Business Environment

And Social Responbilit

Lecture Notes 02
Dr. Fahmy Radhi, MBA

Business Environment
Business Environment is
individual and organization
that exist outside the
business and have
influence direct and
indirect to the business.

Business Environment Elements

Supplier supply materials,

machine, service and information
used to produce its products and
services
Financial institution the capital
resources that available for the firm
Customers targets for the firm to
market its products and services
Competitor - all of the entities that
compete with the firm in marketplace

Business Environment Elements

Stockholders/owners persons who are

invest money in the firm and represent the
high level of management
labor union organization of skilled and
unskilled workers
The community people in the area
where the firm perform its operation
Government federal, state and local
level government that provides not only
constraints in the form of law, regulation,
and taxes taking but also provides
assistance in form of purchases,
information and funds.

Social Responsibility

The awareness that business

activities have an impact on its
environment so it should try to
balance its commitment in its
environment
A businesss obligation to
maximize its positive impact and
minimize its negative impact on
society

Arguments for Social Responsibility

1.

Business helped to create many of the social problems

that exist today, so it should play a significant role in
solving them

2.

Businesses should be more responsible because they

have the financial and technical resources to help solve
social problems

3.

As members of society, businesses should do their fair

share to help others

4.

Socially responsible decision making by businesses can

prevent increased government regulation
Social responsibility is necessary to ensure economic
survivall Businesses must take steps to help solve the
social and environmental problems that exist today

5.

2-6

The Pyramid of Social

Responsibility
Voluntary
Responsibilities
being a
good corporate citizen;
contributing to the
community and quality of life
Ethical Responsibilities
being ethical; doing what is right, just,
and fair; avoiding harm
Legal Responsibilities
obeying the law (societys
codification
of right and wrong)
Economic Responsibilities
being profitable
Source: Adapted from Archie B. Carroll, The Pyramid of Corporate Social Responsibility: Toward the
Moral Management of Organizational Stakeholders. Business Horizons 34 (July/August
1991): 42.
2-7

Motivation for going

green
Competitive
advantage

Legitimacy
(approval of the
regulator

Ecological
responsibility
(moral commitment)

How to implement green

management

Top management with

a commitment to
sustainability
Line manager
involvement
Codes of environmental
conduct
Cross functional teams
Rewards and incentives

How green management become

competitive advantage?

Cost saving

Product differentiation

Reduction of pollution, waste and use

more recycle materials means greater
energy efficiency which can reap more
cost savings
Green marketing: sustainable products
and services to attract environmentally
aware customers

Technological innovation

Social Responsibility

Responsibility to consumers, such

as:

the right to safety,

the right to be informed
the right to choose,
the right to be heard

Responsibility to employees, such

as:

The right to safety

The right to equality in the workplace,
The right to improve its capability

Social Responsibility

Responsibility to investors, such as:

Responsibility to the environment, such as

The right to be proper management of funds

The right to access information
Preventing to water and air pollution,
Safe to the land and Forest
natural resources

Social responsibility, such as

Community support
Social audit

Social Support

Sponsorship Program
designed to reach
and interest target
public
Scholarship
Donation

Public service activities

Companies can improve public goodwill by

contributing money and time to public service
activities.