bgs chapter 1

THE STUDY OF BUSINESS

GOVERNMENT & SOCIETYChapter 1

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BGSIT,presenter Kiran.S

INTRODUCTION

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BUSINESS

• Definitions of business: “Business is profit , can be more the main objective of a business than betting is the main of making profit and acquiring wealth through the satisfaction of human wants” -R.Urvick

• “Business comprises all profit seeking activities and enterprises that provide goods and services necessary to an economic system. It is the economic system. It is the economic pulse of a nation, striving to increase society’s standard of living. Profits are primary mechanize for motivating these activities.”-Boone louis.E

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GOVERNMENT

• A group of people that governs a community or unit.

• It sets and administers public policy and exercise executive, political and sovereign power through customs,institutions, and laws within a state.

• Types-democracy,republic,monarchy,aristocracy

Ex: Tata nano shifting of singur plant from Westbengal to gujarath

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SOCIETY

• In common words the term society refers to members of specific groups.

• Definitions-Society is a system of usages and procedures, authority and mutual aid, of many groupings and divisions, of human behaviour and of liberties.-Macler and page

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Importance of BGS to managers

• T o understand the role of business in society.• To understand the business power in society.• It becomes criteria for managerial decisions.• To understand the extent of corporate social

responsibility.• To know the ethical duties of managers and need for

regulations.• To succeed in meeting the objectives of business.• To excel in managerial performance.• To monitor the non economic environment by

taking stock of the situation before anything happens.

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Models of BGS relationships

• Market Capitalism Model

• Dominance Model

• Countervailing Forces Model

• The stakeholders model

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Market Capitalism Model

• Business operates within a market environment• Primarily responding to economic forces.• Sheltered from direct impact of social and political

forces.• Business is substantially sheltered from the direct

impact of socio political forces and focuses on the primary economic forces.

• Classic capitalism most economic activity is carried on by private firms in competitive markets.

• It is based on the assumption of laissez faire(the government should let us alone)

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Model assumptions

• Government interference is slight or “Laissez fire”.• Government, not business should correct social

problems• Managers focus on profit and efficiency• Individuals can own property and freely risk

investments • Markets convert selfish competition into broad

social benefits• Informed consumers making rational decisions• Moral restraint of business• Many producers and consumers

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Model critics:

• Creates prosperity only at the cost of rising inequality

• Markets erode virtue

• Greed

• Ruthlessness

• Profit motive encourages plundering of the earth

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THE DOMINANCE MODEL

• Implications:

Began in 1970’s

Business and government dominate the great mass of people ,which result in the enrichment of a few at the expense of many.

Proper measure of corporate performance is profit

Ethical duty of management is to promote the interests of shareholders

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Perspectives of dominance model

• The view that business is the most powerful institution in society, because of its control of wealth.

• A merger wave between 1895 and 1904 concentrated economic growth

• The public viewed these huge firms as colossal monuments to greed.

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Model critics

• Creates prosperity only at the cost of rising inequality

• Markets erode virtue

• Greed

• Ruthlessness

• Profit motive encourages plundering of the earth

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The countervailing Forces Model

Environment catalysts:

• Economic conditions

• Markets

• Geopolitics

• Ideologies

• Technology

• Nature

• Culture

• Change

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The Public:

• Values

• Opinions

• Demands

• Supports

• Non governmental organizations

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Corporations:

• Market operations

• Influence efforts

• Lobbying

• Leadership

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Government:

• Statutes

• Regulations

• Political leadership

• Partisan behaviour

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Countervailing forces model

conclusions▫ Business is deeply integrated into an open society and must

respond to many forces, both economic and noneconomic.

▫ Business is a major initiator of change in society through its interaction with government, its production and marketing activities, and its use of new technologies.

▫ Broad public support of business depends on its adjustment to multiple social, political, and economic forces.

▫ BGS relationships continuously evolve as changes take place in the main ideas, institutions, and processes of society.

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The stakeholder Model

• Stake holders are those whom the corporation benefits or burdens by its actions and those who benefit or burden the firm with their actions:

• The below people are the primary stake holders1. Suppliers2. Society3. Government4. Creditors5. Shareholders6. customers

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• The secondary stake holders are:Educational institutions The poor Future generationsEarth’s atmosphereReligious groupsPolitical partiesUnions Political interest groupsTrade associationsSuppliersCompetitorsmedia

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Criticism of the stakeholder model

• It is not a realistic assessment of the power relationships between the corporation and other entities.

• There is no single, clear and objective measure to evaluate the combined ethical/economic performance of a firm.

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Advocacy for the stakeholder model

• A corporation that embraces stakeholders performs better.

• It is the ethical way to manage because stakeholders have moral rights that grow from the way powerful corporations affect them.

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Global perspective of BGS

• A global perspective is far more than an understanding of worldwide business and international career opportunities.

• It takes more critical view of experience ,knowledge and learning

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• To adopt a global perspective, we need to enhance our understanding of the social, political and environmental forces that shape our existence.

• Thus developing a global perspective means that we aim to :

• Enable people to understand the links between their own lives and those of people throughout the world.

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• Increase understanding of economic, social and political forces which shapes life.

• Develop skills, attitudes and values to enable people working together to bring about change for common good and to take control of their own lives.

The four main pillars under global perspectives.• Concentrate on sustainable development.• Internationalization• Global issues• Global process• Each pillar contributes to the development of global

citizens

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Historical perspective of BGS

• The BGS relationship is a stream of events, of which only one part exists today.bgs relationship is not like that of other eras; that current ideas and institutions are not the only alternative;

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bgs chapter 1

Leadership & Management

presenter kiran

business power

role of business

economic system

objectives of business

primary economic forces

economic activity

economic environment