2004 Edelman Asia Pacific Stakeholder Study:

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2004 Edelman Asia Pacific Stakeholder Study The
Only Way to Have a Friend is to Be One Ralph
Waldo Emerson
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Driving Corporate Reputation
Driving Business Outcomes
Corporate Reputation Management
Delivering Quality Products Services
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Major Forces are Impacting Business
Erosion of Trust in Corporations
Deregulation Privatization
Globalization
Rise of Consumerism
Dispersion and Immediacy of Media
Tech and Media Convergence
Social Responsibility
Advances in Science and Technology
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Resulting Shift

• Imperative to switch focus

Managing relationships as drivers of corporate
reputation and resulting business outcomes
Managing perceptions as drivers of corporate
reputation
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So, What Does this Mean for Business?

• Business success requires mastery of the
  Relationship Imperative -- a philosophy that
  underscores the critical role of open,
  interactive, and information-rich relationships
  between a corporation and its stakeholders.

Driving Business Outcomes
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Implications for Driving Business Outcomes
Aligning your agenda to your stakeholders agendas

• Mutuality
• Commitment
• Satisfaction
• Trust

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How Do We Do This?
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Edelmans Asia Pacific Stakeholder Research

• Research Premise Relationships with key
  stakeholder groups are critical to driving
  business outcomes

• Research Objectives -- To examine and understand
  
• The current environment for corporations
• The drivers of stakeholder opinions
• The role of social factors in relationships

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Edelmans Asia Pacific Stakeholder Research

• Year two of annual research
• Conducted by Wirthlin Worldwide
• Forty-minute, in-depth face to face interviews
  with 540 stakeholders in 13 Asia-Pacific cities

• Six stakeholder groups
• Senior business executives
• Government officials
• Media
• NGOs/Trade Associations
• Up-scale consumers
• Employees

• Nine markets
• Australia (2)
• China (3)
• Hong Kong
• India (2)
• Japan
• Korea
• Malaysia
• Singapore
• Taiwan

Added to 2004 research
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Asia Pacific Business Environment
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In thinking about the way corporations do
business, are things going in the right direction
or are they off track?
An Optimistic View of Markets the Direction of
Corporations

• Similar to 2003, 3-in-4 stakeholder respondents
  believe that things are 'pretty much on the right
  track
• The most often cited reasons for this optimism
  are
• Follow strategies, plan for the future, and good
  management
• A good economy, high GDP, and better lifestyles
• Profitability of corporations
• Stable political/legal system/good government
  policy
• Significantly more respondents in 2004, compared
  to 2003, cited this indicator

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The Other Perspective

• 1-in-4 feel things are 'off track
• Japan and Korea account for much of this
  perspective
• The most often cited reasons for this are
• Corporations over emphasize profit making
• Corporations are short-sighted
• Bad government policy/lack of corporate
  governance
• Lack customer focus
• Unethical/fraudulent behavior

Korea
Japan
Average Response
58
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Right Direction
75
42
55
Off Track
25
Significantly more respondents in 2004 cited
these reasons, compared to 2003
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Worth Noting

• Reasons for why feel things have gotten off
  track

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What this Means for Managing Stakeholder
Relationships

• Air of confidence for corporations in pursuing
  relationships and pursuing agendas
• Stakeholders predisposed to cooperate with
  corporations

• However, macroeconomics and government policy --
  not corporate behavior -- driving perceptions of
  business environment

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Drivers of Corporate Image
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Stakeholders Opinions Of Corporations In Asia
Pacific

• Key Findings
• Tangible business indicators still most critical
• Significant increase in importance of
• Customer relationships
• Corporate Social Responsibility (CSR)

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When thinking about corporations in your market,
what do you usually notice first that makes them
stand out from the rest?
First Impressions of Corporations
Significantly more respondents cited Good
service in 2004
Significantly less respondents cited
Management/leadership in 2004
26
25
19
14
13
12
12
11
10
10
5
2
2004
2003
Profitable Good service Staff quality/attitude
Brand/product quality Corporate Image/lack of
scandal Management/leadership
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First Impressions of Corporations
Additional factors of importance
9
8
7
7
7
6
6
6
5
2004
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How would you prioritize different aspects of a
corporations corporate image when seeking
information about that corporation?
Underscoring the Point
Customer Relations and CSR more important in
2004
2004
2003
Financial performance Attention to CSR How it
deals with employees
The mean score represents the average
allocation of poker chips (out of 10) that a
respondent would spendfor information on each of
the six areas.
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Why A Focus on These Factors?
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Worth Noting

• Corporate Social Responsibility
• Upscale consumers and employees are significantly
  more likely to discount this information
• NGOs/Trade Associations are significantly more
  likely to value this information
• Dealing with Customers
• NGOs/Trade Associations are significantly more
  likely to discount this information
• Employees are significantly more likely to value
  this information

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Where Does CSR Fit?
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A Responsible Corporation in Asia Pacific

• Key Findings
• Tangible business factors are still considered
  the most essential to a good and responsible
  corporation
• Intangibles/social factors receiving higher
  priority and in some areas have rivaled
  tangible business factors
• Building relationships with stakeholders and
  operating in an open and transparent fashion is
  now more important than providing profits for
  owners/shareholders
• Providing good training and staff development is
  now more important than making products that
  impress others

