Forces that shape the relationship between business and society

Describe Two Forces That You Believe Shape The Relationship Between Business And Society? - Blurtit

forces that shape the relationship between business and society

What Are Two Forces That Shape The Relationship Between Business And Society. be defied as a social and economic system where capital assets are mainly. Understanding the relationship between business and society and the ways in dynamic forces powerfully shape the business and society relationship. One of the theory that explains this relation between the business and the . Fig 2: Forces that shape the business and societal relationship.

By using this two dimensional approach, both the society and the business can go hand in hand. How the organization performs its activities and their agendas and their strategy significantly impacts the society, the decision that the manager makes is therefore, not only for the company itself but helps to shape the society for better or worse.

It is this interaction that explains the relationship between the variables and the organism. In order for any organism to survive, it needs to be the part of the system. Here, the organism refers to the company whereas the external environment is everything beyond the organization including the society.

In order to survive, the business must interact with the environment, but that too is not enough, more important that interacting is the ability to adapt to the environments.

It is true that society absolutely needs what the business produces as they are what they eat, what they wear, what they do, business gives not only product and services, it gives job and taxes without which no society would flourish, but the business is in no way doing favor to the society. The business operates in the society and use their resources. This interdependence between the society and the business gives rise to interactive social system where both need and influence each other.

Only focusing on creation of wealth for the firm is nothing but a downfall in the current economy. This is because of the interlink that the society has with the business. The value generation is not only for the wealth of the corporation but also towards the society. The obligation is not limited to company but the stakeholders- the customers, the employees, the government as well as the environment.

  • Forces Shaping Society and Business Relationship
  • Describe Two Forces That You Believe Shape The Relationship Between Business And Society?

Types of stakeholders Stakeholders can be broadly categorized into two types based on their interaction with the company. Some stakeholders are directly involved in economic transactions, these are the market shareholders. Other stakeholders, on the other hand, are directly engaged in economic transaction but are still affected or affects the company, these are the non-market share holders.

Market stakeholder includes those aspect of the society who directly benefits from the goods and services that the business produces. These includes the customers and the suppliers. Similarly, the shareholders also falls under this category as they receive the gains interms of bonus, dividend or additional share based on how the company performs.

The employees are also other example of market stakeholders as they get paid by the organization for their inputs. Stakeholder and its types Non market stakeholders include those people who are not directly involved, whatsoever, with what the company produces or sell. They, however, does have significant impact on the business and vice versa, this includes the community, government, NGOs, the public as well the competitors.

Although no direct relationship can be traced, there is always a link between them.

forces that shape the relationship between business and society

If the competitors uses low cost strategy, the business cannot increases the price, if government imposes some taxes the company has to increase their profit margin if they have to earn the same amount of profit.

If public thinks that the factory is producing too much harmful gases, the business has to rethink about continuing their production. Other believes that government does not conduct any direct economic transactions and hence a non-market stakeholders. So, although by definition it may sound that lack of direct interaction makes non market stakeholders less important, that is far from truth. They are the reason why some organization survive and why many go home. Macro Economic forces Apart from the internal environment, the company operates in the external environment, that we call the macro economic forces, that although is not controllable by the business, has do or die impact on the organizations.

forces that shape the relationship between business and society

They either provide challenges or opportunities to the organization. These can be categorized into 4 major factors: Based on these factors, the business has to adapt to changes. The company cannot go beyond the acceptable norms. The age of the customers, their attitude on health or their culture affects what the business decision will look like Economic: The business has to clearly study the inflation rate, the purchasing capability of the customers before actually introducing their product.

Income and living standards may be significantly different from one place to another and feasibility study is a must for the business.

The interest rate, exchange rate, income are the major determinants of the business success and failure Political Legal: Business operates in the environment that is government by various rules and policies imposed by the government.

Various acts like environment protection act, labor act, taxation policy must be followed by the company, regardless of whether they like it or not. Some opt out of the pressure, others rely on lobbying. Government binds certain activities which might have been the reason for the competitive advantage, everyone of these things needs to be considered to operate in the society. From the traditional to technological, business must adapt to change, quick. Those who are quick at adapting technology can channel the advantage into their business process.

Those who are slow falls behind. Society wants products that are better and cheaper and one way to provide them is through efficient production through the technology- namely automation, online payment, e-business, etc. These forces provides enormous opportunities to the companies as well as biggest threats. Compliance may lead to a competitive advantage from the competitors, else, they are forced to discharge.

business and society

Forces determining business and societal relationship Some of the forces which determines how the business and societal relationship interacts are as follows: Forces that shape the business and societal relationship Changing social expectation: Every other company can provide similar goods but consumers looks for those who not only work for the customers but also the society as a whole. Growing emphasis on ethics The public also expects business to be ethical and wants corporate managers to apply ethical principles or values—in other words, guidelines about what is right and wrong, fair and unfair, and morally correct—when they make business decisions.

Fair employment practices, concern for consumer safety, contribution to the welfare of the community, and human rights protection around the world have become more prominent and important. Business has created ethics programs to help ensure that employees are aware of these issues and act in accordance with ethical standards. Globalization People live in an increasingly integrated world economy, characterized by the unceasing movement of goods, services, and capital across national boundaries.

Large transnational corporations do business in hundreds of countries. Today, economic forces truly play out on a global stage. A financial crisis on Wall Street can quickly impact economies around the world.

Environmental issues, such as ozone depletion and species extinction, affect all communities. Globalization challenges make it an imperative necessity for businesses to integrate their financial, social, and environmental strategies for the best competitive edges. Creating value in a dynamic environment These powerful and dynamic forces—fast-paced changes in societal and ethical expectations, the global economy, government policies, the natural environment, and new technology—establish the context in which businesses interact with their many market and nonmarket stakeholders.

This means that the relationship between business and society is continuously changing in new and often unpredictable ways. Environments, people, and organizations change; inevitably, new issues will arise and challenge managers to develop new solutions. To be effective, corporations must meet the reasonable expectations of stakeholders and society in general. A successful business must meet all of its economic, social, and environmental objectives. Business and society, thus, form an interactive social system.

Business and Society: Business Relationships

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.