Business And Society 3t1q4z

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, Gibson’s Men’s Wear, and Zim’s 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 1940’s – 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, business–society 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, government policies, 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.

Society’s 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 today’s highly competitive world. They must keep abreast of rapid technological advancements, competitor’s 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, it’s 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 economic intervention is an action taken by a government or 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, and subsidies. • Governments may also intervene in markets to promote general economic fairness. • Maximizing social welfare is one of the most common and best understood reasons for government intervention. Examples of this include breaking up monopolies and regulating negative externalities like 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 Nepal’s 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 country’s 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 as corporate social responsibility, or CSR. • Corporate Responsibility is the action we take to ensure we are not only a responsible employer towards our colleagues but also that we recognize and manage our impact on the wider community, for example reducing our carbon footprint and maintaining environmentally responsible business 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 ability • Lack of broad public

Shareholder and stakeholder Theories • A shareholder owns part of a company through stock ownership, while a stakeholder is interested in the performance of a company for reasons other than just stock appreciation.  • Stakeholders could be: employees who, without the company, would not have jobs. • A shareholder or stockholder is 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. • A stakeholder is any person, organization, social group, or society at large that has a stake in the business. Thus, stakeholders can 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 company’s actions and asks, “What are their legitimate claims on the business?” “What rights do they have with respect to the company’s actions?” and “What kind of responsibilities and obligations can they justifiably impose on a particular business?” • In a single sentence, stakeholder theory affirms that those whose lives are touched by a corporation hold a right and obligation to participate in directing it.

Stakeholder theory

Corporate Citizenship • Corporate Citizenship is a global management consultancy specializing in sustainability and corporate responsibility. • We work with corporate clients around the world to achieve their commitments to responsible business behaviors and sustainable practices. • Corporate citizenship involves the social responsibility of businesses and the extent to which they meet legal, ethical and economic responsibilities, as established by shareholders. The goal is to produce higher standards of living and quality of life for the communities that surround them and still maintain profitability for stakeholders. • The demand for socially responsible corporations 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 company’s marketing efforts (e.g., helps create a positive company image, helps a company manage its reputation, s 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 ability 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 accomplish—the 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

Carroll’s 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 or organization. • Stakeholders can affect or be actions, objectives, and policies.

affected

by

an

organization's

• Primary stakeholders are usually internal stakeholders who engage in economic transactions with the business. • Secondary stakeholders are usually external stakeholders who may not necessarily engage in direct economic 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 policies they believe in.

Some reasons why a core group, rather than an individual, should lead the effort:

• A core group will have more s and more knowledge of the community than a single individual. • It will give the idea of a coalition more standing among potential . • It will make finding and reaching potential 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 .

Stakeholder activism • An activist investor is 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.