Managing All Stakeholders Term Paper

Pages: 80 (23212 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Business

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[. . .] "The absorption of one company by another," Black's adds, "[with] the former losing its legal identity, and latter retaining its own name and identity and acquiring assets, liabilities, franchises, and powers of former, and absorbed company ceasing to exist as separate business entity" (p. 988).

In other cases, mergers and takeovers have appeared to be the result of opportunists looking for the quick profit; however, the consolidation of the highly complementary assets and resources of both of these giants will create some clear advantages for everyone concerned. Nevertheless, just as bigger may not mean better, merger may not mean advantage. In his chapter, "Technology Strategy: Collaborative Mode, V.K. Narayanan says that from a strategic viewpoint, collaborative mode is undertaken by firms when the economics of collaborative mode enhance the firm's value more than the alternative mode of a firm undertaking implementation all by itself" (p. 289).

Types of Mergers. Mergers are of several different types: There is the horizontal merger (if both firms produce the same commodity or service for the same market); market-extensional, if the merged firms produce the same commodity or service for different markets; or vertical, if a firm acquires either a supplier or a customer. If the merged business is not related to that of the acquiring firm, the new corporation is called a conglomerate. The reasons for mergers are also varied. The acquiring firm may seek to eliminate a competitor; to increase its efficiency; to diversify its products, services, and markets; or to reduce its taxes. Merger activity tends to vary with the business cycle, with the rate of mergers being higher when business is good; based on the current status of the U.S. And global economies, the business cycle is relatively depressed (Mergers, 2004).

Identifying All Stakeholders in a Given Business. Table 1 below illustrates a model of strategic management that incorporates the dual role of public relations in strategic management, in both the overall strategic management of the organization and in the strategic management of public relations itself. According to Grunig (1992), the first three components of the model are described as stages instead of steps because they describe the evolution of publics and issues. Public relations practitioners cannot control these stages, but they can make a contribution to overall strategic management by diagnosing the environment to make the overall organization aware of stakeholders, publics, and issues as they evolve. However, organizations will need different kinds of public relations programs for each stakeholder:

Table 1. The Strategic Management of Public Relations [Source: Grunig, 1992].

1. Stakeholder Stage. An organization has a relationship with stakeholders when the be- havior of the organization or of a stakeholder has consequences on the other. Public Relations should do formative research to scan the environment and the behavior of the organization to identify these consequences. Ongoing communication with these stake- holders helps to build a stable, long-term relationship that manages conflict that may occur in the relationship. 2. Public Stage. Public form when stakeholders recognize one or more of the consequences as a problem and organize to do something about it or them. Public relations should do research to identify and segment these publics. At this stage focus groups are particu- larly helpful. Communication to involve publics in the decision process of the organiza- tion helps to manage conflict before communication campaigns become necessary. 3. Issue Stage. Publics organize and create issues" out of the problems they perceive.

Public relations should anticipate these issues and manage the organization's response to them. This is known as "issues management." The media play a major role in the cre- ation and expansion of issues. In particular, media coverage of issues may produce publics other than activist ones -- especially "hot-issue" publics. At this stage, research should segment publics. Communication programs should use the mass media as well as interpersonal communication with activists to try to resolve the issue through negotia- tion. Public relations should plan communication programs with different stakeholders or publics at each of the above three stages. In doing so, it should follow Steps 4-7. 4. Public relations programs designed to address stakeholder concerns should develop formal objectives such as communication, accuracy, understanding, agreement, and complementary behavior for its communication programs. 5. Public relations should plan formal programs and campaigns to accomplish the program's objectives. 6. Public relations, especially the technicians, should implement the programs and campaigns. 7. Public relations should evaluate the effectiveness of programs in meeting their objectives and in reducing the conflict produced by the problems and issues that brought about the programs.

Grunig also points out that a crucial distinction for segmenting a population of people into publics is the extent to which they passively or actively communicate about an issue and the extent to which they behave in a way that supports or constrains the organization's pursuit of its mission. Publics are more likely to be active when the people who comprise them perceive:

That what an organization does will involve them (level of involvement);

That the consequences of what an organization does is a problem (problem recognition); and,

That they are not constrained from doing something about the problem (constraint recognition) (Grunig, 1992).

In the event that none of these conditions is applicable to a given group of people, these people then represent a nonpublic; and they are of no further concern to an organization. According to Grunig, whenever an organization does something that has consequences on people or people have consequences on the organization, there is a likelihood that the people will perceive an involvement and recognize a problem. Therefore, consequences produce, at the minimum, a latent public; in other words, a public that is passive but has the potential to be active. As the level of involvement and problem recognition increase and constraint recognition decreases, however, these publics can become more aware and may then become increasingly active. Grunig points out that publics generally move from the latent to the aware and active stages, therefore, as strategic management of public relations moves through the first three stages of the process.

Frequently, the terms stakeholder and public are used synonymously; however, there is a subtle but important difference that helps to understand strategic planning of stakeholder management. According to Grunig, "People are stakeholders because they are in a category affected by decisions of an organization or if their decisions affect the organization. Many people in a category of stakeholders -- such as employees or residents of a community -- are passive" (Grunig, 1992 p. 126). The stakeholders who are or become more aware and active can be described as being publics, with whom the company would then have a continuing interest.

Gruning adds that stakeholders are people who are linked to an organization because they and the organization have consequences on each other, they can cause problems for each other. In this regard, people who are linked to an organization have a stake in it, which Carroll (1989) defined as "an interest or a share in an undertaking" (p. 56). A stakeholder, then, is "any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organization" (Freeman, 1984 p. 25). Along these same lines, Brody (1988) defined stakeholders somewhat more symmetrically as "groups of individuals whose interests coincide in one or more ways with the organization with which the public relations practitioner is dealing" (p. 81).

The first step in strategic management of stakeholders, then, is to identify the people who are linked to or have a stake in the organization. Freeman (1984) termed this list a "stakeholder map" of the organization. A typical stakeholder map for a corporation, Freeman notes, contains owners, consumer advocates, customers, competitors, the media, employees, special interest groups, environmentalists, suppliers, governments, and local community organizations.

Strategic Market Factors Driving Merger Activity. Once the key stakeholders in the potential merger process have been identified, it is important for any company to incorporate their management into their overall business strategy. In this regard, successful cosmopolitan firms, such as the Japanese and German car makers Honda, Toyota, Mercedes, and BMW, and the Swedish-Swiss conglomerate ABB (Asea Brown Boveri) have all managed to anticipate changes in the global environment as opportunities (Georgantzas, 1995). In this regard, within every business venture, there is an underpinning that serves as the framework for the operations of the business. This foundation is frequently referred to as the company's "business strategy." The business strategy tends to be evidence of the core competencies of an organization; it also expands on the core competencies through the organization's mission statement (Georgantzas, 1995).

Business strategy in general has experienced a profound transformation over the past few decades. Early on, the construct of strategy was generally well received and considered to be an effective business approach. The supporting rationale was that there were abundant resources and little or no competition particularly from foreign investors; in this regard, companies in the United States have experienced virtually no growth constraints.… [END OF PREVIEW]

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