Business & Society

Ethics, Sustainability, and Stakeholder

Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
2012 South-Western, a part of Cengage Learning
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Chapter 1
The Business
and Society
Relationship
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Learning Outcomes
1. Characterize business, society, and their interrelationships.
2. Describe pluralism and identify its attributes, strengths,
and weaknesses.
3. Clarify how our pluralistic society has become a special-
interest society.
4. Identify, discuss, and illustrate the factors leading up to
business criticism.
5. Single out the major criticisms of business and
characterize businesss general response.
6. Explain the major themes of the book: managerial
approach, ethics, sustainability and stakeholder
management.
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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
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Business and Society
Business
The collection of private,
commercially oriented organizations ranging in
size from sole proprietorships to corporate giants.
Society
A community, a nation, or a broad group of people
with common traditions, values, institutions, and
collective activities and interests.
Business and society interrelate in a
macroenvironment as stakeholders.
A macroenvironment is the complete societal
context in which the organization resides.


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Conceptualizing the
Macroenvironment
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Segments of the Macroenvironment
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Pluralism
Pluralism
A diffusion of power among a societys
many groups.
Involves decentralization and diversity of
power concentration.
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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




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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.
Revolution of rising expectations
Creates a social problem, a gap between
societal expectations for social conditions
and social realities.
Entitlement mentality
Rights movement
Victimization philosophy



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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.
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.


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Elements in the Social Contract
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Laws or Regulations:
Rules of the Game
Shared Understandings
of Each Other
Society or
Societal
Stakeholder
Groups
Business
Focus of the Book



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Managerial
Approach
Business
Ethics
Stakeholder
Management
Sustainability
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Managerial Approach
What changes are occurring or will occur in societys
expectations of business that mandate businesss taking
the initiative with respect to particular societal or
ethical problems?
Did business, in general, or our firm, in particular, have
a role in creating these problems?
Can we reduce broad social problems to a size that can
be effectively addressed from a managerial point of
view?
What are the specific problems, alternatives for solving
these problems, and implications for managements
approach to dealing with social issues?
How can we best plan and organize for responsiveness
to socially related business problems?


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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.



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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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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
Entitlement mentality
Ethics
Iron Law of
Responsibility
Macroenvironment
Managerial approach
Pluralism
Political environment


Revolution of rising
expectations
Rights movement
Social contract
Social environment
Social problem
Society
Special-interest society
Stakeholder
management
Stakeholders
Sustainability
Technological
environment
Victimization
philosophy

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