Topic 1_NonMarket - Topic 1 P.E.S.T Framework and NonMarket...

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Topic 1: P.E.S.T Framework and Non- Market Stakeholders REQUIRED READINGS: “The Power of Organized Interests” and “Farming Pharmaceuticals: Ventria Bioscience and the Controversy over Plant-Made Medicines” Online Ventria Bioscience Case Discussion: 1/21—1/24 In-class Ventria Bioscience Case Debriefing: 1/25
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Corporate Social Strategy Competition in the marketplace tends to school managers to think in terms of outcomes. Profits, Sales, Market Share, Etc… However, in interactions with non-market players, processes gain in relative importance. Oversight, Quality Assurance, Social Welfare, Etc… Corporate Social Strategy: Integrate non-market forces (Political, Economic, Social, and Technological) into your market strategy. For example: Evaluate current and proposed government regulations, or monitor non-governmental organization (NGO) activity and changing social demands.
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Non-Market Strategy Firm and Market Strategy Firm and Market Strategy Political Political Economic Economic Social Social Technology Technology P.E.S.T. Framework Integrated Strategy
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Mini Case: BP’s Integrated Strategy In the early 21 st century, BP made two strategic acquisitions: ARCO (oil and gas) and SOLAREX (solar energy). The Solarex acquisition made BP Solar the largest solar energy company in the world. BP launched the ‘Beyond Petroleum’ campaign and began re-branding with the Helios logo. What was BP’s motivation?
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Beyond Petroleum Profit Drivers First mover advantage into new growing market. Enhance brand equity and corporate reputation. Differentiate from competitors. Tap into new customer segments. Employee retention/recruiting concerns. Attract green/socially-responsible investors (SRIs). Manage regulatory risks Preempt, stall, or shape future regulation. Take advantage of government subsidies. Manage growing social risks (NGOs).
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Beyond Petroleum Risks Heightened public expectations, especially from NGOs. Greenpeace awarded BP the Greenwash of the year. $45 million spent on Solarex, while: $26.5 billion spent on ARCO (588 times more). And $207 million spent on Helios re-branding. Brandweek wrote: “BP will be beyond petroleum the day that Anheuser-Busch is beyond beer.”
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Market Efficiency and Social Regulators NGOs usually take political or direct action when market inefficiencies exist: Lack of property rights, market power abuses, quality concerns, externalities (pollution), etc… Public policy changes can either correct existing inefficiency, or it can be the cause of inefficiency. Let’s first define the socially efficient production level
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Topic 1_NonMarket - Topic 1 P.E.S.T Framework and NonMarket...

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