The Interconnection between Business and Society
Business and society have an association for a reason that business cannot operate in isolation. Business is bound to interact with the various aspects of society like the people, and environment. Business is related to people in the form of the workforce that it needs to facilitate the operation. It is also in combination with people as customers are its end-users. Customers are in fact the ultimate destination of a business. The business produces both positive and negative influences on the surrounding environment. The wastages left out of factories and the other types of polluting substances are polluting the environment and making it unhealthier for people. The connectivity between business and society has increased nowadays. The connectivity has increased due to the existence of various dynamic forces. The study is aimed at understanding those dynamic forces and its impacts on both business and society. This also covers how strategic decision making can make a difference. Additionally, it also covers what decision making tools can bring the required changes.
A business affects both the shareholders and the stakeholders. Stakeholders can be further divided into two categories like the market stakeholders and the non-market stakeholders. Market stakeholders are the customers, the suppliers and also the shareholders. Non-market stakeholders are all those who have no direct linkage with the economic perspective of business; however, they get influenced in varied ways. Those non-market stakeholders are the society, environment, the government, the NGOs and also the competitors. In a broad sense, it can be said that both influence each other’s activities. For example, if the government increases the different kinds of taxes like the import tax then the affected business tries to adjust to the circumstances by making a few changes which may or may not be beneficial for both the market or non-market stakeholders. If the business considers a hike in the prices of goods and services then customers may be in the challenge. On the other hand, if it compromises on the quality part then customers are again in the challenge as they may not get the best quality service.
There are various dynamic factors which are as follows that cause such things to happen:
PESTLE analysis
Political: Globalisation has produced a radical change in the way business used to happen. The national boundaries are no longer the actual border. They look like as if a hypothetical border. The incrementing use of globalisation has integrated things like never before. The goods and services are now traded to cross border countries and also at the global platform. Foreign companies are now entering the local market. They enter to introduce their products to a wider customer base. They are also at challenge where foreign government policies are not so favourable or are uncertain like China. The business is then tested and hence, customers can also be at lost by not being able to get the best service from their selected brand.
Dynamic Forces Impacting Business and Society
Economic: This is another big factor which influences the business at both the national and the international level. The economic turbulence is not good for the society either. The consequences can be later on good or bad for customers, suppliers and the other market & non-market stakeholders. It also has a negative impact on the projected salaries as it might get hampered.
Social: Customers are now educated. In most cases, they are aware of the products and its related facts. Not only this, they are also aware of how responsible is the particular employer from the social perspective. Social responsibilities like whether they have serious concerns about increasing environment pollution or they have taken the initiatives to not support the child labour. They also judge them on how ethical the particular business has been from different regards. Notably, the number of educated customers has now grown up and so, their thought process is. It has readily impacted the way employers look into the business.
Technology: Technological advancement has never been the same. It has kept on evolving. Technological evolution enhances the living standard of people. It also affects the society on a negative note. For example, the gradual development of cars has been good from the perspective of desire. However, it has kept on increasing the burden on the environment by means of greenhouse gas emission. The advancement is now getting shifted to the natural resource which is good for the environment; however, the particular society may then be short of its natural resources.
Environmental: Business has kept on evolving with the change in business strategies and the technologies. Customers are at the benefit when they get something that is fulfilling their desire. However, environmental values could then be at stake as it is due to the increasing CO2 emission in the air. The largely responsible bodies for CO2 emission are the factories, the vehicles and the others.
Legal: The government legislations do also impact the business and the society. For example, there are a certain set of laws and legislation which is necessary for the employer to follow. If they follow such policies then they will be termed as if they are ethical. Society gives values to business which is ethical and they trust on such business. Hence, legal policies do also form a relationship between business and society.
Porter’s Five Forces
Following forces do also impact the business and society:
PESTLE and Five Forces and their Impact on Business and Society
Bargaining power of suppliers: The relationship between suppliers and the business is important for business and society. If suppliers are cooperative then business will be at boost. Customers will then get the products as per their needs. However, if terms are not so good then the business will be tested and hence, employees, customers, and the other market & non-market stakeholders.
Bargaining power of buyers: It is the customers who make up the business. If they are loyal to one brand and the brand is capable to attract new customers then business is at the benefit. Moreover, employees are also at the benefit. The products may or may not be environment-friendly. In such case, a high trust of customers may be a threat to the environment. For example, customers use a varied range of cars which are a high contributor of CO2 emission.
Threat of new entrants: Threat of new entrants means the level of difficulties which the specific industry offers. If threat is low then very few businesses will then exist or vice-versa. The incrementing number of business may or may not be good for the society. It may be good for the employees as they have ample of job options. This may not be equally good for the people as the business may be hampering the environment where they live. For example, smoking is one of the resources of CO2 emission which is not good for the society and the common people.
Threat of substitutes: This can also be high, medium or low depending on the feasibility rate of the industry. In any regards, the business and the society get hampered. For example, there is a lot car manufacturing brands; however, they are not good from the environmental perspective. Electric cars manufacturers are indeed treated to be as ethical as such cars contribute to a very low CO2 in air.
Competitive rivalry: Competition is good for customers in most of the time as businesses will fight for competitive price and product quality. However, such facts may not be equally beneficial for the environment. For example, factories contribute to a large CO2 emission which pollutes the environment. A polluting environment is never good for the society.
The forces such as PESTLE and Five Forces have its relationship with business and society. The relationship will produce positive outcomes if being addressed with effective strategic decisions. The challenges that are being addressed can be reduced if appropriate strategies are being adopted. For example, if environmental pollution is a challenge to a car manufacturing company then the real answer from the company would be to produce something which is less harmful to the environment. Electric cars are probably the answer which emits a very low CO2.
Strategic Decision Making
If there is an economic turbulence, the business may consider an entry into a more favourable economy. For example, a business that struggles in the developing nations may consider to entry the developed nations like the United States, Germany, and Australia. Electric cars are the examples of a strategic move in technology. Business can answer to criticism by being ethical in practice. If government policies are not certain then this can really test the business. In such cases, business will consider moving to a better state where policies are stable.
There are a few decision making tools that act as contemporary drivers for change. Those few tools are flowcharting and Force Field Analysis. Flowcharting is like making a sketch of different activities which can be discussed during a board meeting or also in meetings with the managers. This is indeed a very engaging and attractive way of getting to know how all operation related activities take place. This is very simple and understandable also. Flowcharts can be used to show activities related with the different functional departments in business.
Force field analysis is another decision making tool to bring the required change in business. The tool is a philosophical point of view which considers that the change relies on two forces to happen. One of the forces acts as a resistant to the change. The other one does strengthen the change management process. In Business, its members are the most powerful resistant. A prior discussion with the managers and the assistant level staffs is mandatory before implementing the change.
Conclusion:
Therefore, it can be said that business and society are related to each other for different purposes. They are feasible to each other when the several dynamic forces impacting the relationship between business and society, are all favourable. In otherwise case, the business can be beneficial to few like employees while it might not be equally good for the common people and the surrounding environment. A strategic decision making capability with the help of change management tools can indeed help a business remaining fruitful to the society.
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