Major groups of societal issues confronting businesses today

Business today is confronted with major groups of societal issues: the economy, people-oriented management, ecology and environmental protection, consumerism, and the energy crisis. 

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Nearly all specific societal questions fall into one of these general areas. Some issues are interrelated. The energy crisis, for example, has led to concern over the use of petroleum resources, but it also has raised important consumer, ecological, and inflation issues.

The economy

Business decisions play a key role in health in every country. These decisions are based upon business' perception of changes in economic factors like interest rates and consumer sales, as well as shifts in governmental and Federal Reserve Board policies that affect industry. The results of these decisions have a significant impact on the general public. So businesses must be certain that the decisions they make are socially as well as economically acceptable.

Every government are justifiably concerned about the economic dangers of inflation and unemployment. Both have the potential to alter the lifestyles, and both have done so in recent years.

Inflation refers to the decreasing purchasing power of a nation's currency, often defined in terms of rising prices. Inflation has often been a critical economic problem for both consumers and businesses. The two traditional types of inflation are demand-pull and cost-push. 

Demand-pull inflation occurs when there is too much money relative to products available. In other words, if consumer demand for a product is greater than its supply, the price of the item will tend to go up. Cost-push inflation results from rising costs (labor, raw materials, interest rates, and the like) that are passed onto the consumer.

The biggest inflation threat in mid-1980s is the growing federal budget deficits. Although inflation is currently in check, many worry that federal deficits will lead to higher prices as the government borrows to pay its bills.

Inflation calls for adjustments on the part of consumers, who have shown an ability to react sensibly in the past. When meat prices were high, for example, soybeans became popular meat extender. Consumers also cut expenses where possible and delay purchases. Some even take direct action when prices get too high. 

For instance, consumer boycotts of various products and sellers became common place during the past decade. But producers have also boycotted the marketplace. Farmers, for example, have tied up traffic in several cities with their slow-moving tractors in an effort to secure higher prices for their products.

Business people must also deal with the rising price spiral. Higher costs must be absorbed or passed on to the consumer. Management had to adopt innovative responses to the problems of inflation and tight budgets. Consider the past actions of the following firms. 

Many corporations have ordered their executives to fly coach class rather than first class on plane trips. Others have eliminated the traditional employee gifts at Christmas time. Still others have posted notices at light switches, encouraging employees to turn off lights that aren't needed in an attempt to cut utilities costs.

Inflation does not have a negative impact on all firms. Discount stores, do-it-yourself kits, energy-saving items, secondhand outlets, and generic drugs all do well in an inflationary economy.

Unemployment as jobless people who are actively looking for work. Some are just temporarily out of a job; others face much longer periods of unemployment because they lack the skills to compete in today's labor market.

While double-digit inflation was the primary economic concern of the late 1970s and 1980s, unemployment figures have been the economic curse in recent years. The term stagflation has been used to describe a situation in which there is both high unemployment and a rising price level.

Every country, unemployment is a serious economic problem. For the most part, business has taken socially responsible actions during periods of high unemployment. Examples include the severance pay, job transfer, and retraining programs of manufacturers. Hundred of firms have tried to cushion the personal suffering caused by general economic conditions. Business has also joined labor, in many instances, to press for protection against foreign products that export jobs abroad.

On the other hand, management has sometimes felt it necessary to press employees to take wage cuts to remain competitive. Examples are the US Steel and Eastern Airlines. Still other firms have had to turn to foreign-made parts to remain competitive and preserve a scaled-back level of employment. These firms argue that without such actions, they would no longer be competitive in their own domestic market and would eventually fail.

People-oriented management

Business executives must strive to maintain a people-oriented philosophy of management. The daily press of commercial activity often makes it easier to deal with numbers, organization charts, interoffice memos, and administrative procedures. Insensitivity to human needs is a critical problem in nearly all organizations; yet, a humanistic approach to management is always good business, regardless of the industry.

The special needs of some people have been neglected. The physically handicapped have had to overcome managerial barriers in order to achieve occupational dignity. Individuals who have served time in jails or prisons need jobs that will keep them from returning to criminal activity. Coal miners are often affected by "black lung," an occupational disease of their industry.

These situations reflect dissatisfaction on the part of people involved in or affected by business organizations. Such people argue that business has been too concerned about short-run profitability, machinery, evaluation, and control of corporate personnel and not concerned enough about the people involved. One of the aims of social responsibility is the achievement of a new concept of management that will take into account people-oriented concerns.

Workers are more productive when they have a sense of participation in the decisions affecting them. Human resource development has thus become major organizational objective for many businesses. West German firms have labor representation on management boards. Swedish automobile manufacturers have pioneered the concept of job enrichment for assembly-line workers. American companies have substantially upgraded their equal opportunity employment and affirmative action programs over the years.

People-oriented management requires a careful balance between productivity and profitability objectives on one hand and employee desires on the other. Is the four-day (four working days of ten hours each) as productive as the traditional five-day, forty-hour workweek? This is the type of questions that must be answered by management.

Ecology and environment protection

Ecology and environmental protection can be vital issue in modern business. Ecology - the relationship between people and their environment - is an important managerial consideration from legal as well as a societal viewpoint.

