Business and Society

Business does not stand alone

A business is part of the society around it. Many groups have an interest in what it does, and they are called its stakeholders: the owners, the employees, the customers, the suppliers, the local community and the government. These groups often want different things, so a business has to balance their interests. Society also expects a business to act responsibly: to treat people fairly, to be honest, and to care for the environment. And society shapes a business back, through laws and expectations. This module covers stakeholders, balancing their interests, ethical and environmental responsibility, and the external influences on a business.

Business and society words

Learn these terms before the ideas are described. They name the groups and the responsibilities a business has.

Match each stakeholder to what it wants

Owners against the community

Different stakeholders can want opposite things from the same decision, and a business has to weigh them. Comparing two shows why balancing is hard.

What does the community want?

A factory opens in a small town. As a stakeholder, what does the local community most want from it?

• Local jobs and no pollution or nuisance
• The largest possible profit for the owners
• Only that it pays its tax
• Nothing at all from the factory

Balancing the stakeholders

Because stakeholders want different things, a business rarely pleases everyone at once, and a strong answer shows this balancing act. Paying workers more pleases employees but raises costs for owners. Cutting corners on the environment saves money but angers the community and can harm reputation. So a good business weighs the interests, and often acting responsibly pays off in the long run through trust and loyalty. When you write about a decision, name the stakeholders affected, say what each gains or loses, and judge the balance. Name the stakeholders, weigh the effects, then decide: that is how to analyse a business decision.

Pick the responsible actions

Select every action of a responsible, ethical business.

• Paying its workers fairly
• Advertising its products honestly
• Reducing waste and pollution
• Misleading customers to sell more
• Dumping waste to save money

Order responding to a concern

A community raises a concern about pollution. Put a responsible business response in order.

• Listen to the concern the community has raised
• Check the impact the business is having
• Decide on a responsible action
• Make the change to reduce the harm
• Tell the stakeholders what has been done

Complete the society facts

Any group with an interest in a business is a _____. A business that acts fairly and honestly is an _____ business. The effect a business has on the natural world is its _____ impact. A law that affects a business from outside is an _____ influence.

One factory, many stakeholders

Picture a factory deciding whether to fit an expensive filter that would cut its pollution. The owners see the cost and worry about their profit. The employees hope the factory stays healthy so their jobs are safe. The local community wants the pollution gone so the air is cleaner. The government expects the factory to meet the law. If the factory fits the filter, it spends money now but earns trust and protects its reputation, which can bring loyal customers over time. If it refuses, it saves money but risks anger, fines and lost custom. There is no choice that pleases everyone, so the business must weigh the interests and decide. That weighing is exactly what business in society is about.

Tap the stakeholders

Tap the TWO groups that are stakeholders in a business.

• the employees who work there
• the local community around it
• the weather next week
• the colour of the sky

The business and society run

Answer each one correctly to keep your lives. Choose the best answer.

Advise each business

Read each situation and choose the best answer.

• A business could save money by dumping waste into a river. What should a responsible business do?
• Employees ask for fairer pay, but this will lower the profit. Who are the two main stakeholders in tension here?
• A business advertises its product honestly and treats suppliers fairly. What is it being?

Build a point about stakeholders

Choose the word for each gap to complete one clear point about business and society.

Explain business and society

A friend thinks a business only has to worry about making money. Using what you have learned, explain how a business is connected to the society around it.

• Explain who the stakeholders in a business are and what they want
• Explain why a business must balance different stakeholders
• Explain what an ethical and responsible business does
• Explain what environmental responsibility means
• Explain how acting responsibly can help a business in the long run