Chapter 2Managing Public Issues and Stakeholder Relationships .docx

Chapter 2
Managing Public Issues and Stakeholder Relationships
Copyright ©2020 McGraw-Hill Education. All rights reserved.
Authorized only for instructor use in the classroom. No
reproduction or further distribution permitted without the prior
written consent of McGraw-Hill Education.
Copyright © 2017 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Ch. 2: Key Learning Objectives
2-1 Identifying public issues and analyzing gaps between
corporate performance and stakeholder expectations.
2-2 Applying available tools or techniques to scan an
organization’s multiple environments and assessing stakeholder
materiality.
2-3 Describing the steps in the issue management process and
determining how to make the process most effective.
2-4 Identifying the managerial skills required to respond to
emerging issues effectively.
2-5 Understanding how businesses can effectively engage with
its stakeholders, what drives this engagement, and the role
social media can play.
2-6 Recognizing the value of creating stakeholder dialogue and

networks.
Copyright ©2020 McGraw-Hill Education
2-‹#›
Public Issues
Public Issue: Any issue that is of mutual concern to an
organization and one or more of its stakeholders.
Stakeholder Expectations: A mixture of people’s opinions,
attitudes, and beliefs about what constitutes reasonable business
behavior.
2-‹#›
Public Issues:
Performance-Expectations Gap
Failure to understand stakeholder concerns and to respond
appropriately will:
Permit the performance–expectations gap to grow.
The larger the gap, the greater the risk of stakeholder backlash
or of missing business opportunity.
Example:

Antibiotics in chicken.
2-‹#›
The Performance-Expectations Gap
Figure 2.1
Copyright © McGraw-Hill Education. Permission required for
reproduction or display.
Access the text alternative for these images.
2-‹#›
5
Environmental Analysis and Intelligence
Environmental Analysis: A method managers use to gather
information about external issues and trends
to develop an organizational strategy that minimizes

threats and takes advantage of new opportunities.
Environmental Intelligence: the acquisition of information
gained from analyzing the multiple environments affecting
organizations.
2-‹#›
Eight Strategic Radar Screens
Figure 2.2
2-‹#›
7
Competitive Intelligence
The systematic and continuous process of gathering, analyzing,
and managing external information about the organization’s

competitors that can affect the organization’s plans, decisions,
and operations.
With the need to comply with all applicable laws, and to follow
the professional standards of fairness and honesty.
2-‹#›
Stakeholder Materiality*
Figure 2.3
*Adaptation of an accounting term to prioritize the relevance of
the stakeholders and their issues to the company.
2-‹#›
9

The Issue Management Process1
Identify Issue
Anticipating emerging concerns, or “horizon” issues.
Analyze Issue
Organizations must understand how the issue is likely to evolve,
and how it is likely to affect them.
Generate Options
Requires complex judgments that incorporate ethical
considerations like the company’s reputation.
Take Action
Once an option is chosen, the organization must design and
implement a plan of action.
Evaluate Results
Must assess results of the program and make adjustments if
necessary.
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10
The Issue Management Process2
Figure 2.4

2-‹#›
Long description slide needed
11
Organizing for Effective Issue Management
Part of the organization is mobilized to address a particular
emerging issue, it often depends on the nature of the issue
itself.
Involve the board of directors and top management levels.
Effective global leadership on public issues requires three basic
capabilities:
Understanding of the changing business context.
Ability to lead in the face of complexity.
Connectedness: the ability to engage with external stakeholders
in dialogue and partnership.
2-‹#›
Stages in the Business-Stakeholder Relationship

Over time, the nature of business’s relationship with its
stakeholders often evolve through a series of stages.
Inactive – Companies ignore stakeholder concerns.
Reactive – Companies act only when forced to do so, and then
in a defensive manner.
Proactive – Companies try to anticipate stakeholder concerns.
Interactive –Companies actively engage stakeholders in an
ongoing relationship of mutual respect, openness, and trust.
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Drivers of Stakeholder Engagement1
Stakeholder engagement is, at its core, a relationship.
The participation of a business organization and at least one
stakeholder organization is necessary.
Engagement: both the company and its stakeholders have:
An urgent and important goal.
The motivation to participate.
The organizational capacity to engage with one another.
2-‹#›

