Social Responsibility and Ethics in Strategic Management Chapter 3 Learning Objectives

Benefits of Being Socially Responsible

• May enable firm to charge premium prices and gain brand loyalty
• May help generate enduring relationships with suppliers and distributors
• Can attract outstanding employees
• Can utilize the goodwill of public officials for support in difficult times

Characteristics of Sustainability

Environmental
Economic
Social

Corporate Stakeholders

• Stakeholders
• have an interest in the business and affect or are affected by the achievement of the firm’s objectives
• Enterprise strategy
• an overarching strategy that explicitly articulates the firm’s ethical relationship with its stakeholders

Stakeholder Analysis

• Stakeholder analysis
• the identification and evaluation of corporate stakeholders
• usually done in a three-step process

Stakeholder Analysis

• The first step in stakeholder analysis is to identify primary stakeholders.
• Primary stakeholders
• have a direct connection with the corporation and who have sufficient bargaining power to directly affect corporate activities
• include customers, employees, suppliers, shareholders and creditors

Stakeholder Analysis

• The second step in stakeholder analysis is to identify the secondary stakeholders.
• Secondary stakeholders
• have an indirect stake in the corporation but are also affected by corporate activities
• include NGOs, activists, local communities, trade associations, competitors and governments

Stakeholder Analysis

• The third step in stakeholder analysis is to estimate the effect on each stakeholder group from any particular strategic decision.

Stakeholder Input

• Once stakeholder impacts have been identified, managers should decide whether stakeholder input should be invited into the discussion of the strategic alternatives.
• A group is more likely to accept or even help implement a decision if it has some input into which alternative is chosen and how it is to be implemented.