7bAnalysing the external environment: Social and technological change (needs finishing!)- includes CSR Flashcards
Businesses can be affected by social changes in what two major ways?
- Demand of different goods & services.
- The way businesses produce goods & services- use of tablets and smartphones to purchase products.
What do Demographic changes represent?
What can demographic change impact upon a business?
- Size & make-up of a population.
- It can impact upon a businesses costs of production, as well as the level of demand for its products.
The UK population has been demonstrating what two major trends?
- It is growing quickly- living longer, rise in birth rate, migration.
- Ageing population.
What is urbanisation?
The movement of people from the countryside to live in cities.
What is migration?
The movement of people between countries or regions.
What are the implications of demographic change and population movements for businesses?
Not sure if question is right- ask sir from slides
Population movements are potentially immense - difficult to predict population forecast
Uncertainty of income levels in some countries which experience rapid population growth
Demand for a wide range of goods and services could increase rapidly - dependent on income per head
Strategic decisions about entering new markets might need to be taken
Diverse workforces can enhance the business competitiveness
Create new or expand existing market segments or niches.
Increased investment /investment opportunities
Increased prices of resources
Increased locational costs
Increase and larger competitors
How are lifestyles and consumer buying behaviour closely related?
When a consumer experiences a significant change in lifestyle such as becoming unemployed or getting married their buying behaviour is likely to change.
It is possible to identify a number of contemporary influences on consumer lifestyles and to consider how these might impact on the spending behaviour of consumers.
What impact does technology have on lifestyles?
- Developments that synchronise home appliances & control domestic appliances from outside the home
- Wearing technology that monitors factors such as blood pressure.
This technology records a lot of data about consumers and their behaviour.
What impact does technology have on buying behaviour?
- Technology can provide consumers with details about a businesses operations as consumers are influenced by their ethical or environmental behaviour.
- Social media provides a vast amount of information about the activity of businesses and apps are being developed to provide data to help consumers rate firms and products according to their ethical and environmental performance.
- Health and well being - exercise, eating healthier
- Consumer confidence.
What are the implications of online growth?
Decrease in store numbers
Share of online retail sales will increase
Decreasing employment
Increase in companies that cease trading
Lower costs - labour, storage, property etc
Amount of consumers that can be reached by all businesses
Easy and cheap to start up online
What is corportate social responsibility?
- A businesses philosophy that emphasises that firms should behave as good citizens - ‘social responsibility’.
- They should not merely operate within the law, but should consider the effects of their activities on society as a whole.
- A socially responsible business should attempt to fulfill the duties that it has towards its employees, customers and other stakeholders.
- Businesses have become increasingly aware of the expectations of stakeholder groups over recent years.
What are shareholders interests?
Regular dividends
Rising share prices
Preferential treatment as customers- e.g. lower prices.
What are employees interests ?
Steady & regular income
Healthy and safe working conditions
Job security
Promotion & higher incomes
What are customers interests?
Certain and reliable supply of goods.
Stable prices
Safe products
After sales service technical support.
What are some examples of changing lifestyles of consumers?
Organic & fair trade products- having a large market share.
Health- growing awareness os issues tha surround health.
Holidays- with more leisure time & greater affluence, people take more holidays.
Ready meals & eating out- growth in these industries illustrates increasing demand & the variety of products offered.
Growth of online businesses
What do businesses need to do to have a highly respected internet presence?
- The creation of a high-quality, user friendly website.
- A carefully targeted audience.
- Content that is increasingly personalised.
- Mobile capabilities for modern consumers.
- Integrated sales channels.
Technological changes
What is CAD & what has it done?
What is CAM and what has this done?
CAD (computer-aided design)- has shortened lead to times.
CAM ( computer-aided manufacture)- had made production more efficient.
What are the benefits of technological change?
Lower costs- (due to improved efficiency & reduced waste in production, also reduced administration expenditure & distribution costs.)
Improved communication- Now quicker & easier, allowing a flexible business to be more responsive to customer needs.
Increased sales- Access to wider markets is possible, particularly for small & medium sized businesses.
Working environment- Generally become cleaner, quieter & safer, especially in manufacturing.
