© 2015 Cengage Learning 1

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

Conceptualizing the Macroenvironment

© 2015 Cengage Learning 6

Segments of the Macroenvironment

© 2015 Cengage Learning 7

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

Business and Stakeholder Relationships

© 2015 Cengage Learning 9

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