Business & Society Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition Archie B. Carroll Ann K. Buchholtz © 2012 South-Western, a part of Cengage Learning 1

Chapter 16 Business and Community Stakeholders © 2012 South-Western, a part of Cengage Learning 2

Learning Outcomes © 2012 South-Western, a part of Cengage Learning 1.Identify and discuss two basic ways of business giving. 2.Discuss reasons for community involvement, various types of community projects, and management of community stakeholders. 3.Explain the pros and cons of corporate philanthropy, provide a brief history of corporate philanthropy, and explain why and to whom companies give. 4.Differentiate between strategic philanthropy, cause-related marketing, and cause branding. 5.Characterize the nature of, magnitude of, reasons for, and impacts of offshore outsourcing and business or plant closings. 6.Address steps that a business or plant might take before a decision to close is made. 7.Identify strategies that a business or plant might employ after a decision to close has been made. 3

Chapter Outline Community Involvement Corporate Philanthropy or Business Giving The Loss of Jobs Summary Key Terms Discussion Questions 4 © 2012 South-Western, a part of Cengage Learning

A Company’s Positive Impact Community involvement Voluntary activities in the community Company contributions Support of programs in: Education Culture Urban development The arts Civic activities Health and welfare Corporate philanthropy Business giving Enlightened self-interest and moral reasons 5 © 2012 South-Western, a part of Cengage Learning

Philanthropy A desire to help mankind as indicated by acts of charity; love of mankind. Business giving  Can be difficult to assess the true motives behind philanthropic giving. 6 © 2012 South-Western, a part of Cengage Learning

A Call for Transparency Companies need not disclose direct donations to charities. There is a debate raging over whether they should. Some fear that disclosure would result in fewer donations. Concerns that nonprofits are being established to bypass campaign financing laws restricting the use of soft money. 7 © 2012 South-Western, a part of Cengage Learning

Giving to the “Third Sector” Third sector The nonprofit sector Nonprofits require business giving to survive. No profits No tax receipts Why do companies give? Charitable giving Community investment Commercial giving where businesses expect to benefit from the donation 8 © 2012 South-Western, a part of Cengage Learning

Categories of Corporate Contributions Programs 1.The Nondonor 2.The “What’s In It for Us” Donor 3.The “Company President Believes in Art Support” Donor 4.The “We Are a Good Citizen” Donor 5.The “We Care” Donor 9 © 2012 South-Western, a part of Cengage Learning

To Whom Do Companies Give? Major categories of recipients 1. Health and human services 2. Education 3. Civic and community activities 4. Culture and the arts 10 © 2012 South-Western, a part of Cengage Learning

Managing Corporate Philanthropy Base giving on business skills, resources, and capabilities to enhance philanthropic outcomes. Focus on philanthropy that will enhance corporate profitability and also make a difference in the community. Seek to align corporate philanthropy with business objectives, reputation, and branding. 11 © 2012 South-Western, a part of Cengage Learning

Factors Influencing Corporate Giving Priorities  Aligning closely with business needs  Limits on budgetary resources  Directions from the CEO and/or the Board  Strengthening the brand  Costs of responding to natural disasters  Being more responsive to stakeholders  Changes in the workforce  Employee needs/requests  Community needs  Global giving 12 © 2012 South-Western, a part of Cengage Learning

Community Partnerships and Strategic Philanthropy Community partnerships Occurs when a for-profit business enters into an arrangement with a nonprofit for their mutual advantage. Strategic philanthropy An approach by which corporate giving and philanthropic endeavors are designed to fit with the firm’s mission, goals, or objectives. 13 © 2012 South-Western, a part of Cengage Learning

Strategic Philanthropy 1.Make as direct a contribution as possible to the financial goals of the firm. 2.Bring contribution programs into sharper alignment with business endeavors. 3.Ensure that philanthropy is well planned and managed.  How is strategic philanthropy implemented? 14 © 2012 South-Western, a part of Cengage Learning

Cause-Related Marketing Cause-related marketing Directly linking a business’s product or service to a specified charity.  Businesses enhance their public image and increase sales.  Nonprofit organizations get funding and visibility. 15 © 2012 South-Western, a part of Cengage Learning

Cause Branding Cause branding A longer-term commitment than cause- related marketing. Is related more directly to the firm’s line of business and the target audience. 16 © 2012 South-Western, a part of Cengage Learning

Loss of Jobs Outsourcing The relocation of business processes to a different company. Offshore outsourcing (Offshoring) The relocation of business processes to a different country. Affects blue collar and white collar workers. Even skilled high-tech jobs are offshored. 17 © 2012 South-Western, a part of Cengage Learning

Plant Closings  What are the reasons why businesses and plants close?  Be able to describe the process and considerations a firm makes before closing a plant.  What are the steps through which a plant must go after deciding to close? 18 © 2012 South-Western, a part of Cengage Learning

Community Impact Analysis 19 © 2012 South-Western, a part of Cengage Learning

Advance Notice Worker Adjustment and Retraining Notification Act (WARN) Requires firms with 100 or more workers to provide 60 days advance notice before shutting down or conducting layoffs. The recent global economic crisis has prompted some states to strengthen WARN protections. WARN often falls short of its goals of protecting workers. 20 © 2012 South-Western, a part of Cengage Learning

Survivors– The Forgotten Stakeholders 21 © 2012 South-Western, a part of Cengage Learning

Key Terms Cause branding Cause-related marketing Community action program Community involvement Community partnerships Employee owned Offshore outsourcing Offshoring Outsourcing Philanthropy Resource-based giving Strategic philanthropy Third sector Worker Adjustment and Retraining Notification Act (WARN) © 2012 South-Western, a part of Cengage Learning 22