UNIT:1 BUSINESS AND SOCIETY

Business may be defined as the collection of private, commercially oriented

(profit-oriented) organizations, ranging in size from one-person proprietorships
(such as Sons of Italy Pizzeria, Gibsons Mens Wear, and Zims Bagels) to
corporate giants (such as Johnson & Johnson, GE, Coca-Cola, Dell Inc., and UPS).
Between these extremes, of course, are many medium-sized proprietorships,
partnerships,
and
corporations.
An organization or economic system where goods and services are exchanged for
one another or for money. Every business requires some form of investment and
enough customers to whom its output can be sold on a consistent basis in order to
make a profit. Businesses can be privately owned, not-for-profit or state-owned. An
example of a corporate business is PepsiCo, while a mom-and-pop catering
business
is
a private
enterprise.

BUSINESS AND SOCIETY

Society may be defined as a community, a
nation, or a broad grouping of people having
common traditions, values, institutions, and
collective activities and interests.
As such, when we speak of business and
society relationships, we may in fact be
referring to business and the local community
(business and Atlanta), business and the
country as a whole, business and the global
community, or business and a specific group of
people (consumers, investors, minorities).

Relationship between Business and

Society
Business: Any organization that is
engaged in making a product or
providing a service for a profit
Society: Human beings and the social
structures they collectively create
Business and society are highly
interdependent

Relationship between Business and

Society
We borrow General Systems Theory (GST) from
Biology to explain this relationship; first
introduced in 1940s
Theory posits that organisms cannot be understood in
isolation, even though they have clear boundaries;
they can only be understood in relationship to their
surroundings

Adapted to management theory means that

business firms are embedded in a broader social
environment with which they constantly interact
Business and society together form an interactive
social system (shown graphically in the following slide)

Relationship between Business and

Society

Relationship between Business and Society

Systems theory helps us understand how business and
society, taken together, form an interactive social system .
Each needs the other, and each influences the other. They
are entwined so completely that any action taken by one
will surely affect the other. They are both separate and
connected.
Business is part of society, and society penetrates far and
often into business decisions.
In a world where global communication is rapidly
expanding, the connections are closer than ever before.
Throughout this book we discuss examples of organizations
and people that are grappling with the challenges of, and
helping to shape, businesssociety relationships.

Business in Society

Looking at a variety of perspectives

Shareholders / Managers
Employees
Unions
Government
Environmentalists
Media
Other businesses
Consumers

Business System

Types of Businesses
Sole / Single Proprietorship
One owner

Partnership
Two or more owners

Corporation
Separate legal entity
Private or public

Forces That Shape the Business

and Society Relationship

Forces That Shape the Business and Society

Relationship
The figure above shows the six dynamic forces that
powerfully shape the business and society relationship.
These dynamic forces, the constant changes in ethical
and
societal
expectations,
the
global
economy,governmentpolicies, natural environment,
and technology create the setting in which businesses
interact with their many stakeholders such as
employees,
customers,
stockholders,
suppliers,
creditors, communities, media, governments, and
others.
This relationship between businesses and society is
continually changing in uncertain ways.

Societys Expectations
Complex
Not focusing on right and wrong
Analysis of problems and issues from
a variety of perspectives

Changing social expectations

growing emphasis o ethical values
More than simply a legal or moral responsibility, ethics need to
become an organizational priority. Organizational leaders have a lot
on their minds in todays highly competitive world. They must keep
abreast of rapid technological advancements, competitors products
and services, the effects of globalization, and opportunities and
threats within their own industry, to name the most obvious.
Leaders must also keep a constant eye on the mission, vision,
values, culture, strategy and goals of their own organizations. In the
midst of all of this complexity, its not easy to find room on the
organizational plate for another major priority. However, to succeed
in the 21st century, organizations will have to figure out how to make
ethics a priority.
Priorities are those few things that are deemed most important. Many
things are important, some more and some less important, but only a
few things are most important. Ethical values need to achieve
recognition as among the elite, most important success factors in
modern organizations.

Changing social expectations

growing emphasis o ethical values
As an organizational priority, ethics will not only affect
decision-making but also, and ultimately, institutional
culture. To achieve this ideal, there must be an alignment
process that integrates business ethics with mission,
vision, values, strategies and goals. Ethical values are
essentially social in nature, therefore, this alignment
process will be concerned with relationships and defining
relational expectations. The goal of an ethical
organizational culture is the greater good of all. Internal
relationships between leaders and followers, as well as
external relationships with clients, customers, vendors
and the community are all prized. As a result, people are
treated well consistently and an ethical culture emerges.