Drivers of Stakeholder Engagement2
From Figure 2.5
CompanyStakeholder(s)GoalTo improve corporate reputation;
to earn a license to operate;
to win approval of society.To change corporate behavior on an
issue of concern.MotivationNeeds stakeholder involvement
because of their expertise or control of critical
resources.Governmental campaigns,
protest perceived as inadequate to change corporate
behavior.Organizational capacityTop leaders committed to
engagement;
well-funded department of external (stakeholder)
affairs.Experienced staff;
core group of activists committed to dialogue with business.
2-‹#›
15
The Role of Social Media in
Stakeholder Engagement
Address public issues and engage stakeholders.
Identify and solve problems faster.
Share information better among their employees and partners.

Bring customers’ ideas for new product designs to market
earlier.
Platforms to engage with multiple stakeholders, communication
has become faster and more effective.
2-‹#›
Stakeholder Dialogue
Business and its Stakeholders come to face-to-face
conversations.
Core interest and concerns, common definition of a problem.
Understandings and concerns of all parties.
Invent innovative solutions and implement them.
Example: Merck.
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http://files.visir-network.eu/wp-
content/uploads/2012/06/consult.jpg
17
Stakeholder Networks
Addressing public issues by:
working collaboratively with other businesses, concerned
persons and organizations in stakeholder networks.
Example: Nike.
2-‹#›
The Benefits of Engagement
Stakeholder organizations bring a number of distinct strengths:
Alert companies to emerging issues.
Give a firm access to information via networking.
Technical or scientific expertise in specific areas.
Better result in the eyes of the public.
Meet the society’s expectations and generate good solutions.
Improve a company’s reputation.
2-‹#›

End of Main Content
Because learning changes everything.®
www.mheducation.com
Closing slide.
20
Accessibility Content:
Text Alternatives for Images
The Performance-Expectations Gap Text Alternative
On the left side of the illustration, there is a vertically
positioned rectangular box that is labeled performance (social
and economic), ranging from high to low. At the bottom of the
illustration, there is a horizontally placed rectangular box that is
labeled time, with an arrow pointing to the right. There are two
lines positioned in the area between the two rectangular boxes.
The first line lies on the top and slants upward. This line is
labeled expected corporate performance (what stakeholders
expect). The second line runs parallel to the box labeled time,

and this line slants slightly upward. This line is labeled actual
corporate performance (what actually happens). A line arises
from the center of the first line, and another line arises from the
center of the second line. These two lines converge to point at a
rectangular box that is labeled performance–expectations gap.
The gap shows the difference between what was expected and
what actually happened.
Return to slide containing original image.
2-‹#›
Eight Strategic Radar Screens Text Alternative
At the center of the illustration, there is content that reads
seeking environmental intelligence. Eight double-ended arrows
point at this text. There are circles on the other end of these
arrows. In a clockwise manner of appearance, these circles are
labeled as follows:
Customer environment.
Competitor environment.
Economic environment.
Technological environment.
Social environment.
Political environment.
Legal environment.
Geophysical environment.

2-‹#›
Stakeholder Materiality*
Text Alternative
The y-axis is labeled stakeholder interest, with a range from the
bottom to the top indicating low to high interest.
The x-axis is labeled impact on Nestlé, with a range from left to
right of moderate to major significance.
Below the x-axis is a key with symbols that are used to
represent different types of business concerns including
nutrition; rural development; water; environmental
sustainability; and our people, human rights, and compliance.
Topics of the types listed above are scattered within the
illustration depending on their stakeholder interests and
significance to the firm.
From low interest and moderate significance to high interest and
major significance, the data reads as follows:
Employee safety, health, and wellness.
Natural resource stewardship.
Animal welfare.
Women’s empowerment.
Water, sanitation, and hygiene.
Fair employment and youth employability.
Food and nutrition security.
Resource efficiency, (food) waste, and circular economy.
Climate change.
Rural development and poverty alleviation.
Responsible sourcing and traceability.
Business ethics.
Human rights.
Responsible marketing and influence.

