MANAGEMENT

A Global Perspective
Heinz Weihrich
Herold Koontz
Chapter No 2

Management and Society

External Environment Social
Responsibility and Ethics
 Contents

 Operating in a pluralistic society

 The technological environment
 The Ecological environment
 Social responsibility of a manager
 Ethics in managing
 Trust in basis for change management
 Managers Environment

Managers consider while planning :

• Needs & desire of society members outside organization
• Needs for material, HR, technology, other requirements
• Forces of external environment
• Requisite response to environmental changes
 Managers Environment

Technological Economic

Social Organization Ethical

Political &
Ecological
Legal
 Operating in Pluralistic Society
A society where
many organized groups represent various interests

Managers operate in pluralistic society in which

many organized groups represent various interests.
Each group has an impact on other groups, but
no one group exerts an inordinate amount of power.
Many groups exert some power over business.
It is the task of the manager to integrate their aims..
 Operating in Pluralistic Society
Implications for business

Various groups ( environment groups) keep business

power in balance
Business interests can be expressed by joining groups
such as the Chamber of Commerce
Business groups can participate in projects with other
responsible groups for the purpose of bettering society
In pluralistic society, there can be conflict as well as
agreement among groups
In such a society, one group is quite aware of what other
groups are doing.
 Technological Environment
Technology
Sum total of knowledge we have of ways to do
things

Technology ….
 One of the most pervasive factors in environment
 Science provides knowledge, and technology uses it
 Includes inventions, techniques & vast store of organized
knowledge about everything
 Its main influence is on ways of doing things
How we design, produce, distribute & sell goods / services
 Ecological Environment
Managers must account for ecological factors in DM

Ecology
Relationship of people , other living things
with their environment such as soil, water, and
air.

 Land, water, and air pollution … A concern to all people

 Land pollution through industrial waste , packaging.
 Water pollution through hazardous waste & sewage
 Air pollution through acid rain, vehicle exhaust fumes
 Mangers must be
 Aware of laws and regulations
 Incorporate ecological concerns into their dm
Social Responsibility of Managers
Due to interdependencies
of many groups in our society
social involvement of business has increased

 Society has awakened & become vocal

 Is asking managers about :
 what they are doing to discharge their social
responsibilities & why they are not doing more
 Social Responsibility &
Social Responsiveness

Corporate social responsibility

Consideration of impact of company’s actions on society
Social responsiveness
Ability of corporation to relate
operations & policies to social environment
in ways that are mutually beneficial

Both definitions focus on corporations

Main difference is
that latter implies actions and
the “How” of enterprise responses.
 Arguments for Social Involvement of Business

 Business receives its charter from society…therefore, it

must respond to the needs of society
 The creation of better social environment benefits both
society and business.
-- Society gains through better neighborhoods and
employment opportunities;
-- Business benefits from a better community,
-- Community is source of workforce and consumer of
its products and services.
 Social involvement discourage government regulation
and intervention and facilitates greater freedom and
flexibility in decision making for business
 Business has a great deal of power therefore, should be
accompanied by an equal amount of responsibility
 Modern society is an interdependent system and internal
Org activities have impact on external environment
 Problems can become profits. Items considered waste
(empty cans) can be reused profitably
 Social involvement may be in stockholders interest
 Creates a favorable public image and therefore, firm may
attract customers, employees, and investors
 Business should try to solve the problems that other
institutions have not been able to solve
 Business has resources which can be used to solve
society’s problems
 It is better to prevent social problems through business
involvement than to cure them. It may be easier to help
the hard-core unemployed than to cope with social unrest
 Arguments against social involvement
 Business task is to maximize profit. Social involvement
could reduce economic efficiency.
 Social involvement would create excessive costs for
business, which cannot commit its resources to social
action.
 Social involvement can create a weakened international
balance-of-payment situation
 Social involvement would increase business power
 Businesspeople lack skills to deal with society problems
 Without accountability , business should not get involved.
 Without full support for social actions, disagreements in

groups with different viewpoints will cause friction

 Re-action or Pro-action
Reaction is not an answer to environmental developments
Anticipation and pre-emption is also essential

 An alert company does not wait until its product is obsolete and sales fall
off
 A government agency does not wait till its regulations are obsolete and
discredited
 Enterprise should not wait for problem to develop before preparing to face
them

Pro-action is an important part of planning process

 Ethics in Managing

Ethics … discipline dealing with

what is good & bad … with moral duty & obligation

 Business ethics is concerned with truth and justice.

 Has a variety of aspects :
 Expectations of society
 Fair competition
 Advertising
 Public relations
 Social responsibility
 Consumer autonomy and
 Corporate behaviour
in the home country as well as abroad,
 Ethical Theories

 Managers compete for

Information,
Influence &
Resources
 Potentials for conflicts in selecting
means to ends and ends to means is understood
 Question … what criteria should guide ethical behaviour
 Ethical Theories

Utilitarian Theory
Plans & actions should be evaluated by their consequences
Plans or actions should produce max good for max people

Theory based on rights

All people have basic rights
Theory based on rights holds that people have basic rights
Rights to freedom of conscience, free speech, and due
process
Theory of justice
Decision makers must be guided by fairness and equity, as
well as impartiality
 Institutionalizing Ethics
Mangers, must create an organizational environment
that fosters ethical DM by institutionalizing ethics

This means
applying and integrating
ethical concepts with daily actions

BY
 Establishing appropriate company policy or code of ethics
 Using formally appointed ethics committee &
 Teaching ethics in management development programs

Theodore Purcell and James Weber

 Institutionalizing Ethics
Stating code of ethics is not enough to ensure
compliance. Appointment of an ethics committee
consisting of internal and external directors,
is essential for institutionalizing ethical behaviour.

Functions of Committee Include

 Holding regular meetings to discuss ethical issues
 Dealing with “gray areas”
 Communicating code to all organization members
 Checking for possible violations of code
 Enforcing the code,
 Rewarding compliance & punishing violations
 Reviewing & updating the code and
 Reporting activities of committee to board of directors
 Factor that Raise Ethical Standards

 Factors that raise ethical standard :

Public disclosure & publicity and
Increased concern of a well-informed public
 Factors are followed by :
Government regulations &
Education to raise professionalism of business
managers
 Factor that Raise Ethical Standards
For ethical codes to be effective
provisions must be made for their enforcement
Unethical managers should be accounted for their actions.

Effective code enforcement requires

Demonstration of consistent ethical behaviour
Support from top management.
Teaching of ethics and values in higher education
institutions.
 Whistle Blowing
Making known to outside agencies
unethical company practices

Whistle-blowing center is a nonprofit organization

It helps enforce environmental laws and
Works for accountability of business & Govt Orgs
Its primary objective is to :
Protect & defend persons who disclose harmful actions
Questions
THANK YOU