4. social enviroment

8/18/2019 4. Social Enviroment

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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

4. social enviroment

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