Food and product safety.
Water stewardship.
Over- and under-nutrition is at the top of the chart.
2-‹#›
The Issue Management Process2 Text Alternative
It contains five circles placed in a circular manner. Each circle
is connected to the next via a curved arrow in a never-ending
cycle. In a clockwise manner of appearance, these five circles
are labeled as follows:
Identify issues.
Analyze issue.
Generate options.
Take action.
Evaluate results.
2-‹#›

2-D Kinematics and Projectile Motion
Mary Pruittphysics 133 lab 1
STUDENT ID : 5773918
Pre-Lab Questions
1. In one of your experiments, you will roll a marble down a
ramp to provide an initial horizontal velocity. Suppose you start
the marble at rest (vo = 0 m/s) and it travels a distance of, d,
down the ramp. Use 1-D kinematics to predict the velocity of
the ball (vf ) at the bottom of the ramp. Hint: the acceleration of
the ball down the ramp is 9.81*sin(θ) m/s2 where θ is the angle
of the ramp. Record you answer in variables (you will calculate
the velocity with magnitudes when you perform the
experiment).
= + 2*a*d
vo = 0 m/s, a = m/s2,
vf =
vf = 4.3*
2. Use the kinematic equations to derive a general equation for
the time it takes a ball dropped from rest at vertical height, h, to
reach the ground.
h = u*t + g*t2
For ball dropped from rest, u = 0 m/s
t =
3. Use the result from Question 2 to write a general equation for
the distance travelled by a projectile that is rolling off a table of
height, h, with a horizontal speed, v0x.
distance, d = speed*time
The distance travel d = vox*
Experiment 1: Distance Traveled by a Projectile

Data Sheet
Table 1. Range and Velocity of Projectile at Ramp Distance 1
Ramp Incline (degrees)
10
Ramp Distance (m):
000000
Trial
Measured Distance (m)
1
1.41
2
1.36
3
1.35
4
1.25
Average
1.35
Ramp Distance (m):
111
Trial
1
1.61
2
1.55
3
1.50
4
1.58
Average
1.58

Ramp Distance (m): 0.9
001.2
Trial
1
1.52
2
1.58
3
1.53
4
1.61
Average
1.56
Post-Lab Questions
1. Use your predictions of velocity and range from the Pre-Lab
Questions and the data recorded from your experiment to
complete Table 4.
Table 4. Velocity and Range Data for all Ramp Distances
Ramp Distance (m)
Calculated
velocity (m/s)
Predicted Range (m)
Average Actual Range (m)
Percent Error

2. How do your predictions compare to the observed data?
Explain at least two reasons for the differences.
3. If you were to fire a paintball pellet horizontally and at the
same time drop the same type of paintball pellet you fired from
the paintball gun, which pellet would hit the ground first and
why is this so?
if there was no resistance, the vertical velocities of both pellets
would grow at the same rate and they both would hit the ground
at the same time. The resistance grows with speeds, so the pellet
would hit the ground first. The dropped pellet will hit the
ground first (assuming the ground is perfectly horizontal and
smooth, as the difference between the pellets would normally be
very small). Resistance sometimes act as a barrier to the motion
of falling objects.
4. Suppose you altered your existing ramp so that the marbles
had twice their initial velocity right before leaving the ramp.
How would this change the total distance traveled and the time
that the marbles were in the air?
They would hve gained more speed allowing for further
distance. However, for the falling part it will be the same
because gravity will still put on the marble at the same rate. The
speed will allow for further distance not further time.
5. Describe the acceleration of the marble after it leaves the
ramp. Use kinematic equations to support your discussion.
When the marble officially leaves the ramp, the velocity vs the
initial velocity will change as the replacement of the marble

