Part 1 Chapter 1

The Business and Society Relationship

2012 South-Western, a part of Cengage Learning 1

Learning Outcomes
1. Characterize business, society, and their 2.
interrelationships. Describe pluralism and identify its attributes, strengths, and weaknesses. Clarify how our pluralistic society has become a special-interest society. Identify, discuss, and illustrate the factors leading up to business criticism. Single out the major criticisms of business and characterize businesss general response.
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Business and Society

Business
The collection of private, commercially oriented organizations ranging in size from sole proprietorships to corporate giants.
A community, a nation, or a broad group of people with common traditions, values, institutions, and collective activities and interests.

Society

Business and society interrelate in a macroenvironment as stakeholders.

2012 South-Western, a part of Cengage Learning

Pluralism
A society in which citizens can legally and publicly hold multiple competing ethical views and are allowed to choose for themselves what ethical beliefs if any they wish to hold; often mistaken for a society which tolerates different ethical beliefs or groups of people and holds that all are equal, which is correctly identified as moral relativism. A diffusion of power among a societys many groups. It is not a monoculture like a lawn of only green grass, it is a field of wildflowers full of color and life. Involves decentralization and diversity of power concentration. Power is dispersed among many groups and people. It is not in the hands of any single institution (e.g. Business, government, labor or the military) or a small number of groups.

2012 South-Western, a part of Cengage Learning

Strength of Pluralistic Society

1. Prevents power from being concentrated in the hands of a few. 2. Maximizes freedom of expression and action and strikes a balance between monism (social organization into one institution) and anarchy (social organization into an infinite number of persons)
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Strengths of Pluralistic Society

(cont.)
3. In which the allegiance of individuals to groups is dispersed 4. Crates a widely diversified set of loyalties to many organizations and minimizes the danger that a leader of any one organization will be left uncontrolled. 5. Provides a built-in set of checks and balances, in that groups can exert power over one another with no single organization dominating and becoming overly influential.
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Weaknesses of Pluralistic Society

1. Might creates an environment in which diverse institutions pursue their own self-interest, with the result that there is no unified direction to bring together individual pursuits. 2. Groups and institutions grow to the extent that their goals tend to overlap, thus, causing confusion as to which organizations best serve which functions.
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Weaknesses of Pluralistic Society (cont.)

3. forces conflict onto center stage because of its emphasis on autonomous groups, each pursuing its own objectives.

2012 South-Western, a part of Cengage Learning

Special Interest Groups

SIG representing consumers, employees, the natural environment, government and business In health care doctors, hospitals, drug companies, insurance, etc. Pursue their own focused agendas Are active, intense, diverse and focused Can attract a significant followers Often work at cross purposes, with no unified goals A special-interest society is pluralism taken to the extreme
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Factors in the Social Environment

Affluence and education
Create higher expectations of major institutions. Growing public awareness through television, movies, and the Internet. Creates a social problem, a gap between societal expectations for social conditions and social realities. Entitlement mentality someone owned smthg. Rights movement nonsmokers rights; women voting rights; early education rights Victimization philosophy unjust treatment; after 9/11 Muslim were badly treated in the USA.
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Revolution of rising expectations

2012 South-Western, a part of Cengage Learning

http://www.revivingworkethic.com/entitlemen t-thinking-exposed/

2012 South-Western, a part of Cengage Learning

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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. To improve quality of life or exploit it through pollutions, slavery, lack of transparency, sinful pay of the CEOs, etc.
http://www.businessweek.com/stories/2003 -10-05/is-wal-mart-toopowerfulhttp://www.businessweek.com/sto ries/2003-10-05/is-wal-mart-too-powerful
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Examples of Wal-Mart abusive power

An anti-union company which is widely blamed for the sorry state of retail wages in America. On average, Wal-Mart sales clerks -"associates" in company parlance -- pulled in $8.23 an hour, or $13,861 a year The most hotly contested battleground at the moment is Contra Costa County, near San Francisco. In June, county supervisors enacted an ordinance that prohibits any retail outlet larger than 90,000 square feet from devoting more than 5% of its floor space to food or other non-taxable goods. Wal-Mart promptly gathered enough signatures to force a referendum, scheduled for March.
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2012 South-Western, a part of Cengage Learning

Business Criticism: Use and Abuse of Power

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.
If business does not meet the challenge of social responsibility, then government reform legislation will force it to meet its obligations. Example Saudization: The Saudi government has enacted policies to promote Saudization, including warnings that "companies which fail to comply with Saudization regulations will not be awarded government contracts"
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2012 South-Western, a part of Cengage Learning

Elements in the Social Contract

Laws or Regulations: Rules of the Game
Business Society or Societal Stakeholder Groups

Shared Understandings of Each Other

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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 businesss activities as it attempts to interact with major stakeholder groups.
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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.
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Stakeholders
Stakeholders
Individuals or groups with which business interacts and who have a vested interest in the firm.
External stakeholders Internal stakeholders

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Key Terms
Affluence Business Business ethics Business power Society Economic environment Education Ethics Iron Law of Responsibility Macroenvironment Pluralism Revolution of rising expectations Rights movement Social contract Society Special-interest society Stakeholder management Stakeholders Sustainability

2012 South-Western, a part of Cengage Learning

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Discussion Questions
1. What is the one greatest strength of a pluralistic society? What is the one greatest weaknesses? Do these characteristics work for or against business? 2. Identify and explain the major factors in the social environment that create an atmosphere in which business criticism takes place and prospers. How are the factors related to one another? 3. Explain how business response to the business criticism.
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Experiential exercise
You are required to go through a newspaper on a given day of your choosing and identify news articles that make reference to any special interest group. You will identify and highlight special interest groups in those articles to understand how much news is "driven" to influence public opinion on a certain issue.

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http://www.naturalnews.com/037315_Monsa nto_GM_corn_breakfast_cereals.html

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Genetically modified foods (GMO)

Foods derived from genetically modified organisms; specific changes introduced into specifically, crops DNA by genetic engineering techniques. Commercial sale in 1994 - delayed ripening tomato; genetically modified foods are soybean, corn, canola and cotten seed oil engineered for faster growth, resistance to pathogens, production of extra nutrients, or any other beneficial purpose GM crops pose no greater risk to human health than conventional food, critics have objected to GM foods on several grounds, including safety issues, ecological concerns, and economic concerns raised by the fact GM plants/livestock that are food sources are subject to intellectual property law.
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