The Business and Society Relationship
Chapter
1
Prepared by Deborah Baker
Texas Christian University
Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz
Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
1
Chapter 1 Learning Outcomes
1. Characterize business, society, and their
interrelationships.
2. Describe pluralism and identify its attributes,
strengths, and weaknesses.
3. Clarify how our pluralistic society has become a
special-interest society.
4. Identify, discuss, and illustrate the factors leading up
to business criticism.
5. Single out the major criticisms of business and
characterize business’s general response.
6. Categorize the major themes of the book: managerial
approach, ethics, and stakeholder management.
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Chapter 1 Outline
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
3
The Business and Society Relationship
Business scandals
Business issues
Broad societal concerns
4
Business and Society
Business
Society
The collection of private,
commercially oriented organizations
A broad group of people and other
organizations, interest groups,
a community, a nation.
Business and society interrelate in a
macroenvironment as stakeholders.
5
Society as the Macroenvironment
Social
Economic
Political
Technological
6
Segments of the Macroenvironment
Segment
Focus
Social
Demographics, lifestyles, social values
Economic
Nature and direction of the economy in
which business operates
Political
Processes for passing of laws and election
of officials. Interactions between firms,
politics, and government
Technological
Changes in technological advancements
taking place in society
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A Pluralistic Society
Strengths
Prevents concentration of
power
Maximizes freedom of
expression and action
Disperses individual
allegiances
Creates diversified set of
Weaknesses
Pursuit of self-interest
Proliferates organizations
and groups with overlapping
goals
Forces conflicts to center
stage
Promotes inefficiency
loyalties
Provides checks and
balances
8
Business and Stakeholder Relationships
Figure 1-2
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Special-Interest Society
Special Interests groups…
make life more complex for business and government
number in the tens of thousands
pursue their own focused agenda
are more active, intense, diverse and focused
attract a significant following
often work at cross purposes, with no unified set of goals
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Social Environment, Business
Criticism, and Corporate Response
Affluence
Education
Awareness
Factors in the Social Environment
Rising Expectations
Rights Movement
Entitlement
Mentality
Victimization
Philosophy
Business Criticism
Increased Concern for the
Societal Environment
Figure 1-3
A Changed Social Contract
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Factors in the Social Environment
Affluence and education
Awareness through television and the Internet
Revolution of rising expectations
Entitlement mentality
Rights movement
Victimization philosophy
12
Society’s Expectations Versus
Business’s Actual Social Performance
Social Performance:
Expected and Actual
Society’s
Expectations
of Business
Performance
Social Problem
Business’s Actual
Social Performance
Social
Problem
1960s
2000s
Time
Figure 1-4
13
Business Criticism: Use & Abuse of Power
Business
Power
Iron Law of
Responsibility
The ability or capacity to produce
an effect or to bring influence
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
Levels
Spheres
Macro
Level
Intermediate
Level
Micro
Level
Individual
Level
Economic
Social/Cultural
Individual
Technological
Environmental
Political
Figure 1-5
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Elements in the Social Contract
Laws or Regulations:
“Rules of the Game
Business
Two-Way Shared
Understandings of
Each Other
Figure 1-6
Society or
Societal
Stakeholder
Groups
16
Focus of the Book
Managerial
Approach
Business
Ethics
Stakeholder
Management
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Urgent vs. Enduring Issues
1. Short-Term:
Issues or crises arise on the spur of the
moment and management must formulate
quick responses.
2. Long-Term:
Issues or problems are a long-term
concern and management must develop a
thoughtful organizational response.
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Business Ethics
Ethics
Business
Ethics
Refers to issues of right, wrong,
fairness, and justice.
Focuses on ethical issues that arise
in the commercial realm.
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Stakeholders
Individuals or groups with which
business interacts who have a
vested interest in the firm.
Stakeholders
External stakeholders
Internal stakeholders
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Organization and Flow of Book
Business, Society, and Stakeholders
1.
2.
PART
ONE
3.
The Business and Society Relationship
Corporate Citizenship: Social Responsibility, Responsiveness and
Performance
The Stakeholder Approach to Business, Society, and Ethics
Corporate Governance and Strategic Management Issues
PART
TWO
4.
5.
6.
Figure 1-7
Corporate Governance: Foundational Issues
Strategic management and Corporate Public Affairs
Issues and Crisis Management
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Organization and Flow of Book
Business Ethics and Management
7.
PART
8.
THREE
9.
10.
Business Ethics Fundamentals
Personal and Organizational Ethics
Business Ethics and Technology
Ethical Issues in the Global Arena
External Stakeholder Issues
PART
FOUR
11.
12.
13.
14.
15.
16.
Figure 1-7
Business, Government and Regulation
Business’s Influence on Government and Public Policy
Consumer Stakeholders: Information Issues and Responses
Consumer Stakeholders: Product and Service Issues
The Natural Environment as Stakeholder
Business and Community Stakeholders
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Organization and Flow of Book
Internal Stakeholder Issues
17.
18.
19.
PART
FIVE
Employee Stakeholders and Workplace Issues
Employee Stakeholder: Privacy, Safety, and Health
Employment Discrimination and Affirmative Action
CASES
Figure 1-7
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Selected Key Terms
Business
Society
Macroenvironment
Social environment
Economic environment
Technological environment
Pluralism
Special-interest society
Affluence
Education
Revolution of rising
expectations
Social problem
Entitlement mentality
Rights movement
Victimization philosophy
Business power
Iron Law of Responsibility
Social contract
Business ethics
Stakeholder management
Ethics
Stakeholders
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