Explain the relationship between business and society and the ways in which they are part of the interactive system. A business Is any organization that Is engaged In making a product or providing a service for a profit. A society Is human beings and the social structure they collectively create. Both business and society are highly Interdependent. We borrow “General Systems Theft from biology to explain this relationship between business and society, which was first introduced in the sass.
The 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. 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.
Business Is part of society, and society penetrates far and often into business decisions. 2. What Is the purpose of the modern corporation? In the ownership theory of the firm, the firm is seen as the property of its owners. The purpose of the firm is to maximize its long-term market value, that is, to make the most money it can for shareholders who own stock in the company. Managers and boards of directors are agents of shareholders and have no obligations to others, other than those directly specified by law.
In this view, owners’ interests are paramount and take precedence over the interest of others. A contrasting view, called the stakeholder theory of the firm, argues that corporations serve a broad public purpose: to create value for society. All companies must have a profit for their winners. However, corporations create many other kinds of value as well, such as professional development for their employees and Innovative new products for their customers. In this view, corporations have multiple obligations, and all stakeholders’ interests’ must be taken into account. . Define a stakeholder and who a corporation’s market and non-market stakeholders are. A stakeholder refers to persons or groups that affect, or are affected by, an organization’s decisions, policies, and operations. A stake Is an interest in, or claim, on a business enterprise. Businesses are embedded In networks that involve many groups with such a stake. Stakeholder groups can be divided Into two categories: Market stakeholders, and Non market stakeholders. Market stakeholders are those purpose of providing society with goods and services.
Non market stakeholders are people or groups who, although they do not engage in direct economic exchange with the firm, are affected by or can affect its actions. 4. Analyze the forces of change that continually reshape the business and society relationship. The external environment of business is dynamic and ever changing. The purpose of the firm is not simply to make a profit, but to create value for all of its stakeholders- a successful business must meet both its economic and social objectives. Six dynamic forces powerfully shape the business and society relationship.
These forces are: 1. Changing society expectations 2. Growing emphasis on ethical reasoning and actions 3. Globalization 4. Evolving government regulations and business response 5. Dynamic natural environment 6. Explosion of new technology and innovation 5. Evaluate public issues and their significance to the modern corporation. A public issue is any issue that is of mutual concern to an organization and one or more of its stakeholders. The stakeholder expectations are a mixture of people’s opinions, attitudes, and beliefs about what constitutes reasonable business behavior.
Public issues is the performance-expectations gap. This is the discrepancy between what stakeholders expect and what an organization is actually doing. It is important to identify emergent expectations as early as possible. Doing so, can gain the company competitive advantage. Failure to understand stakeholder concerns and to respond appropriately will: 1 . Cause the performance-expectations gap to grow. 2. The larger the gap, the greater the risk of stakeholder backlash or missing a major business opportunity. 6. Identify the organization’s multiple environments.
Environmental analysis is a method managers use to gather information about external issues and trends, so they can develop an organizational strategy that minimizes threats and takes advantage of new opportunities. Environmental intelligence is the acquisition of information gained from analyzing the multiple environments affecting organizations. The organizations multiple environments are: . Customer Environment, 2. Competitor Environment, 3. Economic Environment, 4. Technological Environment, 5. Social Environment, 6. Political Environment, 7. Legal Environment, and 8.
Geophysical Environment. 7. Describe the steps the issue management process. 1 . Identify Issue: Anticipating emerging concerns, or “horizon” issues 2. Analyze Issue: Evaluating the issue; coming to an understanding of how it will evolve and how it will affect the organization 3. Generate Options: Evaluating action options, involves complex Judgments that take into account “non-quantifiable” factors like the Meany’s reputation 4. Take action: Once option is chosen, must design and implement it 5. Evaluate Results: Must assess results of the program and make adjustments as needed 8.
Identify who is responsible for managing public issues and the skills required to do so effectively. A corporation’s issue management activities are usually linked to both the board of directors and to top management levels. Effective global leadership on public issues requires three basic capabilities: 1 . Understanding the changing business context 2. Ability to lead in the face of complexity 3. Connectedness-the ability to engage with external stakeholders in dialogue and partnership 9. When did the idea of social responsibility originate and what are the phases through which it was developed?
