Businesses and the Social Environment

Businesses and the Social Environment
PESTLE analysis
Govt social
The business
Interest rates
Exchange rates
The EU
• new products
• new processes
• impact of change
• cost of change
Syllabus aims…
• Assessing the effects of:
– changes in the social
– 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.
• 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
Demographic issues
How has the UK population
UK population to reach 70m
What are the changes and
How might UK businesses
respond to these changes?
Population by age and
gender mid 2009
Study the population chart
What are the main
characteristics of the UK
Compare this to the
Government’s description of
the chart using the link
What does this mean for
UK businesses?
Example – Population Size
The estimated resident
population of the UK was
61.4million in 2008, up by
408,000 on 2007.
Children aged under 16
represented around one in five
of the total population, around
the same proportion as those
of retirement age.
Adapted from Social Trends 2009
In mid-2008 the average age of
the population was 39 years,
up from 37 in 1998.
Example – Population Structure
The population of the UK is
ageing. Over the last 25 years
the percentage of the
population aged 65 and over
increased from 15 per cent in
1983 to 16 per cent in 2008, an
increase of 1.5 million people in
this age group. This trend is
projected to continue.
Adapted from Social Trends 2009
By 2033, 23 per cent of the
population will be aged 65 and
over compared to 18 per cent
aged 16 or younger.
Example – Mortality Rates
Adapted from Social Trends 2009
Mortality rates are
declining at all ages. More
recently, further
decreases have occurred
at older ages. During the
1960s and 1970s, the
largest declines in
mortality rates occurred in
the age-group 35-59
years. Since the 1980s,
the age-group 60-79 has
experienced the largest
declines in mortality rates.
Which businesses might
n in
Population is
rates are
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.
Demographic issues:
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:
• promote diversity – better recruitment and retention
• more attractive to potential employees
•older staff – experience, low staff turnover, less absenteeism
• higher motivation and commitment
Markets / Customers
more attractive to customers and investors
• more varied and diverse ideas and able to access different
overseas opportunities
Environmental issues
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
– Is it the Governments responsibility to intervene and
protect these natural resources?
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.
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
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
Earth Tax
We pledge to give 1% of our turnover or 10% of
pre-tax profits (whichever is greater) to grassroot 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.
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
Is it right to make 500 workers
redundant because the factory
they work in is polluting the
Should passengers
have to pay for the
pollution they generate
by flying?
• 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
– Legislation: ban or control
– Licences: allow a certain level of
– Taxation: e.g. make the polluter
– Fines: penalise undesirable
Marketing: eg. Body Shop,
Financial: may be easier to raise
finance if they have a good track
record, e.g. Co-op bank
HR: committed, loyal, motivated
Changes in the Social Environment
There has been increasing pressure on firms to operate using
environmentally friendly methods – minimal or no negative impact on the
environment. The main methods of doing this include:
 Renewable clean energy sources – wind, solar and hydro power
 Waste management – recycling and composting rather than landfill
 Eco-friendly products – green cleaning such as soap powders
 Organic produce – foods produced using natural pest control
Plastic bags go out of
Social and Environmental audits
What are they?
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
– Establishes priorities in tackling environmental issues
– Establishes policies and procedures
– Identifies responsibilities
– Committees the organisation to train staff on environmental
– Establishes standards of monitoring performance.
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
A.K.A. Corporate Social
Social and
assessment report
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
(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
Changes in the Social Environment
“Corporate Social Responsibility (CSR) is the continuing commitment by
business to behave ethically and contribute to economic developments
while improving the quality of life of the workforce and their families as
well as of the local community and society at large”.
The World Business Council for Sustainable Development
In essence, CSR (also referred to as simply social responsibility) is a
firm’s decision to accept responsibility to its stakeholders for its social,
environmental and ethical actions.
A firm will produce a Corporate Social Report to set targets that will be
used to meet its social responsibilities and to assess how far it has met
previous targets.
Visit the Marks and Spencer website and review its Plan A
Watch the video outlining M&S progress to date
Identify the costs and benefits to M&S of
its approach to CSR
BUSS4.4 Social Environment
Read more
about CSR
• 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
Start now, finish for
Resources for research
Link to a pdf with
lots of company
CSR report links
theme bullet
Tutor2u business
blog on CSR news
and companies
Read more
about CSR
CSR revision