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Introduction
The Business and Society Relationship
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
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Introduction
The Business and Society Relationship
We borrow General Systems Theory (GST) from
biology to explain this relationship; first introduced in
1940s.
This 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.
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Instrumental
Normative
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Market stakeholders
Nonmarket stakeholders
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Market Stakeholders
Market stakeholders are those that engage in
economic transactions with the company as it
carries out its primary purpose of providing society
with goods and services.
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Nonmarket Stakeholders
Nonmarket stakeholders are people or groups who
although they do not engage in direct economic
exchange with the firmare affected by or can affect
its actions.
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Further Distinction
Internal stakeholders are those, such as employees
and managers, who are employed by the firm.
They are inside the firm, in the sense that they contribute
their effort and skill, usually at a company worksite.
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Stakeholder Analysis
It is part of every managers job to identify relevant
stakeholders and to understand both their interests
and the power they may have to assert these interests.
Process whereby identify relevant stakeholders and
analyze their interest, power, legitimacy and links with
one another.
Asks 4 questions:
The nature of each groups stake, what are their concerns and what
do they want from their relationship with the firm?
Example shareholders have invested in the firm, they expect to
receive dividends and capital appreciation.
Government and public interest group wish to protect the
environment or assure human rights.
Some businesses sell directly to the public and will not have retailers.
A certain stakeholder may not be relevant to a particular
decision/action.
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Examples:
Stockholders have an ownership interest, they expect to receive
dividends and capital appreciation
Customers are interested in gaining fair value and quality in
goods and services they purchase
Public interest groups advance broad social interests
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Voting power
Economic power
Political power
Legal power
Informational power
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The Corporations
Boundary-Spanning Departments
Boundary-spanning departments (shown graphically in the
following slide) departments or offices within an
organization that reach across the dividing line that
separates the company from groups and people in
society.
Building positive and mutually beneficial relationships
across organizational boundaries is a growing part of
managements role.
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Figure 1.5
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It seemed that I wasnt the only one affected and Farm Fresh Milk was just responding
to it. This was their official response.
Dear valued consumers,
Recently there have been a spate of complaints about our Farm Fresh milk curdling and
turning sour. Initially we had thought the problem was due to less than ideal handling on the
retail level. At the same time, we were also doing everything to examine our operations at the
processing level. We then discovered that a very small amount of our yogurt had somehow
gotten into two of our filling lines. That explains the slight curdling of the milk and the sourish
taste, without the typical spoilt milk smell.
We have since isolated these two filling lines. We truly apologize for the inconvenience
caused and we understand that this has caused some consternation for you, our valued
customers. The curdled product, though it may seem disturbing, was basically an unintended
version of yogurt milk.
We are thankful for your prompt feedback, and we want to assure you that we are constantly
doing our best to ensure the highest quality standards so that you can continue to enjoy the
freshest quality milk from our farm. Our apologies again, and thank you for your continuous
support.
Further to this, we would like to offer all customers a refund for any bottles of Farm Fresh
milk purchased which were not up to the desired quality. Please email us at
custsvc@farmfreshmilk.com.my indicating the number of bottles purchased and the total
retail price.