The Business Environment Themes and Issues PDF

 Political Economic Social The Business Environment Technological Themes and Issues Legal...

 Political Economic Social The Business Environment Technological Themes and Issues Legal Environmental This page intentionally left blank The Business Environment Themes and Issues Second edition Paul Wetherly and Dorron Otter  Great Clarendon Street, Oxford ox2 6dp Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © Oxford University Press 2011 The moral rights of the authors have been asserted Database right Oxford University Press (maker) First published 2008 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Data available Typeset by Techset Printed in Italy on acid-free paper by L.E.G.O. S.p.A. – Lavis TN ISBN 978-0-19-957960-0 1 3 5 7 9 10 8 6 4 2  For Mum (PW) To Ingrid, Soren, Freddie and Ferdy as well as Mum, Dad, Ley and Jackie (DO) This page intentionally left blank NEW TO THIS EDITION This edition has been thoroughly updated throughout, with a large proportion of new case and illustrative material added. The chapters have been re-structured and include a new chapter on equal business oppor- tunities (Chapter 12). The editors have further improved the accessibility and consistency of all the contributed chapters and updated the book thoroughly to incorporate numerous developments including the global financial crisis and its implications for the business environment. This page intentionally left blank CONTENTS List of cases.........................................................................................................xix About the authors.............................................................................................xxiii About the book................................................................................................xxvii How to use this book........................................................................................xxix How to use the Online Resource Centre.........................................................xxxi Acknowledgements.........................................................................................xxxiv 01 Introduction: ‘business’ and its ‘environments’............................................1 Paul Wetherly and Dorron Otter PART ONE Environments................................................................................................ 31 02 The economic environment............................................................................ 32 Dorron Otter 03 The technological environment..................................................................... 63 Dorron Otter 04 The political environment................................................................................ 86 Paul Wetherly 05 The legal environment..................................................................................... 114 David Amos 06 The social and cultural environment.......................................................... 143 Paul Wetherly PART TWO Issues............................................................................................................... 171 07 Keeping the economy stable......................................................................... 172 Chris Mulhearn and Howard R. Vane 08 Globalization of business: Good or bad?................................................... 204 Dorron Otter 09 Can the marketplace be ethical? Corporate responsibility................. 229 Simon Robinson 10 Global warming, pollution, resource depletion and sustainable development: Is business the problem, and can it be part of the solution?............................................................................................................... 257 Eamonn Judge 11 Does business have too much power?....................................................... 286 Paul Wetherly 12 Are opportunities in business equal?......................................................... 314 Stephen Taylor and Paul Wetherly x Contents 13 European business: a deepening or widening Union?......................... 343 Stratis Koutsoukos 14 The changing public sector: becoming more ‘business-like’?............ 374 Richard Rooke 15 Entrepreneurship and enterprise: national drivers of economic performance?................................................................................. 402 Alison Price and Martyn Robertson 16 Conclusion: themes and issues—looking ahead...................................... 437 Dorron Otter and Paul Wetherly Glossary.............................................................................................................. 463 Index...................................................................................................................475 DETAILED CONTENTS Detailed contents............................................................ xi Case Study: ‘UK plc’............................................................................27 List of cases...................................................................xix Review and discussion questions....................................................29 About the authors.......................................................xxiii Assignments............................................................................................29 About the book..........................................................xxvii Further reading......................................................................................29 How to use this book..................................................xxix Useful websites.......................................................................................29 How to use the Online Resource Centre...................xxxi References................................................................................................30 Acknowledgements...................................................xxxiv 1 Introduction: ‘business’ and its PART ONE Environments.................................. 31 ‘environments’....................................................... 1 2 The economic environment......................... 32 Paul Wetherly and Dorron Otter Dorron Otter The approach of this book—themes and issues....................... 2 Themes...............................................................................................32 What is business?..............................................................................5 Introduction.....................................................................................33 What is business? Broad and narrow definitions..................5 Dealing with the problem of scarcity................................................ 7 Describing the economic environment..................................33 Labour....................................................................................................34 The private sector of business.....................................................9 Land........................................................................................................34 The private sector—on closer inspection...............................11 Capital...................................................................................................34 Free market vs. regulation?...............................................................11 Enterprise...............................................................................................34 Competition vs. market power?.......................................................12 Developing the economic problem.........................................34 Profit vs. social responsibility?...........................................................13 Commodities........................................................................................34 Other sectors of business—the public sector Efficiency...............................................................................................37 and the third sector.......................................................................15 Perspectives on the economic environment........................37 Differences between the private and public sectors....................15 The price mechanism.........................................................................39 A simple model of business in its environment— Neoclassical economics......................................................................41 transforming inputs into outputs..............................................17 The case for government intervention...................................41 Porter’s ‘five forces’ model.................................................................19 Disadvantages of the market system..............................................42 Conceptualizing the environment of business....................19 Competing critiques—the need to acknowledge the Spatial level—local to global.............................................................19 modern nature of capitalism............................................................43 Immediate and general environments...........................................20 