The Relationship between Business and the Society - Essay Example

? Business and the society August 13, Business exists in the society and the two affects each other through expectations and power. This paper examines the relationship between business and the society and identifies the power of business over the society that should be regulated for mutual and equitable benefits. Business and the society Introduction and background information The term business is common in the society and may assume different meanings. Its wide meaning has involved the state of being engaged with an activity but definitions that are more specialized have been offered from economic perspectives. Exchange of a commodity between individuals with the aim of deriving mutual benefits or with profit motif is one of the available definitions for the term business. The definition however extends to multiple transactions and disqualifies isolated transactions, such as a single exchange in a person’s life, as business. A single exchange transaction or just a few number of exchange transactions like three times in a person’s lifetime, for instance, does not identify the individual as a businessperson and therefore fails to offer an accurate definition of business. A more accurate definition of business is therefore an activity whose primary objective is wealth creation through exchange of goods and services. This definition separates such transactions as sale of personal property as a disposal strategy because of lack of profit motive. Some examples of activities have also been identified with the definition of business. According to Maheshwari (1997), all activities in the field of commerce and industrial based activities meets the definition of business and this includes activities in “basic industries, processing and manufacturing industries and the network of ancillary services, distribution, banking, insurance, transport,” among other sectors (Maheshwari, 1997, 1). Business also defines forms of organizations through which business activities are conducted and these include “sole proprietorships, partnerships, companies, and cooperative societies” (Maheshwari, 1997, p. 2). An individual owns and manages a sole proprietorship form of business. The person is the owner and worker, only enlisting help from family members. Its formation is simple, requiring no formalities, and it requires small amount of capital to start because its scope can be narrow. The proprietor also enjoys all the derived profit from the business and has the sole decision making right, a property that allows for faster decisions because there is no consultation obligations. Sole proprietorships however faces a number of challenges such as difficulty to raise sufficient capital for ventures, limited sources of capital because of lack of collaterals, and lack of specialization that limits quality of goods or services from a sole proprietorship business (Kelly and McGowen, 2010; Gitman and McDaniel 2008). Lack of expertise in management and service delivery possibility of the proprietor overworking himself are other limitations of the form of business. The business’ life is also limited to the life of the owner (Schneeman, 2012; Miller, n.d.). Partnership is another form of organization for business activities and defines a group of individuals, normally between two and twenty people, with a common objective of making profit. The form of business has advantages such as a wider capital base from members’ contribution, possibility of rich skills and experience from members that can be organized into specialization, rich sources of ideas for decision-making. Members also share losses and this facilitates continuity because of reduced impacts (Pride, Hunges and Kapoor, 2010; Kimmel, Weygandt and Kieso, 2010). Disadvantages however include sharing of profits, lengthy decision-making processes that may also experience disagreements and unlimited liability of business partners (Sutherland and Canwell, 2008). Cooperatives have such advantages as low operation costs and lower capital requirement but faces challenges in attracting equity, inability to expand and conflict among members (Hansen, 2013). Companies have wider capital base and specialized managements but have many legal requirements and owners may lack control (Twomey, Jennings and Fox, n.d.). This paper seeks to support the position that business, through these forms, plays an important role in the society with focus on roles of business on the society, ability of business workers to make decisions, and adverse effects of business on business workers. The different forms of business organizations exist in the society and the two institutions interact to shape one another. Members of the society own business organizations and derive benefits, in return on investments, from the businesses. Existence of businesses within the society also identifies expectations of businesses from members of the society while members of the society also have expectations from businesses. Carroll and Buchholts explain a dual way interaction between business and the society and from which the role of business on the society and its effects on members of the society can be explored. The society has rules and regulations, based on cultural and ethical believes, which influences position and power of businesses in its existence within the society and reliance on the society for survival dictates that businesses comply with the society’s rules. The need for positive relations with the society, as a marketing strategy for businesses, is one of the reasons for compliance with the society’s rules I order to avoid possible rejection of an organization and its products as could be the case of social boycott. Ethical rules in a society would for example dictate policies that a business organization can enact and programs that can be implemented in the society and a developed understanding allows a business to exploit resources from the society and to offer its products back to the society (Carroll and Buchholts, 2011). The relationship between business and the society is also defined from both parties’ expectations. While the society expects businesses to conform to its values, businesses also expect the society to accept its needs and meet them. Such a balance is however not easy to strike because of the capitalistic power allows business to dictate terms to the society. Need for employment by members of the society for example forces people to give in to such unfair conditions such as low wages and high working hours as dictated by capitalist business owners. The oppression is more significant in monopolistic institutions but scarcity of employment opportunities relative to employable population restricts the