increases the further the marble gets from the rmap.
©eScience Labs, 2018
Chapter 1
The Corporation and Its Stakeholders
reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Copyright © 2017 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
1-‹#›
1
Ch. 1: Key Learning Objectives
1-1 Understanding the relationship between business and
society, and how they form an interactive system.
1-2 Considering the purpose of the modern corporation.
1-3 Knowing what a stakeholder is and who a corporation’s
market and nonmarket and internal and external stakeholders
are.
1-4 Conducting a stakeholder analysis and understanding the
basis of stakeholder interests and power.
1-5 Recognizing the diverse ways in which modern
corporations organize internally to interact with various

stakeholders.
1-6 Analyzing the forces of change that continually reshape
the business and society relationship.
1-‹#›
1-‹#›
2
Business and society together form an interactive social
system1
Business: organizations engaged in making a product or
providing a service for profit.
Society: Human beings and the social structures they
collectively create.
1-‹#›
1-‹#›
3
system2
Figure 1.1
Business and Society: An Interactive System

1-‹#›
1-‹#›
4
system3
General Systems Theory (GST):
Organisms do not exist in isolation but can only be understood
in relationship to their surroundings.
Businesses are embedded in a broader social environment with
which they constantly interact.
1-‹#›
1-‹#›
5
Purpose of Business
What is the purpose of the corporation?

To whom, or what, should the firm be responsible?
1-‹#›
1-‹#›
Shareholder Theory of the Firm1
Sees the firm as property of owners (shareholders).
Owners’ interests take precedence over interests of others.
The purpose of the firm is to maximize its long-term market
value and money for its shareholders.
1-‹#›
1-‹#›
Stakeholder Theory of the Firm2
Corporations serve a broad public purpose: to create value for
society.
Profit is necessary for survival, but is not the only purpose of
the firm.
Corporations have multiple obligations and need to consider all
stakeholders.
1-‹#›

1-‹#›
Shareholder theory and stakeholder theory define the purpose of
business differently
Shareholder
Purpose
Owners’Needs and Wants
Share Value
Stakeholder
Purpose
Stakeholders’ Needs and Wants
1-‹#›
1-‹#›
9
Three arguments in support of
the stakeholder theory of the firm
Descriptive
realistic description of how companies really work
Normative
Stakeholder management is the right thing to do
Instrumental
stakeholder consideration key for effective corporate strategy

1-‹#›
1-‹#›
10
Stakeholders
Stakeholders are persons or groups that affect, or are affected
by, a firm’s decisions, policies, and operations.
A stake is an interest in–or claim on–a business.
Stakeholder is NOT the same as stockholder (or shareholder).
Shareholders are just one of several kinds of stakeholders.
1-‹#›
1-‹#›
Two Kinds of Stakeholders: Market and Nonmarket
Market stakeholders
Shareholders, suppliers, employees, etc.
They engage in economic transactions with the company as it
carries out its primary purpose of providing society with goods
and services.
Shareholders
Nonmarket stakeholders

Community, government, business support groups, etc.
People or groups who—although they do not engage in direct
economic exchange with the firm—are affected by or can affect
its actions.
Community
Government
Competitors
Environment
1-‹#›
1-‹#›
12
Internal stakeholders are employed by the firm - external
stakeholders are not
Internal stakeholders
work “inside” the firm and contribute their effort and skill to
everyday operations.
Company
Employees
Managers
External stakeholders
may have important transactions with the firm, but are not on its
payroll.
Suppliers
Society

Government
Creditors
Shareholders
Customers
1-‹#›
1-‹#›
13
A Firm and Its Stakeholders
Figure 1.2

1-‹#›
1-‹#›
14
Stakeholder Analysis
From Figure 1.3
Stakeholder analysis includes the identification of relevant
stakeholders and an analysis of their interests and power.
Who are the relevant stakeholders?
What are the interests of each stakeholder?
What is the power of each stakeholder?
How are coalitions likely to form?
1-‹#›
1-‹#›
15
Stakeholder Analysis Question 1
Who are the relevant stakeholders?
Draw market and nonmarket stakeholder maps.
Recognize not all groups are relevant to every situation.

