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Business Environment Course Overview

What is, and what should be, the role of business in society?

How should businesses best manage all of the stakeholder issues that impact them, and that they impact?

• External stakeholders (customers, government, interest groups, etc.)

• Internal stakeholders (employees, owners)

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The Business and Society Relationship

Chapter 1

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Outline of Topics

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

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Business scandals, incidents

• Examples: Bernie Madoff (2008), Enron/Arthur Anderson (2001), Exxon Valdez (1989), Union Carbide - Bhopal (1984)

Business issues

• Examples: downsizing retirement pensions, environmental pollution, product liability

Broad societal concerns

• General feeling with much of public that business is not ethical and cannot be trusted (particularly since 2001)

The Business and Society Relationship

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Course focuses on large businesses (visibility, power, widely recognized brands), but issues apply to small and medium-sized companies as well.

Business and Society

BusinessThe collection of private, commercially oriented organizations

SocietyA broad group of people and other organizations, interest groups, a community, a nation.

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Society as Macroenvironment

Segment Focus

Social Demographics, lifestyles, social values

PoliticalProcesses for passing of laws and election of officials. Interactions between firms, politics, and government

EconomicNature and direction of the economy in which business operates

TechnologicalChanges in technological advancements taking place in society

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Pluralistic Society

Definition:

• A society in which there is wide decentralization and diversity of power concentration.

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Pluralistic Society

Strengths Weaknesses

Prevents concentration of power

Maximizes freedom of expression and action

Disperses individual allegiances and loyalties

Provides checks and balances

Pursuit of self-interest

Proliferates organizations and groups with overlapping goals

Forces conflicts to center stage

Promotes inefficiency

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Business and Stakeholder Relationships

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Special-Interest Society

Society viewed as...

• A whole

• Subgroups by geography• Nation, state, region, city/town, neighborhood

• Subgroups by interest (Interest Groups)• Gender, race, profession, religion, etc.• Other interests (environment, health, social equity, etc.)

• Individuals

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Special-Interest Society

Special Interests groups…

make life more complex for business and government huge number of groups/interests 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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Factors in the Social Environment

Affluence and education

Awareness through television and the Internet

Revolution of rising expectations

Entitlement mentality

Rights movement

Victimization philosophy

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Social Environment, Business Criticism, and Corporate Response

Factors in the Social EnvironmentFactors in the Social Environment

Affluence Education Awareness

Rising Expectations Rights Movement

EntitlementMentality

VictimizationPhilosophy

Business CriticismBusiness Criticism

Increased Concern for theSocietal Environment

Increased Concern for theSocietal Environment A Changed Social ContractA Changed Social Contract

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Society’s Expectations VersusBusiness’s Actual Social Performance

Society’s Expectations of Business Performance

So

cial

Per

form

ance

: E

xpec

ted

an

d A

ctu

al

1960s 2000sTime

Social Social ProblemProblem

Business’s Actual Social Performance

Social ProblemSocial Problem

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BusinessPower

The ability or capacity to producean effect or to bring influence

Iron Law ofResponsibility

In the long run, those who do not usepower in a manner society considersresponsible will tend to lose it

Business Criticism: Use & Abuse of Power

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Levels and Spheres of Corporate Power

Macro Level

Intermediate Level

Micro Level

Individual Level

Economic

Social/Cultural

Individual

Technological

Environmental

Political

LevelsSpheres

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Elements in the Social Contract

Laws or Regulations:“Rules of the Game”

Two-Way Shared Understandings of

Each Other

Society orSocietal

StakeholderGroups

Business

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Themes in Textbook: Managerial Approach

Managerial Approach

Managerial Approach

BusinessEthics

BusinessEthics

Stakeholder Management

Stakeholder Management

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Theme: 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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Ethics Refers to issues of right, wrong, fairness, and justice.

BusinessEthics

Focuses on ethical issues that arisein the commercial realm.

Theme: Business Ethics

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Stakeholders

Individuals or groups with which business interacts who have a vested interest in the firm.

External stakeholders Internal stakeholders

Theme: Stakeholders

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1. The Business and Society Relationship2. Corporate Citizenship: Social Responsibility, Responsiveness and

Performance3. The Stakeholder Approach to Business, Society, and Ethics

1. The Business and Society Relationship2. Corporate Citizenship: Social Responsibility, Responsiveness and

Performance3. The Stakeholder Approach to Business, Society, and Ethics

PART ONE

Business, Society, and Stakeholders

Corporate Governance and Strategic Management Issues

4. Corporate Governance: Foundational Issues5. Strategic management and Corporate Public Affairs6. Issues and Crisis Management

4. Corporate Governance: Foundational Issues5. Strategic management and Corporate Public Affairs6. Issues and Crisis Management

PARTTWO

Organization and Flow of Book

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7. Business Ethics Fundamentals8. Personal and Organizational Ethics9. Business Ethics and Technology10. Ethical Issues in the Global Arena

7. Business Ethics Fundamentals8. Personal and Organizational Ethics9. Business Ethics and Technology10. Ethical Issues in the Global Arena

PART THREE

Business Ethics and Management

External Stakeholder Issues

11. Business, Government and Regulation 12. Business’s Influence on Government and Public Policy13. Consumer Stakeholders: Information Issues and Responses14. Consumer Stakeholders: Product and Service Issues15. The Natural Environment as Stakeholder16. Business and Community Stakeholders

11. Business, Government and Regulation 12. Business’s Influence on Government and Public Policy13. Consumer Stakeholders: Information Issues and Responses14. Consumer Stakeholders: Product and Service Issues15. The Natural Environment as Stakeholder16. Business and Community Stakeholders

PARTFOUR

Organization and Flow of Book

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17. Employee Stakeholders and Workplace Issues18. Employee Stakeholder: Privacy, Safety, and Health19. Employment Discrimination and Affirmative Action

17. Employee Stakeholders and Workplace Issues18. Employee Stakeholder: Privacy, Safety, and Health19. Employment Discrimination and Affirmative Action

PART FIVE

Internal Stakeholder Issues

Organization and Flow of Book