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How important is it for a good and responsible
corporation to have each of the following
characteristics?
A Responsible Corporation in Asia Pacific
Most essential characteristics
Characteristics of a Responsible Corporation in
Asia Pacific
78
Offers top quality products/services
72
Stands behind its products/services when
something goes wrong
A ranking of eight or higher on a 10-point
scale with 10 being absolutely essential.
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A Responsible Corporation in Asia Pacific
2003
2004
65
65
Listens to customer attitudes and opinions on
satisfaction
Significantly less respondents ranked this as
essential in 2004
56
55
Provides senior leadership that can be trusted
52
Works hard at building relationships with core
stakeholders
--
Operates in an open and transparent fashion
51
50
Provides profits for its owners/shareholders
58
49
Significantly less respondents ranked this as
essential in 2004
Provides good training and development for staff
54
49
Makes products that really impress other people
44
58
41
Communicates frequently and openly with employees
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Significantly more respondents ranked this as
essential in 2004
Educates customers about the impact of its
products/services on society
36
37
Concerned about/active in doing something about
community welfare
36
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Tangible business factors
A ranking of eight or higher on a 10-point
scale with 10 being absolutely essential.
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Why are Tangible Business Indicators So Important?
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Why are Intangible/Social Factors Important?
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A Note on CSRAn Evolving Definition in Asia
Pacific
2003
2004

• CSR
• meeting the expectations of your
  stakeholdersandmeeting the needs of your
  community

• CSR
• meeting the expectations of your stakeholders

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What Does This Mean?

• Key to CSR activities in Asia Pacific
• Understand the difference between corporate
  altruism and CSR
• CSR must focus on your core competencies and
  increasingly your communities welfare

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How Do Corporations Perform Against These
Criteria?

• Western multinationals (MNCs)
• Asian MNCs
• Healthcare/pharmaceutical corporations
• Technology/telecommunications corporations

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Living Up to Stakeholder Expectations

• Key Findings
• All corporations fail to live up to most
  important characteristics for a good and
  responsible corporation
• Western MNCs performed significantly better on
  most characteristics versus other corporations
• Technology/telecommunications corporations
  generally outperformed Asian MNCs and
  pharmaceutical/healthcare corporations
• Overall performance similar to 2003

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To what degree do you believe these corporations
live up to the characteristics?
Degree MNCs Live Up To Characteristics
Expected Western MNCs Tech/Telecoms Pharma/Healthc
are Asian corporations
On a 10 point scale where 10 completely live
up to it and 1 not at all.
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To what degree do you believe Western MNCs live
up to the characteristics?
Degree Western MNCs Live Up To Characteristics
Expected Western MNC performance
On a 10 point scale where 10 completely live
up to it and 1 not at all.
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Significant Changes from 2003 to 2004

• Western MNCs performed significantly
• Better in provides senior leadership that can be
  trusted
• Worse in provides profits for its
  owners/shareholders
• Worse in makes products that really impress
  other people

These two characteristics were also significantly
less important to respondents in 2004 compared to
2003
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To what degree do you believe Asian corporations
live up to the characteristics?
Degree Asian MNCs Live Up To Characteristics
Expected Asian MNC Performance
On a 10 point scale where 10 completely live
up to it and 1 not at all.
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Significant Changes from 2003 to 2004

• Asian MNCs performed significantly
• Better in offers top quality products and
  services
• Better in communicates frequently/openly with
  employees

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To what degree do you believe Pharma/HC
corporations live up to the characteristics?
Degree Pharmaceutical/Healthcare Corporations
Live Up To Characteristics
Expected Pharma/HC Performance
On a 10 point scale where 10 completely live
up to it and 1 not at all.
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Significant Changes from 2003 to 2004

• Pharmaceutical/Healthcare corporations performed
  significantly
• Better in offers top quality products and
  services
• Better in listens to customer attitudes and
  opinions on satisfaction
• Better in provides senior leadership that can be
  trusted
• Better in communicates frequently/openly with
  employees

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To what degree do you believe Tech/Telecoms
corporations live up to the characteristics?
Degree Technology Corporations Live Up To
Characteristics
Expected Tech/Telecoms corporations performance
On a 10 point scale where 10 completely live
up to it and 1 not at all.
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Living Up to Stakeholder Expectations

• Summary
• Corporations continue to fail to live up to
  most important characteristics for a good and
  responsible corporation
• Some improvements seen between 2003 and 2004
  performance, especially among pharmaceutical/healt
  hcare corporations
• Western MNCs continue to lead in performance
  levels
• Corporations in Asia Pacific must close the gap
  between perceived performance and stakeholder
  expectations
• Offer quality products and services
• Stand behind products and services
• Listen to customer attitudes
• Operate transparently

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Key Learnings Four Imperatives

• 1. Start with a focus on relationship outcomes,
  not on driving a communications message.
  Relationships their creation, enhancement and
  management should be at the heart of business
  strategy and communications campaigns.

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Key Learnings Four Imperatives

• 2. Building relationships with key stakeholders
  means understanding their priorities and what
  factors they use when forming opinions about
  corporations.
• Tangibles regarding corporate performance are the
  most important in driving relationships but
  alone, they are not enough
• Intangibles and more socially-driven topics such
  as listening to customer attitudes and
  commitment to community welfare are an
  increasingly part of the equation

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Key Learnings Four Imperatives

• 3. Expectations of responsible behaviors start
  with factors driven by a corporations core
  competencies.
• Should be anchored by quality products and
  services and appropriate support of these should
  something go wrong
• At a minimum, the needs of the community must be
  understood actually addressing these needs will
  become increasingly more important to
  stakeholders in Asia Pacific

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Key Learnings Four Imperatives

• Customers set the tone. If your customers are
  satisfied and think highly of you, other
  stakeholders will follow.
• When seeking information about a corporation,
  stakeholders investigate how a corporation deals
  with customers as the second most important
  driver

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