society’s bargaining power. The society’s expectations from businesses has also established the concept of corporate social responsibility that has influence businesses to ensure that their decisions and activities are consistent the society’s well physical and psychological well-being. Even though legal provisions have strengthened the need for businesses sensitivity to its environment and immediate society, other factors such as ethical sensitivity and the need to be competitive against other businesses influenced business actions towards the society towards relative fairness. The expected interaction between business and the society and effects of the capitalists power the role of business in the society, its positive effects on employees in empowering them, and its negative impacts such as oppression and poor working conditions that compromises employees’ well being (Carroll and Buchholts, 2011). Role of business in the society Unlike the traditional objective of business, which was to maximize on the profit, current business objective include profit motive, consumer satisfaction, employees welfare and national interest (Mikkelsen and Langhelle, 2008). The core role of business to the owner is to make profit and an entrepreneur funds the business unit with objective of gaining returns on his investments. Business also has role to satisfy the demands of the market. This is because absence of a good or service to satisfy utility of a consumer is always the driving factor to start a business. Successful business entities should be capable of identifying a gap in the market to provide necessary goods and services required. Another mandate of a business in the society is to uphold the welfare of workers through ensuring favorable working environment. This is because business, being an independent entity, should ensure that the working and living conditions of the workers are humane. Workers remuneration should be justified by the workload performed. The role in ensuring workers’ welfare has two foundations: legal requirements and social obligation. Labor laws exist that defines businesses’ decisions such as standards for ensuring employees’ safety and minimum wages to employees as well as working hours that employees can be subjected to. At the national level, the business has a duty to contribute to the development of the nation. The business is obligated to pay taxes, which facilitate the development of national interest. Business parties could further participate in the national interest through creation of both formal and informal employment opportunities. Creation of employment opportunities results to decreased national employment rates and decreases incidents of social vices in the society (Jain, 2009). Stastry argues for businesses’ role in social well being that can be understood through corporate social responsibility. The author argues that business must be sensitive to social needs and must shape their activities to environmental conservation and preservation. One of the major strategies to achieving this role is through restraint from activities that can cause harm to the environment and promotion of activities that derives benefits to the environment. Recycling of harmful wastes is an example (2011). Businesses also play the role of developing economies through development of commodities for domestic and foreign trade. This can be understood through macroeconomic perspective of gross domestic product that depends on the quantity of products that an economy can generate through its business activities such as manufacturing and processing activities. Generated goods and services for exchange across an economy’s borders also earns foreign exchange, improves an economy’s balance of payment and the strength of an economy’s currency (Krstovic, Bakic and Kostic, 2012). An empirical study that focused on the role of small and medium sized organizations supported the role of the forms of organization in economic development and social responsibility. Another fundamental role of businesses, from the research, identified community development and employees’ welfare and consumer’s plight as the role of business organizations. Businesses’ meets consumers’ needs through their role in supply chains that ensure availability of goods and services to consumers. Cooperatives also play similar roles (Inyang, 2013; Taddei and Delecolle, 2012). Decision making ability of business workers The relationship between business organizations and the society also identifies significance of employees’ decision-making ability in organizational set ups. This is because organizations relies on employees to undertake operations and rationale for correct decisions is necessary for accurate implementation of developed plans and for development of solutions to organizations’ emerging problems. An empirical study by Costa, Leal, and Nunes identifies significance of employees’ decision making potentials as the authors explored employees decision making ability. The study identified the need for early identification of decision-making problems among employees for corrective measures, and this would only be necessary is decision making potential is a fundamental requirement among employees in an organization. With a proposal that early detection of decision making problems among employees allows for improvement of a business’ work environment and promotes employees’ retention, the authors assumes the position that decision making ability is important to collective ability of an organization’s workers and helps in sustaining employee’s productivity (Costa, Leal and Nunes, 2011). Business also plays an important role in promoting employees’ ability to make decision and this is instrumental to all scopes of the employees’ lives. Experience that employees gain from their business environments empowers their rationale and as Meister (2010) explains, efficient utilization of accumulated knowledge and skills, by workers, could result in enhancement of organizational functioning. Workers in a business unit have the ability to identify factors that may promote the growth of the business or factors, which may hinder efficient operation of the organization. Workers abilities to make decisions could be cultivated through empowerment of the workers by delegating major decision-making roles to employees (Mark, 2005). While worker may shy away from decision-making responsibilities because of fears and lack of self-confidence, business organizations empowers workers through orientating them into decision making work environments by offering clear statement of duties and responsibilities of employees. Identification of potential fears and counseling and training on strategies for overcoming the fears is another role that