Virtual Class ~
PutraLMS
http://lms.upm.edu.my/
• Notes
• Announcement
• Assignment

1-3
1-3

Chapter 1
The Corporation and
Its Stakeholders
McGraw-Hill/Irwin

Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

Ch. 1: Key Learning Objectives
 Understanding the relationship between business and society  Considering the purpose of the modern corporation
 Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are
 Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power
 Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders  Analyzing the forces of change that continually reshape the business and society relationship

1-5

Introduction –
The Business and Society Relationship
 Business: Any organization that is engaged in making a product or providing a service for a profit
 Society: Human beings and the social structures they collectively create


1-6

Figure 1.1 Business and Society:
An Interactive System

1-7

Introduction –
The Business and Society Relationship
 We borrow “General Systems Theory (GST)” from biology to explain this relationship; first introduced in
1940s
 Theory posits that organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their surroundings

 Adapted to management theory means that business firms are embedded in a broader social environment with which they constantly interact
 Business and society together form an interactive social system 1-8

Two critical questions:
 What is the purpose of the modern corporation?
 To whom, or what, should the firm be responsible?

1-9

Two contrasting views:
