3.7.6 Analysing the external environment to assess opportunities and threats: social and technological
The impact of the social and technological environment on strategic and functional decision making
Key features of demographic information:
- Population growth
- Age of population
- Migration
- Gender
- Household composition
- Race
The growth of technology:
- Internet
- E-commerce
- Robotics
- Software robotics
- Health
- Cars
- Security
- Wearable technology
- Gaming industry
- Audio visual technology
- Drones
Social problems:
- Lack of education
- Poverty
- Climate change
- Public health
- Homelessness
- Water and food security
- Unemployment
- High morbidity
- Pollution
How the government combats social problems:
- Investing money into public services
- Tax and regulate products and the amount of pollution
- Nationalisation to reduce unemployment
- Regional grants and aid to encourage business startup
- Minimum wage
How businesses solve social problems:
- Businesses are more aware of problems and introduce many policies to help solve them and create more social awareness amongst the public
- Many believe NGOs have the solutions for these social problems (true that these organisations have had a growth through the years) – but this growth is too slow, thus, the solutions that they are achieving and their impact are small because of lack of resources
- Business generate the resources to make a large scale impact because of the amount of revenue they receive due to making products/services to meet the needs and demands of customers
- Profits allow for solutions to become self-sustaining
- Firms should analyse social problems that can be related with their business activities and make changes relating to this
- Creating shared value – a business strategy designed to solve social issues profitably. It does this by leveraging the resources and innovation of the private sector to create new solutions to some of society’s most pressing issues
Corporate Social Responsibility (CSR) = the duties a business has towards its stakeholders
- Changes from making money to becoming socially responsible
- Sustainability and long term profitability
Advantages of CSR:
- Improved financial performance
- Reduced operating costs
- Enhanced brand image and reputation
- Increased sales and customer loyalty
- Attracts and retains employees
- Access to capital
Disadvantages of CSR:
- May decrease efficiency
- Can be costly
- Stakeholders tend to have differing views/opinions
- Goes to the back of the queue in terms of priority when the economy is struggling
- Not legally binding
- May only be done to meet changing consumer tastes instead of real commitment
The pressures for socially responsible behaviour
Carroll’s CSR Pyramid = a simple framework that helps argue how and why organisations should meet their social responsibilities
Key features of Carroll’s CSR pyramid:
- CSR is built on the foundation of profit – profit must come first
- Then comes the need for a business to ensure it complies with all laws & regulations
- Before a business considers its philanthropic options, it also needs to meet its ethical duties
Advantages of Carroll’s CSR pyramid:
- The model is easy to understand and so evaluation can be simple
- Simple message – CSR has more than one element
- Emphasises importance of profit
Disadvantages of Carroll’s CSR pyramid:
- Too simplistic so evaluation isn’t in depth and can’t be done extensively
- Weak/no relationship between each stage of the CSR activities involves and so it is have to link and therefore make a valid evaluation
- Businesses don’t always do what they claim when it comes to CSR