The changing workplace external

factors influencing the workplace
The uncontrollable forces in the external
environment are:
Competition
Government policies
Natural forces
social and cultural forces
Demographic factors
Technological changes

Government intervention
An economicinterventionis an action taken by a
governmentor international institution in a
market economy in an effort to impact the
economy beyond the basic regulation of fraud and
enforcement of contracts and provision of public
goods.
Government intervention refers to the ways in
which a government regulates or interferes with
the various activities or decisions made by
individuals
or
organizations
within
its
jurisdiction.The effects of this can be positive or
negative.

Government intervention
The government tries to combat market inequities through
regulation, taxation, andsubsidies.
Governments may alsointervenein markets to promote
general economic fairness.
Maximizing socialwelfareis one of the most common and
best understood reasons for governmentintervention.
Examples of this include breaking upmonopoliesand
regulatingnegativeexternalitieslike pollution.
Governments may sometimes intervene in markets to
promote other goals, such as national unity and
advancement.

Women at Work
Women remain underrepresented across organizations
especially at senior levels of leadership.
Jul 13, 2016-In an important landmark in Nepals judicial
history, Chief Justice Sushila Karki formally assumed office on
Monday after the Parliamentary Hearing Special Committee
unanimously endorsed her appointment, making her the first
woman to head the countrys judiciary.
After President Bidhya Devi Bhandari and House Speaker
Onsari Gharti Magar, Karki has thus become the third woman
to hold a top constitutional position.

Women at Work

corporations efforts to promote

diversity
Workplace diversity makes good business sense.
Understanding differences between people from a
broad spectrum of backgrounds can help companies
find ways of appealing to a broader range of
customers and employees. To promote diversity in
the workplace, companies can take an active role by
establishing diversity programs and valuing diversity
in all aspects of the business.
Establish Task Forces
Diversity Policies
Hiring and Promotion
Communicate Effectively

corporations efforts to promote

diversity
Diversity in the workplace today can include some of
the following:
Race
Ethnicity
Gender
Sexual orientation
Religious affiliation
Generation
Disability
Personality type
Thinking style

corporations efforts to promote

diversity
Global company should have solutions
in place to monitor and retain a
talented and diverse workforce, such
as any of the following:
Global mentoring programs
Employee resource groups
Multicultural talent management
Strategic partnership development
e-Learning modules

Unit: II fundamental of CSR

Corporate Social Responsibility(CSR) is the
responsibility of an organization for the impacts of its
decisions and activities on society, the environment
and its own prosperity, known as the triple bottom
line of people, planet, and profit.
Social responsibility means that individuals and
companies have a duty to act in the best interests of
their environments and of society as a whole. Social
responsibility as it applies to businesses is known
ascorporate social responsibility, orCSR.
Corporate Responsibilityis the action we take to
ensure we are not only a responsibleemployer
towards our colleagues but also that we recognize and
manage our impact on the wider community, for
example reducing our carbon footprint and maintaining
environmentallyresponsiblebusiness practices.

Basic elements of CSR

Historical evolution of CSR

Historical evolution of CSR

Drivers of CSR

Drivers of CSR

Benefits to CSR to Business and Society

Company benefits:
Improved financial performance;
Lower operating costs;
Enhanced brand image and reputation;
Increased sales and customer loyalty;
Greater productivity and quality;
More ability to attract and retain employees;
Reduced regulatory oversight;
Access to capital;
Workforce diversity;
Product safety and decreased liability.
2. Benefits to the community and the general public:
Charitable contributions;
Employee volunteer programmes;
Corporate involvement in community education, employment and homelessness
programmes;
Product safety and quality.

Benefits to CSR to Business and Society

3. Environmental benefits:
Greater material recyclability;
Better product durability and
functionality;
Greater use of renewable resources;
Integration of environmental
management tools into business
plans, including life-cycle assessment
and costing, environmental
management standards, and eco-

Argument for and against CSR

For

Public Expectation
Long run profit
Ethical obligation
Public image
Better environment
Stockholder interests

Against
violation of profit
maximization
Dilution of purpose
to much power
Lack of skills
Lack of accountability
Lack of broad public support

Shareholder and stakeholder Theories

Ashareholderowns part of a company through stock
ownership, while a stakeholderis interested in the
performance of a company for reasons other than just stock
appreciation.
Stakeholderscould be: employees who, without the
company, would not have jobs.
Ashareholderorstockholderis an individual or institution
(including a corporation) that legally owns a share of stock in a
public or private corporation.Shareholders are the owners of
a limited company. They buy shares which represent part
ownership of a company.
Astakeholderis any person, organization, social group, or
society at large that has a stake in the business.
Thus,stakeholderscan be internal or external to the
business. A stake is a vital interest in the business or its
activities.

