Chapter 5
Strategic Management and Corporate Public Policy
LEARNING OUTCOMES
After studying this chapter, you should be able to:
1. Describe the concepts of strategic management and corporate public policy.
3. Explain the strategic management process and the role that sustainability reports and
integrated reports play in the process.
4. Link public affairs with the strategic management function.
TEACHING SUGGESTIONS
INTRODUCTION – This chapter provides a broad overview of how social, ethical, and public
issues fit into the general strategic management processes of the organization. Corporate public
policy, that part of management decision making that encompasses these issues, is discussed.
Corporate social performance reporting also is examined. Finally, the chapter covers public
affairs management as the formal organizational approach companies use to deal with these
issues. The overarching goal of the chapter is to focus on planning for the turbulent social and
ethical stakeholder environment currently existing.
KEY TALKING POINTS – After laying the groundwork and introducing concepts necessary for
the study of (1) business and society in Part 1 of the textbook and (2) corporate governance in
potentially fascinating and important career path. As the authors show by relating corporate
public policy to the firm’s strategic planning process, public policy professionals can play a key
role in setting the strategic direction for the firm and working in concert with a firm’s board of
directors and other members of top management. Playing a role in this process gives the public
policy staff a significant say in both the firm’s values and operations, and the role it plays in its
society. Another important facet of the chapter is its emphasis on the proactive position firms
now take toward social issues. Following the evolution of corporate social responsibility to
PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:
Cases:
3-The Body Shop (B) – Reputation is Tarnished
4-The Body Shop (C) – Into the New Millennium
20-DTCA – The Pill Pushing Debate
21-Big Pharma’s Marketing Tactics
23-McDonald’s Coffee Spill
24-The Betaseron Decision (A)
25-The Hudson River Cleanup and GE
Ethics in Practice Cases:
DuPont and Sustainability Reporting
Spotlight on Sustainability:
Enterprise-Level Strategy in Action
LECTURE OUTLINE
I. STRATEGIC MANAGEMENT AND CORPORATE PUBLIC POLICY
A. Relationship of Ethics to Strategic Management
II. FOUR KEY STRATEGY LEVELS
A. Four Strategy Levels Described
1. Enterprise-Level Strategy
B. Emphasis on Enterprise-Level Strategy
1. Social Entrepreneurship
III. THE STRATEGIC MANAGEMENT PROCESS
A. Strategic Corporate Social Responsibility
1. Porter and Kramer Framework
B. Measuring Sustainable Corporate Performance
IV. PUBLIC AFFAIRS AS A PART OF STRATEGIC MANAGEMENT
V. THE CORPORATE PUBLIC AFFAIRS FUNCTION TODAY
A. PA’s Place at the Table
B. Future of Corporate PA in the 21st Century
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
Students should recognize that their answers to these discussion questions should be well
reasoned and supported with evidence. Although some answers will be more correct than others,
students should be aware that simplistic answers to complex questions, problems, or issues such
as these will never be “good” answers.
1. Question: Which of the four strategy levels is most concerned with social, ethical., or
public issues? Discuss the characteristics of this level.
Answer: The enterprise (or societal) level of strategy is the one most directly concerned
with social, ethical, and public issues. This is the level that asks, and attempts to answer,
what role the business plays in society and what the firm stands for. This level
encompasses the strategic thinking that is necessary to address social, ethical and public
issues. Corporate governance is an important topic at this level, as boards of directors
2. Question: Identify the steps involved in the strategic management process.
Answer: The textbook presents six steps in the strategic management process (which
boards and top management are responsible for activating): (1) goal formulation, (2)
Ch 5, Instructor’s Manual, Business & Society, Carroll 10e
3. Question: What is the difference between integrated reporting and a social performance
report?
Answer: A social performance report is a systematic attempt to identify, measure,
monitor, and evaluate the firm’s performance with respect to its social efforts, goals, and
programs. It does not address the finances of the corporation, as it deals with social
performance only. It can operate as a tool for strategic control by comparing the results of
the firm’s efforts to its social goals, assuming of course, that the firm has included setting
social goals in its planning process. To the extent that the firm’s actual performance
doesn’t meet its stated standards, a firm can take corrective action to bring the two into
4. Question: What is social entrepreneurship and how is it related to the bottom of the
pyramid (BOP)?
Answer: Social entrepreneurship is a cultural phenomenon, growing exponentially, but still
in search of a good definition. While traditional entrepreneurs focus on creating wealth,
social entrepreneurs have at their core a mission of societal value creation as their reason
for being. Socially responsible businesses may create social value on their way to creating
5. Question: Why are integrated reports increasing in popularity?
Answer: Integrated reports are increasing in popularity because more and more people are
interested in the extent to which corporations pay attention to the triple bottom line, and
6. Question: Describe the corporate public affairs function today. What are the three
opportunities for PA executives in the future?
Answer: The public affairs function today is to influence public policy. Public affairs
activities would include lobbying, global public affairs, social media, corporate
responsibility, campaign finance, grassroots advocacy, and crisis communication, to name
a few.
GROUP ACTIVITY
Divide students into groups of four to five students. Have each group review the current social
performance report of a different company. Students should compare the current social
performance report with the most recent social performance report issued by the company prior
to the current report. Students should determine what the company is trying to achieve with the
INDIVIDUAL ASSIGNMENT
Distribute the following instructions to each student:
Visit the Public Affairs Council’s website at http://pac.org/. Review the Council’s various areas