Download Social and other opportunities and constraints

Social and other opportunities and
constraints
Content
• Social responsibilities:
– Employees
– Customers
– Other stakeholders
•
•
•
•
•
•
Business ethics
Technological change
Environmental pressures and opportunities
Political change
Pressure group activity
Social auditing
Social responsibilities
• Business should operate as good citizens who have
duties towards their stakeholders
• Stakeholders are all individuals or groups that have
a direct interest in an organisations performance
• These include employees, shareholders, the local
community and the government
Stakeholders
Businesses have the following responsibilities to different
stakeholders:
• Shareholders – to generate profits
and pay healthy dividends
• Customers – to provide good quality products
at reasonable prices, to look after interests of customers
• Employees – to ensure health and safety at work, to provide job
security and to pay them fairly, to provide training to develop
employees skills
• Suppliers – to pay them on time and to pay a fair price for their
goods, to place regular orders and offer long term contracts
Stakeholders
• Local Community – to provide employment, to provide safe working
environment, to minimise pollution and negative externalities, to use
local suppliers where possible
• Government – to ensure that no laws are broken, to pay taxes
• Environment – to keep levels of pollution to a minimum, to try and
ensure that the environment is protected
Why should firms accept their social
responsibilities
• Although some argue that by meeting social
responsibilities profits are reduced in fact the
converse is true if businesses accept their social
responsibilities they are able to increase profit
levels
• They allow a business to increase its profile
• Costs can be reduced
• It can work as a USP differentiating the businesses
product
Business Ethics
• Ethics are the shared attitudes and principles held
by a businesses employees
• Moral code – what is ‘right’ and what is ‘wrong’?
• They are highly subjective in nature
• An ethical code of practice states how businesses
believe its workers should respond to situations
which challenge business values
Business Ethics
There are conflicts that arise regarding ethics, these
mainly stem from conflicting stakeholder
requirements, e.g. :
• Profits (shareholders) vs. higher wages
(employees)
• Production (shareholders) versus pollution (local
community, environmental)
How to create an ethical culture
• There are a number of steps which allow a business
to create an ethical culture:
–
–
–
–
–
–
Find a champion
Discover ethical issues
Benchmark
Test the idea
Develop a code of conduct
Make it work
Technological Change
• Not only has technology helped to improve the
performance of a business, it has also led to new
products
• New technologies such as the internet and mobile
technologies have changed the business
environment
• CAM and CAD have changed how products are
designed and manufactured
Benefits of Technological Change
•
•
•
•
•
•
•
•
New methods of production
Lower Costs
Higher profit margins
Higher productivity
Easier expansion/ diversification into new markets
Automation
New skills
Flexibility
Problems with Technological Change
•
•
•
•
•
•
Shorter product life cycles
Higher R&D costs
Monopolies and Barriers to Entry
Mergers and takeovers of smaller firms
Teething problems
Unemployment – incapacity to do the job, job
insecurity
Environmental Threats and Opportunities
• Businesses can have a negative impact on the
environment
• Environmental audits assess the impact of a
business on its environment
• Businesses create many external costs that affect
the environment e.g. pollution
Environment
•
•
•
•
•
External costs created by businesses can impact the environment in the
following ways:
Urban blight – excessive development and inappropriate developments mean
the environment is visually less attractive, loss of farmland
Production and disposal of waste – this could include an increase in litter and
rubbish from packaging
Use of energy
Pollution:
–
–
–
–
–
Noise – from cars, lorries, factories etc
Air – emissions from cars and delivery vehicles
Land
Sea
Water
Methods of Controlling Environmental
Impact
• The Environmental Protection Act, 1991 and the
Environment Act, 1995 are designed to protect the
environment
• Businesses can also help reduce harm to the
environment by:
– Redesigning products to use less materials and making
them biodegradable / recyclable
– Sourcing resources from sustainable supplies
– Finding ways to reduce pollution
External Benefits
• As well as external costs businesses can create external
benefits
• External benefits are advantages a business brings to the
local community when it locates its business in a particular
area. These benefits will be positive for the local
community.
• Examples:
• Employment
• Quality of life
• Providing a service
• Regeneration of land
Political Change
• A change in political leadership can impact UK
businesses
• UK Law : Competition Policy, Consumer Protection
• EU Law
• Enlargement of the EU
• Political stance – trading/ trade blocks/ Embargos
Pressure Groups
• A group seeking to influence government policy or business
activity to secure the interests of their members and
supporters.
Pressure Groups
• Environmental, Consumer, Welfare (animals),
industries (TUs)
• Lobbying- where a pressure group campaigns
through leaflets, petitions etc in order to raise public
awareness or change the law
Types of Pressure Group
•
•
•
•
Single Cause - Focus on a particular issue:
Multi Cause - Focus attention on a wider range of issues often under a generalised heading
Protective – Seek to protect interest of members
Promotional - Seek to promote issues of interest to its members and supporters in relation to the
particular topic
Types of Action
• Direct Action: Direct action can
include:
•Lobbying
•Protest
•Boycotts
•Civil disobedience – e.g. causing obstruction – sit ins, lie
downs, making noises, etc
•Terrorism – intimidation of workers or owners/management of
a business, for example
•Violence – bombings, shootings, threats, attacks
•Criminal damage – damage to property, releasing animals into
the wild – Animal Liberation Front
Indirect
•
•
•
•
Publicity
Leaflets/adverts
Petitions
Providing research
Effects
• Successful campaigns can lead to legal and ethical
changes in business practice e.g.
– The increasing practice of environmental audits by
businesses
– The movement to the use of synthetic fur in the fashion
industry
– The compulsory use of seat belts
– The decrease in the use of CFCs
Response of Business
Business might:
• Accept the arguments and change its practice
• Present its own arguments on the issue
• Take legal redress
• Seek to publicise its image and what it is doing to
counter the damage pressure groups could cause
Criticisms
• Pressure Groups can be criticised if:
– They appear too powerful
– They are powerful enough to represent minority
interests at the expense of the majority
– They focus on their own agenda at the expense of wider
issues
– They take direct action that breaks the law
Social Auditing
• Where a business assesses its social impacts and
ethical behaviour in relation to its and the
stakeholders aims
• E.g. recyclable packaging, avoiding the use of child
labour and sweat shops, free trade products, brown
field sites
Summary
•
•
•
•
•
•
•
•
•
•
•
Social responsibilities are stakeholder views that a business can operate towards
Stakeholders are anyone who has an interest in the business
By trying to meet the views of different stakeholders businesses are operating in a more socially
responsible manner
Business ethics are the shared attitudes and principals shared by a business
Businesses need to ensure that they try and behave in an ethical way as this has a positive impact on
society and their employees
Technological change impacts the way businesses operate
Businesses create external costs due to their operation a lot of these costs are environmental e.g.
increased pollution
By decreasing the environmental impact of their business a firm is able to decrease their external costs
and improve their image
Political change can influence business operation through the creation of new laws or regulations
Pressure groups aim to change business behaviour through direct and indirect actions
Social auditing looks at the businesses social behaviour and impacts