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Exhibit 1.

B Nonmarket Stakeholders: Nature of

cont. Interest and Power
Chapter 2

Public Affairs
Ch. 2: Key Learning Objectives
 Evaluating public issues and their significance to the modern
 Analyzing the ways business utilizes its boundary-spanning
departments to interact with their various stakeholders
 Knowing the duties of a companyʼs public affairs manager or
department both for domestic and international issues
 Applying available tools or techniques to scan an organizationʼs
multiple environments
 Investigating how competitive intelligence is gathered and used
 Describing the steps in the issue management process and
determining how to make the process most effective
Public Issues
 Public issue
An issue that is of mutual concern to an
organization and one or more of the organizationʼs
stakeholders. Discrepancy between what
stakeholders expect and what an organization is
actually doing.
It is important for an organization to identify emergent
expectations of stakeholders as early as possible.

Doing so can gain the company competitive advantage and

failure to understand stakeholder concerns and to respond
not appropriately will cause the performance–expectations gap
to grow(public issue).
Figure 2.1
The Performance-Expectations Gap
Boundary Spanning Departments
These are the departments within an organization that reach
across the organizationʼs boundary line to interact with groups
and people in society.
Boundary Spanning is concerned with the detection of
information and It has two primary roles
1) To detect information and bring it into the organisation.
2) Send information into the environment presenting the
company in a favourable light.

Building positive and mutually beneficial relationships that span

organizational boundaries is a growing part of a managerʼs role
Boundary spanning roles

Boundary spanning roles interact with individuals and groups

outside the organization to obtain valuable information to help the
innovation process. It's useful to gain insight from other
organizations that you may not be aware of. Not just management
is involved in boundary spanning; all employees can get information
from one or more companies and bring information back to their
business to help improve innovation.
Figure 2.2 The Corporationʼs Boundary-Spanning Departments
Public Affairs Management

It is the management of a companyʼs external relations,

especially its relations with stakeholders such as
government and regulatory agencies, customers, investors,
and communities.

 Sometimes called corporate affairs, external affairs, or

government relations
Issue Management
A structured and systematic process
in identifying, monitoring, and selecting public issues for
organizational action.
To identify those public issues that require attention and
action, a firm needs a framework of environmental
Two ways of information:

 Environmental analysis
It provides managers with the information about external
issues and trends that enables an organization to develop a
strategy that minimizes threats and takes advantage of new
 Environmental intelligence
 The acquisition of information gained from analyzing the
multiple environments affecting organizations
 Depends on scanning eight “radar” screens shown on next
Figure 2.3 Eight Strategic Radar Screens
Issues Management Process
 Composed of 5 Steps or Stages
1. Issue Identification
Issue identification involves anticipating emerging
concerns, sometimes called “horizon issues” by managers
Sometimes managers become aware of issues by
carefully tracking the media, experts’ views, and
legislative developments to identify issues of concern to
the public.
2. Issue Analysis
Once an issue has been identified, its implications must be
analyzed. Organizations must understand how the issue is
likely to evolve, and how it is likely to affect them. For each
company, the ramifications of the issue will be different.
3. Option Generation, Evaluation and Selection
The next step in the issue management process
involves generating, evaluating, and selecting among
possible options. This requires complex judgments
that incorporate ethical considerations, the
organization’s reputation and good name, and other
non quantifiable factors.
Issues Management Process
4. Program Implementation
Once option is chosen, must design and implement it
5. Assessment of Results and Continuous Improvement
Must assess results of the program and made adjustments
as needed

 The Issues Management Process should be thought of as

continuous, a “Loop” like shown on next slide
 Also requires creative problem solving, is as much “Art”
as “Science”
Figure 2.5 The Issue Management Process
Business and the Social Environment

Week 3/4

Corporate Social Responsibility

Ch. 3: Key Learning Objectives
 Understanding the basic meaning of corporate
social responsibility.
 Knowing where and when the idea of social
responsibility originated
 Examining the critical arguments for and against
corporate social responsibility
 Assessing how business meets its economic and
legal obligations while being socially responsible
 Investigating how business balances its
responsibilities to multiple stakeholders, including
its stockholders

Corporate Social Responsibility
A corporation should be held accountable for any of its
actions that affect people, their communities, and their
environment. It implies that harm to people and society
should be acknowledged and corrected if at all possible. It
may require a company to forgo some profits if its social
impacts seriously hurt some of its stakeholders or if its funds
can be used to have a positive social impact.
It also requires companies to balance the benefits to be
gained against the costs of achieving those benefits. i.e

Corporate Social Responsibility (CSR) and
 Social responsibility of business is the result of:
Essential function it performs for a variety of
Immense influence it has over the lives of its
The worldʼs largest 200 companies account for more
than 25% of the worldʼs economic activity
History of the CSR Concept
 Turn of the 20 century corporations came

under attack for being too big and powerful

and guilty of antisocial and anticompetitive
 Curbs on their power began with antitrust
and consumer protection laws.
 It is viewed that business leaders had a
responsibility that went beyond just making a
profit. They should do something extra by
giving charities to the needy of the society,
called the “Charity Principle”
 Later a broader concept of business as “trustees”,
who work in the public interest, came to be
known as the “Stewardship Principle”
Figure 3.1
Foundation Principles of Corporate
Social Responsibility

The CSR Debate

 Despite strong support in the business community for

CSR, it is not universally accepted
 2005 Global study of corporate executives found 84%
thought large corporations should “Generate high
returns to investors but balance [this] with contributions
to the broader public good.”
 Common arguments, both for and against CSR, shown
on next slide

Figure 3.3
The Pros and Cons of Corporate
Social Responsibility

Multiple Responsibilities of Business
 There are three
 Economic responsibilities
 Social responsibilities
 Legal responsibilities
 Challenge is to balance all three
 Successful firm is one which finds ways to meet
each of its critical responsibilities and develops
strategies to enable the obligations to help each
other. Having multiple and sometimes
competing responsibilities does not mean that
socially responsible firms cannot be as
profitable as others less responsible. 10
Enlightened Self-Interest
 Economic and social goals come together in
companies that practice enlightened self-
 Means firm leadership can see it is in the
companyʼs self-interest in the long term to
provide true value to its customers, to help
its employees grow and behave with
 Studies comparing CSR with firm
performance shows there is a moderately
positive association between the two factors

Legal Requirements Versus Corporate
Social Responsibility
 A firm must abide by laws and regulations governing
 Legal rules set the minimum standard for business
 Companies can choose to go beyond the legal
standard and strive for higher levels of social
Stockholder Interests Versus other
Stakeholder Interests
 Corporate executives and board members are
constantly under pressure to produce value for

 Managementʼs central goal is to promote the interests of

the entire company, not any single stakeholder group
An enlightened self interest approach helps reconcile
these challenges