Quality- CAD & CAM have brought improvements in the quality & reliability of products.
What are the problems with technological change?
Pace of change- Businesses must keep moving forward to stay ahead of competition, which can prove costly.
Competition- Technology has a resulted in a more competitive market, not only due to globalisation but also due to the fact that smaller businesses have found it easier to access markets.
Security- There is an increasing problem with hackers able to access confidential material & customer information. Results in need for higher-security systems- adding to costs.
What implications has the advancement of technology had for each functional area?
Operations- the way products are designed & made.
Marketing- the ways products are sold to consumers.
HR- skills required and the working environment.
Finance- costs and potential savings to be made.
What are the reasons for CSR (corporate social responsibility)?
Cost savings- Using less packaging/less energy.
Brand Differentiation- Although more difficult now, CSR reporting could lead to a competitive advantage.
Customer & employee engagement- They are aware of the organisations position on social reporting.
The ‘right thing to do’- Business is responsible for some of society’s problems such as pollution & working conditions- so should take responsibility.
Resources- Some would argue the business has the resources to take action.
Prevent government intervention- By taking action, business can offset the need for gov intervention & legislation.
What are the reasons against corporate social responsibility?
Profit- Socially responsible policies have a cost.
Customer perception- Some consumers may not be willing to pay more for products produced by environmentally aware businesses.
State of the economy- In periods of high growth & profit- it may be easier to take this approach- but during periods of low growth/ recession, and lower profits- it may be difficult.
The market- some argue the market should decide whats best than the businesses.
Stakeholders views- Different stakeholders have different views, making it difficult to achieve agreement on socially responsible behaviour.
What is the stakeholder concept?
How do some argue that this will in the long term result in increased shareholder value?
That a business owes a responsibility to a wider group of stakeholders than just their shareholders.
- By treating employees properly, they are likely to be more engaged.
- By providing higher- quality products, consumers are more likely to buy.
- By having a socially responsible image, consumers may be more likely to buy.
What is (ESV) enlightened shareholder value?
States that businesses should seek shareholder wealth that promotes sustainable growth & profits based on a responsible attention to a full range of stakeholder interests.
What theory did Carrol propose?
The pyramid of corporate social responsibility.
What are the different levels within Carolls CSR pyramid ?
- Philanthropic responsibilities- Be a good corporate citizen.
- Ethical responsibilities- Be ethical. Obligation to do what is right & fair. Avoid harm.
- Legal responsibilities- Obey the law, law is society’s codification of right & wrong.
- Economic responsibilities- Be profitable, the foundation upon which the others rest.
Carrols CSR pyramid
What are economic responsibilites?
Responsibility to be profitable, to provide return to shareholders, create jobs & contribute useful products & services to society.
Carrols CSR pyramid
What are legal responsibilities?
The responsibility to ensure that the business practises are legal. This involves obeying laws & regulations relating to employees, consumers & the environment.
Carrols CSR pyramid
What are ethical responsibilities?
- This is the responsibility to act morally & ethically.
- With this responsibility, businesses should go beyond narrow requirements of the law.
- E.g. Treatment of suppliers & employees
What is philanthropic responsibility?
- This is the responsibility to give back to society & be good corporate citizens & imrove the lives of others.
- The responsibility is discretionary (optional), but still important.
- E.g. charitable donations, staff time on projects
What are the strengths of Carolls CSR pyramid?
The model is easy to understand
Simple message – CSR has more than one element
Emphasises importance of profit
What are the weaknesses of Carolls CSR pyramid?
- Perhaps too simplistic?
- Should ethics be at the top?
- Businesses don’t always do what they claim when it comes to CSR
What are the pressures for socially responsible behaviour?
Pressure groups- e.g. Greenpeace, which can draw unwanted attention to a businesses activities & some cases influence consumer purchasing choices.
Regulation- Strong & well-enforced state regulation makes socially responsible behaviour more likely.
Self-regulation- Businesses are more likely to act in a socially responsible way if there is a well organised & effective system of industrial self-regulation in place.
The media- These can have a big impact on the business, making CSR more likely as busineses aim to avoid negative publicity.
Consumer perception- Consumers are more aware & through social media could have a big impact on a business that is not acting responsibly.
