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Illustrate, with examples, the framework for the analysis of nonmarket issues.
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Business and Its Environment
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Nonmarket issues are typically complex and require conceptual frameworks to guide analysis and strategy formulation. In this framework the unit of analysis is the nonmarket issue. The initial step involves generating strategy alternatives. Managers must exercise creativity in generating alternatives beyond those that immediately suggest themselves. For example, to spur the use of mobile devices, Google proposed opening the C-band of the radio spectrum and the white spaces of the television for the development of open networks for mobile devices. As an alternative to higher fuel economy standards, General Motors advocated a tax on carbon fuels as a means of addressing the global climate change issue.
Once alternatives have been identified, they can be evaluated in three stagesscreening, analysis, and choice. In the screening stage, alternatives that are contrary to the law, widely shared ethics principles, or a well-evaluated company policy are eliminated.
In the case of the automobile industry, an alternative involving noncompliance with mandatory NHTSA safety standards would be screened out. Several automobile companies, however, have routinely paid a fine, as provided for by law, for not meeting fuel economy standards.
The alternatives that remain after the screening stage are then analyzed to predict their likely consequences. The analysis stage is based on the methods of economics, political science, and other social sciences and focuses on predicting the actions of interests and the consequences of alternative strategies. For example, pharmaceutical companies had to predict how strong the opposition to their direct-to-consumer advertising in the broadcast media might be. Prediction focuses on interests, institutions and their officeholders, and information and takes into account the likely actions of the other interested parties. The analysis stage also considers moral motivations of nonmarket behavior and how others evaluate the firm's actions.
The alternatives are evaluated and a choice made in the third stage. On issues that do not involve significant moral concerns, choice is based on the interests of the firm and its stakeholders. The objective is typically value creation, taking into account the impact of alternatives on stakeholders who are important to sustainable performance. If the issue involves significant moral concerns, normative principles pertaining to well-being, rights, and justice are to be applied.
In the nonmarket environment, moral claims about rights are frequently made. Some rights are granted in the sense that the government or moral consensus has both established them and clearly assigned the associated duty to respect them. When the duty has not been clearly assigned or the right itself has not been established by government or through moral consensus, the right is said to be claimed. Granted rights are to be used to screen out alternatives in the first stage, whereas claimed rights are to be evaluated in the choice stage.
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