Business Ethics, the Changing Environment,

and Stakeholder Management

Environmental Forces and

Stakeholders
Organizations are embedded in and interact with multiple changing
local, national, and international environments.
These environments are increasingly merging into a global system of
dynamically interrelated interactions among businesses and
economies.
We must think globally before acting locally in many situations. The
macro level environmental forces that affect the performance and
operation of industries, organizations, and jobs.
This framework can be used as a starting point to identify trends,
issues, opportunities, and ethical problems that affect people and
stakes in different levels.
A first step toward understanding stakeholder issues is to gain an
understanding of environmental forces that influence stakes.

Environmental Dimensions Affecting

Industries, Organizations, and Jobs

Demographic Environment

Denotes characteristics of population in area (race, age, income, educational

attainment, asset ownership, employment status, Size, growth rate, age
composition, sex composition of population, family size, educational levels,
economic stratification of the population, language, caste, religion, and location).

POPULATION
SIZE
GEOGRAPHIC
DISTRIBUTION

Change in birth rate, family size

Increase and decline in total population
Effect of Rapid population growth on natural resources

Attractiveness of Companies location.

Availability of qualified work force
Concept of working from home due to IT revolution

ETHNIC MIX

Change in product and service design

Demand of new products and services
Culturally diverse work force
Advantages of work force heterogeneity

INCOME
DISTRIBUTION

Individual and group purchasing power

Consumption
Spending
Saving pattern

EconomicEnvironment
EconomicEnvironment Economic environment refers to the aggregate of
the nature of economic system of the country, business cycles, the socioeconomic infrastructure etc. The successful businessman visualizes the
external factors affecting the business, anticipating prospective market
situations and makes it suitable to get the maximum benefits with
minimize cost. Important factors are: Economic conditions, Economic
policies, and Economic systems
Economic condition
The economic conditions of a country for example, the nature of the
economy, the stage of development of the economy, economic resources, the
level of income, the distribution of income and assets, etc.- are among the
very important determinants of business strategies. In a developing country,
the low income may be the reason for the very low demand for the product.

CONSUME
RS /
CUSTOME
RS

Who are the customers and what benefits they are looking at? What are their buying
patterns and buying habits? Difference between customer and consumer?

Who are competitors (competing for both resources and markets)? What are their
COMPETI present strategy and business objectives (direct and indirect competition)? Who are most
TORS
powerful and aggressive competitors?
People occupying different positions and their background (their varied interests)?
ORGANIZA Analysing objectives, goals and resource availability? Groups influencing an
TION
organization (Owners, Board of Directors, and Employees)?
Market actual and potential size, growth prospects and its attractiveness? Study of Cost
structure, price sensitivity, technological structure and distribution system? Is market
MARKET
mature?
Suppliers are important (provides raw material, components, and services)? Suppliers
SUPPLIERS own bargaining power affect cost structure of the industry? Outsourcing or In house
production depends on supplier environment?

MARKET
INTERMEDI
ATER IES

Major influence (middle man, marketing agencies, financial and physical intermediaries)?
Consumer is not aware of manufacturers? Adds to cost structure?