Public Relations So What Is a Business  Research Paper

Excerpt from Research Paper :

Public Relations

So what is a business? A business is an organization that operates to generate profits, usually for its owners. Those owners may be a private individual or individuals, a group of individuals who form a partnership, or a wider group of people with a financial interest in the business and its profits because they are shareholders or members. The things a business does to generate those profits are varied. It may manufacture goods for sale or trade, import or sell goods and products, or provide services to people or other businesses (Davidson, 2011). Public relations have several important roles in a business. It can make people aware of what the business is able to provide (goods and services), help the business communicate with the people who have an interest in it (owners, customers, employees and the community), and help the business develop an image and reputation within its environment. Public relations practitioners are in constant contact with publics that affect the activities of an organization (Payne, 2009). Because of this, public relations practitioners can be important influencers of how people regard the business and its activities. This is part of the boundary-spanning role of public relations. A boundary spanner is an individual who creates links between different publics and the organization. They metaphorically span a boundary between an organization and other groups of people through facilitating communication (Adams, 2012).

There are special publics that are vital to business operations because they directly affect profits through financial transactions. These are investors (or shareholders) and customers. Of equal importance, are publics who influence profits indirectly through opinion and action, such as employees, the community and the media (Cameron, et Al. 2008).

Investors as special publics

For some businesses (notably privately owned ones and small businesses), it can be said that the most important public to consider for the continued life of the business is the people who engage in trade with the organization through the purchase of products or services -- suppliers or customers. However, when a company becomes 'public' through listing shares for sale on the country or region's stock exchange, there is another public -- investors (Payne, 2009) which demands regular communication. This field of public relations is increasing in professional importance and is generally called investor relations, or IR.

Businesses are responsible to owners. Owners need information about the business operations of the organization on a regular basis. For companies listed on the stock exchange, their wealth and operating viability are determined by judgments about their performance. Reports to the financial community help to form those judgments. These judgments and opinions can affect the prices of the shares that are owned and traded through the stock market (Milliman, et al. 2008). For example, in mid-2008, the share price of both BHP Steel and Rio Tinto surged on reports that they had locked in deals to sell steel for higher than expected prices to the burgeoning Chinese market (Cameron, et Al. 2008; The Economist Intelligence Unit, 2009). When people (individuals or corporate investors) own shares in a company, a proportion of the organizational profit is divided up among all shareholders periodically, giving them a dividend. The more net profit a company makes, the higher the dividend is likely to be. If a company is performing well or is judged to have the potential to perform well and make healthy profits, it is likely that the shares will become popular to purchase. Investors will want to buy them, and the share price will rise through competitive trading. As share prices rise, more investors are attracted to them, sometimes purely for the purpose of buying the shares at one price and selling them for a higher price later on. Share trading, when it leads to higher share prices, creates greater revenue for the company. The converse is also true: if a company performs poorly, the opposite is likely to happen and the share prices drop (Davidson, 2011; Porter, et al. 2011; Strauss, 2010).

Although the stock market is far more complicated than this simple description, it is easy to see that opinion and commentary play an important role in influencing how people respond to trading shares in various companies (Milliman, et al. 2008; Strauss, 2010). Many sources of information can be used by investors to make judgments about buying and selling shares. Company information, the opinions of financial specialists, the knowledge of the share brokers and media commentary together paint a picture of how the business is performing. And the work of the public relations practitioner is crucial to all of them (Cameron, et Al. 2008; The Economist Intelligence Unit, 2009).

It is critical to many companies' long-term goals to ensure that financial publics are informed about business activities. Investors, potential investors, financial analysts and financial media need specialized information about the organization in order to judge the performance of their investment and the company's potential for future investment (The Economist Intelligence Unit, 2009). These financial publics are what would be called active or information-seeking (Dozier & Broom, 2006). They will look for specific information on which to base their opinions and decisions.

Financial media, financial analysts and investors constitute specialist publics and they have special information needs. Agenda-setting theory is useful to understand in order to put a client or company's interest on the media agenda. Financial information must be comprehensive and deal with the complexities of fiscal performance in a competitive national and international market (Basu & Palazzo, 2008). This requires detailed information for a target public that has a special understanding of finance and uses a special language. Like other highly specialized areas of public relations, the practitioner needs to know the meaning of a variety of special terms and to be able to talk to experts in their own language (Dozier & Broom, 2006). Unlike communicating with a more generalized public or group of publics, where simple and easy-to-understand words should be used, certain types of jargon can be included in specialized areas like finance. In order to share understandings with experts, practitioners can develop their background knowledge in finance and economics to more effectively specialize in financial public relations (Davidson, 2011; The Economist Intelligence Unit, 2009).

In Australia, the Australian Securities and Investment Commission (ASIC) is the authority that administers the rules pertaining to public companies and, among other things, the annual reports they produce (discussed below). In New Zealand, it is the Securities Commission. In 2008 the two countries brought into effect the Mutual Recognition of Securities Offerings (MRSO), introduced to simplify and streamline the issuing of shares across both countries (Cutlip, et al. 2012). Both countries had previously brought in new laws and regulations to make the MRSO happen. This illustrates why public relations practitioners need to be appraised of legislative changes that may affect shareholders -- in this case, those relating to trans-Tasman corporations (Eisenhardt, 2009).

Annual reports

One of the most direct ways of communicating with investor publics is through the company's annual report. Every company listed on the stock exchange must publish an account of its performance during the year. This must include a detailed audited balance sheet of all the income and expenditure of the company, names of the principal officers of the company, and details of where and when an annual meeting of investors and other interested parties is to be held (Goshal & Bartlett, 2010; Kim, et al. 2009).

Practitioners should always keep up-to-date with any changes to legislation that will affect the production of the annual report or any other financial documents or information (Payne, 2009). For instance, there are regulations governing the type (font) size of financial statements that must be adhered to, and certain headings and information must be included. It is wise to check these regulations on an annual basis or before the production of any major financial publication (Kamm, 2011).

In addition to the requirement of a financial summary of business operations and other mandatory statements, almost all annual reports incorporate a narrative description of yearly events (Milliman, et al. 2008; Strauss, 2010). This trend began in the 1950s and has continued to the present, with the annual report assuming often elaborate and expensive forms -- sometimes involving over 100 pages of text, full-color glossy printing, sophisticated photography and lengthy descriptions of company activities. It is now an established practice to make the annual report accessible on the company website (Basu & Palazzo, 2008).

The annual report is a challenging document to write and publish. It is generally considered to be one of the most important documents produced by the company (Postmes, et al. 2011). It typically involves coordinating written material from many sectors of the organization; liaising with graphic designers and printers; establishing message and theme strategies in conjunction with senior management; and managing a tight and complicated time schedule and deadlines (Goshal & Bartlett, 2010).

Because it is such an important communication vehicle, one of the difficulties of writing and producing an annual report involves taking other people's ideas and…

Cite This Research Paper:

"Public Relations So What Is A Business " (2013, February 26) Retrieved January 18, 2018, from

"Public Relations So What Is A Business " 26 February 2013. Web.18 January. 2018. <>

"Public Relations So What Is A Business ", 26 February 2013, Accessed.18 January. 2018,