Markets and how they operate.................................................45 Environmental uniqueness................................................................20 Demand and supply...........................................................................45 Interaction between business and the environment— Demand and price..............................................................................47 responding, influencing, and choosing..................................21 Demand curves....................................................................................48 Responsiveness.....................................................................................21 Supply and price..................................................................................49 Influence................................................................................................21 Surplus in the market.........................................................................50 Choice of environment.......................................................................22 Shortages in the market.....................................................................51 Environmental analysis................................................................24 Analysing market changes: the significance of Markets and uncertainty..................................................................24 equilibrium............................................................................................52 PEST......................................................................................................24 Equilibrium analysis explained.........................................................52 SWOT....................................................................................................24 Equilibrium analysis—guidelines for use.........................................53 Stakeholder analysis...........................................................................25 Market power.......................................................................................53 Summary...........................................................................................26 Income elasticity of demand.............................................................56  xii Detailed contents Looking ahead.................................................................................57 Managing the economy....................................................................92 Case Study: The 2007 Credit Crunch and the The international dimension.............................................................92 Future of Capitalism...........................................................................59 The UK political system................................................................93 Summary...........................................................................................59 Growth of the state.............................................................................93 Liberal democracy...............................................................................94 Review and discussion questions....................................................61 Multi-level governance......................................................................97 Assignments............................................................................................61 Further reading......................................................................................61 Political values and ideologies...................................................99 Useful websites.......................................................................................62 Left versus right................................................................................. 100 References................................................................................................62 Ideology and political parties................................................. 103 The main political parties......................................................... 105 The Conservative party................................................................... 105 3 The technological environment................. 63 The Labour party.............................................................................. 107 Dorron Otter The Liberal Democrats.................................................................... 109 Themes...............................................................................................63 Looking ahead............................................................................. 110 Introduction: what is technology?............................................64 Summary........................................................................................ 110 How does technology foster business growth Case Study: The Return of ‘Big Government’?................... 111 and development?.........................................................................65 Review and discussion questions................................................. 112 Total ouput/total amount of labour................................................66 Assignments......................................................................................... 112 Creating the conditions for economic growth.....................66 Further reading................................................................................... 113 Competing perspectives about the role of Useful websites.................................................................................... 113 technology—assessing the evidence........................................70 References............................................................................................. 113 Technology promotion within a business..............................72 The technology debate................................................................74 5 The legal environment.................................. 114 Military technology.............................................................................75 The legal environment and the themes of Energy technologies............................................................................75 the book.......................................................................................... 114 New technologies................................................................................76 Introduction.................................................................................. 115 Appropriate technology.....................................................................79 What is the law?........................................................................... 116 Looking ahead.................................................................................80 Sources of the law....................................................................... 116 Summary...........................................................................................81 Case law/precedent......................................................................... 117 Case Study: Just Google it!.............................................................82 Legislation.......................................................................................... 117 Review and discussion questions....................................................83 Structure of the courts..................................................................... 118 Assignments............................................................................................84 Criminal cases................................................................................... 119 Further reading......................................................................................84 Civil claims......................................................................................... 119 Useful websites.......................................................................................85 The European Court of Justice....................................................... 119 References................................................................................................85 Tribunals and alternative dispute resolution.............................. 119 The European Union................................................................. 120 4 The political environment............................. 86 Sources of European law................................................................ 120 Who makes European law?........................................................... 121 Paul Wetherly Who enforces European law?........................................................ 122 Themes...............................................................................................86 Business organizations.............................................................. 123 Introduction: what is politics? Why is politics Sole traders........................................................................................ 