Business and Society Stakeholders Ethics Public Policy 14e Anne Lawrence, James Weber instructor manual and test bank
Business and Society: Stakeholders, Ethics, Public Policy
© 2014
by Anne Lawrence James Weber
14th Edition • Active, In-Print • 592 Pages • Hardcover
9780078029479 • 0078029473 Hi dear students:
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Business and Society: Stakeholders, Ethics, Public Policy, 14e by Lawrence and Weber has continued through several successive author teams to be the market-leader in its field. This new edition highlights why government regulation is sometimes required as well as new models of business-community collaboration. The authors believe that businesses have social (as well as economic) responsibilities to society; that business and government both have important roles to play in the modern economy; and that ethics and integrity are essential to personal fulfillment and to business success. In addition, this textbook has long been popular with students because of its lively writing, up-to-date examples, and clear explanations of theory.
Business and Society Stakeholders Ethics Public Policy 14e Anne Lawrence, James Weber instructor manual and test bank
solutions manual and case solutions for
CHAPTER 2
MANAGING PUBLIC ISSUES AND
STAKEHOLDER RELATIONSHIPS
INTRODUCTION
Businesses today operate in an ever-changing external environment, where effective management requires anticipating emerging public issues and engaging positively with a wide range of stakeholders. Whether the issue is growing concerns about climate change, water scarcity, child labor, animal cruelty, or consumer safety, managers must respond to the opportunities and risks it presents. To do so effectively often requires building relationships across organizational boundaries, learning from external stakeholders, and altering practices in response. Effective management of public issues and stakeholder relationships builds value for the firm.
PREVIEW CASE
IKEA
The chapter opens with a short case on the response of IKEA, the Swedish home furnishings retailer, to stakeholder complaints that some of the company's rug suppliers in South Asia used child labor. The company responded proactively, meeting with a range of expert nonprofit organizations. It subsequently stated it would immediately terminate any supplier found to be using child workers, and funded an extensive community development project, in partnership with UNICEF, in the affected areas.
Teaching Tip: Preview Case
The instructor may wish to use the IKEA story to illustrate the use of creative engagement with stakeholders to respond positively to a performance-expectations gap on a public issue.
CHAPTER OUTLINE
I. PUBLIC ISSUES
A. The Performance-Expectations Gap
II. ENVIRONMENTAL ANALYSIS
Teaching Tip: Eight Strategic Radar Screens
The "eight strategic radar screens" is a useful tool for nearly any case. The instructor may want to introduce a case from the end of the book, before launching into a more elaborate analysis later in the semester using the same case, since the radar screens can provide an overview of the major forces engaged in the case. Or, a local situation from the community or campus might be a good focus for applying the radar screens - paralleling the exercise that may be used with Chapter 1 when identifying multiple stakeholders involved on campus or in the community.
A. Competitive Intelligence
III. THE ISSUE MANAGEMENT PROCESS
A. Identify Issue
B. Analyze Issue
C. Generate Options
D. Take Action
E. Evaluate Results
Teaching Tip: Issue Management Process
This is another opportunity where a current issue on campus, in the local community, or on the national or international stage could be used for students to analyze how this issue is progressing or has progressed through the issue management process.
IV. ORGANIZING FOR EFFECTIVE ISSUE MANAGEMENT
V. STAKEHOLDER ENGAGEMENT
A. Stages in the Business-Stakeholder Relationship
B. Drivers of Stakeholder Engagement
a. Goals
b. Motivation
c. Organizational Capacity
C. Making Engagement Work Effectively
D. Stakeholder Networks
E. The Benefits of Engagement
GETTING STARTED
KEY LEARNING OBJECTIVES
1. Evaluating public issues and their significance to the modern corporation.
A public issue is an issue that is of mutual concern to an organization and one or more of the organization's stakeholders. Emerging public issues present a risk, but they also present an opportunity, because companies that correctly anticipate and respond to them can often obtain a competitive advantage.
