4. social enviroment
TRANSCRIPT
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Social Environment
Lecturer:
Aris Arif Mundayat. Ph.D
Gadjah Mada University
Introduction: Business Social Environment
Social environment of Business is a set of
political, social, cultural forces that are
largely outside the control and influence of
a business.
Those can potentially have both a positive
and a negative impact on the business.
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What Is the effect of social
environment toward business?
Social environment as the totality of
conditions might effecting the activity
feature of a human being.
Those conditions possibly will promote or
restrain, the characteristic activities of a
living being.
Why business is vital parts of human society for
many reasons?
Businesses make available goods and services thatpeople need;
Businesses give people work and income for living; Businesses provide a space for people to interact witheach other on a daily basis;
People purchase products from individuals and fromother businesses;
Businesses often serve their communities by contributingmoney and other resources to various causes thatpeople care about.
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Why social Environment need to be
Studied
Businesses live within society and the
interrelation between businesses and
stakeholders is happening within social
environment.
They interrelate with society on many
levels: owners, customers, suppliers,employees, government and the
community as stakeholders
Who are the Stakeholders?
Stakeholders in the broad sense: those individuals orgroups whose interest is involved because they undergothe ‘external effects’, positive or negative, of thetransactions performed by the firm, even if they do notdirectly participate in the transaction, so that they do notcontribute to, nor directly receive value from the firm.
Stakeholders in specific sense: those are includingcompetitors, suppliers, employees, customers,distributors, government policy makers and regulators,media, local communities, groups of people, etc.
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These different actors are calledstakeholders and can be regrouped in four
main categories (Henriques and Sadorsky
1999):
(a) organizational (e.g., employees,
customers, shareholders, suppliers),
(b) community (e.g., local residents,
special interest groups),
(c) regulatory (e.g., municipalities,regulatory systems), and
(d) media stakeholders.
Stakeholders Power
When business impacts on specific issues contravene stakeholdernorms, stakeholder communities might make use of their power tobring about changes in business behavior.
At least three main strategies that are usually used by stakeholdercommunities to advocate an issue:
1. With legalistic approaches, stakeholders antagonize businesspractices with the letter of the law.
2. With Exit strategies, stakeholders hold back or threaten towithhold resources if the business fails to address a specific issue.
3. With voice strategies, a stakeholder community tries to motivateconsciousness and action among other powerful stakeholdercommunities.
(Cited from Maignan, Isabelle & Ferrell, O. C. “Corporate Social Responsibility and Marketing: An Integrative Framework” in JOURNAL
OF THE ACADEMY OF MARKETING SCIENCE. INTER 2004)
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The Objective of Understanding Social Environment
Learn to analyze the interplay between
organizations and their stakeholders.
To develop approaches that the organization's
managers can use in responding to these
complex and dynamic forces.
To explore the role played by the public policy
process, business social responsibility and
ethical decision making in creating a
sustainable global business system and
natural environment .
What Is the significant of sustainable Business for
social environment ?
Sustainable business is about ensuring a
business that will provide better quality of
life for the business social environment,now and for the future generations.
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Why Sustainable Business is Important?
Business organizations operate in acomplex and dynamic social environment.
The viability and effectiveness of these
organizations depends on their ability to
understand and respond to a host of
stakeholders.
The quality of life in our society, and the
viability and sustainability of our naturalecosystems are influenced by and
impacted by business organizations.
Human Right
Protection
Sustainable
Human
Development
Democratic
Relationships
Business
People
Social
Environment
The Strategic Issues of
Sustainable Business
Natural,
economy &Technological
Resources
Social &
Cultural
Resources
Political
Resources
EconomicGrowth &
Distribution
The
Distribution of
Development
Self-Potential
Actualizations
Sustainable Business Policies
Sustainable Business Strategies
Sustainable Business Programs
TheBasic
Capital
of
Sustain
able
Industri
al
Relation
ships
TheNeeds
of
Social
Environ
ment
Good and Clean Business
The Implementation of programs
in Social Environment (CSR)
INDUSTRIAL RELATIONSHIPS FOR SUSTAINABLE BUSINESS
Sustainable DevelopmentBusiness Sustainability
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SWOT
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PEST
SWOT & PEST
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Industrial Ecology and Social Environment
Some basic scenarios: Business recognizing its interdependence on the social
environment and natural ecosystems which supports it.
Material fluxes through local economies should approacha closed loop.
Extensive implementation of renewable sources andpreserving an equilibrium between rate of consumptionand production of renewable materials.
Maintaining and humanizing the economic feasibility of
industrial systems, whilst minimizing impacts on thebiosphere and social environment through CorporateSocial Responsibility (CSR)
What is Corporate Social Responsibility:
CSR is generally understood to be the waya company achieves a balance orintegration of economic, environmental, and
social imperatives while at the same timeaddressing shareholder and stakeholderexpectations.
CSR is the way businesses engage/involvethe shareholders, employees, customers,suppliers, governments, non-governmentalorganizations, international organizations,and other stakeholders.
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Why Social Responsibility is Important?
