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 1 The Business and Society Relationship © 2012 South-Western, a part of Cengage Learning 2

Learning Outcomes 1. Characterize business, society, and their interrelationships. 2. Describe pluralism and identify its attributes, strengths, and weaknesses. 3. Clarify how our pluralistic society has become a special- interest society. 4. Identify, discuss, and illustrate the factors leading up to business criticism. 5. Single out the major criticisms of business and characterize business’s general response. 6. Explain the major themes of the book: managerial approach, ethics, sustainability and stakeholder management. 3 © 2012 South-Western, a part of Cengage Learning

Chapter Outline Business and Society Society as the Macroenvironment A Pluralistic Society A Special-Interest Society Business Criticism and Corporate Response Focus of the Book Structure of the Book Summary Key Terms Discussion Questions 4 © 2012 South-Western, a part of Cengage Learning

Business and Society Business The collection of private, commercially oriented organizations ranging in size from sole proprietorships to corporate giants. Society A community, a nation, or a broad group of people with common traditions, values, institutions, and collective activities and interests. Business and society interrelate in a macroenvironment as stakeholders. A macroenvironment is the complete societal context in which the organization resides. © 2012 South-Western, a part of Cengage Learning 5

Conceptualizing the Macroenvironment © 2012 South-Western, a part of Cengage Learning 6

Segments of the Macroenvironment © 2012 South-Western, a part of Cengage Learning 7

Pluralism A diffusion of power among a society’s many groups. Involves decentralization and diversity of power concentration. 8 © 2012 South-Western, a part of Cengage Learning

Special Interest Groups Make life more complex for business and government Can number in the tens of thousands in some societies Pursue their own focused agendas Are active, intense, diverse and focused Can attract a significant following Often work at cross purposes, with no unified goals  A special-interest society is pluralism taken to the extreme 9 © 2012 South-Western, a part of Cengage Learning

Factors in the Social Environment Affluence and education Create higher expectations of major institutions. Growing public awareness through television, movies, and the Internet. Revolution of rising expectations Creates a social problem, a gap between societal expectations for social conditions and social realities. Entitlement mentality Rights movement Victimization philosophy 10 © 2012 South-Western, a part of Cengage Learning

Business Criticism: Use and Abuse of Power Business Power The ability or capacity to produce an effect or to bring influence to bear on a situation or people. Iron Law of Responsibility In the long run, those who do not use power in a manner society considers responsible will tend to lose it. 11 © 2012 South-Western, a part of Cengage Learning

Elements in the Social Contract © 2012 South-Western, a part of Cengage Learning 12 Laws or Regulations: “Rules of the Game” Shared Understandings of Each Other Society or Societal Stakeholder Groups Business

Focus of the Book 13 Managerial Approach Business Ethics Stakeholder Management Sustainability © 2012 South-Western, a part of Cengage Learning

Managerial Approach What changes are occurring or will occur in society’s expectations of business that mandate business’s taking the initiative with respect to particular societal or ethical problems? Did business, in general, or our firm, in particular, have a role in creating these problems? Can we reduce broad social problems to a size that can be effectively addressed from a managerial point of view? What are the specific problems, alternatives for solving these problems, and implications for management’s approach to dealing with social issues? How can we best plan and organize for responsiveness to socially related business problems? 14 © 2012 South-Western, a part of Cengage Learning

Urgent versus Enduring Issues Short-Term Issues or crises arise on the spur of the moment and management must formulate quick responses. Long-Term Issues or problems are a long-term concern and management must develop a thoughtful organizational response. 15 © 2012 South-Western, a part of Cengage Learning

Business Ethics Ethics Refers to issues of right, wrong, fairness, and justice. Business Ethics Focuses on ethical issues that arise in the commercial realm.  Ethics questions permeate business’s activities as it attempts to interact with major stakeholder groups. 16 © 2012 South-Western, a part of Cengage Learning

Sustainability Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs. Has become one of businesses’ most pressing mandates. Includes the following criteria: Environmental Economic Social  Concerns businesses’ abilities to survive and thrive over the long term. 17 © 2012 South-Western, a part of Cengage Learning

Stakeholders Individuals or groups with which business interacts and who have a vested interest in the firm.  External stakeholders  Internal stakeholders 18 © 2012 South-Western, a part of Cengage Learning

Key Terms Affluence Business Business ethics Business power Society Economic environment Education Entitlement mentality Ethics Iron Law of Responsibility Macroenvironment Managerial approach Pluralism Political environment Revolution of rising expectations Rights movement Social contract Social environment Social problem Society Special-interest society Stakeholder management Stakeholders Sustainability Technological environment Victimization philosophy © 2012 South-Western, a part of Cengage Learning 19