Reading Outline and Study Guide for Exam 1
Key Concepts: Most of the test will come from the key concepts. Distinguished by **
Key Definitions distinguished by *
Chapter 1 – The Business & Society Relationship relatively low emphasis
1. Business and Society a. Business: Defined*
May be defined as the collection of private, commercially oriented (profit oriented) organizations, ranging in size from one-person proprietorships to corporate giants. b. Society Defined*
Defined as a community, a nation, or broad grouping of people with common traditions, values, institutions, and collective interests.
2. Society as the Macroenvironment**
a) Macro-environment: includes the total environment outside the firm
a. Is the complete social context in which the organization resides
b. Composed of four segments
i. Social, economic, political, technological
1. Social Environment: Focuses on demographics, lifestyles, and social values of the society.
2. Economic Environment: Focuses on the nature and direction of the economy in which the business operates.
3. Political Environment: Focuses on the process by which laws get passed and officials get elected and all other aspects of the interaction between the firm, political process, and government.
4. Technological Environment: Represents the total set of technology-based advancements taking place in society.
3. A Pluralistic Society** Defined: One in which there is wide decentralization and diversity of power
a) Pluralism Has Its Strengths and Weaknesses
a. Pro’s of Pluralism
i. A pluralistic society prevents power from being concentrated in the hands of the few ii. Maximizes freedom of expression and action iii. Provides for a built-in set of checks and balances so that no single group dominates
b. Weaknesses of Pluralism
i. Creates environment which diverse institutions pursue their own self-interest, with the result that there is no unified direction to bring together individual pursuits.
b) Multiple Publics, Systems, and Stakeholders
a. Read paragraph before exam*
c) Figure 1-1: Virtues of a Pluralistic Society**
a. Prevents power from being concentrated in the hands of few
b. Maximizes freedom of expression and action. Strikes balance between monism and anarchy.
c. On in which the allegiance of individuals to groups is dispersed.
d. Creates a widely diversified set of loyalties to many organizations and minimized the danger that a leader of any one org will be let uncontrolled
e. Provides built in set of checks and balances, in that groups can exert power over one another with no single org domination and becoming overly influential
4. A Special-Interest Society Not as important
a) A pluralistic society often becomes a special-interest society
b) Meaning a society is created that is characterized by tens of thousands of special interest-groups, each pursuing its own focused agenda.
c) Past 3 decades have been characterized by increasing specializations on the part of interest groups representing all sectors of society – consumers, employees, investors, communities, the natural environment, government, and business itself.
5. Business Criticism and Corporate Response**
a) Factors in the Social Environment
a. Affluence and education
i. Affluence: Refers to the level of wealth, disposable income, and standard of living of the society. ii. Education: As citizens become more highly educated, their expectations of life generally rise.
b) Criticisms of Business: Use and Abuse of Power
a. Common Criticisms
i. Business is too big, it is too powerful, it pollutes the environment and exploits people for its own gain, it takes advantage of workers and consumers, it does not tell the truth, its executives are too highly paid, and so on.
b. Business Power
i. Refers to the ability or capacity to produce an effort or to bring influence to bear on a situation or people. Power, in and of itself, may be either