All lists

3 types of public issues

1. Strategic - Problems involving business decisions, competition, or a company's future success.

Example:

• Amazon buys Whole Foods → Kroger has to rethink strategy

• Kodak focuses on Fujifilm but misses digital photography

• Restaurants adapt during COVID with takeout / outdoor dining

• Customer strategy changes during COVID

• Competitor-related decisions in general

2. Political - Problems involving government, laws, policies, or regulations.

Example:

800 towing → controversy leads to public-policy debate and regulation

• Finnair → Russia closes airspace and disrupts its Asia strategy

• Tariffs → unpredictable government trade policy affects businesses

• Sealed takeout cocktails → restaurants work with government to change alcohol rules

• International political events that affect firms

• Russia/Ukraine-related business disruptions

• H-1B / immigration-rule changes if your professor connects them to political host-environment changes
  
  3. Social - Problems involving society, cultural values, or what the public thinks is acceptable.

Example:

• Confederate flag merchandise → changing cultural expectations affect what businesses sell

• Grok generating sexualized images → social backlash; can also become political

• Cultural expectations around products or business behavior

• Walmart trying to avoid getting pulled too far into culture-war issues

A couple are mixed:

• Grok = social + political

• AI data centers = public issue, but not as cleanly one of the three unless your professor specifically classified it

• Resort fees = public issue / performance-expectations gap rather than one of the cleanest category examples
  
  EASY MEMORIZATION: SPS

3 Stakeholder Salience

1. Power = Can this stakeholder actually affect the business?

Examples: Customers can stop buying; the government can fine the company; employees can strike.

• Employees go on strike → power because they can stop production.

• Customers boycott Nike → power because sales can fall.

• Government fines a company → power because it can legally punish the business.

• A major supplier refuses to ship parts → power because production can stop.

• Amazon changes fees for a small seller → Amazon has power because the seller depends on the platform.

• Advertisers pull out of the NFL → power because the NFL could lose revenue.

Easy question: “Can they actually do something to the company?”

2. Legitimacy = Is the stakeholder’s concern reasonable or valid?

Example: customers wanting safe peanut butter is a legitimate concern.

• Customers expect peanut butter not to make them sick → legitimate.

• Employees expect a safe workplace → legitimate.

• Neighbors complain that a factory is polluting their air → legitimate.

• Parents want accurate movie ratings so they can judge content for children → legitimate.

• A homeowner complains about an $800 tow when they had no choice of towing company → legitimate.

• A community worries a huge data center could raise electricity demand and rates → legitimate.

• Easy question: “Does this stakeholder have a fair reason to care?”

3. Urgency = Does the issue need attention right now?

Example: if people are getting sick or dying, the issue is urgent.

• Peanut butter is actively making people sick → urgent.

• A gas leak could cause an explosion → urgent.

• A company discovers a dangerous product defect → urgent.

• Workers are currently being exposed to unsafe chemicals → urgent.

• A cyberattack is happening right now → urgent.

• A restaurant has a serious food-safety contamination problem today → urgent.

Peanut butter contamination:

• Legitimacy → customers deserve safe food

• Urgency → people are getting sick

• Power → government can shut the plant down or customers can stop buying

NFL advertisers:

• Power → can withdraw advertising money

• Legitimacy → may reasonably care about how controversy affects their brands

• Urgency → if the controversy is happening during the season they may want a fast response

AI data center community:

• Legitimacy → residents may reasonably worry about electricity rates

• Power → they may influence local government or permits

• Urgency → could become urgent if approval or construction is happening soon

Best memory trick:

Power = “Can they hurt/help us?”
Legitimacy = “Are they justified?”
Urgency = “Does it need action now?”

A factory is polluting a neighborhood's drinking water.

• Power: Residents can organize protests or pressure government officials.

• Legitimacy: Residents have a legitimate concern because their drinking water is contaminated.

• Urgency: The contamination is happening now and could immediately harm people's health.

4 stakeholder relationship styles

• Inactive = ignore the issue
  The company does little or nothing about stakeholder concerns.

  Example: Seattle towing companies kept charging very high fees until government stepped in.

• Reactive = respond after the problem happens
  The company waits until there is controversy or pressure.

  Example: NFL responded to the kneeling controversy after it had already become a major public issue.

• Proactive = anticipate the problem before it becomes serious
  The company tries to identify issues early and act first.

  Example: a company notices customers are worried about data privacy and creates stronger privacy protections before a scandal happens.

• Interactive = actively work with stakeholders
  The company communicates with stakeholders and involves them in finding solutions.

  Example: a company planning a new data center meets with local residents and government officials to discuss electricity use and community concerns before construction.

3 problems of regulation

Three problems of regulation:

1. Too much regulation
   Government rules can become so burdensome that they raise costs, create barriers to entry, and make businesses less competitive.

Examples:

• 2018 National Multifamily Housing Council → said 30%+ of multifamily development costs came from regulation.

• Cadillac effect → regulation can force consumers to buy more quality/cost than they need.

• Cambodia housing → very strict safety standards can make housing too expensive.

2. Too little regulation
   There are not enough rules to protect consumers, workers, or the public.

Examples:

• Vietnam $1 haircut → very low barriers to entry but less assurance of training/safety.

• Parasailing in Florida → professor said regulation was very light even though accidents can be severe.