In the United States, the idea of corporate social responsibility appeared around the start of the 20th century. Faced with social protest, a few farsighted business executives advised corporations to use their power and influence voluntarily for broad social purposes rather than for profits alone. Frederick provides expanded framework for understanding the evolution of CARS concept. It is divided into 4 hashes: 1. Corporate social stewardship, sass-sass 2. Corporate social responsiveness, sass-sass 3. Corporate/ business ethics, sass-sass 4.
Corporate/ global citizenship, sass-sass 10. Examine the key arguments for and against corporate social responsibility. For: Balances corporate power with responsibility. Discourages government regulation. Promotes long-term profits for business. Improves stakeholder relationships. Enhances business reputation. Against: Lowers economic efficiency and profit. Imposes unequal cots among competitors. Imposes hidden costs passed onto stakeholders. Places responsibility on business rather than individuals 11. Define a social enterprise and its role in solving social problems.
A social enterprise is a business that adopts social benefits as its core mission. It is an organization that uses business strategies for the purpose of improving human and environmental well-being. The primary purpose of a social enterprise is not to maximize returns to shareholders. A social enterprise can be large and established, or small and new. Social Entrepreneurship is individual who, like traditional entrepreneurs, act boldly to pursue opportunities, attract support, and build new organizations to create and sustain social rather than economic value.
When a person or group of people identify a social need and use their entrepreneurial skills to address this need, it is called social entrepreneurship. 12. How would you evaluate Business social obligations to help the world’s poorest members? The term bottom of the period refers to the poorest people in the world- nearly 4 billion who earn less than $2. 50 per day. Business can carry out its responsibilities to society by brining products and services to these undeserved people. For example, Grahame Bank uses micromanage to serve the bottom of the pyramid.
This is when financial organizations provide loans to low-income clients or solidarity lending groups who traditionally lack access to banking or related services. 13. Define ethics and business ethics. Ethics is a conception of right and wrong conduct. Ethics tells us whether our behavior is moral or immoral. It deals with fundamental human relationships, which is how we think and behave toward others and want them to think and behave towards us. Business ethics is an application of general ethical ideas to business behavior. 14. Why do you think businesses should be ethical?
There are five key reasons as to why businesses should be ethical. Demands of business stakeholders 2. To enhance business performance 3. To comply with legal requirements 4. To prevent or minimize harm 5. To promote personal morality 15. Why do ethical problems occur in business? To meet gain and selfish interest, 2. Competitive pressure on profits, 3. Conflicts of interest, 4. Cross-cultural contradictions. 16. The stages of moral reasoning are: 1 . From childhood to mature adulthood, people move up in their moral 2. Earliest stages of reasoning are ego-centered reasoning .
Most developed stages are principle-centered 4. Most managers make decisions based on criteria in levels 3 and 4 Company executive’ reasoning has wide implications both in and out of the organization 17. Discuss ethics challenges across the multiple functions of business. 5. Ethical dilemmas in business may occur. Business managers and employees need a set of decision guidelines that will shape their thinking when on-the-Job ethics issues occur. These guidelines should help them: 1. Identify and analyze the nature of an ethical problem, 2. Decide which course of action is likely to produce an ethical result. 18.
Assess the strengths and weaknesses of a comprehensive ethics program. The strengths are weaknesses of a comprehensive ethics program is: Integration of various program/ policy components is critical to effective ethics design a. Integrated approach is called a “comprehensive” program 2. Of companies recently surveyed had a “6 element” program integrating Written policies, training, advice resources, hotlist, ethics discipline, and evaluation 3. Those working at firms with a comprehensive program are to report ethical misconduct a. More likely b. More likely to be satisfied with any investigation and response to ethical conducts 19.
Explain how a company can improve their ethical performances. A company can improve their ethical performance through two ethics approaches: The first is the Compliance-based approach. This approach seeks to avoid legal sanctions. It also emphasizes threat of detection and punishment to promote lawful employee behavior. The second approach is the Integrity-based approach. This approach combines concern for law with emphasis on employee responsibility for ethical conduct. It also gives employees instruction to act with integrity and conduct business dealings honestly.
Both if these approaches have been found to lessen unethical conduct, but in somewhat different ways. 20. How can an organization conduct Business ethically in a global marketplace? Common example is bribery. Bribery is defined as a questionable or unjust payment, often to a government official, to ensure or facilitate a business transaction. International watchdog agency, Transparency International, publishes a survey of countries’ levels of corruption. Bribe-taking more likely in countries with low per capita income, low salaries for government officials, and less income variation.
