2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-1 Chapter 1 The Business/Society Relationship 1 The Business/Society Relationship Search the Web Interested in socially responsible investing? Visit Good Money’s web site at: www.goodmoney.com/directry_codes.htm. www.goodmoney.com/directry_codes.htm

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-2 Chapter 1 The Business/Society Relationship 2 Chapter One Objectives Characterize business, society, and their relationship to each other Describe pluralism and identify its strengths and weaknesses Clarify how our pluralistic society became a special- interest society Identify and discuss factors leading up to the criticism of business Identify the major criticisms of business and characterize business' response Identify the major themes of this book: managerial approach, ethics, and stakeholder management

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-3 Chapter 1 The Business/Society Relationship Chapter One Outline Business and Society Society as the Macroenvironment Our Pluralistic Society Our Special-Interest Society Business Criticism and Corporate Response Focus of the Book Structure of the Book Summary

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-4 Chapter 1 The Business/Society Relationship Introduction to Chapter One The Business and Society Relationship Specific incidents versus broad societal concerns –Firestone tires versus discrimination Questions arise as to the behavior of the firm –Is the firm’s behavior ethical? –Is the firm’s behavior socially responsible? –What is the firm’s correct response? –What is the role of the firm in society?

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-5 Chapter 1 The Business/Society Relationship Business and Society Relationship Business is the collection of private, profit-oriented organizations. Society is a broad group of people and other organizations, interest groups, a community, a nation. Business and society interrelate in a macroenvironment as stakeholders. Business Community Consumers Owners Government Employees

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-6 Chapter 1 The Business/Society Relationship Society as the Macroenvironment The macroenvironment is the total societal context in which the firm resides and is composed of four segments: Social Economic Political Technological

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-7 Chapter 1 The Business/Society Relationship Society as the Macroenvironment Four segments of the Macroenvironment Social environment focuses on demographics, lifestyles and social values Economic environment focuses on the economy Political environment focuses on the legislative process, election process and the interaction between firms, politics and government Technological environment focuses on the changes in technological advancement

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-8 Chapter 1 The Business/Society Relationship Pluralistic Society Strengths Prevents concentration of power Maximizes freedom of expression Disperses individual allegiances Creates diversified set of loyalties Provides checks and balances Weaknesses Pursuit of self-interest Proliferates organizations and groups with overlapping goals Forces conflicts to center stage Promotes inefficiency Diffusion of Power

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-9 Chapter 1 The Business/Society Relationship Business and Selected Stakeholder Relationships Business Community Consumers Owners Government Employees General Public Environmental Groups Local State Federal Corporate Raiders Private Citizens Institutional Investors Consumer ActivistsProduct Liability Threats Unions Older Employees Women Minorities Civil Liberties Activists

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-10 Chapter 1 The Business/Society Relationship Special-Interest Society Special interests make life more complex for business Special interest groups number in the tens of thousands Special interest groups each pursue their own limited agenda Special interest groups are more active, intense, diverse and focused Special interest groups attract a significant following increasing revenue and power

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-11 Chapter 1 The Business/Society Relationship Social Environment, Criticism, and Corporate Response A Changed Social Contract Increased Concern for Societal Environment Business Criticism AffluenceEducationAwareness Factors in the Social Environment Rising Expectations Entitlement MentalityVictimization Philosophy Rights Movement

13. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-12 Chapter 1 The Business/Society Relationship Business Criticism Affluence and education Awareness through television Revolution of rising expectations Entitlement mentality Rights movement Victimization philosophy Factors in the Social Environment

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-13 Chapter 1 The Business/Society Relationship Society’s Expectations versus Actual Social Performance Society’s Expectations of Business Performance Social Performance: Expected and Actual 1960s1990s Time Social Problem Business’s Actual Social Performance Social Problem

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-14 Chapter 1 The Business/Society Relationship Business Criticism Power Use and abuse of power –Business power refers to the ability or capacity to produce an effect or to bring an influence to bear on a situation or people Iron Law of Social Responsibility –In the long run, those who do not use power in a manner society considers responsible will tend to lose it

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-15 Chapter 1 The Business/Society Relationship Business Criticism Levels and Spheres of Corporate Power Macro Level Intermediate Level Micro LevelIndividual Level Economic Social/Cultural Individual Technological Environmental Political Levels Spheres

17. Business Criticism Response Elements In the Social Contract Business Society or Societal Stakeholder Groups Laws or Regulations: “Rules of the Game” Two-Way Shared Understandings of Each Other Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved 1-16

18. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-17 Chapter 1 The Business/Society Relationship Focus of Book Managerial approach Ethics theme Stakeholder management theme

19. Structure and Flow of Book 1.The Business and Society Relationship 2.Corporate Citizenship: Social Responsibility, Responsiveness and Performance 3.The Stakeholder Approach to Business Part One BUSINESS, SOCIETY, AND STAKEHOLDERS STRATEGIC MANAGEMENT FOR CORPORATE STAKEHOLDER PERFORMANCE 4.Strategic Management and Corporate Affairs 5.Issues Management and Crisis Management Part Two Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved 1-18 Chapter 1 The Business/Society Relationship

20. Structure and Flow of Book BUSINESS ETHICS AND MANAGEMENT 6.Business Ethics Fundamentals 7.Personal and Organizational Ethics 8.Business Ethics and Technology 9.Ethical Issues in the Global Arena 10.Business, Government and Regulation 11.Business’s Influence on Government and Public Policy 12.Consumer Stakeholders: Information Issues and Responses 13.Consumer Stakeholders: Product and Service Issues 14.The Natural Environment as Stakeholder 15.Business and Community Stakeholders EXTERNAL STAKEHOLDER ISSUES Part Three Part Four Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved 1-19 Chapter 1 The Business/Society Relationship

21. Structure and Flow of Book INTERNAL STAKEHOLDER ISSUES 16.Employee Stakeholders and Workplace Issues 17.Employee Stakeholder: Privacy, Safety, and Health 18.Employment Discrimination and Affirmative Action 19.Owner Stakeholders and Corporate Governance Part Five Cases Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved 1-20 Chapter 1 The Business/Society Relationship

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-21 Chapter 1 The Business/Society Relationship Selected Key Terms Affluence Business Business ethics Business power Economic environment Education Entitlement mentality Ethics Iron Law of Responsibility Macroenvironment Pluralism Political environment Revolution of rising expectations Rights movement Social contract Social environment Social problem Society Special-interest society Stakeholders Technological environment