1 The Business and Society Relationship Business and Society: Ethics and Stakeholder Management, 7e Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved Prepared by Deborah Baker Texas Christian University Chapter 1

2 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.

3 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

4  Business scandals  Business issues  Broad societal concerns The Business and Society Relationship

5 Business and society interrelate in a macroenvironment as stakeholders. Business and Society Business The collection of private,commercially oriented organizations Society A broad group of people and otherorganizations, interest groups,a community, a nation.

6 Society as the Macroenvironment Social Economic Political Technological

7 Segments of the Macroenvironment SegmentFocus SocialDemographics, lifestyles, social values Political Processes for passing of laws and election of officials. Interactions between firms, politics, and government Economic Nature and direction of the economy in which business operates Technological Changes in technological advancements taking place in society

8 A Pluralistic Society StrengthsWeaknesses  Prevents concentration of power  Maximizes freedom of expression and action  Disperses individual allegiances  Creates diversified set of loyalties  Provides checks and balances  Pursuit of self-interest  Proliferates organizations and groups with overlapping goals  Forces conflicts to center stage  Promotes inefficiency

9 Business and Stakeholder Relationships Figure 1-2

10 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

11 Social Environment, Business Criticism, and Corporate Response Factors in the Social Environment AffluenceEducationAwareness Rising ExpectationsRights Movement Entitlement Mentality Victimization Philosophy Business Criticism Increased Concern for the Societal Environment A Changed Social Contract Figure 1-3

12 Factors in the Social Environment  Affluence and education  Awareness through television and the Internet  Revolution of rising expectations  Entitlement mentality  Rights movement  Victimization philosophy

13 Society’s Expectations Versus Business’s Actual Social Performance Society’s Expectations of Business Performance Social Performance: Expected and Actual 1960s2000s Time Social Problem Business’s Actual Social Performance Social Problem Figure 1-4

14 Business Power The ability or capacity to producean effect or to bring influence Iron Law of Responsibility 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

15 Levels and Spheres of Corporate Power Macro Level Intermediate Level Micro Level Individual Level Economic Social/Cultural Individual Technological Environmental Political Levels Spheres Figure 1-5

16 Elements in the Social Contract Laws or Regulations: “Rules of the Game Two-Way Shared Understandings of Each Other Society or Societal Stakeholder Groups Business Figure 1-6

17 Focus of the Book Managerial Approach Business Ethics Stakeholder Management

18 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.

19 Ethics Refers to issues of right, wrong,fairness, and justice. Business Ethics Focuses on ethical issues that arisein the commercial realm. Business Ethics

20 Stakeholders Individuals or groups with whichbusiness interacts who have avested interest in the firm.  External stakeholders  Internal stakeholders Stakeholders

21 1.The Business and Society Relationship 2.Corporate Citizenship: Social Responsibility, Responsiveness and Performance 3.The Stakeholder Approach to Business, Society, and Ethics 1.The Business and Society Relationship 2.Corporate Citizenship: Social Responsibility, Responsiveness and Performance 3.The Stakeholder Approach to Business, Society, and Ethics PART ONE Business, Society, and Stakeholders Corporate Governance and Strategic Management Issues 4.Corporate Governance: Foundational Issues 5.Strategic management and Corporate Public Affairs 6.Issues and Crisis Management 4.Corporate Governance: Foundational Issues 5.Strategic management and Corporate Public Affairs 6.Issues and Crisis Management PART TWO Organization and Flow of Book Figure 1-7

22 7.Business Ethics Fundamentals 8.Personal and Organizational Ethics 9.Business Ethics and Technology 10.Ethical Issues in the Global Arena 7.Business Ethics Fundamentals 8.Personal and Organizational Ethics 9.Business Ethics and Technology 10.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 Policy 13.Consumer Stakeholders: Information Issues and Responses 14.Consumer Stakeholders: Product and Service Issues 15.The Natural Environment as Stakeholder 16.Business and Community Stakeholders 11.Business, Government and Regulation 12.Business’s Influence on Government and Public Policy 13.Consumer Stakeholders: Information Issues and Responses 14.Consumer Stakeholders: Product and Service Issues 15.The Natural Environment as Stakeholder 16.Business and Community Stakeholders PART FOUR Organization and Flow of Book Figure 1-7

23 17.Employee Stakeholders and Workplace Issues 18.Employee Stakeholder: Privacy, Safety, and Health 19.Employment Discrimination and Affirmative Action 17.Employee Stakeholders and Workplace Issues 18.Employee Stakeholder: Privacy, Safety, and Health 19.Employment Discrimination and Affirmative Action PART FIVE Internal Stakeholder Issues CASES Organization and Flow of Book Figure 1-7

24 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