2. Applying available tools or techniques to scan an organization's multiple environments.
The eight strategic radar screens (the customer, competitor, economic, technological, social, political, legal, and geophysical environments) enable public affairs managers to assess and acquire information regarding their business environments. Managers must learn to look outward to understand key developments and anticipate their impact on the business.
3. Describing the steps in the issue management process and determining how to make the process most effective.
The issue management process includes identification and analysis of issues, the generation of options, action, and evaluation of the results.
4. Identifying who is responsible for managing public issues and the skills required to do so effectively.
In the modern corporation, the issue management process takes place in many boundary-spanning departments. Some firms have a department of external affairs or corporate relations to coordinate these activities. Top management support is essential for effective issue management.
5. Understanding how businesses can build collaborative relationships with stakeholders through engagement, dialogue, and network-building.
Stakeholder engagement involves building relationships between a business firm and its
stakeholders around issues of common concern. It may involve dialogue, network building, or partnerships.
6. Identifying the benefits of stakeholder engagement to the business firm.
Engaging with stakeholders benefits businesses by bringing in expertise, enhancing legitimacy, and generating creative solutions to common problems.
KEY TERMS
competitive intelligence, 31
environmental analysis, 29
environmental intelligence, 29
issue management, 32
issue management process, 32
performance-expectations gap, 26
public issue, 25
stakeholder dialogue, 40
stakeholder engagement, 38
stakeholder network, 41
INTERNET RESOURCES
www.wn.com/publicissues World News, Public Issues
www.nifi.org National Issues Forum
www.un.org/en/globalissues United Nations, Global Issues
www.issuemanagement.org Issue Management Council
www.scip.org Society of Competitive Intelligence Professionals
www.wfs.org World Future Society
www.globalissues.org Global Issues
dir.yahoo.com/Society_and_Culture/issues_and_Causes
Yahoo's list of issues
www.cfr.org Council on Foreign Relations
DISCUSSION CASE
Coca-Cola's Water Neutrality Initiative
Teaching Tip: Discussion Case Video
The PBS News Hour aired an 8-minute segment November 17, 2008, entitled "Coca Cola, Indian Farmers Compete for Water Supply." In the segment, correspondent Fred de Sam Lazaro goes to India to interview a farmer, an environmental activist, and the president of Coca Cola India about the controversy over the company's use of water there. These events helped prompt Coca Cola's development of a new water policy, as described in the discussion case. The segment may be used to introduce the case. A full transcript of the segment is available at:
www.pbs.org/newshour/bb/asia/july-dec08/waterwars_11-17.html. The segment is available on streaming video at the PBS web site. It also appeared in the video supplement that accompanied the 13th edition of the textbook.
Discussion Questions
1. What was the public issue facing The Coca-Cola Company in this case? Describe the "performance-expectations gap" found in the case - what were the stakeholders' concerns, and how did their expectations differ from the company's performance?
The chapter defines a public issue as "any issue that is of mutual concern to an organization and one or more of its stakeholders... They are typically broad issues, often impacting many companies and groups, and of concern to a significant number of people. Public issues are often contentious-different groups may have different opinions about what should be done about them. They often, but not always, have public policy or legislative implications." In this case, the relevant issue is public concern about the quality, safety, and availability of fresh water.
The chapter defines a performance-expectations gap as a gap <emph type="italics"></emph>between what a firm wants to do or is doing and what stakeholders expect. In this example,The Coca-Cola Company's actions did not meet stakeholders' expectations. <keyterm id="id_0000000000_001_000042" type="keyterm"><term id="id_0000000000_001_000043"><emph type="bold">[{–}]</emph></term></keyterm><emph type="bold"></emph> Activists in India, where several Coca-Cola bottling plants operated, charged that the company had depleted local water supplies by diverting water for their own use. They also maintained that Coca-Cola drinks had been contaminated by pesticide residue in water used as an ingredient. World leaders had also pointed to growing prospects of acute water shortages in some regions. The public's expectation that Coca-Cola would provide a safe product and not use more than its share of water resources seemed to conflict with some stakeholders' perception that the company's products were unsafe and that it had depeleted the groundwater near its bottling plants.
2. If you applied the strategic radar screens model to this case, which of the eight environments would be most significant, and why?
