Lecture Business and society - Chapter 1: The Business and Society Relationship

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Chapter 1
The Business
and Society
Relationship

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Learning Outcomes
1. Characterize business and society and their
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interrelationships.
Describe pluralism and identify its attributes, strengths,
and weaknesses.
Clarify how a pluralistic society becomes a specialinterest society.
Identify, discuss, and illustrate the factors leading up to
business criticism.
Pinpoint the major criticisms of business and
characterize business’s general response.

Describe the major themes of the book: managerial
approach, ethics, sustainability and stakeholder
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management.

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Chapter Outline
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Business and Society
Society as the Macroenvironment
A Pluralistic Society
A Special-Interest Society
Business Criticism and Corporate Response
Focus of the Book
Structure of the Book
Summary
Key Terms
Discussion Questions

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Business and Society
Business •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

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Conceptualizing the
Macroenvironment

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Segments of the
Macroenvironment

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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.
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Business and Stakeholder
Relationships

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Special Interest Groups •
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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.
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Social Environment, Business
Criticism and Corporate
Response
Affluence

Education

Awareness

Factors in the Social Environment
Rising Expectations

Rights Movement
Victimization
Philosophy

Entitlement
Mentality
Business Criticism

Increased Concern for the
Societal Environment

A Changed Social Contract
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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
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Society’s Expectations Versus
Business’ Actual Social
Performance Society’s
Social Performance:
Expected and Actual

Expectations
of Business
Performance

Social Problem

Social
Problem

Business’s Actual
Social Performance

1960s

2010s
Time
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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
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Levels and Spheres of

Corporate Power
Level
Spheres s

Macro
Level

Intermediate
Level

Micro
Level

Individual
Level

The
business
system

Several firms

A single firm

A Single
Executive

Economic
Social/Cultural
Individual

Technological
Environmental
Political
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Elements in the Social Contract
Laws or Regulations:
“Rules of the Game”
Business

Two-Way
Shared
Understandings of
Each Other

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Society or
Societal
Stakeholder
Groups

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Focus of the Book

Managerial
Approach

Business
Ethics

Sustainability

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Stakeholder
Management

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A Managerial Approach
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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.
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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.

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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.
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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:
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Environmental
Economic
Social

Sustainability concerns the ability of

businesses to survive and thrive over the long
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term.


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.
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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

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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
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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

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