123 necessary?.........................................................................................87 Partnership......................................................................................... 125 What has politics got to do with business?............................88 Limited Liability Partnerships........................................................ 126 The interdependence of business and government..........90 Companies......................................................................................... 126 Regulation.............................................................................................90 Separate legal personality.............................................................. 127 Taxation.................................................................................................91 Effect of separate legal personality....................................... 128 Public services......................................................................................91 Shareholders/members............................................................ 128 Government as customer...................................................................91 Directors............................................................................................. 129  Detailed contents xiii Directors’ legal duties...................................................................... 130 Company secretary/auditor........................................................... 130 PART TWO Issues................................................171 General Meetings and written resolutions.................................. 131 7 Keeping the economy stable...................... 172 Legal action by shareholders......................................................... 131 Chris Mulhearn and Howard R. Vane What is the company for?.............................................................. 132 Themes............................................................................................ 172 How far should the law intervene—regulation v Introduction: the economy and deregulation.................................................................................. 133 macroeconomic policy.............................................................. 172 Deregulation?.................................................................................... 133 Regulation?........................................................................................ 134 The objectives of macroeconomic policy........................... 173 Macroeconomic objective 1: A stable and satisfactory Self regulation?................................................................................. 136 rate of economic growth................................................................ 174 Looking ahead.............................................................................. 137 Long-term growth............................................................................ 177 Summary........................................................................................ 137 Short-term growth........................................................................... 179 Case Study: The Working Time Directive.............................. 138 Macroeconomic objective 2: A high and stable level Review and discussion questions................................................. 139 of employment, and a consistently low level of Assignments......................................................................................... 139 unemployment.................................................................................. 180 Further reading................................................................................... 140 Macroeconomic objective 3: A low and stable rate of Useful websites.................................................................................... 140 inflation.............................................................................................. 184 References............................................................................................. 141 The case for stabilizing the economy................................... 186 Case law................................................................................................. 142 Questioning the need to stabilize output and employment................................................................................. 190 6 The social and cultural environment...... 143 From stabilization policy to controlling Paul Wetherly inflation........................................................................................... 193 Themes............................................................................................ 143 Macroeconomic policy and the 2008-09 Introduction: what is the social and cultural recession—a rebirth of Keynesianism................................... 196 environment?............................................................................... 144 Looking ahead.............................................................................. 198 Demographic trends—an ageing population..................... 144 Summary........................................................................................ 199 An ageing population..................................................................... 146 Case Study: What Does an Independent Implications of ageing for business and society........................ 149 Central Bank Do?.............................................................................. 200 The proposals of the Turner report............................................... 150 Review and discussion questions................................................. 202 Immigration and multiculturalism........................................ 153 Assignments......................................................................................... 202 Implications of immigration for business and society.............. 155 Further reading................................................................................... 202 Class structure............................................................................... 156 Useful websites.................................................................................... 203 The meaning of class....................................................................... 156 References............................................................................................. 203 Capitalism and class........................................................................ 157 The occupational order................................................................... 158 8 Globalization of business: Relevance of the class structure to business............................... 162 Good or bad?.................................................... 204 Inequality....................................................................................... 162 Dorron Otter Equality of opportunity versus equality of outcome................. 162 Themes............................................................................................ 204 The earnings distribution................................................................ 163 Introduction: the impact of globalization on Executive pay.................................................................................... 164 the business environment........................................................ 205 What has inequality got to do with business?........................... 164 Globalization: from local to global?............................................ 206 Looking ahead.............................................................................. 167 What is globalization?................................................................ 207 Summary........................................................................................ 167 International trade and the creation of the global Case Study: Decline of the Working Class?........................... 168 marketplace....................................................................................... 207 Review and discussion questions................................................. 169 Globally organized production and investment flows............. 208 Assignments......................................................................................... 169 Migration........................................................................................... 209 Further reading................................................................................... 169 Communication flows..................................................................... 209 Useful websites.................................................................................... 170 Cultural flows.................................................................................... 209 References............................................................................................. 170 Rapid technological change.......................................................... 210  xiv Detailed contents The growth of globalization..................................................... 