Carroll 10e CH01 PPT

© 2018 Cengage 1
Chapter 1
The Business and
Society
Relationship
© 2018 Cengage Learning 2

Learning Outcomes
1. Describe and explain business and society as foundational
concepts. Describe how society is viewed as the
macroenvironment.
2. Explain the characteristics of a pluralistic society. Describe
pluralism and identify its attributes, strengths, and weaknesses.
3. Define a special-interest society and describe how it evolves.
4. Identify, discuss, and illustrate the factors leading up to business
criticism and corporate response. What is the general criticism of
business? How may the balance of power and responsibility be
resolved? What is the changing social contract?
5. Highlight the major focuses or themes of the book: managerial
approach, business ethics, sustainability, and stakeholder
management.

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

Business and Society
Business -
• the collection of private, commercially oriented
organizations ranging in size from one-family
proprietorships to multinational corporations.
Society -
• a community, nation, or broad grouping of people with
common traditions, values, institutions, and collective
activities and interests.
Macroenvironment -
• the total environment outside the firm, the comprehensive
societal context in which the organization resides.
Society
• is the macroenvironment in which businesses operate.

Conceptualizing the Macroenvironment
© 2018 Cengage 6
Segments of the Macroenvironment

A Pluralistic Society -
• Prevents power from being concentrated in the
hands of a few.
• Maximizes freedom of expression and action and
strikes a balance between monism, on the one hand,
and anarchy on the other.
• Is one in which the allegiance of individuals to groups
is dispersed.
• Creates a widely diversified set of loyalties to many
organizations, and minimizes the danger that a leader
of any one organization will be left uncontrolled.
• Provides a built-in set of checks and balances, in that
groups can exert power over one another with no
single organization (business or government)
dominating and becoming overly influential.
8
© 2018 Cengage Learning
Business and Stakeholder Relationships

Special Interest Society
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.
Social Environment, Business Criticism and
Corporate Response
Affluence Education Awareness
Factors in the Social Environment
Rising Expectations Rights Movement
Entitlement Victimization
Mentality Philosophy
Business Criticism
Increased Concern for the

A Changed Social Contract
Societal Environment

Factors in the Social Environment
Affluence and Education -
• Create higher expectations of major institutions.
• Growing public awareness through television,
movies, the Internet, and social media.
Revolution of rising expectations - creates a
social problem, a gap between societal expectations
for social conditions and social realities. This can lead
to:
• Entitlement mentality
• Rights movement
• Victimization philosophy

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

Problem Social Performance
1960s 2010s
Time
General Criticism of Business:
Use and Abuse of Power
Business Power -
• the capability or ability to produce an
effect, have impact, 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
© 2018 Cengage 14
Levels and Spheres of
Corporate Power
Levels Macro Intermediate Micro Individual
Spheres Level Level Level Level
The business Several firms A single firm A Single Executive
system
Economic
Social/Cultural
Individual
Technological
Environmental
Political

15
Elements in the Social Contract
Laws or Regulations:
“Rules of the Game”
Business Society or
Societal
Stakeholder
Groups
Two-Way
Shared Understandings
of Each Other

Focus of the Book
Managerial
Approach
Business Stakeholder
Ethics Sustainability Management

A Managerial Approach
• Managers are practical and have begun to deal
with social and ethical concerns in ways similar to
those they use to manage traditional business
functions such as marketing, finance, operations,
and risk management.
• As a result, managers have been able to convert
seemingly unmanageable concerns into ones that
can be dealt with in a balanced and impartial
fashion.
• At the same time, managers have had to integrate
traditional economic and financial considerations
with ethical and social considerations.
© 2018 Cengage 18
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.
© 2018 Cengage 19
A Business Ethics Theme
Ethical questions -
• inevitably and continually come into play during
business operations.
Ethics -
• refers to issues of right, wrong, fairness, and
justice.
Business Ethics -
• focuses on ethical issues that arise in the
commercial realm.
Ethical questions -
• permeate business’s activities as it attempts to
interact with major stakeholder groups.
© 2018 Cengage 20
A Sustainability Theme
Sustainability - Has become one of business’s
most pressing mandates.
Sustainable development - is a pattern of
resource use that aims to meet current needs while
preserving the environment for future generations.
Sustainability embraces criteria which are:
• Environmental
• Economic
• Social
Sustainability concerns the ability of businesses to
survive and thrive over the long term.
© 2018 Cengage 21
Stakeholder Management Theme
Stakeholders -
• Individuals or groups with which business
interacts and who have a vested interest in the
firm.
• In this text, we consider:
• External stakeholders, such as government,
consumers, the natural environment,
community members.
• Internal stakeholders, such as employees,
those involved in corporate governance, and
others.
© 2018 Cengage 22
Structure of the Book (1 of 3)
Part One: Business, Society, and Stakeholders
1. The Business and Society Relationship
2. Corporate Citizenship: Social Responsibility, Performance and
Sustainability
3. The Stakeholder Approach to Business, Society, and Ethics
Part Two: Corporate Governance & Strategic Management Issues

4. Corporate Governance: Foundational Issues
5. Strategic Management and Corporate Public Policy
6. Issue, Risk, and Crisis Management
© 2018 Cengage 23
Part Three: Business Ethics and Management
7. Business Ethics Fundamentals
8. Personal and Organizational Ethics
9. Business Ethics and Technology
10. Ethical Issues in the Global Arena
Part Four: External Stakeholder Issues

11. Business, Government, and Regulation
12. Business Influence on Government and Public Policy
13. Consumer Stakeholders: Information Issues and Responses
14. Consumer Stakeholders: Product and Service Issues
15. Sustainability and the Natural Environment
16. Business and Community Stakeholders
© 2018 Cengage 24
Part Five: Internal Stakeholder Issues
17. Employee Stakeholders and Workplace Issues
18. Employee Stakeholders: Privacy, Safety, and Health
19. Employment Discrimination and Affirmative Action
Cases
© 2018 Cengage 25
Key Terms
• affluence • rights movement
• business • social contract
• business ethics • social environment
• business power • social problem
• economic environment • society
• education • special-interest society
• entitlement mentality • stakeholder
• Iron Law of management
Responsibility • stakeholders
• macroenvironment • sustainability
• managerial approach • sustainable
• Nongovernmental development
organizations (NGOs) • technological
• pluralism environment
• political environment • victimization
• revolution of rising philosophy
expectations
© 2018 Cengage 26

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© 2018 Cengage 1

© 2018 Cengage Learning 2

© 2018 Cengage Learning 3

© 2018 Cengage Learning 4

© 2018 Cengage Learning 5

© 2018 Cengage Learning 7

© 2018 Cengage Learning 9

Factors in the Social Environment

Rising Expectations Rights Movement

Increased Concern for the

© 2018 Cengage Learning 11

© 2018 Cengage Learning 12

Social Business’s Actual

© 2018 Cengage Learning 15

© 2018 Cengage Learning 16

© 2018 Cengage Learning 17

Part Two: Corporate Governance & Strategic Management Issues

Part Four: External Stakeholder Issues

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