Businesses and the Social Environment

1. Businesses and the Social Environment

2. PESTLE analysis Govt economic policies Govt social policies Govt intervention Remind students that we have been looking at the impact of the wider business environment, what that comprises, how it impacts businesses and what the strategic responses are. Today we are focusing on social and within that environmental issues.Remind students that we have been looking at the impact of the wider business environment, what that comprises, how it impacts businesses and what the strategic responses are. Today we are focusing on social and within that environmental issues.

3. Syllabus aims� Assessing the effects of: changes in the social environment the changing nature of the ethical environment Evaluating responses of businesses to a changing social environment including corporate social responsibility. Changes in the social environment might include demographic factors environmental issues. Candidates should be aware of the actions that businesses can take to demonstrate corporate social responsibility and consider whether these reflect genuine values or are just a form of public relations.

4. Today Examine the factors arising from changes in the social environment: Demographic issues Environmental issues How might businesses respond to changes in the social environment? Start research into Corporate Social Responsibility

5. Stakeholder perspectives We are already familiar with the stakeholder concept Some are direct stakeholders Others are indirect

6. How has the UK population changed?

7. UK population to reach 70m

8. Example � Population Size

9. Example � Population Structure

10. Example � Mortality Rates

11. Which businesses might benefit?

12. Demographic issues The estimated resident population of the UK was 61,792,000 in mid-2009, up by 394,000 on the previous year. Children aged under 16 represented approximately one in five of the total population around the same proportion as those of retirement age. In mid-2009 the average age of the population was 39.5 years, up from 37.3 in 1999. At older ages, towards the top of the pyramid, females outnumber males. Between ages 37 and 50 there is a �bulge� due to the �baby boom� years of the 1960s and early 1970s. A sharp narrowing of the pyramid for people aged 30 to 34 reflects the low fertility in the late 1970s. A further narrowing of the pyramid appears between the ages of 5 and 10 reflecting the low fertility rates in the early 2000s. The broadening of the base of the pyramid is due to increasing numbers of births from mid-2002 onwards, reaching just under 790,000 in the year to mid-2009.

13. Demographic issues:Diversity The major issues in relation to recent demographic change in the UK include: Increasingly diverse racial and religious distribution of the population Immigration � e.g. eastern Europe The ageing population Demographic changes influence two important aspects of business:

14. Environmental issues

15. Natural resources�. The World�s resources are running out What natural resources do firms use? Do firms have a duty to limit their use of natural resources? Is it the Governments responsibility to intervene and protect these natural resources?

16. Business response:

18. Howies Mission Statement Our beliefs A higher quality product will invariably last longer. It will keep on performing as it was designed to for longer before it finally needs replacing. And so over its lifespan it will have consumed less valuable resources than an inferior product that will have been replaced many times. That's why we make the best quality products that we know how. Because ultimately the best thing we can do for the environment is to make our stuff last a real long time. Functionality We believe in making products that serve a purpose and that stand the test of time. We avoid the fashions of the day and just ensure our products are as functional and as simple as possible.  Our Purpose Why are we in business? For us it is not as simple to make a profit. Like any company we require a profit to stay in business. But it is not the reason we are in business. The thing that has not changed from day one is the desire to make people think about the world we live in. This is, and always will be, why we are in business. Earth Tax We pledge to give 1% of our turnover or 10% of pre-tax profits (whichever is greater) to grass-root environmental and social projects. To find out more about our donations, please visit the website. It is only a small amount but as our company grows we will be able to give more. Which gives us a nice reason to want to grow. Fun We are trying to get the balance right between work and play. Whenever a real nice day comes along, it'd be a shame to waste it. So if you phone up and no-one answers, don't worry. We are out there doing what we love. So leave a message and we'll get back to you in a while. The rocking chair test Every product we make has passed the 'rocking chair test'. This is something we use to guide us along the path we are taking. So when we are old and grey and sitting in our rocking chairs, we can look back on the company we created with a smile. That's why we go to the trouble of using the best quality materials to make sure our clothing lasts longer. The longer our products last the less impact they will have on the environment, and the bigger our smile will be.

19. Costs In a market economy firms create external costs that do not directly affect them There is no direct incentive for the firm to minimise these costs Sometimes government has to intervene: Legislation: ban or control Licences: allow a certain level of activity Taxation: e.g. make the polluter pay Fines: penalise undesirable actions Opportunities Marketing: eg. Body Shop, FairTrade Financial: may be easier to raise finance if they have a good track record, e.g. Co-op bank HR: committed, loyal, motivated employees

20. Changes in the Social Environment

21. Social and Environmental audits What are they?

22. Environment Audit An environmental audit is an organisation�s key to environmentally responsible behaviour. It: Identifies the ways in which the business interacts with the environment Establishes priorities in tackling environmental issues Establishes policies and procedures Identifies responsibilities Committees the organisation to train staff on environmental matters Establishes standards of monitoring performance.

23. Your research task http://www.benjerry.com/our_company/about_us/social_mission/social_audits/2007_sear/

24. Social Audits Social audits are broader than environmental audits They attempt to assess the impact of the entire range of a businesses activities on stakeholders and society in general

26. Fisher Price What do you think their social audit should include? Or�.what could go so wrong that could destroy their reputation?

27. BUSS4: CSR theme The research theme for Section A of the BUSS4 exams in June 2011 is Corporate Social Responsibility The 2011 Research Theme on CSR requires students to consider: (1) The potential benefits of Corporate Social Responsibility relative to the costs for businesses and stakeholders (2) The importance of Corporate Social Responsibility relative to other corporate objectives (3) The influences determining which responsibilities are accepted by a business and which are not (4) The factors that determine the extent to which a business is socially responsible (5) The value and limitations to businesses and stakeholders of social reporting (6) The extent to which governments should influence Corporate Social Responsibility

28. Changes in the Social Environment

29. ICT ACTIVITY Choose a business that attracts high profile media attention e.g. Tesco, M&S, Primark, Nike, Gap, Shell, Coca Cola Carry out some independent research into its approaches towards its social responsibilities and/or its ethics Produce an article for a business magazine evaluating how they have responded to social and ethical factors (500 words) Use the slide deck on P Drive together with the CSR them framework issued by the exam board to help you structure your article

30. Resources for research

31. Essay Q In 2007, Marks and Spencer plc, a leading UK clothes, food and home products retailer launched a five-year strategy to, �tackle some of the biggest challenges facing our business and our world�. This strategy involves working with customers and suppliers, �to combat climate change, reduce waste .... trade ethically and build a healthier nation�. To what extent do other retailers need to follow Marks and Spencer plc�s strategy? (40 marks) June 2008

32. Further reading http://commdev.org/section/tools/csr Companies doing good: http://www.dailychallenge.org/blog/companies-doing-good/