210 Looking ahead, beyond the triple bottom line................. 250 Perspectives on globalization................................................. 211 Summary........................................................................................ 251 Classical and neoclassical views................................................... 211 Case Study: Nestlé and Infant Formula................................. 251 Ricardo and comparative advantage.......................................... 211 Review and discussion questions................................................. 253 Radical/Marxist views: globalization is bad—the Assignments......................................................................................... 253 dependency tradition....................................................................... 214 Further reading................................................................................... 254 Structuralist writers—globalization could be good if …............. 215 Useful websites.................................................................................... 254 Global ethics for the global business?.................................. 218 References............................................................................................. 254 Global CR........................................................................................... 220 Global citizenship............................................................................. 221 10 Global warming, pollution, resource Employment practices..................................................................... 221 depletion and sustainable development: Human rights.................................................................................... 222 Is business the problem, and can Environment...................................................................................... 222 it be part of the solution?......................... 257 Abuse of market power................................................................... 223 Eamonn Judge Attitudes to graft and corruption.................................................. 223 Themes............................................................................................ 257 Looking ahead.............................................................................. 223 Introduction: the impact of sustainable Summary........................................................................................ 224 development issues on the business environment......... 258 Case Study: Coffee.......................................................................... 225 Historical context............................................................................. 258 Review and discussion questions................................................. 226 Moving from history to the present day...................................... 259 Assignments......................................................................................... 227 The current global environmental problem and Further reading................................................................................... 227 business, and the international response........................... 260 Useful websites.................................................................................... 227 The current global environmental problem............................... 260 References............................................................................................. 228 International responses: the ‘Earth Summit’ and after............ 264 The application of sustainable development 9 Can the marketplace be ethical? frameworks to environmental issues................................... 267 Corporate responsibility.............................. 229 Conventional frameworks for dealing with Simon Robinson environmental issues....................................................................... 267 Themes............................................................................................ 229 The concept of sustainable development (SD)........................... 269 Introduction.................................................................................. 230 Types of approaches for dealing with environmental The emergence of the CR agenda.......................................... 232 problems............................................................................................. 270 Key terms in the discussion of corporate Sustainable development and business.............................. 273 responsibility................................................................................ 233 Defining sustainability in relation to business........................... 273 Corporate responsibility.................................................................. 234 The significance of sustainable development for Corporate citizenship....................................................................... 234 business............................................................................................... 278 Business ethics................................................................................... 235 Looking ahead.............................................................................. 279 Justifying CR.................................................................................. 236 Summary........................................................................................ 280 The free market view of CR............................................................ 236 Case Study: Sustainable Transport for a Large Stakeholder theory and CR............................................................ 238 Business: The Case of Leeds Metropolitan The nature of responsibility, and motivations University............................................................................................. 280 for pursuing a CR policy............................................................ 240 Review and discussion questions................................................. 283 Self-interest........................................................................................ 241 Assignments......................................................................................... 283 Mutual interest................................................................................. 241 Further reading................................................................................... 283 Shared responsibility........................................................................ 242 Useful websites.................................................................................... 284 An overview of CR policy and process using References............................................................................................. 285 Petrobras as a case study.......................................................... 242 11 Does business have too much The process and practice of CR.............................................. 243 power?.............................................................. 286 Data gathering................................................................................. 243 Value clarification and management.......................................... 245 Paul Wetherly Responsibility negotiation and planning.................................... 248 Themes............................................................................................ 286 Audit.................................................................................................... 249 Introduction.................................................................................. 287  Detailed contents xv What is power? What’s it got to do with business?.................. 287 Paternity leave.................................................................................. 332 Bargaining power........................................................................... 292 Adoption leave.................................................................................. 332 Engagement with Civil Society Organizations................... 294 Parental leave................................................................................... 332 The right to request flexible working........................................... 333 Business in the political arena................................................. 296 Maternity pay and leave................................................................ 333 The representation of business interests............................ 297 Stress checks....................................................................................... 333 The play of interests and power in the political Employer initiatives.................................................................... 334 process............................................................................................ 298 The lessons of Sunday trading....................................................... 300 Summary—Does it matter? Is business responsible?.................................................................................. 