control 6. Environmental Analysis

Strategic Management Process Goal Formulation

It involves:
1.
2.

Establishment of goals Setting of priorities among goals

Often a politically charged process, goal formulation integrates the personal values, perceptions, attitudes, and power of the managers and owners involved in the process. Economic or financial goals typically dominate the goal formulation process.

Strategic Management Process Strategy Formulation

Four Components of Strategy Formulation
3-MANAGEMENT

Personal Values and Aspirations of Management

1- THE COMPANY

(What we WANT to do)

2 THE MARKET

Organizational Strengths and Weaknesses (What CAN be done)

Strategy Formulation Decision

Market Opportunities and Threats (What MIGHT be done)

Acknowledged Obligations to Society (What OUGHT to be)

4 - SOCIETY

Strategic Management Process Strategy Evaluation

The need for continuing assessment of the firms current goals and strategy relative to proposed goals and strategic alternatives.

Six criteria for evaluating strategy (Seymour Tilles)

1. 2.

Is the strategy internally consistent? Is the strategy consistent with the environment?

3.
4. 5. 6.

Is the strategy appropriate in view of available resources?

Does the strategy involve an acceptable degree of risk? Does the strategy have an appropriate time frame? Is the strategy workable?

Strategic Management Process Strategy Implementation

McKinsey 7S Framework
A straightforward identification of seven variables that must be skillfully coordinated in order for successful implementation to occur

Staff Skills Shared Values is achieving fit, or The key to the successful use of this framework

congruence, among all the elements. Fit - a process, as well as state, in which there is a dynamic search that align an organization with its environment and to arrange internal resources in such a way that the alignment is supported.

Strategy Structure Systems Style

Strategic Management Process Strategy Control

Three Essential Steps Setting standards against which performance may be compared Comparing actual performance with planned performance Taking corrective action to bring actual and planned performance in sync Social audit is a systematic attempt to identify, measure, monitor, and evaluate an organizations performance with respect to its social efforts, goals, and programs.

Strategic Management Process Environmental Analysis

Environmental analysis is the linking pin between the organization and the stakeholder environment, from which information is gathered. The environment of the business in terms of three levels 1. Task Environment : set of customers, suppliers, competitors, and others with which a firm interacts on an almost daily basis; 2. Competitive or Industry Environment: comprises those firms functioning in the same markets or industry; and 3. General Environment or Macroenvironment : includes everything else that influences the organization.

Strategic Management Process Environmental Analysis Four stages of environmental analysis

Scanning the Environment
It focuses on identification of precursors or indicators of potential environmental changes and issues. The purpose of this stage is to alert management to potentially significant events, issues, or trends before they have fully formed. It focuses on tracking of specific trends and events with an eye toward confirming or disconfirming trends or patterns. Monitoring often involves following up on the indicators or signals that were detected during the scanning stage. The goal here is to gather and assemble sufficient date to discern patterns. future-oriented stage and is concerned with the It is the

Monitoring Environmental Trends Forecasting Environmental Changes

development of plausible and realistic projections of the directions, scope, speed, and intensity of environmental change. It shifts the attention away from gathering and projecting and toward the task of understanding what the information Assessment for means to management. The central question becomes, Organizational What are the implications of our analysis of the environment to our organization?. The key is to develop the ability to sift Implications through all the information that has been generated and determine what is relevant to management.