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2 months ago
Firms need to develop approaches to address social pressure from activist groups. Discuss.
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Business and Its Environment
Edition: 7th
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In dealing with activist organizations, firms take a number of approaches. Some ignore the issues and the activists in the hope that their interest will wane or that they will fail to generate broader support. First, a company must assess its positioning and any possible private politics challenges to that position. This assessment begins by answering the question of what is demanded of the firm by the activists and, more importantly, by the public. The next step is to assess vulnerability to a private politics campaign. This involves assessing not only the firm's own vulnerability but also the vulnerability of those in its value chain. It is also important to assess the extent of public support for the activists' agendas. This depends on the issue as well as the public. If a company is potentially vulnerable, the next step is to consider whether it is possible to forestall a possible campaign through self-regulation, by working with cooperative NGOs, or by making public commitments to new policies. Interacting with a cooperative NGO can provide benefits, particularly when the group has expertise. When a firm is challenged by an activist group or NGO, the specific issues of concern must be evaluated. Often the issues generated by activists and interest groups are early in their life cycles, and thus firms have an opportunity to affect their progress. The next step involves identifying other potentially interested parties and assessing how likely they are to become active on the issue. In the case of a boycott, the firm must assess whether customers and the public are likely to be aware of the issue and sympathetic to the position of the activists.
Determining the most effective strategy requires understanding the nature and strength of the activists, the concerns that motivate them, the likelihood of media coverage, the likely support for the issue among consumers and the public, how much harm the activist could cause, how central the issue is to their agenda, and whether they are led by professionals or amateurs. Professionals are more difficult to co-opt, but they may be more practical as well. With limited resources, activists and interest groups must determine which issues to address, and they may abandon an issue that appears to be unwinnable or requires too much of their available resources. When confronted with private nonmarket action, a natural reaction is to be defensive. A better response is to evaluate the claims and demands made by the activists and determine whether they have merit. If the interactions with an activist group reach the point of bargaining over the resolution of the issue, a firm must assess the benefits and costs of alternative resolutions. It is also important to determine how an agreement will be monitored and how misunderstandings that might subsequently develop will be resolved. A firm must also assess whether its competitors will follow suit or whether the playing field will become uneven. Many firms prefer that the playing field be level with their competitors adopting the same policies for dealing with the issue. In cases where the stakes are high and monitoring of the firm's actions is difficult, the parties may require more than a simple agreement. The demands made in a campaign often are unreasonable or too costly to meet, and firms resist or fight back. Some firms decide that they will agree to disagree with the activist and bear whatever pressure the activist can muster. Most firms, however, prefer to negotiate rather than become engaged in a protracted confrontation that could attract the attention of the media, the public, and government officials.
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