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 BA 385 - Business Environment Week 1 ~ Part 2

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 BA 385 - Business Environment Agenda Chapter 1 - Business & Society –Society as a Macroenvironment –Pluralism –Stakeholders –Special Interests –Business Criticism

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 BA 385 - Business Environment 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?

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 BA 385 - Business Environment Business vs. Society 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

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 BA 385 - Business Environment Society as the Macroenvironment Four segments 1.Social environment focuses on demographics, lifestyles and social values 2.Economic environment focuses on the economy 3.Political environment focuses on the legislative process, election process and the interaction between firms, politics and government 4.Technological environment focuses on the changes in technological advancement

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 BA 385 - Business Environment 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

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 BA 385 - Business Environment Business/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

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 BA 385 - Business Environment Special-Interest Society Special interests make life more complex for business Special interest groups number in the tens of thousands Each pursue their own limited agenda More active, intense, diverse and focused Attract a significant following increasing revenue and 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 BA 385 - Business Environment Cycle of Criticism A Changed Social Contract Increased Concern for Societal Environment Business Criticism AffluenceEducationAwareness Factors in the Social Environment Rising Expectations Entitlement Mentality Victimization Philosophy Rights Movement

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 BA 385 - Business Environment Factors in the Social Environment Affluence and education Awareness through television Revolution of rising expectations Entitlement mentality Rights movement Victimization philosophy

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 BA 385 - Business Environment Expectations versus Performance Society’s Expectations of Business Performance Social Performance: Expected and Actual 1960s1990s Time Social Problem Business’s Actual Social Performance Social Problem

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 BA 385 - Business Environment 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

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 BA 385 - Business Environment Business Criticism: Levels and Spheres of Corporate Power Spheres Economic Social/Cultural Individual Technological Environmental Political Levels: Macro Level (the business system) Intermediate Level (several firms) Micro Level (single firm) Individual Level (single executive)

15. 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