1. 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. 2  Business criticism and scandals (Enron, Tyco, World Com, Arthur Andersen, ImClone, Oil Companies, Halliburton, Wal-Mart, Financial Companies, Auto..)  Issues, such as executive compensation, abuse of corporate power, and sexual harassment  Broad societal concerns, such as the “rights” movement, discrimination, loss of jobs to foreign countries, and workplace violence  “Stick it to the MAN” – (Adversarial Relationship) The Business and Society Relationship

3. 3 “The Corporate Image”  Kenneth Lay  Dennis Koswolski  Bernie Ebbers  Martha Stewart  Bill Gates  Warren Buffet  Dale Carnegie  http://images.businesswe ek.com/ss/08/11/1124_big gest_givers/index.htm?ca mpaign_id=yahoo http://images.businesswe ek.com/ss/08/11/1124_big gest_givers/index.htm?ca mpaign_id=yahoo

4. 4 “New Philanthropy”  ‘Best Solutions’  Google’s decision to operate its philanthropic arm largely as a for- profit entity gives it the ability to make both grants to nonprofit organizations and investments in for-profit companies involved in solving social problems. To date, Google.org’s giving and investments total $75.4-million.$75.4-million.  In the program to promote plug-in hybrid electric vehicles, for example, Google.org has awarded $1-million in grants to nonprofit organizations, such as CalCars and Plug-In America, that raise public awareness about the cars. But it also has issued a call for proposals for $10-million in investments.program  “We want to be open if the best solution is in the private sector or if the best solution to a given problem is to invest in a for-profit company,” says Jacquelline Fuller, head of advocacy and communications at Google.org.

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7. 7 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.

8. 8 Society as the Macroenvironment Social Economic Political Technological

9. 9 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

10. 10 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

11. 11 Business and Stakeholder (Pg. 9) Relationship Figure 1-2

12. 12 Business and Stakeholder Relationships Business CommunityGovernment Employees Consumer Owner Environmental groups General public Local State Federal Corporate raiders Private citizens Institutional Investors Consumer activists Product liability threats Unions Older employees Women and minorities Civil Liberties activists

13. 13 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

14. 14 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

15. 15 Factors in the Social Environment  Affluence and education  Awareness through television and the Internet  Revolution of rising expectations  Entitlement mentality  Rights movement  Victimization philosophy

16. 16 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

17. 17 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

18. 18 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

19. 19 Focus of the Book Managerial Approach Business Ethics Stakeholder Management

20. 20 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.

21. 21 Ethics Refers to issues of right, wrong,fairness, and justice. Business Ethics Focuses on ethical issues that arisein the commercial realm. Business Ethics

22. 22 Stakeholders Individuals or groups with whichbusiness interacts who have avested interest in the firm.  External stakeholders  Internal stakeholders Stakeholders

23. 23 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

24. 24 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

25. 25 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

26. 26 Course Structure  www.sba.pdx.edu web page (current term) PPT’s, handouts and other useful “tools” www.sba.pdx.edu  Publishers web page (check it out – http://carroll.swlearning.com) pg. “ix” in your text http://carroll.swlearning.com  Why NAME Cards?!?  Course Overview – NO ELECTRONICS  Course Calendar  Figure two hours outside class for every one hour spent in class (seat time)

27. Case Analysis: (1)Problem Analysis (summation, central conflict): (2) Stakeholders: General (pg. 9) (several) Specific (case) Govt. Employees Consumers Owners Community (3) Recommendation: (HARDEST SECTION) Model (page #, statement, application to case) Pros: Cons:

28. 28 Next Time  Chapter 2  Rough draft the WalMart Merchant of Doom – we will review in class. Sample only…  Welcome!  See you Wednesday!