Assessing Changes in the Business
Environment
The Relationship between Businesses
and the Social Environment
“We can be richer by being greener.”
Tony Blair
“A well run business must have high and consistent standards of ethics.”
Richard Branson
“Customers must trust an organisation and its people.”
Tom Farmer
“Unless managers are aware of ethical issues…they will fail to institutionalise ethics in
corporate life. Ignorance can be as pernicious as malice.”
Damian Grace
BUSS4.4 Social Environment
In this topic you will learn about

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.
We must respect the environment
BUSS4.4 Social Environment
Changes in the Social Environment
A Stakeholder is anyone that has an interest in an organisation. This
is a very important concept, showing the impact of a firm not only
internally, but also on wider society.
Stakeholders of a business
(Recap BUSS4.1)
Government
Customers
Local community
The Business
Employees
Shareholders
Suppliers
Management
The Stakeholder concept suggests that whether they accept it or not,
firms have a responsibility to their stakeholders. The shareholder
concept suggests that their main responsibility is to shareholders.
BUSS4.4 Social Environment
Changes in the Social Environment
The impact of demographic changes. How a firm might respond:
 An increase in the global population size – an opportunity for UK
firms to move into new markets with new or existing products
 An increase in the average age of UK society – firms will have to
change their product range to satisfy the needs of older people
 Falling EU birth rates – as EU market size falls but the population
gets richer UK firms might move into premium product markets
Migrants boost UK population
UK population sees steep rises
How might UK businesses
respond to these changes?
UK population breaks 60m
BUSS4.4 Social Environment
Changes in the Social Environment
Demography is the statistical study of human populations and
demographic factors are those that influence these populations.
Firms will have to take into account population trends. These include:
 An increase in the global population size
 An increase in the average age of UK society
 Falling EU birth rates
Study the population chart opposite
What are the main characteristics of the UK
population?
Compare this to the Government’s description
of the chart using the link below.
What does this mean for UK businesses?
Source: www.statistics.gov.uk
BUSS4.4 Social Environment
Changes in the Social Environment
The environment encompasses the surroundings in which we live.
Firms will have to operate within and take account of environmental
issues. This will include how they impact on:
 The natural environment – the natural resources that firms exploit
to produce goods and services
 The built environment – the man-made surroundings that provide
the setting for the production of goods and services
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?
BUSS4.4 Social Environment
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
M&S boss on plastic bags
Plastic bags go out of fashion
For the eco cynics! (contains swearing)
BUSS4.4 Social Environment
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.
http://plana.marksandspencer.com/about
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
Changes in the Social Environment
Business Ethics looks at morality in decision-making. This infers
doing what is ‘right’. Of course, peoples’ views can differ on what is
right or wrong. There will also be conflict between stakeholders.

Profits for a firm or higher wages for staff

Cheaper production or less pollution

Supplier benefits or lower consumer prices

Survival of the business versus needs of other stakeholders
Whenever a firm makes a decision there will be conflicts
between stakeholders. Remember, every decision made has
an opportunity cost.
How many dots? Follow this link to start a
debate on ethics in the classroom.
Introduce the theme, show the video and
then wait for the discussion!
BUSS4.4 Social Environment
Changes in the Social Environment
Most large firms will produce an ethical code of practice. This will
detail the steps that a firm will take to be ethical and to uphold the
firm’s social responsibilities. This might include:
To take responsibility for the stakeholders of the business
To be environmentally friendly wherever possible
To promote products with integrity, honesty and accuracy
To compete within legal and moral guidelines
The Press Complaints Commission
have a Code of Practice that all
members should adhere to. Do you
think that they do?
ACTIVITY
The problem with Ethics is that it is subjective. This means that it is based on people’s
values – and values are based on different people’s judgements. Read this article. Do
you think that TESCO was right to sell this product?
BUSS4.4 Social Environment
Changes in the Social Environment
Is ethical behaviour simply a form of Public Relations (PR)? Why be ethical?
There are a number of reasons for a firm to have an ethical business culture.
These range from the profit motive to wanting to ‘do the right thing’.
Why be ethical?


Build loyal customer base through
USP
Attract best workers who want to
work for a company with high
standards

Lower costs through recycling and
less waste

Motivation across the company
Visit the Institute of Business
Ethics to learn more. They even
run a student essay competition
Why not be ethical?

More expensive to source raw materials

More expensive capital goods to cut
pollution

Training workers to be ethical costs
money

Losing custom to unethical practices from
more ruthless competitors

Providing better facilities for staff costs
money

Higher costs lead to higher prices and
lower revenues
BUSS4.4 Social Environment
ACTIVITY
Chose a business that attracts high profile
media attention e.g. Tesco, M&S, Primark, Nike,
Gap, Shell
 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

BUSS4.4 Social Environment
Essay
Ben and Jerry’s, makers of high quality ice cream since
1978, take their commitment to their social
environment seriously. They state that “We believe its
our duty to use our business to improve social,
economic and environmental conditions around us.”
With reference to Ben and Jerry’s and/or other
businesses you have studied to what extent do you
believe that the key to successful business today is social
responsibility?
Read Ben and Jerry’s Social Environmental Assessment
Report
BUSS4.4 Social Environment