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Society on the other hand is the segments of people living in a particular place- community, group or a country.
Business has always been a part of society and has been using various aspects like the workers and resources for its operation. However, it is not a one-way process. Not only should the business extort various resources from the society but also plan to serve and preserve the culture and resources in the society, aim to develop it and give something back.
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.
Forces Shaping Society and Business Relationship
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. 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.
Forces Shaping Society and Business Relationship - MBA Teacher
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. 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.
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. For example, businesses recruit workers, buy supplies, and borrow money; they also sell products, and pay taxes. Business and society are highly interdependent. Business activities impact upon other activities in society, and actions by various social actors continuously affect business. Society defined Society, on the other hand, is a network of individuals, groups and organizations.
The relationship between business and society | Madan Mohit - relax-sakura.info
Society, in its broadest sense, refers to human beings and to the social structures they collectively create. In a more specific sense, the term is used to refer to segments of humankind, such as members of a particular community, nation, or interest group. As a set of organizations created by humans, business is clearly a part of society. Business, therefore, is inextricable linked to society. The dynamic environment of business One core argument is that the external environment of business is dynamic and ever changing.
Businesses and their stakeholders do not interact in a vacuum. On the contrary, most companies operate in a swirl of social, ethical, global, political, ecological, and technological change that produces both opportunities and threats.
People increasingly expect business to be more responsible, believing companies should pay close attention to social issues and act as good citizens in society. New public issues constantly arise that require action. Increasingly, business is faced with the daunting task of balancing its social, legal, and economic obligations, seeking to meet its commitments to multiple stakeholders. 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.