Thursday, December 10, 2009

Part One: Doing Business in a Turbulent World

This section of the book focuses mainly on the fact that the way we do business has changed tremendously over the past years. Indeed, globalization can be used by companies for the better of humanity, that is, to make a more equitable society and undo the deterioration of the environment we are to leave for future generations. Because of that, there is a rising need for companies to associate with governments and other stakeholders in order to look for the best means to achieve these objectives.[iii]

The authors note several issues currently affecting free market conditions that are prompting that new rules be created within capitalism, since expectations are rising and new challenges appearing. These issues can be summarized as follows:

the current global economic downturn, and the previous bursting of the dot-com bubble (the crash of dot-com companies after 2001)

* the failure of corporate governance and ethics
* growing geopolitical uncertainty—war against terrorism, international trade tensions and anti-globalization campaigns
* ongoing environmental degradation—global climate change, loss of biodiversity, and water insecurity

These situations are creating new challenges for enterprises, which nowadays are facing new crises (e.g., trust, inequality, and sustainability). Unfortunately, after scandals such as Enron and Andersen, trust has become one of the main concerns for companies searching for long-term positioning in the market. Furthermore, there is now without a doubt a global crisis regarding inequality. According to a survey conducted in 2000, the general trend for options distribution in companies is as follows: 75 percent are top five company executives; 15 percent are the next 50 executives; and 10 percent, all other employees.[iv] Furthermore, sustainability is indeed a central concern not only for companies but for our entire civilization, as humanity’s ecological footprint continues to grow. Therefore, the roles of businesses, as well as governments and non-governmental organizations (NGOs), have to be adapted to confront these new realities.

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