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Business Environment Chapter 2 24-9
Business Environment Chapter 2 24-9
Business Environment Chapter 2 24-9
Social responsibility
This is the way a Co acts in a responsible way to those inside and outside it. It also looks at the way it does business. Is it good for the environment? Is it good for the society?
Shareholders
Some believe that the only job of managers is to make the owners wealthy (very rich) There are two reasons for this thinking: 1. The shareholders own the business. So managers should not do anything which reduces the value of the business E.g. giving away things for free to school children.
Shareholders
2. If managers increase the wealth of the owners the following will happen: A) the Govt will have more taxes, which can help more people B) Having rich people also helps the society, they create jobs, they spend money on many things. So everyone gains from having rich people! C) Most shares are owned by Pension Funds e.g. Pingan. So they may be owned by people who are not rich.
Continued
3. Businesses get a lot of help from the Govt: - Govt pays for education, health, roads etc - Cos pollute the environment - the tax they pay may not be much anyway. 4. Cos produce two types of things: - Good - goods and services - Bad pollution, noise,
B. Employees
Workers are part of the internal and external environment. 1 Internal as workers 2 external as part of the public and society.
Internal wages, job security, promotion, pensions Cos are now trying to make workers happier by: - daycare paid by the Cos or at the worksite. - flexible working working from home - Paternity leave for fathers.
C. Customers
These are very important to the Cos. If they are unhappy the Co may lose money or close!
Their main worries are: 1. quality of goods and services 2. Safe products 3. Availability of products 4. Support concerning products.
Suppliers
These like Customers are connected to the Co. They are very important to the Co: E.g. they can cause a Co to lose money or fail. Suppliers worry about: 1. Getting paid for the goods and services given. 2. Future businesses: Power of suppliers: A. they may stop supplying to the Co. B. They may say from now on pay in cash. C. They may tell other people the Co is not a good Co.
Financiers are people who give money to the Co like banks. Their main concerns are: 1. Being paid the interest. 2. Being paid the capital. Powers of Financiers: 1. Can make the Co close 2. They can refuse to give the Co anymore money. 3. They may take the Co to court. 4. They may take some of the Assets of a Co.
D. Financiers, Lenders
Professional bodies
For accountants think of CICPA in China. Its job is to control what the members can do. In reality there is very little they can do except: 1. to ask him to pay money 2. Or to stop him being a member
neighbours
Cos must not disturb their neighbours e.g. Must not pollute, make noise or cause traffic jams
This will depend on the country, society or its laws.
Government
This is very powerful. Govts interests may be as follows: Tax Cos are paying tax. Employment How many people are working, Environment it may wish to discourage pollution. Development the government may wish to see the country becoming better.
Govt
Powers are many e.g.
Can change, remove or add laws. Controls taxes. Controls public spending e.g. taxes Can help cos e.g. laws or give Cos money Can build infrastructure e.g. roads, hospitals. Can be a competitor sometimes!
Environmental Responsibilities
Laws The Govt may encourage you to do something. E.g. if you buy an electric car you may pay no sales tax. Or the Govt may discourage you by tax E.g. people used to be given plastic bags for free. To reduce pollution, the govt makes people pay for them.
1. Primary sector
These have a big effect on the environment, e.g. mining, agriculture, fishing or timber. Effects - deforestation no more forests - animals lose their homes - fewer plants and animals - poor working conditions and safety, - food or products not safe
Steps taken by business: 1. recycle more 2. Have processes and products which use less resources.
These do not have a big effect as the other two sectors: They affect the environment in the following Electricity. E.g. office machinery, lights. Energy. Business trips, using private cars Paper. E.g. printing business documents Water e.g. in the toilets at work.
Possible solutions: Recycle papers Print less or use electronic printers Switch off lights after hours or use better lights.
3. Tertiary sector
Ethical issues
Ethics is the study of right and wrong. It is a very problematic area because people do not always agree on what that is. Cos try to make sure that employees act in a certain way. They may follow a code of conduct.
These are usually documents which tell an employee what he can or not do. They are supposed to help him do the right thing. Conduct means the way you behave E.g. a code of conduct may talk about: Being fair on e.g. women, Obey the law. Respect others Do not lie or cheat
Codes of Conduct
It is not enough to have a code of conduct. If someone does something wrong they must be punished, whoever they are.
Codes of Conduct
Business Ethics
Question Is there a place for ethics in business? Should a Co not only worry about how to make money and nothing else.
It is not a Cos job but the Courts You may lose business
Ethics models
There are two main models for having ethics in a Co. 1. Compliance based model 2. Integrity based model
Compliance
Follow the law, rules Keep to the law Lawyers Employee does not have much choice
Integrity
Choose your own standards Have legal and responsible behaviour Management, lawers, owners etc Leadership, training, Co systems
Standard
Behaviour ideas Main people Actions
The Law
People are selfish Lawyers Make standards, train people, discipline, investigate, report The Law, code of conduct
Education
Management Responsibilities
Managers are responsible for two key issues: 1. Recruitment bringing people into the Co 2. Retirement people leaving the Co at the end of their working lives. 3. Redundancy asking people to leave because the business is not doing well or they are not good enough.
Recruitment
This means hiring new people. The Co must make sure it gets the right person. It can be expensive or even difficult to fire a person. This can be avoided by choosing the right person in the beginning, Firing people can make others unhappy
Retirement
This when an employee has reached the legal age limit or has chosen to retire early. The employee must get: A good pension to support him during retirement. A big problem for some people is what to do next. Cos may help prepare them through talks etc.
This is when some people are asked to go. This could be because the Co is not doing well Or there is a change in the Co Or they do not have the skills now needed. The Co may help by doing the following: Putting them in sister Cos if possible Helping them to find new jobs. Training them for new jobs Providing advice. Arranging for job fairs Giving them good pensions when they leave the Co.
Redundancies
Making the community better E.g. giving jobs, helping schools and hospitals.
Helping the community when problems happen E.g. noise, pollution
1. 2. 3. 4.
Reasons for P.R. To tell people about the Co and its products. to make the workers want to work harder and longer for the Co To make customers only want their products. To show that they are socially responsible.