MGM Business and society
a). The business, government, and society field is important to managers for a variety of reasons. It is mainly important because a business needs to be responsive to forces in both its economic and non-economic environments in order for it to succeed. Businesses and their managers need to be aware that market forces are not the only environmental factors that can influence a business’s success. Governmental forces as well as social values play a dominant role in the matter too. Integrating these three forces efficiently will assist the business to remain competitive and profitable for as long as possible.
b). The recent scandal involving Volkswagen dubbed ‘Dieselgate’ was unraveled by a group of researchers from the West Virginia University. The researchers discovered discrepancies between test results generated in a lab and the results from the road. The company was presented with the damning reports more than one and a half years ago. However, it chose to turn a blind eye on the matter citing improper testing methods and inexperienced testing personnel.
EPA later discovered that the company was manipulating the emissions from its vehicles during testing by using a subroutine that initiated emission controls during testing but not on the road. The result was that most of the VW vehicles on the roads were emitting up to 40 times the legal amount of nitrogen oxides. EPA went public with its findings shortly thereafter.
At first, the company denied any claims of wrongdoing but finally confessed when faced with the evidence from the EPA. The CEO stepped down shortly afterwards and so did a number of senior executives and engineers due to the mounting public pressure. The company has also initiated plans to recall more than 11 million vehicles that were fitted with the ‘defeat’ software.
The technological environment of a business encompasses the external technological factors that influence the business’s activities. Changes in technology can have a varying effect on how companies conduct their businesses. There are many instances when a company may be forced to change its operating strategy or its business model due to changes in the technological environment. Changes in technology can decrease the amount of time that a company requires to make a certain product. This leads to fewer expenses and more profits for the company. On the other hand, rapid technological changes can result in barriers to entry in certain markets. However, new technology and innovation is often time consuming and expensive to come by.
The cultural environment of a business pertains to both the organizational culture of a business as well as the values of the society that the company operates in. The culture of a nation can have a variety of influences on a company’s activities. A business will only be allowed to operate successfully in a certain area if the company is abiding the norms and beliefs of the people that surround it. Many experts depict the cultural environment of a business as one of the environmental uncontrollables. This is because culture is difficult to grasp, understand, as well as harness towards the company’s advantage. This is especially the case when the company’s product or service is bound by culture.
A business has also to be aware of the culture phase that a society is in. In most modern societies, the citizens desire the need to fulfill the post-materialistic values that include freedom of speech and the right to demand lowering of prices. Therefore, the company has to embrace this post-materialistic nature in order to be seen as part of the community.
The Wall Street Journal article ‘Tech Companies Try to Make More Room for Women’ (http://www.wsj.com/articles/tech-companies-try-to-make-more-room-for-women-1443600701) touches on both the technological and cultural environments of a business. The article highlights how the technological environment is not conducive for female employees. This is both a cultural and technological issue.
Business power can be defined as the force behind an act carried out by an industry, a sector, or just one company. The primary source of business power is the approval granted to the company (ies) by the society. The approval stems from a social contract that the company or the industry will efficiently convert resources into the goods and services that the society really needs. There are two perspectives of business power. These perspectives are contradictory in nature and they include the dominance theory and the pluralist theory.
The dominance theory suggests that business power is dominant in many modern societies such as in America. The proponents believe that the business power in such countries is unregulated, excessive, and inadequately checked. There are two branches of the dominance theory; the asset concentration theory and the theory of the power of economic elite. The former branch finds that there is excessive corporate power because only a few firms in the nation control the majority of the nation’s assets. The latter theory asserts that there is evidence of a corporate ascendancy due to the establishment of power elite. The members of this elite group control major businesses and government institutions in the nation. For instance, the American constitution was written by power elite comprising the wealthiest men in America at the time.
The second perspective is the pluralistic theory that asserts that in a pluralistic nation, the business powers are kept in check by laws, free markets, government regulations, labor unions, public opinion, democratic values, and advocacy groups. In such a situation, there is no concentration of power by a small group of people.
There are four boundaries on managerial power from the pluralist’s perspective. These boundaries include the government that regulates business, social interest groups that represent the diverse interests of the citizens, societal norms and values restrain managers from abusing the power conferred upon them by the society, and market and economic stakeholders who ensure that the companies operate within the mandate provided in the social contract.
There are two specific origins/sources of criticism towards businesses. The first is that business people often prioritize making profits over conscientious efforts. The recent Volkswagen debacle is a perfect example of how firms are willing to manipulate the system in order to continue making a profit even when human life is at stake. This source of criticism originated in ancient Greece and has persisted until today. Many great thinkers such as Plato and Aristotle were very skeptical of commerce and so was the Church. The philosophers believed that people in trade had succumbed to the insatiable and devastating need for more money. Aristotle purported that the pursuit of wealth was an immoral behavior because he believed that the virtues of one’s character were far superior to the wealth that one could accumulate.
The second origin of criticism of business stems from the social strain or problems that come along with economic development. Many people opine that the industrial revolution happened so quickly that it inadvertently changed the society within a span of less than 50 years. Most societies that went through the industrial revolution were unable to alter their values and institutions in order to support the new ways of life brought about by the revolution. The consequences of business included injustices suffered by many people especially the poor as well as displacements in the society.
The American critique of business is exemplified by the strain of business. The conflict between Alexander Hamilton and Thomas Jefferson on rapid industrial development is still being discussed. The former pushed for rapid industrial revolution in the early agrarian society while the latter sought to minimize economic development to curtail the evils brought on by rapid industrial development. Today, there is a network of progressive activists in the country that fights any perceived abuse of power by businesses and corporations.
The global critique of business also referred to anti-globalism stems from the refusal of anti-global proponents to the creation of a global economy that is run by trade agreements, markets, and international organizations e.g. the International Monetary Fund and the World Trade Organization. Such a global economy if often referred to as neo-liberalism. Those opposed to it believe that neo-liberalism is the reincarnation of an enlightenment philosophy.