The chapter identifies eight strategic radar screens-different external environments which managers must systematically monitor. These are the customer environment, competitor environment, economic environment, technological environment, social environment, political environment, legal environment, and geophysical environment. In this case, probably the most significant of the eight would be the geophysical environment. Coca-Cola's stakeholders were concerned about possible scarcity and contamination of an important natural resource-fresh water. To a lesser degree, the company also faced challenges in its political and legal environment, since some government entities had taken regulatory action against the company. Customers had also expressed concern about product safety.
3. Apply the issue management life cycle process model to this case. Which stages of the process can you identify in this case?
The chapter presents a 5-stage issue management process model (Fig. 2.3). The five stages, or steps, are: 1) identify issue; 2) analyze issue; 3) generate options; 4) take action; and 5) evaluate results. Evidence in the case suggests that Coca-Cola had moved through, or was in the process of moving through, each of the five stages of the model. The company had
identified water as essential to its business, because it used extensive amounts both as an ingredient in its products and in the manufacturing process. It was well aware of stakeholder criticisms, because one of its plants had been shut down by regulators for depleting groundwater. The company had undertaken an extensive survey of its water usage globally and had reached out to environmentalists and academic experts-evidence of analysis of the problem. (The case does not explicitly discuss alternative options, although its selection of a course of action implies that it generated options.) The case also describes the actions the company decided to take-a water neutrality initiative. Finally, the case describes the company's efforts to evaluate its results and to share the results of this evaluation with others.
4. How did TCCC use stakeholder engagement and dialogue to improve its response to this issue, and what were the benefits of engagement to the company?
The case provides evidence that the company engaged in dialogue with both internal and external stakeholders. Internally, it consulted with its bottlers and operating groups, and exernally, it consulted with a range of environmental organizations and academic experts. The creative solution the company adopted is evidence that these meetings were productive.
5. In your opinion, did TCCC respond appropriately to this issue? Why or why not?
The company responded appropriately by declaring a goal of water neutrality. That is, it said it it would return to nature and communities an amount of water equal to what it used. It would do this by reducing its water usage, cleaning and recycling water, and contributing to water conservation projects. The company's commitment was appropriate-because it addresses stakeholder concerns directly-and appears to be far-reaching and comprehensive. Evidence in the case shows that as of 2011 the company had made substantial progress towards meeting its goal of water neutrality.
This case illustrates the following themes and concepts discussed in the chapters listed:
Theme/Concept Chapter
Stakeholder theory; stakeholder analysis 1
Corporate social responsibility 3
Methods of ethical reasoning; human rights 4
Global corporate citizenship; codes of conduct 6
NGOs/Activist 6
Community relations 18
Public Relations/Media 19
Case Synopsis:
This case describes a dilemma facing Marilyn Carlson Nelson, CEO of the Carlson Company, a leader in the international travel and hospitality industry. Carlson, which has adopted a global code of conduct aimed at protecting children from sexual exploitation in the global tourist trade, must decide whether or not to develop a potentially lucrative resort complex in
, a Central American nation known for child trafficking. Can the company move forward, while honoring its commitments to the code of conduct and to global human rights?
Summary of Discussion Questions
1) Why did the Carlson Company sign the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism? Do you agree with the company's decision, and why or why not?
2) What are the advantages and disadvantages to the Carlson Company of developing the hotel complex in
?
3) What stakeholders would be affected by a decision to develop the hotel complex in
, and how would they be affected? What are their interests and sources of power in this situation?
4) Would developing the hotel complex in
be ethical, or not? Why do you think so?
5) If the Carlson Company decides to proceed with the hotel development, what steps can it take to assure that the company remains in compliance with the code of conduct it has signed?
Discussion Questions and Answers
1) Why did the Carlson Company sign the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism? Do you agree with the company's decision, and why or why not?
In 2004, the Carlson Company signed the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism. The purpose of the Code was to prevent the sexual exploitation of children at tourist destinations, such as resorts and hotels.
