1. 2 Business PerspectiveBusiness Perspective StakeholdersStakeholders Business EnvironmentBusiness Environment.

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• Business Perspective Business Perspective • StakeholdersStakeholders• Business Business

EnvironmentEnvironment

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Business perspective Business perspective

• Traditional viewTraditional view– Business as economic institutionBusiness as economic institution– Business as socio-political Business as socio-political

institutioninstitution

• System viewSystem view– Business as multipurpose Business as multipurpose

institutioninstitution

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Traditional perspectiveTraditional perspective

• Business as economic institutionBusiness as economic institutionBusiness as economic entity that interacts Business as economic entity that interacts

with society only through transaction in with society only through transaction in the marketplacethe marketplace

• Business as socio-political institutionBusiness as socio-political institutionBusiness as sociopolitical entity that Business as sociopolitical entity that interacts with society through complex interacts with society through complex interaction for increasing wealth and interaction for increasing wealth and

prosperity of societyprosperity of society

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Business as an economic Business as an economic institutioninstitution

Business Firm

Choice of employees

Use ofresources

Quantity ofoutput

Price & ProductQuality

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Business as sociopolitical Business as sociopolitical institutioninstitution

Business Firm

InternationalEnvironment

Changes inIdeologies &

Values

Increased Govt.Intervention:

•Statutory Law• Admnistrative Law

Upgrading of Ethical Standard

Increased Influenceof external or public

Interest Group

Changing Att.ofSociety toward

Business

Increased Importanceof Internal

Stakeholder Group

Improved Communication&

Increased Impt ofMedia

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System PerspectiveSystem Perspective

Business as a living organization that Business as a living organization that interacts with and affected by interacts with and affected by

environment for economic and social environment for economic and social motive ( multipurpose motive ) by motive ( multipurpose motive ) by

using the limited resourcesusing the limited resources

Key To Survival isKey To Survival is

Capacity to adapt efficiently the Capacity to adapt efficiently the changing condition posed by the changing condition posed by the

environmentenvironment

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Business as Multipurpose Business as Multipurpose InstitutionInstitution

Market:Competition

Stakeholder:Expectation

Business:•Economic•Social•Political

Government:•Political Action•Legislative Act•Judicial Action•Regulatory Act

Equity

Efficiency MarketProcess

Public PolicyProcess

Economic Response

Sociopolitical Response

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StakeholdersStakeholders All groups affected All groups affected

by a corporation’s by a corporation’s decision and policydecision and policy

PrimaryPrimarySecondarySecondaryPrimaryPrimary

All groups affected All groups affected by a corporation’sby a corporation’sdecision and policydecision and policy

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Primary StakeholderPrimary Stakeholder

Business

Employees(union)

ShareholderWholesaler

Retailer

Competitor Creditor

SupplierCustomer

Skill

Material

Lend Money

Distribution

Compete

Money

Capital

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Nature of Interest and Nature of Interest and PowerPower

Interest PowerShareholder - Return/Dividend - Exercising voting right - Capital Gain - Exercising right to inspect book and recordEmployee - Stable employment - Strike - Fair pay - Union bargaining power - Safe and comfortable - PublicityCreditor - Repayment of loan - Calling in loan - Interest -Take over loan’s collateralSupplier - Regular order - Refusing to meet order - Paid promptly - Supplying to com[etitorDistributor - Good product quality - Buying from competitor - High reliable product - Boycotting companyCustomer - Fair exchange - Purchasing from competitor - Safe & reliable product - Boycotting companyCompetitor - Be profitable -Forcing to”keep up” - Gain a larger market - Charge lower price

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Secondary StakeholderSecondary Stakeholder

Business

LocalCommunities

Central/Local Govt.

GeneralPublic

BusinessSupport

Foreign Govt.

