Environmental intelligence and the macroenvironment of business 1

1
Environmental intelligence and the
macroenvironment of business (1)

• Environmental intelligence is the acquisition of
  information gained from analyzing the multiple
  external environments affecting organizations.
  Albrecht (2000) has identified eight strategic
  radar screens

2
Environmental intelligence and the
macroenvironment of business (2)

• customer (demographics and customer values),
• competitor,
• economic,
• technological,
• social,
• political,
• legal, and
• geophysical.

3
Business and public issues (1)

• In order to be socially responsive to
  stakeholder demands, it is necessary for managers
  to engage in environmental scanning so that they
  can (1) understand the issues of today and (2)
  forecast the issues of tomorrow. Spanning the
  boundary between business and society is
  important for organizational success.

4
Business and public issues (2)

• A public issue exists when there is a gap
  between stakeholder expectations of what a firm
  business should be doing and the firms actual
  performance on that issue (performance-expectation
  s gap). Keep in mind that stakeholders (alone
  and as part of coalitions) will often try to
  define issues in ways that seek to increase the
  perceived gap between stakeholder expectations
  and firm-level performance.

5
Public affairs management (1)

• Public affairs management refers to how the
  company actively manages its external relations,
  especially with stakeholders.
• Many corporations have specialized public
  affairs departments, although there is an
  increasing expectation that CEOs and other top
  managers will take the lead in managing external
  issues.

6
Public affairs management (2)

• A company needs to engage in public-affairs
  management to (1) find out what its stakeholders
  expect, (2) try to influence stakeholder
  perceptions of corporate behavior, and (3) align
  its espoused values with its policies and
  practices. Gathering environmental and
  competitive intelligence is thus critically
  important.

7
The issue life cycle (1)

• There are four phases of the issue life cycle
• Phase 1 Changing stakeholder expectations
• Phase 2 Political action
• Phase 3 Formal government action
• Phase 4 Legal implementation

8
The issue life cycle (2)

• Managerial discretion to resolve an issue
  declines with each phase. (As a result, it often
  makes sense for organizations to try to forestall
  the last three phases by responding to
  stakeholder pressures.)

9
Issues management

• There are five components of an issues
  management system
• issues identification (think environmental
  scanning),
• issues analysis,
• (development of) policy options,
• program design, and
• evaluation of results.

10
Response strategies (1)

• Businesses can respond to stakeholder pressures
  by using one of four strategies
• inactive (organization doesnt change),
• reactive (organization initially resists and then
  changes, grudgingly),
• proactive (organization initiates change), and
• interactive (the organization and its
  stakeholders attempt to adjust to the others
  needs).

11
Response strategies (2)

• Responses to public issues tend to be most
  effective when they are tied to an organizations
  values and strategies.

12
And finally. . .

• Perceptions of whether an organization is
  behaving legitimately are just thatperceptions.
  (Well take up organizational ethics a bit later
  in the semester.) That said, organizations need
  to (1) shape how they are perceived by their
  stakeholders and (2) respond to allegations that
  they are acting illegitimately.