The

Business
and Society
Relationship
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© 2005 by Nelson, a division of Thomson Canada Limited. 1
Chapter One Objectives
• Characterize the relationship of business and society
• Describe the strengths and weaknesses of pluralism
• Clarify how our pluralistic society has become a special-
interest society
• Identify and discuss the factors leading up to business
criticism
• Identify the major criticisms of business and characterize
business’s general response
• Identify the major themes of the book: managerial
approach, ethics, and stakeholder management

© 2005 by Nelson, a division of Thomson Canada Limited. 2

Chapter One Outline
• Business and Society • Criticism and
• Society as the Corporate
Macroenvironment Response
• Our Pluralistic Society
• Focus of the
• Our Special-Interest Book
Society
• Structure of the
Book
• Summary

© 2005 by Nelson, a division of Thomson Canada Limited. 3

Introduction to Chapter
One
The Business and Society
Relationship
• Specific incidents versus societal concerns
– Firestone and discrimination
• Major Firestone issues:
– Ethical behaviour
– Social responsibility
– Corporate role and responsibility

© 2005 by Nelson, a division of Thomson Canada Limited. 4

Business and Society
Relationship
Business is the collection of private,
commercially oriented (profit-oriented)
organizations.
Society is a numerous interest groups,
more or less formalized organizations,
and a variety of institutions.
Community Government

Business
Owners Employees

Consumers

© 2005 by Nelson, a division of Thomson Canada Limited. 5

Society as the
Macroenvironment
The macroenvironment is
the total societal/business
context and composed of four
segments:
• Social •Political

• Economic •Technolog
y

© 2005 by Nelson, a division of Thomson Canada Limited. 6

 Society as the
Macroenvironment
our segments of the Macroenvironme
• Social environment
• Economic environment
• Political environment
• Technological environment

© 2005 by Nelson, a division of Thomson Canada Limited. 7

 Pluralistic Society
Diffusion of Power
Strengths Weaknesses
• Prevents concentration of • Pursuit of self-interest
power
• Proliferates organizations
• Maximizes freedom
with similar goals
• Disperses individual
allegiances • Forces conflicts
• Creates diversified • Promotes inefficiency
loyalties
• Provides safeguards

© 2005 by Nelson, a division of Thomson Canada Limited. 8

 The Stakeholder
Relationship
Environmental Groups
Local
Provincial
General Public
Federal
Community Government
Unions
Corporate
Raiders Business Older
Employees

Private Owners Employees

Women
Citizens
Consumers Minorities
Institutional Civil Activists
Investors

Consumer Activists Liability Threats

© 2005 by Nelson, a division of Thomson Canada Limited. 9

Special-Interest Society
• Makes life more complex for
business
• Pursue their own agenda
• Are both focused and diverse
• Generate power and money

© 2005 by Nelson, a division of Thomson Canada Limited. 10

 Criticism and Response

Affluence Education Awareness

Factors in the Social Environment
Rising Expectations Rights Movement

Entitlement Victimization

Business Criticism

Environmental The New Social

Concerns Contract

© 2005 by Nelson, a division of Thomson Canada Limited. 11

 Business Criticism
Social Environment Factors
• Affluence and • Entitlement
education mentality
• Awareness through
the media • Rights
• Revolution of Rising movement
expectations

© 2005 by Nelson, a division of Thomson Canada Limited. 12

Expectations versus
Social Performance
Society’s
Expectations
of Business
Performance
Expected and Actual
Social Performance:

Social
Problem

Social Business’
Problem Actual Social
Performance

1960s 2000s

© 2005 by Nelson, a division of Thomson Canada Limited. 13

Business Criticism
Power
• Use and abuse of power
– The ability to produce a desired
effect
• Iron Law of Social
Responsibility
– The use of power or its
inevitable loss
© 2005 by Nelson, a division of Thomson Canada Limited. 14
Business Criticism
Levels and Spheres of
Corporate Power
Levels Macro Intermediat Micro Individual
Spheres Level e Level Level Level

Economic
Social/Cultur
al
Individual
Technologica
l
Environment
al
© 2005 by Nelson, a division of Thomson Canada Limited. 15
Political
Business Criticism
Response
Elements In the Social Contract
Laws or Regulations:
“Rules of the Game”
Stakeholder
Business Groups

Shared Understanding

© 2005 by Nelson, a division of Thomson Canada Limited. 16

Focus of the Book
• The managerial approach
• The ethics theme
• The stakeholder
management theme

© 2005 by Nelson, a division of Thomson Canada Limited. 17

 Structure
BUSINESS, SOCIETY, AND STAKEHOLDERS
1. The Business and Society Relationship
2. Corporate Citizenship: Social Responsibility,
PART Responsiveness, and Performance
ONE
3. The Stakeholder Approach to Business, Society,
and Ethics

STRATEGIC MANAGEMENT FOR CORPORATE

STAKEHOLDER PERFORMANCE

PART
4. Strategic Management and Corporate Public
TWO Affairs
5. Issues Management and Crisis Management

© 2005 by Nelson, a division of Thomson Canada Limited. 18

 Structure
BUSINESS ETHICS AND
MANAGEMENT
6. Business Ethics Fundamentals
PART 7. Personal and Organizational Ethics
THREE 8. Business Ethics and Technology
9. Ethical Issues in the Global Arena

EXTERNAL STAKEHOLDER ISSUES

10. Business, Government, and Regulation
11. Consumer Stakeholders: Information Issues
PART and Responses
FOUR 12. Consumer Stakeholders: Product and Service
Issues
13. The Natural Environment as Stakeholder
14. Business and Community Stakeholders

© 2005 by Nelson, a division of Thomson Canada Limited. 19

 Structure

INTERNAL STAKEHOLDER ISSUES

15. Employee Stakeholders and Workplace Issues

PART FIVE
16. Employee Stakeholder: Privacy, Safety, and
Health
17. Employment Discrimination and Employment
Equity
18. Owner Stakeholders and Corporate
Governance
CASES

© 2005 by Nelson, a division of Thomson Canada Limited. 20

Selected Key Terms
• Affluence • Political environment
• Business • Revolution of rising
• Business ethics expectations
• Business power • Rights movement
• Economic environment • Social contract
• Education • Social environment
• Entitlement mentality • Social problem
• Ethics • Society
• Iron law of responsibility • Special-interest society
• Macroenvironment • Stakeholders
• Pluralism • Technological
environment

© 2005 by Nelson, a division of Thomson Canada Limited. 21