Being responsible to society means thatbusinesses must be honest and fair in doingbusiness in general, and particularly to socialenvironment;
Support social, generous and provides betterenvironmental condition for their communities.
Making the workplace fair for employees mightmean making uncomfortable changes so thatwomen and employees from minority races are
hired, paid and treated fairly.
Why some business people hesitate in
implementing Social Responsibility?:
It can be expensive to be a good corporate
citizen.It costs money to use environment-friendly
processes for making products.
It's expensive to build non-discriminative
infrastructure so that diffable employees
can be hired.
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Some perspectives on CSR(Cited from Maignan, Isabelle & Ferrell, O. C. “Corporate Social Responsibility and
Marketing: An Integrative Framework” inJOURNAL OF THE ACADEMY OF MARKETING SCIENCE. WINTER 2004)
CSR as social obligation
Bowen (1953) defined CSR as the obligation “topursue those policies, to make those decisions, orto follow those lines of action which are desirablein terms of the objectives and values of oursociety” (p. 6). (This advocated by Carroll 1979, and in contemporarymarketing studies by Brown and Dacin 1997; Sen and Bhattacharya 2001).
Carroll (1979), differentiate types of socialobligations into:(a) economic obligations (be productive and
economically viable),
(b) legal and ethical obligations (follow thelaw and acknowledged values and norms),and
(c) philanthropic obligations (proactively giveback to society).
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CSR as stakeholder obligation
Clarkson (1995) and other scholars
(e.g., Donaldson and Preston 1995;
Jones 1995; Wood and Jones 1995)
argue that businesses are not
responsible toward society as a whole
but only toward those who directly or
indirectly affect or are affected by the
firm’s activities.
CSR as ethics driven
The views of CSR as either a social
or a stakeholder obligation imply that
CSR practices are motivated by self-
interest: they enable businesses to
gain legitimacy among theirconstituents.
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CSR as managerial processes
Ackerman (1975) outlined three main activitiesrepresentative of corporate socialresponsiveness:(a) monitoring and assessing environmental
conditions,
(b) attending to stakeholder demands, and
(c) designing plans and policies aimed atenhancing the firm’s positive impacts.
Some Models of CSR(Cited from Benton, A. et all, Corporate Social Responsibility: Opportunities for
Reproductive Health. Corporate Market Strategies, May 2004)
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Model I: Workplace programs
It is typically refer to health-related
programs carried out by a company
for the well-being of its employees.
The vast majority of workplace
programs focus narrowly on
employee occupational health and
safety.
Model II: The community-based
Companies typically engage in community
projects to build their reputation.
To establish good relationships with
surrounding communities and with
governments.
To invest in the social and economic
development of the communities on which
their business depends and from which
they draw their workforce.
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Community-based projects are often determined bystakeholder dialogue and analysis, and guided by thecompany’s business strategy.
Typical community-based projects include environment,education, women’s empowerment, micro-enterprisedevelopment, and health. Some companies areexpanding CSR programs to target fundamental obstaclesto social development.
Companies often undertake these projects through variedpartnerships with international NGOs, local NGOs, andinternational organizations such as the UN agencies.
Model III: Products and Services Model
Projects are usually undertaken in partnership withpublic health organizations. Most of the companiesusing this approach are pharmaceutical or medicaldevice and products companies.
Companies employing this model typically do so
for some combination of social responsibility,image building, and market-development reasons.
This model appears that companies are beginningto bring more of their core business competenciesto bear on these partnerships — going far beyondproduct donation in order to make programssustainable, create a more powerful impact, andbuild local health infrastructures.
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Model IV: Influencing marketing competencies
Companies using this model consider theirengagement to be community-based.
The model is highlight the overall trend in
CSR toward more strategic involvement
based on core competencies and
maximization of impact.
Projects are based on information,
education, and communication, with thegoal of creating behavior change. They
target the company’s consumer base.
Model V: Cause-related marketing
The cause-related marketing model seeks toincrease sales of a particular consumer productby co-branding and marketing a specificconsumer product with a tax-exempt non-profitorganization.
Affiliating a social cause with the product isintended to increase sales of the product byenhancing its attractiveness to consumers andappealing to their social responsibility sensibilities.
As part of the arrangement, the company donatesa portion of the sales to the nonprofit organization.
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Model VI: Market expansion through innovation
Under this model, companies apply their resources
and core competencies to help solve chronic
social problems (i.e. poverty) in ways that add
value to their own businesses.
This model is based on the premise that
companies tackling tough social problems learn to
innovate, which helps them gain an advantage in
new markets.
Donors can fund the NGOs involved in these
partnerships, and help broker relationships
between the companies and partners.
Conclusion
Understanding Social Environment make us asbusiness people realize that it is the source for:
a) Social Capital that will improve and expandsocial relationships to maintain businesssustainability
b) Cultural Capital that will advance stake holdersintellectual capacity, multiculturalism and tolerance
c) Symbolic Capital that will support in creatingbrand image
The accumulation of these capitals will gaineconomic benefit and political legitimacy .
Socially responsible and strengthening businesslegitimacy