What theory of business behaviour best fits the business or person that is being discussed?
From the business-government-society relationship, two models have convincing authority. The market capitalism model depicts the relationship as a set of arrangements in accord with the assumptions of classical capitalism. It is assumed that social responsibility is measured primarily as economic performance that enhances social welfare. The market capitalism model correctly describes business-government-society relationships of that period. It portrays importance of economic forces over social and political forces, the significance of economic performance as a measure of success, laissez faire markets, a limited role for government, and weak nonmarket forces.
The dominance model is also a suitable theory for the American Fur Company in its time. The dominance model represents society as a pyramid. Above it, business and government dominate. This is the model of business critics, it suggests that business has too much unchecked power. It illustrates undemocratic dominance by a privileged of wealth and power, weak government regulation due to the influence of business on government, and lack of effective pressures for social responsibility. These statements in the model accurately portray the business-government-society interrelationship in Astor’s day.
On the other hand, the countervailing forces model has much less convincing authority. The model shows flows of power and influence amid environmental factors, the public, government, and corporations. It represents a pluralist vision in which the power of business is checked and controlled. Nature restricted the growth of the fur trade, showing some validity in the model. However, only after would public values and government regulation come into work.
The stakeholder model also wouldn’t be the best fit as it sets the business at the centre of a set of mutual relationships with persons and groups. It encourages the idea that firms have ethical duties and social responsibilities toward a wide range of stakeholders due to their impacts on them. Fur companies were run to increase the wealth of owners and stockholders. Other stakeholders had little power and managers like Astor were uninformed about the ethical duties implied in the model.
Show how economy, business, and society are connected in this case study.
Though the fur trade was an ancient business, it came to reflect and symbolise forces created by the Industrial Revolution. It introduced factory-made products such as trade goods, relied on manufactured weapons to dominate more simply equipped natives, and it tied Indians and settlers in North America into global markets. Some ideologies supported and formed the fur trade, including the idea that humans dominate nature, which exists to be oppressed; the theory of classical capitalism, which generated in that era attitudes of exploitation; the idea of progress, which saw economic growth as good; the idea that a wilderness inhabited by natives was wild but became civilised when explored and settled; and race principles portraying Indians as inferior, unaware, violent, and unchristian.
In the economic dimension the fur trade created enormous wealth for those such as Astor who gained from it. Beyond that, it was a global industry that provided a living for many. It created paths and settlements that encouraged economic expansion across the North American continent. In the technological dimension the introduction of first the keel boat and then the steamboat on the Missouri River was important. In the cultural dimension the main stress was on native Indian cultures that came in contact with European industrial values. Fur traders introduced new products to Indian societies, including trade goods, alcohol, money, and firearms. New material motives led Indian traders to seek profits to gain stuff. In the natural dimension the fur traders abandoned the continent of fur-bearing animals from the beaver to the plains buffalo. Over time, they cut down major forest land for forts, trading posts, and fuel.
Astor’s actions in the governmental dimension show how open the young American political system was to corrupt influence. With gifts, loans, and contributions he thoroughly enticed a range of politicians including at least one president. The fur trade affected the legal environment because it was a source of international tensions that led to treaties. Statutes to set up government trading posts and regulate contacts with Indian tribes were passed to limit the operations of the American Fur Company and its competitors. Of course, the internal environment of the American Fur Company was completely ruled by Astor. Other fur companies were run as simple partnerships. The opportunity and power of the fur trade brought no change in the structure of these arrangements.
How fairly do you think the case study has presented and discussed the business or person that is being examined?
Astor, as primary owner of the American Fur Company, compensated himself extravagantly. The suppliers and employees of the company were not treated so nobly. Indian trappers were cheated, robbed, and killed, and free trappers and traders worked for low pay under hard, dangerous conditions. Customers in markets around the world were served, and the Government was manipulated, bypassed, resisted, and used. Astor’s abuse of weaker stakeholders was typical of the time. In his History of the Great American Fortunes, Gustavus Myers compares Astor with other capitalists of the era. By current standards the American Fur Company would not be considered an ethical enterprise.
Astor, as a manager, had some admirable qualities. He was hard working, assertive, and a good negotiator. He produced creative approaches and his procedures were advantageous. He let others do the difficult work of initiating an area, then muscled them aside using a set of competitive strategies that carried his mark. These included predatory pricing, pursuing the Indians with whisky, purchases of large quantities of trade goods to lower cost, horizontal and vertical integration along the chain of activities that covered the fur trade and use of political influence.