The Carlson Company and its chief executive, Marilyn Carlson Nelson, had several reasons for signing the Code:
· As the case explains, the sexual trafficking of children had become a multi-billion dollar industry, in which around two million children were exploited annually. In some circumstances, the hospitality, travel, and tourism industry facilitated this exploitation by transporting both victims and sex tourists to their destinations and providing accommodations once there. Sexual trafficking of children was prohibited under international codes and many national laws. The industry therefore had an affirmative obligation to avoid participation in child sexual trafficking.
· The Carlson Company and its founding Carlson family had a longstanding commitment to charitable work, particularly in the arena of children's welfare. CEO Marilyn Carlson Nelson had already worked closely with Queen Silvia of
on projects benefiting at-risk children. Queen Silvia was one of the original champions of the Code.
· Signing the Code could enhance the company's reputation as a leader in the area of children's rights and human rights.
· The Carlson Company was privately held. Thus, the Carlson family had an unusual degree of influence on corporate policies, including in this area.
Most students will agree with the company's decision to sign the Code. Those disagreeing may cite possible legal risk, additional costs of enforcement and compliance, and the possible loss of patronage by sex tourists.
2) What are the advantages and disadvantages to the Carlson Company of developing the hotel complex in
?
Advantages/benefits:
· The expansion of the Regency brand into
,
, would permit Carlson to enter the lucrative and growing market for higher-end accommodations in
. Research indicated that Carlson stood to make a significant return on its investment.
· If Carlson can succeed in Papagayo without catering to the sex trade, it would set a positive example for other hotels in the region.
· Enforcing the Code in an area well known for sex trafficking would underline Carlson's commitment to socially responsible behavior. The venture, if successful, would communicate the benefits of behaving ethically and responsibly even when doing so goes against local custom.
· It could attract customers impressed with the firm's ethical commitments.
· Success in
could well lead to the adoption of the Code by other
based travel and tourism companies and would most certainly enhance the reputation of Carlson Nelson and other decision-makers at Carlson.
· Empowering hotel employees to monitor and act against the exploitation of children could spill over into the communities of those employees. The employees themselves could serve as agents of social change in their own communities.
Disadvantages/risks:
· Complying with the Code in a region rife with sex tourism might lead to financial losses, if some tourists avoided staying at the Carlson property.
· Carlson might not be able to fulfill its obligations under the Code and to prevent child sex trafficking at the new Regent property and, if so, be censured by monitoring agencies for failure to comply with the Code.
· This might harm the Regent brand and link the Carlson name to sex tourism.
· If Carlson fails to meet the challenge of running a profitable hotel while preventing sex tourism, it may discourage other hotels from taking steps to combat sex trafficking or from adopting the Code.
· Some Carlson executives feared litigation from those who might be victimized by traffickers utilizing the company's services or by ordinary tourists who might witness such victimization, despite efforts on the part of the companies to deter the practice. The Marriott litigation exemplified possible dangers.
· The Code might have a negative impact on Carlson's employees and contractors by expecting them to assume the role of policing the Code in addition to their other responsibilities.
3) What stakeholders would be affected by a decision to develop the hotel complex in
, and how would they be affected? What are their interests and sources of power in this situation?
The instructor may wish to develop a table on the board, showing the relevant market and nonmarket stakeholders, their interests, and their sources of power, as follows:
Sample cells are filled in, to illustrate.