336 The privileged position of business...................................... 305 Control without trying..................................................................... 305 Looking ahead.............................................................................. 338 Business as a political actor........................................................... 305 Case Study: Lloyds TSB and King’s Healthcare The consequences of globalization....................................... 305 NHS Trust............................................................................................. 339 Review and discussion questions................................................. 341 The ups and downs of business influence over Assignments......................................................................................... 341 policymaking................................................................................ 307 Further reading................................................................................... 341 Business influence—’nothing special’ or ‘unique’?............ 308 Useful websites.................................................................................... 341 Is business influence in the political process a References............................................................................................. 342 good thing?.................................................................................... 308 Looking ahead.............................................................................. 309 13 European business: a deepening or Summary........................................................................................ 310 widening Union?.......................................... 343 Case Study: The Political Influence of the Stratis Koutsoukos Car Industry........................................................................................ 310 Review and discussion questions................................................. 312 Themes............................................................................................ 343 Assignments......................................................................................... 312 Introduction: the EU and its members................................. 344 Further reading................................................................................... 312 Members and treaties...................................................................... 345 Useful websites.................................................................................... 313 Enlargement...................................................................................... 347 References............................................................................................. 313 Institutions and decision-making.......................................... 349 Council of Ministers of the European Union.............................. 349 12 Are opportunities in business European Parliament....................................................................... 350 equal?................................................................ 314 European Commission.................................................................... 350 Stephen Taylor and Paul Wetherly Decision-making in the EU............................................................ 351 Cultural diversity and business implications.............................. 351 Themes............................................................................................ 314 Integration and trade................................................................. 353 Introduction.................................................................................. 316 Restricted free trade: customs union to single Some preliminary definitions................................................. 316 market................................................................................................. 353 Why has equality of opportunity moved up the Higher level integration.................................................................. 354 agenda?.............................................................................................. 319 EU trade in a global business context.......................................... 355 A woman’s place?............................................................................. 321 The euro and business............................................................... 356 Flexible work..................................................................................... 322 Exchange rates and the euro......................................................... 356 Occupational segregation.............................................................. 323 Euro performance............................................................................. 358 The gender pay gap.................................................................... 325 Euro business strategy and operations: the UK and Why is work–life balance moving up the agenda?.......... 327 the euro............................................................................................... 359 Social trends....................................................................................... 327 Doing business in the new Europe........................................ 361 The intensification of work............................................................. 328 Doing business in the new Europe—stakeholder Labour market trends...................................................................... 329 management in the EU................................................................... 361 Government initiatives.............................................................. 329 Competition and industry policy.................................................. 362 Working time regulations............................................................... 330 Europe and the future: ever-closer union or... ?............ 366 Part-time workers regulations....................................................... 332 The Sapir Report............................................................................... 366 Time off for family emergencies................................................... 332 Scenarios for 2010............................................................................ 367  xvi Detailed contents Looking ahead.............................................................................. 368 Further reading................................................................................... 400 Summary........................................................................................ 369 Useful websites.................................................................................... 401 References............................................................................................. 401 Case Study: The Knowledge Economy: Finland and Nokia............................................................................................. 370 15 Entrepreneurship and enterprise: Review and discussion questions................................................. 371 national drivers of economic Assignments......................................................................................... 371 performance?................................................ 402 Further reading................................................................................... 372 Alison Price and Martyn Robertson Useful websites.................................................................................... 373 Themes............................................................................................ 402 References............................................................................................. 373 Introduction.................................................................................. 403 14 The changing public sector: Understanding enterprise and becoming more ‘business-like’?............. 374 entrepreneurship........................................................................ 403 Richard Rooke What is ‘an enterprise’ or SME?.................................................... 405 Themes............................................................................................ 374 Who is an entrepreneur?................................................................ 405 Defining the entrepreneur as social, serial, or an Introduction.................................................................................. 375 intrapreneur....................................................................................... 406 The public and the private sectors................................................ 376 What makes an entrepreneur?...................................................... 409 The present era................................................................................. 376 Key dimensions in the development of The political environment and public sector small business............................................................................... 