Some businesses sell directly to the public and will not have
retailers.
A certain stakeholder may not be relevant to a particular
decision/action.
1-‹#›
1-‹#›
What are the interests of each stakeholder?
What are the groups’ concerns?
What does the group want/expect from their relationship with
the firm?
Shareholders have an ownership interest; they expect to receive
dividends and capital appreciation.
Customers are interested in gaining fair value and quality in
goods and services they purchase.
Public interest groups advance broad social interests.
1-‹#›
1-‹#›
What is the power of each stakeholder?

Stakeholder power is the ability of a group to use resources to
make an event happen or to secure a desired outcome.
There are 5 types of stakeholder power:
Voting power.
Economic power.
Political power.
Legal power.
Informational power.
1-‹#›
1-‹#›
18
Stakeholder Power Defined
Voting Power
The legal right to cast a shareholder vote.
Economic Power
The ability to grant or withhold transactions with the focal
company.
Political Power
Actions taken through legislation, regulations, or lawsuits.
Legal Power
Lawsuits filed against the focal company for harm caused by the
firm.
Informational Power
Having access to valuable data, facts, or details.

1-‹#›
1-‹#›
19
How are stakeholder coalitions likely to form?
Stakeholder groups often have common interests and will form
temporary alliances to pursue these common interests.
Coalitions are very dynamic (can change at any time).
Coalitions are increasingly international.
Internet has enabled coalitions to form quickly, across political
boundaries.
1-‹#›
1-‹#›
Stakeholder Mapping
Stakeholder map – a visual representation of the relationships
among stakeholder interests, power, and coalitions with respect
to a particular issue.
A stakeholder map is a useful tool, because it enables managers
to quickly see how stakeholders feel about an issue, how
coalitions are likely to form, how powerful these coalitions are,
and what outcomes are likely.

1-‹#›
1-‹#›
Stakeholder Map of SunCal’s Proposed Development
Figure 1.4
1-‹#›
1-‹#›
New figure inserted from screen shot.
22
Stakeholder Salience
Salient – stands out from a background, is seen as important, or
draws attention.
Stakeholders stand out (i.e., are salient) to managers when they
have power, legitimacy, and urgency.

1-‹#›
1-‹#›
23
The Corporation’s
Boundary-Spanning Departments1
Boundary-spanning departments (shown graphically in the
following slide): departments or offices within an organization
that reach across the dividing line that separates the company
from groups and people in society.
Building positive and mutually beneficial relationships across
organizational boundaries is a growing part of management’s
role.
1-‹#›
1-‹#›
24
The Corporation’s
Boundary Spanning Departments2
Figure 1.5

1-‹#›
1-‹#›
25
The External Environment of Business is Dynamic and Ever
Changing
The purpose of the firm is not simply to make a profit, but to
create value for all its stakeholders – a successful business must
meet both its economic and social objectives.
Six dynamic forces powerfully shape the business and society
relationship:
Changing societal expectations.
Growing emphasis on ethical reasoning and actions.
Globalization.
Evolving government regulations and business response.
Dynamic natural environment.
Explosion of new technology and innovation.
1-‹#›
1-‹#›
26

Forces That Shape The Business
And Society Relationship
Figure 1.6
1-‹#›
1-‹#›
End of Main Content
Because learning changes everything.®
www.mheducation.com
1-‹#›
Closing slide.
28
Accessibility Content:
Text Alternatives for Images
1-‹#›
system2
Text Alternative

The image contains a circle labeled society. Within this circle,
there is another small circle positioned at the right bottom
corner. This circle is labeled business. Six double-ended arrows
arise from this circle. One end of each of the arrows points at
the label business, and the other end points at the area within
the first circle, which is labeled society.
1-‹#›
1-‹#›
30
A Firm and Its Stakeholders
Text Alternative
There are nine circles in this illustration. The largest and most
central circle is labeled Business firm.
The remaining circles are labeled as follows:
Nongovernmental organizations.
Governments.
Employees.
Suppliers.
Competitors.
Customers.
Shareholders.
Creditors.
The circle labeled business firm is connected to the following
via double-ended arrows:
Employees.
Governments.
Suppliers.