STAKEHOLDER | INTEREST | POWER |
Carlson employees | Jobs; professional development | Authority to prohibit sex trafficking in the hotel property |
Carlson senior executives and board of directors | To promote profitable development; to meet public commitments, e.g., to the Code | Authority to make decision to develop the property |
Victims of sex trafficking | To escape from trafficking; economic and educational opportunity. | Low power |
Sex traffickers | To promote their business interests | To go elsewhere |
Sex tourists | To operate without legal constraint | To go elsewhere |
Ordinary tourists | To vacation without exposure to sex trafficking | To go elsewhere |
Travel agencies | To bring in travel business | To refer business to other hotels |
Other hotels in region | To compete effectively | -- |
Code monitors | To assure compliance with the Code | To report publicly on failures of compliance; bad publicity |
NGOs addressing trafficking | To reduce the incidence of sex trafficking; to promote the Code | To report publicly on failures of compliance; bad publicity |
Local politicians | To enhance tax revenue from the tourism industry; to maintain a positive reputation as a tourist destination | To provide permits |
Local law enforcement | To enforce local laws | Legitimate legal authority |
To maintain a good reputation as a tourist destination; to enhance tax revenue; to promote business development | Legitimate legal authority |
The stakeholder analysis reveals that the board and senior executives are likely to have a strong interest in developing the Papagayo resort, since it is likely to be profitable for the company. Local officials are also likely to support the development, since it will provide local jobs and tax revenue. Opponents of sexual trafficking (code monitors, NGOs) are unlikely to oppose the development, because Carlson is a Code signatory. Those directly involved in or profiting from child sexual trafficking have the option of taking their business to other destinations. In short, the project is not likely to generate organized opposition.
4) Would developing the hotel complex in
be ethical, or not? Why do you think so?
Instructor tip: This questions provides an opportunity to apply the four methods of ethical analysis presented in Chapter 4: Virtue, utility, rights, and justice and fairness.
Whether or not developing the hotel complex in
depends, to a large extent, on whether or not Carlson will be able to enforce the Code effectively on the property.
TEACHING TIP: VIRTUE ETHICS
The textbook defines virtue ethics as follows:
[Virtue ethics] focuses on character traits that a good person should possess, theorizing that moral values will direct the person toward good behavior. Virtue ethics is based on a way of being and on valuable characteristics rather than on rules for correct behavior…. [Most] scholars believe that there is a great deal of agreement on the question of who is acting as the virtuous person, as summed up by business ethicist Manuel Velasquez: "An action is morally right if in carrying out the action the agent exercises, exhibits, or develops a morally virtuous character, [as opposed to] develops a morally vicious character." When placing virtue ethics in a business context, ethicist Robert Solomon explains, "The bottom line of [the virtue] approach to business ethics is that we have to get away from 'bottom line' thinking and conceive of business as an essential part of the good life, living well, getting along with others, having a sense of self-respect, and being a part of something one can be proud of."
Although virtue ethics usually refer to an individual's character, the concept can also be applied to an analysis of a company's actions.
If Carlson develops the hotel complex and effectively enforces the Code there, its reputation as a responsible and "virtuous" corporation will be enhanced. On the other hand, if the sexual exploitation of children occurs on the property, the company's reputation may be badly damaged (as was Marriott's, under comparable circumstances).
TEACHING TIP: UTILITARIANISM
The textbook defines utilitarianism as follows:
[Utilitarian reasoning] emphasizes utility, or the overall amount of good that can be produced by an action or a decision…It is often referred to as cost-benefit analysis because it compares the costs and benefits of a decision, a policy, or an action… These costs and benefits can be economic (expressed in dollar amounts), social (the effect on society at large), or human (usually a psychological or emotional impact). After business managers add up all the costs and benefits and compare them with one another, the net cost or the net benefit should be apparent. For a utilitarian, the alternative where the benefits most outweigh the costs is the ethically preferred action because it produces the greatest good for the greatest number of people in society.
If Carlson develops the hotel complex and effectively enforces the Code there, many will be helped (local employees, local community, customers, owners, tour operators), and few will be hurt. On the other hand, if the sexual exploitation of children occurs on the property, some will be helped (all of the above, plus sex traffickers and tourists), but others will be hurt (victims of sexual exploitation).
TEACHING TIP: RIGHTS
The textbook defines rights as follows:
Human rightsare another basis for making ethical judgments. A right means that a person or group is entitled to something or is entitled to be treated in a certain way… The most basic human rights are the rights to life, safety, free speech, freedom, being informed, due process, and property, among others. Denying those rights or failing to protect them for other persons and groups is normally considered to be unethical. Respecting others, even those with whom we disagree or dislike, is the essence of human rights, provided that others do the same for us. This approach to ethical reasoning holds that individuals are to be treated as valuable ends in themselves just because they are human beings. Using others for your own purposes is unethical if, at the same time, you deny them their goals and purposes.