410 management................................................................................. 377 Stage of growth................................................................................ 410 Politics and policymaking.............................................................. 377 Sector................................................................................................... 412 Central government and local authorities.................................. 378 General building contractors......................................................... 412 Public sector effectiveness and impact........................................ 380 Values of enterprise.......................................................................... 415 The changing public sector: becoming more ‘business like’?.................................................................................. 382 The importance of new businesses and SMEs.................. 417 Privatization...................................................................................... 382 Strengths and weaknesses of small businesses................. 422 New public management.............................................................. 383 Widening participation in entrepreneurship.................... 423 Pressure for reform........................................................................... 384 Female entrepreneurs...................................................................... 424 Approaches to reform in the context of public service Black and minority ethnic (BME) entrepreneurs....................... 427 management..................................................................................... 384 Graduate entrepreneurs................................................................. 428 An outline of the reform strategy and implementation in Looking ahead.............................................................................. 429 Great Britain...................................................................................... 385 Summary........................................................................................ 430 Public–private partnerships (PPPs)....................................... 387 Case Study: The Female Entrepreneur (Interview)........... 431 Private finance initiative (PFI)....................................................... 388 Review and discussion questions................................................. 433 The importance of data collection and the auditing of Assignments......................................................................................... 433 public services.................................................................................... 389 Further reading................................................................................... 433 Data, measurement, statistics, performance indicators.......... 390 Useful websites.................................................................................... 434 Auditing regimes............................................................................... 391 References............................................................................................. 434 Auditing organizations.................................................................... 391 The political and policy organizations................................. 392 16 Conclusion: themes and issues— The voluntary sector........................................................................ 393 looking ahead................................................ 437 Agencies, NGPBs.............................................................................. 394 Dorron Otter and Paul Wetherly Looking ahead.............................................................................. 395 Themes............................................................................................ 437 Summary........................................................................................ 396 Introduction.................................................................................. 438 Case Study: Fire Safety Provision in Society from the Looking back to the future....................................................... 440 Volunteer to the Professional..................................................... 396 The global business environment post-1945.............................. 440 Review and discussion questions................................................. 400 Domestic business environment in the first world.................... 442 Assignments......................................................................................... 400 Lessons to be learned?..................................................................... 443  Detailed contents xvii Looking ahead: the political environment......................... 444 Creating the knowledge economy—opportunities.................... 456 A new approach to combining the state and the Summary........................................................................................ 458 market? The impact of the 2008–10 global recession on the Case Study: The Football Business—The State of Play in political environment...................................................................... 444 2010........................................................................................................ 458 Challenges for the future political environment....................... 446 Review and discussion questions................................................. 459 Looking ahead: the economic environment...................... 448 Assignments......................................................................................... 460 Will lessons be learned?.................................................................. 448 Useful websites.................................................................................... 460 Prospects for growth........................................................................ 451 References............................................................................................. 461 Looking ahead: the social environment.............................. 452 Affluent societies............................................................................... 452 Glossary........................................................................463 The business response...................................................................... 455 Index.............................................................................475 Looking ahead: the technological environment.............. 456 This page intentionally left blank LIST OF CASES 1.1 Guiding the ‘hidden hand’—the minimum wage 12 1.2 What is business for? 14 1.3 Dyson: champion of British manufacturing? 23 Case Study: ‘UK plc’ 27 2.1 The cost of higher education 38 2.2 Does the pursuit of private profit lead to the common good? 40 2.3 The health business 44 2.4 The rise and rise of the UK coffee bar market 54 Case Study: The 2007 Credit Crunch and the Future of Capitalism 59 3.1 Supermarkets—a personal journey through techno-time! 65 3.2 I’ll see you on Facebook! 67 3.3 Containerization 69 3.4 The real computer games war? 73 3.5 Blackberry or Crackberry? 78 Case Study: Just Google it! 82 4.1 Obesity and the ‘nanny state’ 89 4.2 Would electoral reform in the UK be bad for business? 96 4.3 A left–right touchstone issue: taxation 103 Case Study: The Return of ‘Big Government’? 111 5.1 Van Gend En Loos and direct effect 122 5.2 Cadburys—A time line 124 5.3 Salomon v Salomon and separate legal personality 128 5.4 Asbestos 135 Case Study: The Working Time Directive 138 6.1 The retirement age 151 6.2 Ethnic penalties in the UK labour market 156 6.3 Social mobility 161 Case Study: Decline of the Working Class? 168 7.1 Macroeconomic stability and its relevance to students at university 174 7.2 Japan: from boom to bust 191 7.3 Reducing the natural rate of unemployment in France 196 7.4 Another Response to the 2008–09 Crisis—nationalizing British banks 199 Case Study: What Does an Independent Central Bank Do? 200 8.1 Death by US chocolate? 205 8.2 Banana wars 208 8.3 Cotton 216 8.4 Why has China grown so fast? 219 8.5 The Bhopal disaster 223 xx List of cases Case Study: Coffee 225 9.1 Timeline of Rowntree in the 20th century 232 9.2 Computer games 236 9.3 Petrobras corporate social responsibility policy 243 9.4 War on Want: Anglo American the Alternative Report 244 9.5 Tobacco poison surrounds child workers 245 9.6 The Challenger 51-L 247 9.7 Anglo American plc 248 9.8 Water and citizenship in the semi-arid—from scarcity to sustainability 250 Case Study: Nestlé and Infant Formula 251 10.1 Water, water everywhere, and not a drop to drink? 263 10.2 Even when we think we know, what do we do? 266 10.3 Carbon trading or ‘funny money’? 268 10.4 Throwing some light on the subject? Energy saving light bulbs (ESLBs) 271 10.5 Paying for waste: the spy in the wheelie bin? 272 Case Study: Sustainable Transport for a Large Business: The Case of Leeds Metropolitan University 280 11.1 Should we welcome or worry about the power of supermarkets? 