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Stakeholder And Issues
Management
Approaches
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Chapter Topics
1. Why use a stakeholder management
approach for business ethics?
2. Stakeholder management approach
defined
3. How to execute a stakeholder analysis
4. Stakeholder approach and ethical
reasoning
5. Moral responsibilities of functional area
professionals
6. Three issues management approaches
7. Two crisis management approaches
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Why Use A Stakeholder
Management Approach For
Business Ethics?

The stakeholder approach
is a response to the
growth and complexity of
understanding and study
of the modern
corporation and its
influence on the
environment.
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The ethical dimension of this
approach is based on the view
that:
 Profit maximization is constrained by justice
 Regard for individual rights should be
extended to all constituencies that have a
stake in the affairs of a business
 Organizations are not simply or only
economic in nature but can and do act in
socially responsible ways, not only because
it is the right thing to do, but also to ensure
their legitimacy
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Stakeholder Management
Approach Defined
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The stakeholder approach provides a
framework that enables users to map and
ideally, manage the corporation’s
relationships, both present and potential, with
groups to reach win-win collaborative
outcomes.
It does not have to result from a crisis or
controversial situation.
It can be used as a planning method to
anticipate and facilitate business decisions,
events, and policy outcomes.
Business units, teams, and groups can use this
approach.
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Stakeholder Management
Approach Defined
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Stakeholder: any individual or group who can
affect or is affected by the actions, decisions,
policies, practices, or goals of the organization.
Primary stakeholders of a firm: owners,
customers, employees, and suppliers.
Secondary stakeholders: all other interested
groups such as the media, consumers,
lobbyists, courts, governments, competitors,
the public, and society.
Stakes: any interest, share, or claim that a
group or individual has in the outcome of a
corporation’s policies, procedures, or action
toward others.
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How To Execute A
Stakeholder Analysis
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The stakeholder approach is a pragmatic way of
identifying and understanding multiple, often
competing, political, social, legal, economic, and moral
claims of many constituencies.
The stakeholder analysis is a series of steps aimed at
the following tasks:
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Mapping stakeholder relationships
Mapping stakeholder coalitions
Assessing the nature of each stakeholder’s interest
Assessing the nature of each stakeholder’s power
Constructing a matrix of stakeholder moral
responsibilities
Developing specific strategies and tactics
Monitoring shifting coalitions
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Stakeholder Approach And
Ethical Reasoning


The stakeholder analysis is an analytical method
where no prescribed ethical principles or
responsibility rules are built-in.
Ethical reasoning in the stakeholder analysis
means asking:
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What is equitable, just, fair, and good for those
who affect and are affected by business decisions?
Who are the weaker stakeholders in terms of
power and influence?
Who can, who will, and who should help weaker
stakeholders make their voices heard and
encourage their participation in the decision
process and outcomes?
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Moral Responsibilities Of
Functional Area Professionals
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One goal of a stakeholder analysis is to
encourage and prepare organizational
managers to articulate their own moral
responsibility, as well as the responsibilities of
the company and their profession, toward their
different constituencies.
Stakeholder analysis focuses the enterprise’s
attention and moral decision-making process
on external events.
This approach applies internally, especially to
individual managers in and across traditional
function areas.
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Moral Responsibilities Of
Functional Area Professionals
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Traditional
functional and
expert areas include:
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Marketing
Research and
development (R& D)
Manufacturing
Public relations
Human resource
management (HRM)
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Three Issues Management
Approaches
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First Approach: 6-Step Issue
Management Process
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Most straightforward
More appropriate for companies or groups
trying to understand, manage, and control
their internal environments
Involves the following steps:
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Environmental scanning and issues identification
Issues analysis
Issues ranking and prioritizing
Issues resolution strategizing
Issues response and implementation
Issues evaluation and monitoring
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Three Issues Management
Approaches
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Second Approach: 7-Phase Issue
Development Process
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Issues are believed to follow a developmental
life cycle
Life-cycle stages suggested for tracking an
issue:
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A felt need arises
Media coverage is developed
Interest group development gains momentum
Policies are adopted by leading political jurisdictions
The federal government gives attention to the issue
Issues and policies evolve into legislation and
regulation
Issues and policies enter litigation
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Three Issues Management
Approaches
 Third Approach: 4-Stage Issue Life
Cycle
 Thomas Marx observed that issues
evolve from social expectations to
social control through the following
steps:
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Social expectations
Political issues
Legislation
Social control
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Two Crisis Management
Approaches
 First Approach: Precrisis Through
Resolution
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According to this model, a crisis consists of
four stages:
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Prodromal (precrisis)
 Warning stage
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Acute
 Damage has been done
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Chronic
 Clean-up phase
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Resolved
 The crisis management goal
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Two Crisis Management
Approaches
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Second Approach: Reaction Through
Accommodation
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Five phases of corporate social response to crises
related to unsafe products, or product crisis
management include:
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Reaction
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Defense
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Most agonizing time
Accommodation
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The company is overwhelmed by public attention
Insight
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A crisis has occurred
Addressing public pressure and anxiety
Agency
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Company attempts to understand the causes
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Two Crisis Management
Approaches
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Suggestions that corporations can follow to
respond more effectively to crises include:
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Face the problem
Take your lumps
Recognize that there is no such thing as a
secret or private crisis
Stage war games
Use the firm’s philosophy, motto, or mission
statement
Use the firm’s closeness to customers and end
users for early feedback
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Two Crisis Management
Approaches
 Issues and crisis management
methods and preventive techniques
are effective in corporations only if:
 Top management is supportive and
participates
 Involvement is cross-departmental
 The issues management unit fits with
the firm’s culture
 Output, instead of process, is the focus
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