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To Barbara, Laura, and Becky (PW)
To Ingrid, Søren, Fredie, and Ferdy (DO)
Stratis Koutsoukos and Dorron Otter
LIST OF CASES
1.1 Guiding the ‘hidden hand’—the minimum wage and the ‘living wage’ 14
1.2 What is business for? 18
Case Study: Tax avoidance in a globalizing world—managing costs efficiently or acting immorally? 27
2.1 Costs and benefits of higher education 39
2.2 The hidden source of the Wealth of Nations ‘the invisible hand’ or ‘greed is good’? 43
2.3 The global smart phone market 54
Case Study: The global financial system: efficient markets or a fatally flawed system? 65
3.1 The technological revolution of the food business 72
3.2 Containerization—the steel box that changed the world 76
3.3 I’ll see you on Facebook! 77
Case Study: Automation, robots, and AI: is this time different or will it be both ‘dazzling and disappointing’? 89
4.1 Business, the market, and the good society 97
4.2 Employee representatives on boards of directors 98
4.3 Is democracy linked to economic success? 110
Case Study: Taxing questions for business
5.1 Van Gend en Loos and direct effect
5.2 Company structures and their environment 133
5.3 Salomon v. Salomon and separate legal personality 136
5.4 Asbestos 144
Case Study: Investor-state dispute systems (ISDS) and the Transatlantic Trade and Investment Partnership (TTIP) 147
6.1 Ageing in international context 161
6.2 Ethnic penalties in the UK labour market 170
6.3 Class identification and awareness in modern Britain 172
Case Study: Does living longer mean we should retire later? 179
7.1 Timeline of Rowntree in the twentieth century 187
7.2 Computer games
7.4 War on Want: Anglo American the alternative report
7.5 Tobacco poison surrounds child workers
7.6 The Challenger 51-L
7.7 Taylors of Harrogate: ethical sourcing and fair trade
Case Study: Caterpillar
8.1 Water, water everywhere, and not a drop to drink?
8.2 Beyond muscle power: the basis of modern economies and issues of SD
8.3 Even when we think we know, what do we do?
8.4 Carbon trading or ‘funny money’?
8.5 Putting your money where your mouth is: Starbucks, SD, and taxes
Case Study: SD strategies in a large business: the case of Leeds Beckett University
9.1 Macroeconomic stability and its relevance to students at university
9.2 Japan: from boom to bust
9.3 Reducing the natural rate of unemployment in France
Case Study: Austerity in and out of the euro area: a necessity or a choice?
10.1 A ‘big ocean that you cannot escape from’ or a ‘swamp’ that needs to be drained?
10.3 South Korean economic development—the case of Samsung
10.4 The Chinese dream
Case Study: Is trade the engine of growth?
11.1 The world’s most powerful people
11.2 Should we welcome or worry about the power of supermarkets?
11.3 Is advertising a form of corporate power?
11.4 Ethical consumerism
11.5 Political power of US car makers
Case Study: Under the influence? Lobbying and ‘cabs for hire’
12.1 The expansion of the equal opportunities agenda
12.2 Women in the City and on boards
12.3 Can opportunities ever be equal? 340
12.4 It’s a billionaire’s world 349
Case Study: Breaking open the closed-shop society? 354
13.1 Turkey and the EU 368
13.2 The Trojan horse of Europe? The case of Brexit and Europe’s transformation 372
13.3 Apple vs. the EC: competition and the complexities of multilevel governance 379
Case Study: The development of the ASEAN trading bloc 382
14.1 UK spending on health compared to other countries 397
14.2 Overcoming Beveridge’s ‘giant evil’ of ignorance— the right to education? 410
14.3 Does welfare create a ‘dependency culture’? 413
Case Study: Austerity and the future of the welfare state 416
15.1 The EU Community Innovation Survey 427
15.2 An opportunity for having your voice heard? 429
15.3 Growth: not the only reason? 431
15.4 How vision shapes the entrepreneurial opportunity 442
Case Study: Diving deep into entrepreneurship: how an entrepreneur is building a business in aquaponics 449
16.1 Governing the global business environment 460
16.2 The Silk Road economic belt and the twenty-firstcentury maritime Silk Road 463
16.3 Autonomous vehicle technology 471
Case Study: The football business—the state of play in 2017 472
ABOUT THE AUTHORS
Paul Wetherly is currently reader in politics in the School of Social Sciences at Leeds Beckett University, and has worked in higher education as a teacher, researcher, and manager for more than twenty-five years. He studied economics and public policy as an undergraduate before obtaining an MA in political sociology and a PhD in political theory. Paul’s teaching and research have spanned discipline boundaries including economics, business, and politics. He spent many years in the business faculty of the university where he was responsible for leading a large business environment module. Paul’s other publications include a range of articles and books on British politics, the state, and political theory.