291 11.2 Ethical consumerism 295 11.3 The Confederation of British Industry (CBI) 298 11.4 Sunday trading—group politics in action 299 11.5 The privileged position of business in policy-making 306 Case Study: The Political Influence of the Car Industry 310 12.1 Women in financial services 326 12.2 Can opportunities ever be equal? 327 12.3 CIPD research 330 Case Study: Lloyds TSB & King’s Healthcare NHS Trust 339 13.1 Turkey and the EU 349 13.2 The stages of European Monetary Union (EMU) 358 13.3 The Greek financial crisis and its implications 359 13.4 Car factories drive east 362 13.5 The REACH initiative 364 13.6 Industry and competition policy and the European airlines 365 Case Study: The Knowledge Economy: Finland and Nokia 370 14.1 The balancing act that is public administration 378 14.2 Stakeholders—public and private 379 14.3 Denmark and France 381 14.4 Working with PPPs 388 14.5 The pressure for change 389 14.6 Voluntary sector (UK) 394 Case Study: Fire Safety Provision in Society from the Volunteer to the Professional 396 15.1 Social entrepreneurs creating entrepreneurs! 407 15.2 Post-it notes 408 15.3 The Co-operative Bank: ‘customer-led, ethically guided’ 417  List of cases xxi 15.4 Train 2000: a social enterprise with clear organizational values 418 15.5 eBay entrepreneurs 423 Case Study: The Female Entrepreneur (Interview) 431 16.1 How could we be so wrong? (ah but were we?) 439 16.2 From masters of the universe to scumbag millionaires 445 16.3 Payback time? 450 16.4 Have you caught the ‘affluenza’ bug? 454 Case Study: The Football Business—the State of Play in 2010 458 This page intentionally left blank ABOUT THE AUTHORS Paul Wetherly is currently Reader in Poli- tics in the School of Social Sciences at Leeds Metropolitan University, and has worked in higher education as a teacher, researcher, and manager for more than 25 years. He studied economics and public policy as an under- graduate before obtaining an MA in political sociology and a PhD in political theory. Paul’s teaching and research has spanned discipline boundaries including economics, business, and politics. He spent many years in the busi- Photograph by Kiran Mehta ness faculty of the university where he was responsible for leading a large Business Environ- ment module. Paul’s other publications involve a range of articles and books on British politics, the state, and political theory. Dorron Otter currently leads the Economics and International Business subject group at Leeds Metropolitan University. Having studied Politics, Philosophy, and Economics at Oxford University, he worked in fields as diverse as youth and community work, retailing, tourism, and insurance. In 1984, he undertook a PGCE and spent five years teaching Economics and Business at Queen Mary’s Sixth Form College in Basingstoke. During this time he served as an A level examiner in Economics. He completed his Masters in Development at the University of Leeds whilst working in Further Education. He was the first British Petroleum Fellow in Eco- nomic Awareness at the University of Durham and was then appointed to Leeds Metropolitan University in 1991. He played a key role in the development of the School of Applied Global Ethics at Leeds Met and he continues to combine his management responsibilities with teach- ing and curriculum development activities in the area of international political economy. Contributors David Amos is a law lecturer and solicitor. He qualified as a solicitor in 1993. He continued in practice until 1999 when he became a senior lecturer at Leeds Metropolitan University. He moved to Manchester Metropolitan University in March 2005 and is currently Head of Applied Legal Studies at the University of Westminster. He was a member of the Solicitors Regulation Authority’s Working Party on the Written Standards for the Legal Practice Course (LPC) and is an LPC panel assessor for the Solicitors Regulation Authority. Eamonn Judge is Professor Emeritus in the Faculty of Business and Law, Leeds Metropoli- tan University, Professor at the Polish Open University, Warsaw, and Visiting Professor at the Grimsby Institute of Further and Higher Education. His principal teaching and research in- terests are in the field of transport, environment, and business development, particularly in relation to the UK and Poland. xxiv About the authors Stratis Koutsoukos is Senior Lecturer and Deputy Director of the European Regional Busi- ness and Economic Development Unit (ERBEDU) at Leeds Business School. His principal areas of research and consultancy are European Regional Policy, economic regeneration, and European enlargement. Stratis has undertaken assignments for the European Commission, European Parliament, and the Czech Ministries for Industry and Trade and Regional Devel- opment. He teaches European Business Strategies on the Jean Monnet-funded module of the Leeds MBA. Chris Mulhearn is Reader in Economics at Liverpool John Moores University. His work has appeared in a range of journals including: World Economy, Journal of Economic Perspectives, World Economics, Industrial Relations Journal, and Local Economy. His most recent books in- clude: (with Howard Vane) The Nobel Memorial Laureates in Economics: An Introduction to Their Careers and Main Published Works (Edward Elgar, 2005); The Euro: Its Origins, Develop- ment and Prospects (Edward Elgar, 2008); The Pioneering Papers of the Nobel Memorial Laure- ates in Economics, Volumes 1–5 (Edward Elgar, 2009), Volumes 6–10 (Edward Elgar, 2010). Professor Alison Price is Director of Educator Development at the National Council for Grad- uate Entrepreneurship. Her role is working directly with faculty staff to support curriculum change and develop the role of the educator as a key driver within the development of an entre- preneurial university. Prior to this appointment, Alison was Head of Enterprise Education at Leeds Metropolitan University, establishing and providing academic leadership to the HEFCE- funded Centre for Excellence in Teaching and Learning, the ‘Institute for Enterprise’. Alison has over a decade’s experience of enterprise teaching and curriculum development gained from working within the Russell group and post 1992, which has been enhanced by insight gained from the MIT entrepreneurial programme at Sloan Management School. Alison is also Visit- ing Professor of Enterprise Education at Liverpool John Moores University, and serves on the Board of Women’s Economic Development Centre, Train 2000, as Chair of WICED. Martyn Robertson is Director of Graduate Enterprise at Leeds Metropolitan University. He works closely with regional, national, and international partners to embed creativity, innova- tion, and enterprise within and across the university. He is a government specialist advisor on supporting new businesses and has a lead role in the Centre for Graduate Entrepreneurship in Yorkshire. He has held directorships in research, publishing, property, communications, and design companies and worked at board level for Price Waterhouse Coopers and the RMC Group. Rev. Simon Robinson is Professor of Applied and Professional Ethics, Leeds Metropolitan University; Director of the Institute for Spirituality, Religion and Public Life. His present fo- cus of research is responsibility and professional practice. This includes the philosophy of re- sponsibility, its practice in business and higher education, and pedagogies of responsibility. Most recent publications include: Values in Higher Education; The Teaching and Practice of Professional Ethics; Ethics and Employability; Engineering, Business and Professional Ethics; Spirituality and Sport; Ethics, Spirituality and Care; Ethics of Living and Working; Ethics and the Alcohol Industry; Ethics and Leadership. Richard Rooke is Deputy Head of Department in Social and Policy Studies at London South Bank University. He was for over a decade the Programme Director of a multilingual Post- graduate Master in European Policy Studies collaborating with EMLV, LDV, Paris, France and  About the authors xxv FHWR, Berlin, Germany. His principal research interests include media policy, governance, and policy development at UK and EU levels. He has undertaken consultancy work for the Home Office on public service management issues. He is the author of a book on European Media in the Digital Age for Pearson Education published in 2009. For over 10 years he was a practicing officer in local government. Stephen Taylor is a Senior Lecturer in Human Resource Management at the Manchester Met- ropolitan University Business School, a national examiner for the Chartered Institute of Per- sonnel and Development (CIPD) and an HR consultant. He previously taught at Manchester Business School and worked in a variety of HR management roles in the hotel industry and in the NHS. He teaches courses in employment law, employee resourcing, employee relations and the business context at postgraduate and undergraduate level. Research interests include employee retention, occupational pensions and regulatory issues. He is the author/co-author