Nearly everyone accepts the premise that we should maintain an ecologically sound environment. But the achievement of this goal requires trade-offs that we are not always willing to make. For example, although we fear the oil spill danger of supertankers, we insist upon readily available supplies of gasoline at reasonable prices. Coal-burning boilers were once converted to oil-using furnaces in order to cut air pollution.

Ecological goals are important. However, the real issue is whether we can coordinate these goals with other societal and economic objectives. No clear consensus has emerged on this matter.

Pollution - the tainting or destroying of a natural environment - is the major ecological problem today. We are constantly being reminded of the dangers of water and air pollution. Automobiles now have elaborate emission control devices. Smoke-belching factories are fined by environmental protection authorities. Municipal water and sewer treatment systems are being improved.

Society faces two major questions about pollution. One is whether the benefits of cleaning up any particular form of pollution are worth the costs involved. The other is whether we are willing to pay now for a future ecological benefit. While most of us recognize the current pollution problems, our willingness to pay for corrections is sometimes doubtful. Gulf Oil, for example, had to withdraw unleaded gasoline when it first appeared because of low sales.

Disposable packaging, such as throwaway plastic bottles, has cremated a major ecological problem. Trash of this type continues to pile up, showing an amazing resistance to decomposition. Some states have taken action to reduce accumulations of trash. Several have passed legislation requiring deposits on all soft drink and beer bottles and cans. 

But the most logical approach, recycling, remains underutilized. It has been estimated that recycling - the processing of used materials for reuse - could provide two-fifths of the materials required in our manufacturing sector. While the recycling concept has received considerable public support, a comprehensive system has yet to be implemented. The basic question "Who is going to pay for it?" remains unanswered.

Consumerism

Consumer demands are another pressing issue facing business. Consumerism - the demand that businesses give proper consideration to consumer wants and needs in making their decisions - has become a major social and economic movement within other industrialized nations. Ralph Nader has been a leading contributor to this movement. His book Unsafe at Any Speed was one of many consumer criticisms leveled against the auto industry. Some were justified; others were not.

Since the emergence of consumerism in the 1960s, consumer groups have sprung up throughout the country. Some concentrate on an isolated situation, such as rate hikes by a local public utility, while others are more broadly based. The net effect has been the passage of consumer protection laws covering everything from unethical sales practices to the licensing of persons in the repair business. There is little doubt that more consumer protection laws will be passed in the years ahead, and business would be well advised to heed the warnings of the consumerism movement.

An excellent description of consumer rights was:

·         The consumer has the right to safety.

·         The consumer has the right to be informed.

·         The consumer has the right to choose.

·         The consumer has the right to be heard.

Much of the post-1962 consumer legislation has been based on these rights. They are an excellent set of guidelines for business to use in assessing various consumer demands.

In fact, many companies have gone to considerable effort to assure that consumer complaints are given a full hearing. Ford Motor Company, for example, has set up a consumer appeals board to resolve service complaints.

Energy

The term emery crisis refers to the world's diminish ability to provide for its current and future needs. The country's energy demand will grow by approximately to higher percentage. Approximately the energy demand will be for oil and for gas.

Also during this period, the demand for coal is also expected to rise, and nuclear energy. Hydropower and other energy sources are expected to energy demand.

The impact on business

The energy crisis has had an enormous impact on business. For example, consider the case of Detroit Diesel Allison, a division of General Motors. Sales of engines for trucks and construction equipment declined when fuel costs went up, but demand for diesel and gas turbine engines used in oil rigs increased. Detroit Diesel Allison has also benefited from the increased demand for its helicopter engines used in the aircraft carrying workers to and from ocean drilling platforms.

The US automobile industry suffered severe sales losses until they were able to offer more fuel efficient vehicles to compete with the imports. But businesses have also been affected in other ways. All firms have felt pressure to curtail their own use of energy. Virtually all major energy users have instituted programs to cut energy usage and, thus, moderate future increases.

Components of energy problem

Energy is certainly a complex societal issue. The problem can be divided into its short-run and long-run components. In the short run, the issue is one of conservation - the preservation of declining energy resources. A myriad of conservation programs have been proposed or implemented. 

The success of these plans has been mixed. Some programs have not been as effective as people had hoped; others have been widely ignored by the public. For example the advocates of the 55-mile-per-hour speed limit now emphasize its safety advantages rather than gasoline savings.

Another oil embargo could bring conservation measures to the forefront again. But the emphasis for now has shifted to seeking long-term solutions to the nation's energy dilemma. The long-run problem can be divided into two critical questions:

1. How can we best discover and develop alternative energy resources?

2. How do we coordinate our growing need for energy resources with other societal goals?

It is evident to most people that other nations will need to develop alternative energy resources. Nuclear power, wind, sun, synfuels, coal, even garbage and other waste products - all have been suggested as possible substitute for oil and natural gas. While the search for new energy sources generates considerable public interest, the basic question of how to discover and develop them remains unresolved.

The second question - how to coordinate our growing need for energy resources with other societal needs - is also important. Sometimes national energy needs clash with ecological and environmental objectives. One such situation arose with the proposed construction of a pipeline beneath Puget Sound to carry Alaskan oil to the East.

Conflicts are to be expected. They are a natural aspect of business, and one which must be dealt with if management is to prove effective.