Dorron Otter studied politics, philosophy, and economics at Oxford University and 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. He completed his postgraduate studies in the political economy of development at the University of Leeds and then was the first British Petroleum Fellow in Economic Awareness at the University of Durham. He worked at Leeds Beckett University from 1991 to 2017 where he combined a range of teaching and senior academic management roles and although recently retired he remains active in terms of academic consultancy and writing. As well as his contributions to the editing and writing of this book, his most recent publications have been a chapter on the ecological environment of business in L. Hamilton and P. Webster (eds.), The International Business Environment (2018) and on environmental thinking in P. Wetherly (ed.), Political Ideologies (2017) both published by Oxford University Press.
■ 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 before becoming head of department at the University of Westminster. He is now Associate Dean (External Engagement) at City, University of London. 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.
Mike Franco is Associate Dean for Quality and Programme Leader for Accounting and Finance at Liverpool John Moores University. His principal research interests are in the field of quality assurance and enhancement within higher education. As programme leader for accounting and finance his teaching interests include leadership, economics, and strategic management.
Geoff Gregson is the JR Shaw Research Chair in New Venture and Entrepreneurship and the Associate Dean (Research) at the JR Shaw School of Business, Northern Alberta Institute of
Technology (NAIT) in Canada. He holds degrees from the University of Edinburgh (PhD, LLM, and MSc), University of Calgary (MBA), and University of Alberta (BPE). As an entrepreneur, Geoff has started up three ventures and continues to support entrepreneurs in building successful businesses; in his role at NAIT, as chairman of Axienta Ltd, a Malaysian-based enterprise mobility company and as a board member of JB Equity, a Hong Kong-based private equity firm focused on agri-businesses. Geoff’s research interests include new venture creation, SME growth, risk capital, and angel investment, technology commercialization and intellectual property exploitation, innovation systems, innovation policy and enterprise support programmes and their evaluation. He has managed research projects from funders which include the Economic and Social Research Council, British Academy, Technology Strategy Board, Scottish Executive, Marie Curie (European Commission), Santander Bank, and government of Alberta.
Eamonn Judge is Professor Emeritus in the Faculty of Business and Law, Leeds Beckett University, and was, until recent retirement, professor at the Polish Open University, Warsaw, and Professor at Vistula University, Warsaw (where his students kindly acted as guinea pigs for trying out the new main case study of Chapter 8). His principal teaching and research interests, where he has published extensively, are in the field of transport, environment, and business development, particularly in relation to the UK and Poland.
Stratis Koutsoukos is a principal lecturer at Leeds Business School. Formerly deputy director of the European Regional Business and Economic Development Unit, Stratis is a course director for the BA in International Business and a Senior Fellow of the Higher Education Academy. His main 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 development. He teaches European business strategy and international business across various levels of study.
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 include: (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, Development and Prospects (Edward Elgar, 2008); The Pioneering Papers of the Nobel Memorial Laureates in Economics, vols. 1–5 (Edward Elgar, 2009), vols. 6–10 (Edward Elgar, 2010), vols. 11–14 (Edward Elgar, 2011). The third edition of his bestselling textbook, Economics for Business, widely used in the UK and abroad, was published in 2016.
Simon Raby is Professor in Entrepreneurship and Innovation at the Bissett School of Business, Mount Royal University in Canada, and a Director of Business Improvement and Growth Associates Ltd, a business founded in the UK that supports business schools in their quest to research and work with entrepreneurs and small and medium-sized enterprises (SMEs) in their regions. Simon has helped to create a multidisciplinary applied research programme ‘Promoting Sustainable Performance’ to challenge the way SMEs achieve growth and has developed leadership tools and programmes so that SMEs can apply this new thinking. Simon serves on the Board of the Institute for Small Business and Entrepreneurship, is educated to doctoral level and is an accredited and practising coach and facilitator. Simon is on the editorial board
of the International Journal of Entrepreneurial Behavior and Research; a guest editor for the online journal of the Association for Management Education and Development (AMED) Organisations and People; and continues to write for academic, business, and policy audiences on topics central to SMEs’ growth and success.