If Carlson develops the hotel complex and effectively enforces the Code there, no rights will be violated. On the other hand, if the sexual exploitation of children occurs on the property, the basic human rights of these children will have been badly violated.
TEACHING TIP: JUSTICE AND FAIRNESS
The textbook defines justice and fairness as follows:
Justice, or fairness, exists when benefits and burdens are distributed equitably and according to some accepted rule. For society as a whole, social justice means that a society's income and wealth are distributed among the people in fair proportions. A fair distribution does not necessarily mean an equal distribution. Most societies try to consider people's needs, abilities, efforts, and the contributions they make to society's welfare. Since these factors are seldom equal, fair shares will vary from person to person and group to group. Justice reasoning is not the same as utilitarian reasoning. A person using utilitarian reasoning adds up costs and benefits to see if one is greater than the other; if benefits exceed costs, then the action would probably be considered ethical. A person using justice reasoning considers who pays the costs and who gets the benefits; if the shares seem fair (according to society's rules), then the action is probably just.
If Carlson develops the hotel complex and the sexual exploitation of children occurs on the property, benefits and burdens will not be equitably distributed; many will benefit, but victims of sexual exploitation will bear an undue share of the burdens.
5) If the Carlson Company decides to proceed with the hotel development, what steps can it take to assure that the company remains in compliance with the code of conduct it has signed?
Whether or not the company can remain in compliance with the Code in
depends to a large extent on the local employees who must manage the hotel and enforce the Code on a daily basis. These employees will be charged with policing customers, contractors, and one another for compliance with the Code. To enforce the Code effectively, the company must find ways to motivate local employees to "own" this commitment. Given the prevalence of sex trafficking in the region and at other nearby hotels, it will be challenging for Carlson to secure the buy-in of local employees to this mission. It is likely that some of these employees will be recruited from other hotels that do not share Carlson's commitment to preventing child trafficking and may be accustomed to routinely overlooking it.
Students may be asked to consider whether the Code conflicts with employees' notion of their own roles and responsibilities. Employees may well not want to act as informers or enforcers. They may not accept an obligation to protect children from abuse on the hotel premises because of potential threats from sex traffickers. It is also possible that employees hired locally might be pressured to ignore the code for the "greater benefit" of the community. On the positive side, benefits from compliance with the Code might spill over into the employees' own communities, possibly affecting community norms in a positive manner.
Students may offer the following suggestions about steps Carlson can take to assure compliance:
· Carlson might have to carry out its own investigations and data collection, to determine the actual threats on the ground of sex trafficking.
· A system of rewards and sanctions must be established to motivate Regency managers and employees in
to incorporate enforcement of the Code as part of their daily routines.
· A system must be put in place to monitor employee behavior. One option would be for Carlson Nelson to initiate an honor system that allows employees to monitor and police themselves. This option would be reinforced by a system of rewards. Another option would to hire a person or persons to monitor employee compliance to the Code. A third option would be for employees to decided whether they would like to be responsible for monitoring compliance to the Code or to have an outside party assume this responsibility.
· Another challenge will be how to deal with those stakeholders who oppose the Code, such as national and local politicians, local law enforcement, hotel employees, and others benefit who might benefit financially from payoffs by sex traffickers.
Epilogue:
Carlson Company eventually decided to develop its Regent Hotels & Resorts, Carlson's luxury brand, in
to provide higher-end accommodations to clients than was available through its Radisson brand. The decision to complete the project offered Carlson the opportunity to expand its luxury chain into a lucrative and growing Central American market. Management agreed that it was Carlson's obligation to go forward and recognize that the expansion of the Regent brand into the Papagayo region was a problem that could be "managed and solved over time." From an operational and social responsibility perspective, management believed it was doing more for the tourist industry by "entering into this environment and proving it could run a hotel in a legitimate fashion."
[1]This teaching note is based on one prepared by the case authors, Robyn Linde and H. Richard Eisenbeis. It has been revised by the textbook authors, with the permission of the case authors.
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