3.7.6 Social/Technological Change + Corporate Social Responsibility

Question 1

What does social change relate to and what does it include

Answer 1

Relates to the changing demands for society in different goods and services

Includes the way society spends money (increased spending on luxury goods) and accesses products and services (Subscriptions etc…)

Businesses must keep up with changing demands to remain competitive

Question 2

Key demographic factors

Answer 2

Age - general population is getting older as people live longer (increasing demand in the grey market)

Growth - population in many countries is growing at a considerable rate (increasing demand for products and services)

Migration - migration varies from country to country but a majority and growing proportion of UK are EU immigrants

Urbanisation - a growing trend in developed countries of people moving from rural areas to town and cities

Question 3

What is demography and why may a business study demographics

Answer 3

Demography is the study of the human population

Businesses need to adapt to demographic changes as they create new opportunities for a business

Question 4

What do consumer lifestyle changes affect

Answer 4

Affect their buying behaviour including what,when and how the buy products and services

Question 5

Key lifestyle changes in recent years include

Answer 5

Include:

Technology - consumers use technology to access products and services (online shopping)

Health and wellbeing - consumers being more health conscious

Luxuries - people spend a greater proportion of their income on luxury items

Question 6

What opportunities might arise from lifestyle changes?

Answer 6

Prominent use of smartphones might encourage software developers to create new smartphone apps

Rise in luxury brought products encourage opportunities such as ‘glamping’ and luxury camping and people investing in their comfort when they go camping

Question 7

What can development in new technology do for a business (give examples)

Answer 7

Create new opportunities for products and services
Advancement in the way businesses produce products and deliver them to customer - can reshape the whole market (e.g UBER)

Question 8

Benefits and drawbacks of online shopping for businesses

Answer 8

Benefits:

• access to global markets (internet allows businesses to reach global markets)
• opportunities for small business start-ups (little capital required to start an online business)
• reducing business overheads (online businesses have lower overheads if expensive premises are not important

Drawbacks:
-Cutting out retail - online businesses offer cheaper prices to consumers (creating less footfall in high street retailers causing them to shut down

-Fraud - business fraud occur through e-commerce sites costing business and consumers millions of pounds each year

Question 9

Examples of emerging technologies

Answer 9

3D printing
Wearable technology 
Smartphone/Mobile technology 
Renewable energies 
Virtual reality 
Cloud computing

Question 10

What opportunities do technological advancement creat for a business

Answer 10

Innovating products
Access to new markets
Improving internal efficiencies
Streamlining operations

Question 11

Risks of technological advancement for a business

Answer 11

Technological advancement can become a threshold resource that businesses have to keep up with if they are to remain in a market and compete

New technologies also make some products and services obsolete (no longer produced or needed)

Question 12

Explain two ways change in society and technology can affect functional decisions

Answer 12

Marketing - as society changes market research must be keep up with these trends to ensure the business understands the needs of its customers. Technology also gives businesses new ways of communicating and interatacting with its customers

Finance - growth of technology leads businesses to think carefully about where to invest there money. Online retail offers businesses opportunities to reduce their investment in expensive capital such as retail premises

Question 13

What is CSR

Answer 13

Corporate social responsibility is the belief that a business should act responsibly and protect the interest of all its stakeholders.

Question 14

What are the forces acting against CSR

Answer 14

Investing in CSR can be expensive to focus on sustainability and the interest of all stakeholders and this in turn may have an impact on short term profitability and interest of shareholders - arguably the most important stakeholder

Question 15

CSR in practice

Answer 15

Customers - fair prices / transparency / honesty / safe products
Employees - fair pay / good working conditions / job security
Suppliers - fair prices / frequent and regular orders
Local community - employment opportunities / investment in infrastructure

Question 16

What is the shareholder concept

Answer 16

Businesses sole purpose is to satisfy shareholders by maximising profit. Profit will support long term success of the business and economic prosperity

Question 17

Stakeholder concept

Answer 17

Business caters for the need of all stakeholders not just shareholders creating a long term prosperity and avoid unsustainable business practices

Question 18

What is ESV and what does it involve

Answer 18

Enlightened shareholder value - involves focusing shareholder value with long term perspective and not just for short term profitable gains. As business adopts long term perspective they make consider other stakeholders (investment in training for workforce)

Question 19

What is CSR pyramid and what are its four responsibilities (base to top)

Answer 19

Corporate social responsibility pyramid

From base to top:
Economic responsibility - be profitable
Legal responsibility - obey the law
Ethical responsibility - be ethical / avoid harm
Philanthropic responsibility - be a good corporate citizen (contribute resources to community and improve quality of life)

Question 20

How can appropriate CSR have a significant impact on the competitiveness of a business?

Answer 20

• bad publicity can be shared easily through social media, damaging reputation
• ethically orientated customers may choose a business based on its CSR record
• Good CSR record will help attract the best employees
• Supporting developing countries through effective CSR policies supports long term sustainability and growth in these markets

Question 21

How can the first step of the CSR pyramid contradict the other three

Answer 21

The pressures for a business to be legally ethically and phillantrophically responsible can require significant financial investment, therefore having an impact on short term profitability