Shareholders.
Creditors.
Customers.
The circle labeled nongovernmental organizations is connected
to the following via double-ended arrows:
Employees.
Customers.
Governments.
The circle labeled governments is connected to the following
via double-ended arrows:
Nongovernmental organizations.
Business firm.
Competitors.
The circle labeled competitors is connected to the following via
double-ended arrows:
Creditors.
Customers.
Governments.
Suppliers.
The circle labeled suppliers is connected to the following via
double-ended arrows:
Competitors.
Business firm.
1-‹#›
1-‹#›
31
Stakeholder Map of SunCal’s Proposed Development

Text Alternative
The sections are labeled one though four clockwise starting at
the upper right. On the vertical axis, it shows various
stakeholders’ level of power ranging from high at the top to low
on the bottom. The horizontal axis shows their position on the
issue of SunCal’s proposed development ranging from Oppose
on the left to Support on the right.
In the center of the figure overlapping all sections is a circle
labeled City Council.
The lower right section number two contains a dotted oval
surrounding three smaller circles labeled Unions, Affordable
Housing, and Environmental Groups as well as a portion of City
Council. This section represents the coalition in support of the
project.
The upper left section number four contains a dotted oval
surrounding two smaller circles labeled Disney and Local
Businesses as well as a portion of City Council. This section
represents the coalition in opposition to the project.
1-‹#›
1-‹#›
Under review
32
The Corporation’s Boundary Spanning Departments2
Text Alternative
Return to slide containing original image.It contains a circle
labeled corporation. A bigger circle surrounds this structure.
The bigger circle is divided into eight sections. Each section

contains some content.
In a clockwise manner of appearance, these sections contain
data as follows:
The content in the section that is labeled customers reads as
follows:
Customer relations:
Customer service.
Total quality management.
Liability lawsuit defense.
Recall management.
The content in the section that is labeled community reads as
follows:
Community relations, corporate citizenship:
Corporate philanthropy.
Partners with community-based organizations.
Volunteerism, employee time contributions.
The content in the section that is labeled NGOs, suppliers reads
as follows:
Corporate relations, corporate citizenship, corporate
responsibility, external affairs:
Environmental scanning.
Stakeholder engagement.
Social reporting and auditing.
The content in the section that is labeled general public reads as
follows:
Public relations, media relations, corporate communications:
Public relations.
Brand management.
Image advertising.
Crisis management.The content in the section that is labeled
environment reads as follows:
Environment, health and safety, sustainability:
EPA and state environmental compliance.
Internal environmental auditing.
Recycling, take-back.
The content in the section that is labeled employees reads as

follows:
Human resources, labor relations:
Communications.
Union negotiations.
OSHA, EEOC, and labor law compliance.
Diversity and family–work programs.
Healthcare.
The content in the section that is labeled government reads as
follows:
Public affairs, governmental affairs, government relations:
Public policy.
Lobbying.
Political action.
Trade associations.
Advocacy ads.
Grassroots mobilization.
The content in the section that is labeled shareholders reads as
follows:
Shareholder relations, investor relations:
External and internal audit.
SEC filings, compliance.
Communications.
Proxy election management.
1-‹#›
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33
Forces That Shape The Business And Society Relationship

Text Alternative
It contains a cloud at the center. This cloud is labeled business
and its stakeholders. There are six arrows pointing at this cloud.
In a clockwise manner of appearance, these arrows are labeled
as follows:
Evolving government regulation of business.
Globalization.
Explosion of new technology.
Dynamic natural environment.
Changing societal expectations.
Growing emphasis on ethical values.
1-‹#›
1-‹#›
34

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