What does Baron mean by the

1
What does Baron mean by the nonmarket
environment of business?
2
Why should businesses be concerned with this
nonmarket environment?

• Foresee legal/political/social risks ? CHANGE
• Manage legal/political/social risks ? CHANGE
• Influence rules governing market
• Complement market strategy ? POSITIONING

3
Understanding the nonmarket environment The
Four Is
Issues Interests Institutions Information
4
Complexity the automobile industry - ISSUES
Environmental issues Safety issues Other CAFÉ
stds product safety workplace Global
warming (rollovers, windows, trade
policy Air emissions tires, recalls,
etc.) labor relns Alternative vehicles
5

Interests and Institutions Confusing
terminology I institutions create institutions
NGOs AND COMMUNITIES
p u b l I c o p i n i o n
CUSTOMERS AND SUPPLIERS
FIRM Mgt and Employees
GOVERNMENTS Legislatures, courts, agencies
6
Confusing terminology II Interests have
interests
surface
Positions
Interests
Needs
7
Complexity the automobile industry - INTERESTS
and INSTITUTIONS
Environmental Issues Safety issues Other Congre
ss Congress Congress State legislatures
NHTSA OSHA European Union Nader
groups Unions NGOs consumers consumers courts
8
Information
Views of firm f information, values Body of
information grows, changes Voters
Firm Government
Private politics
9
MTBE Case
10
How to respond to this complexity?
Passive ------------------------------------Active
Reactive------------------------------------Antic
ipatory Fragmented--------------------------------
Integrated Private--------------------------------
-------Public What are the benefits and risks of
different approaches? Who helps you with your
nonmarket strategies? Are those services free?
How do you decide when or how much to use these
services?
11
What does Baron mean when he talks about
positioning in political space? Legal space?
The public sentiment space? What do firms do
to position themselves in political
space? What are the risks and opportunities of
this kind of positioning?
12
According to Baron, how should firms make
strategic decisions about how to handle nonmarket
issues?
Screening
Analysis
Choice
13
Envirotest Case