Social ActivistMedia

Skill,Environment

Social Demand

FriendlyHostile

Opinion

Services

Image,Publicity

RegulationTax

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Nature of Interest and Nature of Interest and PowerPower Interest Power

Local Com. - Employ local residents - Restricting operating licenses - Environment is protected - Lobbying government for - Local area is developed regulation of the companySocial - Ensure that company - Publicizing the negative issues Activist conform to legal and - Lobbying government for ethical standard regulation of the companyMedia - Keep the public informed - Publicizing the negative issues on all issues - Monitor the companyBusiness - Provide services and - Assist company in businessSupport information endeavor & dev. effortGovernment - Taxes - Regulation, licenses,& permit - Economic development - Boycotting companyForeign Gov. - Economic development - Permit to do business - Social improvement - Regulation General - Social value Protected - Support activist Public - Prosperity for society - Condemn or praise company - Risk minimized - Press government to act

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Business EnvironmentBusiness Environment

• External environmentExternal environment– Societal ( macro ),Societal ( macro ), influence the influence the

entire businesses in the same way entire businesses in the same way and magnitudeand magnitude

– StakeholdersStakeholders, do not influence the , do not influence the business in the same way and business in the same way and magnitudemagnitude

• Internal environmentInternal environment

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Internal EnvironmentInternal Environment Identify strength and weaknesses for Identify strength and weaknesses for

responding to the external responding to the external environmentenvironment

• Corporate StructureCorporate Structure– The way of the corporation is organized in term of The way of the corporation is organized in term of

authority, work and information flow, authority, work and information flow, communicationcommunication

• Corporate CultureCorporate Culture– The collection of beliefs, expectation and value, The collection of beliefs, expectation and value,

shared by its membersshared by its members– Produce norms that shape the behavior of Produce norms that shape the behavior of

employeesemployees

• Corporate ValueCorporate Value– Explain the action taken with respect to an issueExplain the action taken with respect to an issue

• Corporate ResourcesCorporate Resources

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External EnvironmentExternal EnvironmentIdentify opportunities and Identify opportunities and

threats for survival and future threats for survival and future successsuccess

BusinessFirm

Economic

Politic Social

Technology

•Interest rate•Unemployment•Inflation,GNP•Poverty Rate, etc

•Demographic•Life style•Population Growth•Age Distribution•Social Value, etc

•Political relationship, processes, changes

•Stability of Government •Regulation & Legal aspect

•Social Value, etc

•Product & Process•Innovation

•Scientific Discovery•Etc

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Business Firm

Government Society

Business Interaction

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Business InteractionBusiness Interaction

Business Firm

Local Communities

Central/Local Govt.

Foreign Govt.

Social Activist

Media

General Public

Business Support

Shareholder

Employee

Creditor

Supplier

Distributor

Customer

Competitor

Market Non Market

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Business InteractionBusiness Interaction

MonopolyMonopoly

OligopolyOligopoly

Free MarketFree Market

BusinessBusiness ConsumerConsumer

MarketMarket

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Free Market SystemFree Market System

BusinessFirm

Consumers

CompetitivePrice

VoluntaryExchange

Supply

Good & Services

Demand

Needs & Wants

Profit Satisfaction

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Consumer Bill of Consumer Bill of RightRight• Right to safetyRight to safety• Right to be informedRight to be informed• Right to chooseRight to choose• Right to be heardRight to be heard

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Business and CommunityBusiness and Community

Request made to businessRequest made to business– Assistance for less advantages peopleAssistance for less advantages people– Support for air and water pollution Support for air and water pollution

controlcontrol– Support for cultural and artistic activistSupport for cultural and artistic activist– Employment and advancement of Employment and advancement of

minority and womenminority and women– Assistance in urban planning and Assistance in urban planning and

developmentdevelopment– Support of health care programSupport of health care program– DonationDonation

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Business and GovernmentBusiness and Government

Assure good and beneficial Assure good and beneficial relations between business relations between business

ant its stakeholderant its stakeholder

Regulating Empowering Regulating Empowering ControllingControlling

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Basic Strategies to Cope with Basic Strategies to Cope with Environmental ChangesEnvironmental Changes

• Inactive StrategyInactive Strategy– Do nothingDo nothing

• Reactive StrategyReactive Strategy– Environment changes first ant then Environment changes first ant then

organization responds to itorganization responds to it

• Proactive StrategyProactive Strategy– Organization initiates changes and than Organization initiates changes and than

environment alteredenvironment altered

• Interactive StrategyInteractive Strategy– Organization and environment are Organization and environment are

changing simultaneously in the same changing simultaneously in the same directiondirection

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