Business Environment and Corporate Social Responsibility
General Environment: Factors Influencing Business
The general environment refers to factors not directly linked to the company but often have a decisive influence on it.
Components of the General Environment
- Budget: Unemployment rates, inflation, and interest rates determine the wages a company pays, the cost of loans, and sales trends. Example: During an economic crisis, every company suffers. A good analysis of the economic environment would anticipate this situation.
- Technology: Technical advances in machinery, electronics, and new technologies make work easier for businesses, reduce costs, and open new business opportunities. Example: Information and communication technologies like the Internet have changed the way we do business.
- Political-Legal: Legal rules on taxes, employing workers, and mandatory technical specifications impact businesses. Example: A new regulation on employment contracts can directly impact businesses, potentially forcing them to sign more permanent contracts or hire certain groups.
- Demographics: Population age, sex distribution, and income level influence the location of a company and its target market. Example: The neglect of rural communities has been an opportunity for many companies.
- Sociocultural: Lifestyle, food habits, and religion are factors that influence people’s behavior and, consequently, affect their consumption habits. Example: Immigrants from South America demand products of their culture, such as specific food and clothing.
- Environmental: Damage due to pollution and climate change is a concern, leading companies to attempt to minimize their environmental impact. Example: Chemical companies must adapt their production systems to be less polluting.
Corporate Culture
Corporate culture is composed of a set of values, beliefs, and principles shared by a company’s members. Examples include open, closed, innovative, conservative, flexible, or rigid cultures.
Elements of Corporate Culture
- Mission: The ultimate purpose that drives the company, its raison d’etre. Example: The mission of Mercedes-Benz cars may be making maximum quality vehicles for the most demanding clients.
- Values: Qualities that are present in the company and influence the behavior of all its members. Example: Ethics.
- Policy: Lines of action through which the company defines its identity. Example: Equal opportunities policy.
Corporate Image
Corporate image is the set of views held by the public about a company. It is how the company is perceived.
- Spontaneous Image: Created by the actions of the company that are observed by employees, customers, and suppliers, and spread throughout the community.
- Purposeful Image: Created through organized and planned campaigns, such as advertisements.
How the Company Interacts with the Environment
The environment influences businesses, and in turn, companies influence the environment. Due to the increasing number and size of firms, the impact of corporations on society has grown significantly.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) is the commitment that businesses make to not only be concerned with their economic interests but also with the impact of their actions on society as a whole.
Externalities: These are the implications of a business’s actions that are not reflected in the market.