Simon Robinson FRSA, SFHEA is Professor of Applied and Professional Ethics, Leeds Business School. He has written and researched extensively in business ethics, corporate social responsibility, leadership, the nature and dynamics of responsibility, equality, integrity, shame and guilt, spirituality and ethics, and ethics and care. Books include: Agape, Moral Meaning and Pastoral Counselling; Case Histories in Business Ethics; Spirituality and the Practice of Healthcare; Values in Higher Education; Ethics and Employability; The Teaching and Practice of Professional Ethics; Spirituality, Ethics and Care; Engineering, Professional and Business Ethics; Ethics and the Alcohol Industry; Leadership Responsibility; Business Ethics in Practice; Islam and The West; Business Ethics: Contemporary Global and Regional Issues Co-charismatic Leadership; Integrity and the Practice of Business; A Spirituality of Responsibility: An Islamic Perspective� Chapters and articles include on applied ethics, integrity and dialogue, peacebuilding, responsibility, responsibility–pedagogy. He is director of the Centre for Governance, Leadership and Global Responsibility, senior editor of the new Palgrave book series on governance, leadership and responsibility, and editor-in-chief of the Journal of Global Responsibility
ACKNOWLEDGEMENTS
We are again indebted to all at OUP for their terrific support, especially our editors Becci Curtis and Kate Gilks for keeping us on track with our writing schedule. We would like to thank all of the authors, both those who have been part of the team on the previous editions and those who have joined us for this fourth edition—Mike Franco, Geoff Gregson, and Simon Raby. We would also like to extend thanks to John Meehan, Martyn Robertson, Carol Langston, Alison Price, and Richard Rooke for their contributions to previous editions. We would also like to extend our thanks to all the reviewers who have commented upon revised draft chapters and reflected on their experiences of using the book with their students.
As always, we would like to thank colleagues and students at Leeds Beckett who have helped us in developing our approach to exploring the Business Environment.
The authors and publisher are grateful to all organizations who kindly granted permission to reproduce copyright materials within this edition. Crown copyright is reproduced under Class Licence Number C2006010631.
Every effort has been made to trace and contact copyright holders, but this has not been possible in every case. If notified, the publisher will undertake to rectify any errors or omissions at the earliest opportunity.
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 and reviewers. 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 readers 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, socialcultural, technological, and other environments of business, and their interrelationships, following the STEEPLE framework. Part Two, however, goes beyond these topics and invites readers to analyse a range of contemporary issues in the business environment such as the financial crisis and austerity, globalization, corporate power, equal opportunity, 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 future 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 Business is a diverse category
INTERNAL/EXTERNAL The environment is both inside and outside organizations�
COMPLEXITY OF THE ENVIRONMENT The external environment is multi-dimensional or complex
LOCAL TO GLOBAL SPATIAL LEVELS Spatial levels vary from the local to the global DYNAMIC ENVIRONMENT The environment of business does not stand still�
INTERACTION BETWEEN BUSINESS AND THE ENVIRONMENT There is interaction between business organizations and their environments
STAKEHOLDERS Individuals and groups that are affected by business decisions
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 including ‘Stop and Think’ exercises, Mini-Cases, highlighted key terms, review and discussion questions, and assignments. These features, combined with this innovative structure and analytical approach to the subject matter, will encourage readers 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, Samsung, Starbucks, Google, and the football industry.
NEW TO THIS EDITION
This edition has been updated throughout, with a large proportion of new case and illustrative material added. Major changes in the environment of business such as the UK referendum vote to leave the European Union (‘Brexit’) and the subsequent vote in Parliament to trigger Article 50 and start the process of withdrawal, and the changing attitudes to globalization that this vote seemed in part to reflect, have been taken into account in the text. The basic structure of the book has been retained but in the second part the chapters on the role of the public sector and on SMEs are completely new and a new chapter on inequality has been added to reflect the increasing debate about this issue.