• Texas school explosion → Texas had not required an odorant in natural gas before the disaster.

3. Poorly enforced / unenforced regulation
   The rules exist, but they are not actually enforced well.

Best example:

• Gujarat, India → pollution rules existed, but factories paid their own auditors. The auditors underreported violations because of the conflict of interest.

4 Public Policy Process

Public Policy Process — 4 parts:

1. Inputs = Why is government acting?

   • Outside pressures or problems pushing government to respond.

   • Example: sick workers, labor unions, public health concerns.

2. Goals = What is government trying to accomplish?

   • The result the policy is supposed to achieve.

   • Example: protect workers and public health.

3. Tools = How will government achieve it?

   • Penalties, incentives, legal action, license removal, information requirements.

   • Example: Postmates fine = a “stick.”

4. Effects = What happened after the policy?

   • Can be intended or unintended.

   • Example: minimum wage raises pay but may also lead employers to hire fewer workers.

Easy memory:
Why → What → How → What happened.

4 Externality options

When an activity creates an externality, government has four choices:

1. Producer pays = make the company creating the harm pay.

• Example: a factory pays for pollution cleanup.

2. Consumer pays = make the person using the product/service pay.

• Example: garbage disposal fees.

3. Public pays = taxpayers/society absorb the cost.

• Example: government cleans up pollution using public money.

4. Ban = prohibit the harmful activity/product.

• Example: microbeads were banned because they passed through wastewater systems and polluted waterways.

Easy memory: Producer → Consumer → Public → Ban.

9 Ways why we regulate

1. Market failure = normal competition/bargaining does not work.

• $800 tow

• Guardianships/conservatorships

2. Externalities = outsiders bear costs from someone else's activity.

• Pollution

• Microbeads

3. Government-approved monopoly = government allows one provider but regulates it.

• Puget Sound Energy

4. Promote ethical conduct = incentives or penalties encourage better behavior.

• Speeding tickets

• False Claims Act

• Reduced penalties for companies that self-report

5. Limits of self-regulation = businesses/industries cannot always regulate themselves effectively.

• Movie ratings

• AI travel books

• Novotel was an example where self-regulation worked better

6. Tort lawsuits may be inadequate = suing after harm may not compensate everyone.

• Bill Gates AI example

• Company could cause more damage than it or its insurer could afford

7. Caveat emptor = consumers cannot always protect themselves.

• Starbucks calorie disclosures

• Dietary supplement/fake-science claims

8. Guardrails = rules stop actions that could damage the overall system.

• Insider trading laws

• Antitrust laws

9. Cost-benefit analysis = regulate when benefits are greater than costs.

• Motorcycle helmets

• Texas natural-gas explosion

2 major types of regulation

Economic regulation = government regulates economic or financial activity.

Examples:

• taxes

• government spending

• tax credits

• EV tax-credit example

Social regulation = protects health safety welfare or quality of life.

Examples:

• OSHA

• ADA

• pollution rules

• chicken-cage requirements

• helmet requirements

Easy memory:
Economic = money/economy
Social = safety/welfare

3 RIA parts

RIA = Regulatory Impact Analysis.

1. Need for rule = Why do we need the regulation?

2. Alternatives = Are there other ways to solve the problem?

3. Costs and benefits = Is this regulation worth it compared with the alternatives?

Easy memory:

Need → Alternatives → Costs/Benefits

4 regulation costs

1. Government enforcement costs

• Government must hire regulators and inspectors.

2. Compliance costs

• Businesses spend money following the rules.

• Employees paperwork inspections etc.

3. Opportunity costs

• Money spent complying cannot be spent somewhere else.

• Example: money could have gone toward R&D.

4. Delay costs

• Regulation can slow things down.

• Example: construction waits for government inspections.

Easy memory:
Enforcement → Compliance → Opportunity → Delay

2 types of deregulation

Substantive deregulation = actually change or remove the rule.

Procedural deregulation = leave the rule in place but weaken the government's ability to enforce it.

Easy memory:

Substantive = change the rule
Procedural = weaken enforcement

Substantive deregulation methods

• Change the law

  • Example: airline and trucking deregulation.

• Sunset laws

  • Regulation automatically expires unless renewed.

• Flexible enforcement

  • Replace command-and-control rules with more freedom for businesses.

  • Command-and-control = government tells you HOW.

  • Flexible = government tells you WHAT result is required.

• Preemption

  • Higher-level government overrides lower-level rules.

  • Federal can override state; state can override local.

Easy memory:
Change → Sunset → Flexible → Preemption

Securities Acts

1933 Securities Act = disclosure before securities are sold.

• Registration statement

• Prospectus

• Give investors material information before they buy.

Memory:
1933 = disclose before selling.

1934 Securities Exchange Act = continuing oversight after a company is publicly traded.

• Independent audits

• Ongoing information

• Helps investors decide whether to buy hold or sell.

Memory:
1934 = keep checking afterward.

Big distinction:

1933 = BEFORE sale
1934 = AFTER / ongoing

WWII regulation

During WWII the government heavily controlled the economy using:

• Wage controls = limits on wages

• Price controls = limits on prices

• Rationing = limits on how much of scarce products people could buy

Examples of rationed goods included gasoline and various foods.

Main lesson:

Major national emergencies → much more government regulation.