© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-1 Business and Society POST, LAWRENCE, WEBER Global Social Issues for a New Century Chapter 20

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-2 Figure 20-1a Globalization: Pros Productivity grows more quickly when countries produce goods and services in which they have a comparative advantage. Raises per capita GDP and standard of living. Global competition creates price competition and minimizes inflation. An open economy spurs innovation and improves the flow of new ideas. Export jobs often pay better than other jobs. Unfettered capital flows give the country access to foreign investment funds; this helps to keep interest rates low. Source; Based on arguments in Thomas Friedman, The Lexus and The Olive Tree, New York: Anchor Books, 2000; David Korten, When Corporations Ruled the World, San Francisco: Berrett-Kohler, 1998; and Business Week, Special issue on globalization, April 24, 2000.

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-3 Figure 20-1b Globalization: Cons Jobs in the domestic economy are lost as imports replace home-made goods and services Companies operate in fear of foreign competition and keep wages as low as possible Employers force employees to take wage cuts and require them to share health care costs Employers threaten to close local operations and move jobs out of the country; Source; Based on arguments in Thomas Friedman, The Lexus and The Olive Tree, New York: Anchor Books, 2000; David Korten, When Corporations Ruled the World, San Francisco: Berrett-Kohler, 1998; and Business Week, Special issue on globalization, April 24, 2000.

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-4 Business models and citizenship models: A comparison Figure 20-2 Business model Citizenship model How do we make money? How do we become effective citizens? Product Market/customer Technology Manage assets wisely Minimize risk to others Build stakeholder trust Cultivate relationships Assist community groups Revenues Profits Goodwill Reputation Revenues Cost control Stakeholder trust Reputation Key question: Elements Results Source: J.E. Post, Meeting the Challenge of Global Corporate Citizenship, Boston College Center for Corporate Community Relations, p. 35

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-5 The “pyramid” of global citizenship activities Figure 20-3 Source: London Benchmarking Group Model described in J.E. Post, Meeting the Challenge of Global Corporate Citizenship, Boston College Center for Corporate Community Relations, National programs e.g., community outreach Regional programs e.g., pharmaceutical firms fighting AIDS and tropical diseases Global programs e.g., IBM global education

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-6 The new wealth: Stakeholder relationships Figure 20-4 Natural resource assets Stakeholder relationships - Intangible assets Financial capital assets Labor; human capital assets Organizational wealth

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-7 Figure 20-5a The business value chain and “triple bottom line” impacts Environmental impacts (negative) * direct air/water pollution * air & water pollutants * resource damage * use of toxics * use of non-renewable resources* excessive packaging * open system waste streams * noise, radiation * waste streams Environmental impacts (positive) * offset damage conservation land* emergency risk management * public service messages * continuous reduction of toxics * upgraded usage * recycled materials * reduced packaging (volume)* less toxic packages * improvements Natural Resources Manufacture of Component Products Assembly Operations Distribution Activities; Market Channels Marketing, Promotion, and Sales Activities

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 20-8 Figure 20-5b The business value chain and “triple bottom line” impacts Social impacts (negative) * industry dependence* worker rights* trade practices * transport safety * over-promotion* media images * advertising messages * company towns * local retailers * human rights* labor safety * service needs * competition Social impacts (positive) * jobs* community involvement * less expensive products * education * contributions/giving* innovation * infrastructure * volunteerism * new knowledge* cause-marketing Natural Resources Manufacture of Component Products Assembly Operations Distribution Activities; Market Channels Marketing, Promotion, and Sales Activities