1. What is the business-government-society (BGS) field and what is its importance? 2. Explain the Four basic models of the BGS relationship
Business, government and society are fundamental in this world. Business satisfies human’s needs by providing them products and services in exchange for profit. Government is a structure and process in society that with authority makes and applies policies and rules. Society is a network of human relations composed of ideas, institutions, and material things (Steiner, 2011). They all work together to create better solutions in all three elements.
Forces in BGS have shaped our world.
Business, government and society are subdivisions of economic, political and social activities. The BGS field is the study of the interrelationships among business, government and society and its importance to managers. These interrelationships change over time. Businesses operate in the environment created by the interrelationships between business, government and society. To make good business decisions it is crucial for manager to understand the interaction between BGS.
Managers have to do what’s right according to all three elements (Steiner, 2011).
BGS has a great importance. The importance of the business-government-society field is to understand the relationship between the three elements. Understanding those help managers make better business decision to run a business or to stop (make a business fail) a business. Businesses should be responsive to forces for its economic and noneconomic environment (pg 7). Businesses have a social contract. It is important to understand that there are several different ways to run businesses and if they don’t comply with society it will fail. All three elements work together to make better business decisions.
There are four basic models of the BGS relationship: the market capitalism model, the dominance model, the countervailing forces model and the stakeholder model.
According to “Business, Government and Society” capitalism is an economic ideology with bundle of values including private ownership of means of production, the profit motive, free competition, and limited government retrains in markets (pg 9). In the Market Capitalism Model it is easier for any individual to enter the market. Any new business that enters the market is in to make profit and to create competition. Competition creates and offers better value to customers and opponent firms. Businesses in this model focus on creative work and profitability. The creative work is well done therefore people are happy with the products, services etc. In the Market Capitalism Model management’s goal is to increase shareholders interests (investments). Government regulations are limited.
The dominance model represents the perspective of business critics. Society is in a pyramid but only a small group of privileged (corporations, government and business leaders) control society. Power and wealth are mostly concentrated in a selected group. In this model society does not have any control and it would probability experience difficulties. The corporations and the government take advantage of society. Business have too much power, changes in the systems is crucial.
The countervailing Forces Model consists of four forces: environmental catalysts, business, government and the public. None of the forces dominate; the countervailing forces model implies exchange of power and influence among all of them (check and balance). In this model the power of business is checked and controlled. The USA and other countries use this model.
In The Stakeholder Model the corporation is the centerpiece that holds several relationships with persons, groups and stakeholders. Stakeholders are critical to the corporation and it is believed that corporations have ethical duties and social responsibility toward stakeholders because the impact those stakeholders have on them. A corporation can benefit or burden stakeholders by its actions. Corporations have primary stakeholders and secondary stakeholders.
BGS are fundamental for Business decisions. it started to shape humanity since the beginning of the civilization and BGS would definitively continue to make changes in this world. The expectations are to have business, government and society to continue to change our world in a positive way, but for that managers have to understand the interrelationships among business, government, and society. The four basic models of the BGS relationship are interesting, but I believe that the countervailing forces work better because it is more democratic. It’s not just one group (government), person (society), or corporation (business) deciding for everyone, it’s everyone making decisions that would have an effect on everyone.
Steiner, S. (2011). Business, government, and society. (13 ed., pp. 4-20). New York: McGraw Hill.