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Chapter 1Chapter 1The Business and The Business and
Society Society RelationshipRelationship
© 2015 Cengage Learning 2
Learning OutcomesLearning Outcomes
1.1. Characterize business and society and their interrelationships.Characterize business and society and their interrelationships.
2.2. Describe pluralism and identify its attributes, strengths, and Describe pluralism and identify its attributes, strengths, and weaknesses.weaknesses.
3.3. Clarify how a pluralistic society becomes a special-interest Clarify how a pluralistic society becomes a special-interest society.society.
4.4. Identify, discuss, and illustrate the factors leading up to Identify, discuss, and illustrate the factors leading up to business criticism.business criticism.
5.5. Pinpoint the major criticisms of business and characterize Pinpoint the major criticisms of business and characterize business’s general response.business’s general response.
6.6. Describe the major themes of the book: managerial approach, Describe the major themes of the book: managerial approach, ethics, sustainability and stakeholder management.ethics, sustainability and stakeholder management.
© 2015 Cengage Learning 3
Chapter OutlineChapter Outline
• Business and SocietyBusiness and Society• Society as the MacroenvironmentSociety as the Macroenvironment• A Pluralistic SocietyA Pluralistic Society• A Special-Interest SocietyA Special-Interest Society• Business Criticism and Corporate ResponseBusiness Criticism and Corporate Response• Focus of the BookFocus of the Book• Structure of the BookStructure of the Book• SummarySummary• Key TermsKey Terms• Discussion QuestionsDiscussion Questions
© 2015 Cengage Learning 4
Business and SocietyBusiness - •the collection of private, commercially oriented organizations ranging in size from one-person proprietorships to corporate giants.
Society - •a community, a nation, or a broad group of people with common traditions, values, institutions, and collective activities and interests. Macroenvironment -•the total environment outside the firm, the comprehensive societal context in which the organization resides.
Society •is the macroenvironment in which businesses operate.
© 2015 Cengage Learning 5
A Pluralistic Society - • Prevents power from being concentrated in
the hands of a few. • Maximizes freedom of expression and action,
and strikes a balance between monism, on the one hand, and anarchy on the other.
• Creates a widely diversified set of loyalties to many organizations, and minimizes the danger that a leader of any one organization will be left uncontrolled.
• Provides a built-in set of checks and balances, in that groups can exert power over one another with no single organization (business or government) dominating and becoming overly influential.
© 2015 Cengage Learning8
Special Interest Groups -
• Make life more complex for business and government.
• Can number in the tens of thousands in some societies.
• Pursue their own focused agendas.• Are active, intense, diverse and focused.• Can attract a significant following.• Often work at cross purposes, with no unified
goals.• A special-interest society is pluralism taken to
the extreme. © 2015 Cengage Learning 10
Social Environment, Business Criticism and Corporate Response
© 2015 Cengage Learning 11
Factors in the Social Environment
Affluence Education Awareness
Rising Expectations Rights Movement
EntitlementMentality
VictimizationPhilosophy
Business Criticism
Increased Concern for theSocietal Environment A Changed Social Contract
Factors in the Social Environment
Affluence and Education -•Create higher expectations of major institutions.•Growing public awareness through television, movies, and the Internet.
The Revolution of rising expectations - creates a social problem, a gap between societal expectations for social conditions and social realities. This can lead to:
• Entitlement mentality• Rights movement• Victimization philosophy
© 2015 Cengage Learning 12
Society’s Expectations Versus Business’ Actual Social Performance
© 2015 Cengage Learning 13
Society’s Expectations of Business Performance
Soci
al P
erfo
rman
ce:
Ex
pect
ed a
nd A
ctua
l
1960s 2010sTime
Social Social ProblemProblem
Business’s Actual Social Performance
Social ProblemSocial Problem
Business Criticism: Use and Abuse of Power
Business Power -
•the ability or capacity to produce an effect or to bring influence to bear on a situation or people
Iron Law of Responsibility -
•In the long run, those who do not use power in a manner society considers responsible will tend to lose it
© 2015 Cengage Learning 14
Levels and Spheres of Corporate Power
© 2015 Cengage Learning 1515
Macro Level
The business system
Intermediate Level
Several firms
Micro Level
A single firm
Individual Level
A Single Executive
Economic
Social/Cultural
Individual
Technological
Environmental
Political
LevelsSpheres
Elements in the Social Contract
© 2015 Cengage Learning 16
Laws or Regulations:“Rules of the Game”
Two-Way Shared Understandings
of Each Other
Society orSocietal
StakeholderGroups
Business
Focus of the Book
Managerial Approach
BusinessEthics
Stakeholder ManagementSustainability
© 2015 Cengage Learning 17
A Managerial Approach• Managers are practical, and have begun to
deal with social and ethical concerns in ways similar to those they use to manage traditional business functions such as marketing, finance, operations, & risk management.