businesses play in empowering employees’ decision making potential and once the employees are empowered, the business are the primary beneficiary (Mark, 2005). Most organizations also prefer empowering their employees as a management strategy and this identifies significance of the worker’s potentials for managerial purposes at different levels of an organization’s structure. Hardina and Montana (2011) explains that managers prefer empowering staff fro decision making initiatives as opposed to empowering clients and this have two corollaries. Businesses appreciate their workers’ decision-making potentials and values the ability that client’s decision-making ability. As a result, management would promote initiatives for worker’s empowerment in decision-making. The workers are then able to use the developed potentials in their duties, their personal lives and in the society. Empowering employees to decision-making ability however requires a diversified approach because people process information in different ways and may therefore require different environments for optimal rationale for decision-making. Achieving optimal decision making potential would therefore require organizations’ initiatives such as transformation of work environment towards core objectives of organizational efficiency and effectiveness that can be achieved from decisions that are accurate to meet their intended purpose (Turner and Makhija, 2012). Adverse effects of businesses on business workers Business activities offer diversified benefits to the society but it also has adverse effects on the society and on workers. Some of the benefits to the society include social responsibility and community development initiatives, and overall economic empowerment as a source of cash flow to members of the society. Employees also benefit from earned salaries and wages from their services and empowerment such towards leadership and decision making potentials. Businesses’ workers and the society are however prone to adverse effects of businesses activities and decisions. Poor work environment, for instance, exposes workers hazards such as stress and illnesses. Poor hygiene in environments such as manufacturing and processing industries threatens health through polluted environments that may cause diseases and allergic reaction. Poor working conditions also increase workers’ vulnerability to stress and associated complications. Claims of relationship between stress level and diseases also identify poor health as a negative effect that businesses have on employees. Major research and surveys have correlated high levels of stress and diseases with business activities. Working for long hours cause workers to suffer from fatigue and work related stress. One type of stress that has been associated with long working hours is burnout. Burnout may be in form of exhaustion cynicism and form of ineffectiveness (Adley, 1997). In addition, workers also suffer from occupational diseases results due to workers being in a given working environment and working under specific conditions such as long hours. All these dioceses and tress have negative impact on the general health of the worker (Lundberg, 2010). Business trends also offer adverse effects on workers financial positions as salaries and wages vary by business trends. While improvements in business trends may offer increments in benefits and remunerations, declining trends such as during economic recessions and inflations strain businesses and forces them to reduce worker’s wages and other benefits. Income strains among workers have also resulted from other causes such as technological developments and changes in the labor market. Krashinsky, for instance, explains a historical shift with a declining trend in salaries and wages in the labor market. The decrease is further significant among employed workers in business organizations than among self-employed individuals. While the renumerations and rewards decrease, living standards have continuously increased and strained employees ((Krashinsky 2008)). Business ethics would have required an equitable adjustment of salaries, wages, and other rewards to reflect on economic and social trends but businesses’ capitalistic approach dictates cost minimization strategies and employees suffer from vulnerability to poor living standards or assumption of part time jobs in order to meet the extra needs. This further induces stress among employees and may cause such complications as cardio vascular diseases, obesity, and diabetes. Regulations for workers protections such as laws on minimum wages and fair compensations should therefore be modified for effectiveness because their current provision offer loop holes that allow businesses to oppress workers. Other negative effects that businesses have on workers include low self-esteem poor level of intrinsic motivation, rebellious behavior, and poor attitudes that may arise from such poor treatments as low remunerations and lack of job security (Krashinsky 2008). Conclusion Business defines the exchange of commodities in goods and services with the aim of making profits. Different forms of business organizations exist for conducting businesses and they include sole proprietorships, partnerships, cooperatives, and companies. The forms of business organizations have distinct features that define their advantages and disadvantages. Rules and regulations as well as expectations also exist between businesses and the society to regulate their relationships but capitalist power centers offers business power over the society. Based on the power, businesses are able to play such roles as economic empowerment, community development, and social responsibility besides workers’ empowerment. Interest in worker’s productivity has also promoted employees’ decision-making ability that is applicable in workplaces and in the society. Businesses has also offered negative impacts on members of the society and on employees through poor remunerations and poor working conditions that have led to psychological and physiological complications. The relationship between business and the society is therefore real and should be regulated for mutual benefits. References Adley, K. (1997). Occupational Stress: A Practical Approach. New York: CRC Press. Carroll, A. and Buchholts, A. (2011). Business and society: Ethics, sustainability, and stakeholder management. Mason, OH: Cengage Learning. Costa, A., Leal, R. and Nunes, I. (2011). An exploratory study of the Work Ability Index (WAI) and its components in a group of computer workers. IOS Press (39.4): 357-367. Gitman, L. and McDaniel, C. (2008). The future of business: The essentials. Mason, OH: Cengage Learning. Hansen, H. (2013). 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