of several books including four editions of People Resourcing, two editions of Employment Law: An Introduction (with Astra Emir), The Employee Retention Handbook and five editions of Hu- man Resource Management (with Derek Torrington and Laura Hall). A new book by Stephen entitled HRM: Contemporary Trends and Future Agendas will be published in 2011. He regu- larly represents parties in employment tribunals. Howard R. Vane is Professor of Economics at Liverpool John Moores University. His main research interests lie in the area of macroeconomics and his work in this field has been pub- lished in many different languages. He has co-authored/edited 26 books and has had articles published in a wide range of journals including: American Economist, Journal of Economic Per- spectives, Journal of Macroeconomics, World Economics, and World Economy. His most recent books include: (with Brian Snowdon) Modern Macroeconomics: Its Origins, Development and Current State (Edward Elgar, 2005); and (with Chris Mulhearn) The Nobel Memorial Laure- ates in Economics: An Introduction to Their Careers and Main Published Works (Edward Elgar, 2005); The Euro: Its Origins, Development and Prospects (Edward Elgar, 2008); The Pioneering Papers of the Nobel Memorial Laureates in Economics, Volumes 1-5 (Edward Elgar, 2009), Vol- umes 6-10 (Edward Elgar, 2010). This page intentionally left blank ABOUT THE BOOK This book is designed primarily for students taking their first undergraduate module in the Business Environment or similar introductory modules on a range of related business degree, foundation degree, or vocational programmes. The book will also be a useful resource for more advanced studies. The editors both have considerable experience of teaching Business Environment, and the approach of this book is based on this experience and the comments of successive generations of students. In addition to the editors’ own chapters in the book, a team of contributing authors has been brought together to write specialist chapters based on their own areas of expertise. All of the chapters are written in an accessible and engaging style and follow a standard layout with common pedagogical features. A key feature of the approach taken throughout the book is to introduce students to debates and controversies surrounding the role of business in modern society, and to help them to think critically. In this way it is the intention of the book to provoke lively discussion and debate. Themes and issues There are two parts to the book: Part One introduces the core political, legal, economic, social- cultural, and technological environments of business, and their interrelationships. Part Two, however, goes beyond these topics and invites students to analyse a range of contemporary issues in the business environment such as globalization, corporate responsibility, sustainable development, and entrepreneurship. These issues have been selected due to their prominence in discussions within business and the wider society, and their importance in shaping the fu- ture of business. The book utilizes an innovative thematic approach to provide a consistent framework for analysis of business and the business environment. The eight themes are intended to help the reader to organize their own thinking about business. Each chapter begins with an overview of how the relevant themes relate to the particular chapter and the themes are then signposted by the use of markers in the margin, as shown here: Diversity of business Diversity Business is a diverse category. Internal/external Internal/ External The environment is both inside and outside organizations. Complexity of the environment Complexity The external environment is multi-dimensional or complex. Spatial levels Variety of spatial levels From the local to the global. xxviii About the book Dynamic environment Dynamic The environment of business does not stand still. Interaction between business and the environment Interaction There is interaction between business organizations and their environments. Stakeholders Stakeholders Individuals and groups that are affected by business decisions. Values Values Business decisions involve ethical questions/. The themes are introduced fully at the start of Chapter 1. Format and pedagogical features Each chapter follows a consistent format, providing a wide range of pedagogical features in- cluding ‘Stop and think’ exercises, mini-cases, highlighted key terms, review and discussion questions, and assignments. These features, combined with this innovative structure and ana- lytical approach to the subject matter, will encourage students to fully engage with the issues raised and develop their interest in critical debate. Real-world cases The book is packed with examples, mini-cases, and end-of-chapter case studies looking at UK, European, and international business, illustrating each topic in real-life contexts. Careful attention has been paid to select cases and examples to which the intended student audience will be able to relate. Examples include Facebook, Cadbury, Blackberry, Lloyds TSB, Google, and the football industry. HOW TO USE THIS BOOK Learning objectives Learning objectives Each chapter opens with a bulleted outline of the main When you have completed this chapter you will able to: Recognize different uses of the term business, and understand the different forms o concepts and ideas. These serve as helpful signposts to terms of, for example, private, public and not-for-profit organizations. what you can expect to learn from each chapter. Understand controversy concerning the nature and purpose of private sector busine Describe the complexity of the external environment in which business operates an idea of environmental uniqueness. Understand how businesses must respond to changing environmental factors in ord successfully, but also how they seek to influence the environment. Use analysis tools such as PEST or SWOT to examine the business environment. Themes Themes The key themes, introduced in Chapter 1 and running The following themes of the book are especially relevant to this chapter through the book, are described at the beginning of Diversity Diversity of business Despite the variety of business types, economic techniques have bee each chapter. This description shows how each set of that allow us to look at the implications of the economic environme whilst also allowing us to focus in on the economic forces that sha themes is relevant to the topic being covered. Markers business behaviour. in the margin throughout the text indicate where one Internal/external Internal/ or more of the themes are illustrated, helping put them external The internal strategic response of a business is very much dependent o of the market in which it operates A central concern of Economics into context. Mini-cases Mini-Case 1.3 Dyson: champion of British manufacturing? The book is packed with real-life examples to show how James Dyson has been regarded as a champion of British manufacturing because of the success of his company manu- However, the compan ment activity at Malmesb organizations have reacted to, or have shaped, the busi- facturing vacuum cleaners in Malmesbury, Wiltshire and be- cruiting more employees cause of his public statements supporting the need to retain high-paid positions. ness environment in which they operate. manufacturing in the UK. The decision to shift m However, in 2002 Dyson announced his decision to shift R&D in the UK shows the production to Malaysia with the loss of 800 jobs at the com- able environments for th pany’s Wiltshire plant (Tran 2002). The company had opened vantages for low skill ma its first plant in Malaysia in 2000. The reasons for the shift of due to much lower labou production out of the UK were indicated by Dyson as fol- advantages for R&D and lows: availability of highly skill Stop & Think Stop and Think: One simple business decision? Let us simplify this rather mind-boggling picture. Picture a certain amount of labo These are short questions and examples that give you materials, production decision makers, and machinery which together cost £1 millio the opportunity to ‘pause for thought’ and relate the decide what you want these resources to do for the next six months. Here are three ide to consider: topic to your own experience. 1 These resources could be used to modernize private student houses with grants of up per house. Potentially 200 houses could be improved. 2 A new state of the art lecture theatre complex could be built for £1 million. 3 Four luxury 5 bed-roomed detached houses in an affluent suburb of the city could a cost of £250,000 each.  xxx How to use this book Key terms ensus came under attack from a New Right or neoliberal perspec- vernment as a force for good, and aimed to ‘roll back’ the state (i.e. Key terms are highlighted in blue where they first ap- al has been particularly evident in the programme of privatization pear. They are also defined in the glossary at the end of of trade unions, but government’s role as a provider of services onomic crisis since 2008 has seen a return to government?