• As a result, managers have been able to convert seemingly unmanageable concerns into ones that can be dealt with in a balanced and impartial fashion.
• At the same time, managers have had to integrate traditional economic and financial considerations with ethical and social considerations.
© 2015 Cengage Learning 18
Urgent versus Enduring Issues
Short-Term -•Issues or crises arise on the spur of the moment and management must formulate quick responses.
Long-Term -•Issues or problems are a long-term concern and management must develop a thoughtful organizational response.
© 2015 Cengage Learning 19
A Business Ethics Theme
Ethical questions - •inevitably and continually come into play during business operations. Ethics -•refers to issues of right, wrong, fairness, and justice.Business Ethics -•focuses on ethical issues that arise in the commercial realm.Ethical questions -•permeate business’s activities as it attempts to interact with major stakeholder groups.
© 2015 Cengage Learning 20
A Sustainability Theme
Sustainability - Has become one of businesses’ most pressing mandates.
Sustainable development - is a pattern of resource use that aims to meet current needs while preserving the environment for future generations.
Sustainability embraces criteria which are: • Environmental • Economic• Social
Sustainability concerns the ability of businesses to survive and thrive over the long term.
© 2015 Cengage Learning 21
Stakeholder Management Theme
Stakeholders - •Individuals or groups with which business interacts and who have a vested interest in the firm.•In this text, we consider:
• External stakeholders, such as government, consumers, the natural environment, community members
• Internal stakeholders, such as employees, those involved in corporate governance, and others.
© 2015 Cengage Learning 22
Structure of the Book (1 of 2)
Part One: Business, Society, and Stakeholders
1. The Business and Society Relationship
2. Corporate Citizenship: Social Responsibility, Performance and Sustainability
3. The Stakeholder Approach to Business, Society, and Ethics
Part Two: Corporate Governance & Strategic Management Issues
4. Corporate Governance: Foundational Issues
5. Strategic Management and Corporate Public Policy
6. Issue, Risk and Crisis Management
© 2015 Cengage Learning 23
Structure of the Book (2 of 2)
Part Three: Business Ethics and Management
7. Business Ethics Fundamentals
8. Personal and Organizational Ethics
9. Business Ethics and Technology
10. Ethical Issues in the Global Arena
Part Four: External Stakeholder Issues
11. Business, Government, and Regulation
12. Business Influence on Government and Public Policy
13. Consumer Stakeholders: Information Issues and Responses
14. Consumer Stakeholders: Product and Service Issues
15. Sustainability and the Natural Environment
16. Business and Community Stakeholders
© 2015 Cengage Learning 24
Organization and Flow of the Book
Part Five: Internal Stakeholder Issues
17. Employee Stakeholders and Workplace Issues
18. Employee Stakeholders: Privacy, Safety, and Health
19. Employment Discrimination and Affirmative Action
Cases
© 2015 Cengage Learning 25
• affluence• business• business ethics• business power• economic environment• education• entitlement mentality• ethics • Iron Law of
Responsibility• macroenvironment• managerial approach• pluralism• political environment• revolution of rising
expectations
• rights movement• social contract• social environment• social problem• society• special-interest society• stakeholder
management• stakeholders• sustainability• sustainable
development• technological
environment• victimization
philosophy
© 2015 Cengage Learning 26
Key TermsKey Terms