Shareholder and stakeholder Theories

stakeholder Theories

Stakeholder theory
Stakeholder theory, which has been described by Edward
Freeman and others, is the mirror image of corporate
social responsibility.
Instead of starting with a business and looking out into
the world to see what ethical obligations are there,
stakeholder theory starts in the world.
It lists and describes those individuals and groups who
will be affected by (or affect) the companys actions and
asks, What are their legitimate claims on the business?
What rights do they have with respect to the companys
actions? and What kind of responsibilities and
obligations can they justifiably impose on a particular
business?

In a single sentence, stakeholder theory affirms

thatthose whose lives are touched by a corporation hold
a right and obligation to participate in directing it.

Stakeholder theory

Corporate Citizenship
Corporate Citizenshipis a global management consultancy
specializing in sustainability andcorporate responsibility.
We work withcorporateclients around the world to achieve their
commitments to responsible business behaviors and sustainable
practices.
Corporate
citizenship
involves
the
social
responsibility
ofbusinessesand the extent to which they meet legal, ethical and
economic responsibilities, as established by shareholders. The
goal is to produce higherstandards of livingandquality of lifefor
the communities that surround them and still maintain profitability
forstakeholders.
The demand for socially responsiblecorporations continues to
grow, encouraging investors, consumers and employees to use
their individual power to negatively affect companies that do not
share
their
values.

Drivers of Corporate Citizenship

What drives companies to embrace corporate citizenship?
According to one major survey, there are both internal (to the
companies) motivators and external pressures that drive
companies toward corporate citizenship.
Internal motivators include:
Traditions and values
Reputation and image
Business strategy
Recruiting/retaining employees
External pressures include:
Customers and consumers
Expectations in the community
Laws and political pressures

Benefits of Corporate Citizenship

Improved employee relations (e.g., improves employee recruitment,

retention, morale, loyalty, motivation, and productivity)
Improved customer relationships (e.g., increases customer loyalty,
acts as a tiebreaker for consumer purchasing, enhances brand
image)

Improved business performance (e.g., positively impacts bottomline returns, increases competitive advantage, encourages crossfunctional integration)

Enhanced companys marketing efforts (e.g., helps create a positive

company image, helps a company manage its reputation, supports
higher prestige pricing, and enhances government affairs activities)

Corporate Social Performance

Corporate
Social
Performance(CSP)
is
an
increasingly important concept used
to ensure the private sector has a
positive impact on communities,
employees and consumers. This is
especially so in geographies where
basic governance, the rule of law and
accountability
mechanisms
are
lacking or limited.

Corporate Social
Performance
The performance focus is intended to suggest that what really
matters is what companies are able to accomplishthe results or
outcomes of their acceptance of social responsibility and adoption
of a responsiveness philosophy.
In developing a conceptual framework for CSP, we not only have
to specify the nature (economic, legal, ethical, philanthropic) of
the responsibility, but we also need to identify a particular
philosophy, pattern, mode, or strategy of responsiveness.
Finally, we need to identify the stakeholder issues or topical areas
to which these responsibilities are manifested.
The issues, and especially the degree of organizational interest in
the issues, are always in a state of flux.
As the times change, so does the emphasis on the range of
social/stakeholder
issues
that
business
must
address

Carrolls CSP Model

Pyramid of CSR

Corporate Social
Performance
Social responsibility categories
economic, legal, ethical, and discretionary
(philanthropic)
Philosophy (or mode) of social
responsiveness e.g., reaction, defense,
accommodation, and pro-action
Social (or stakeholder) issues involved
consumers, environment, employees, etc.)

Unit: III Business and its Stakeholders

Stakeholders play an integral part in the development and ultimate
success of an organization.
Broadly speaking, a "stakeholder" refers to anyone with an interest in
a given business ororganization.
Stakeholders can affect or be
actions,objectives, and policies.

affected

by

an

organization's

Primary stakeholders are usuallyinternalstakeholders who engage in

economic transactions with the business.
Secondary stakeholders are usuallyexternalstakeholders who may not
necessarily engage indirecteconomic exchange with the organization.

Stakeholder Analysis stakeholder

interest, Power and Coalitions

Stakeholder interest, Power and

Coalitions

Stakeholder Coalitions
A stakeholder coalition is a group of stakeholders
working together to support policies they believe in.

Some reasons why a core group, rather than

an individual, should lead the effort:

A core group will have more contacts and

more knowledge of the community than a
single individual.
It will give the idea of a coalition more
standing among potential members.
It will make finding and reaching potential
members a much faster process.
A core group will make the task easier on all
the individuals involved, and therefore more
likely to get done.
It shows that the effort has wide support.

Stakeholder activism
Anactivist investoris an individual
or group that purchases large
numbers of a public company's
shares and/or tries to obtain seats on
the company's board with the goal of
effecting a major change in the
company.