02. The Business Environment

Business Ethics

1. The Business Environment Prepared by: Hamdoon Hussain B.Sc (Economics), MBA HRM Karachi University Business School (K.U.B.S)

2. Businesses do not operate in a vacuum they operate in an environment.

3. What is Business Environment Business environment is the sum total of all external and internal factors that influence a business. You should keep in mind that external factors and internal factors can influence each other and work together to affect a business.

4. Business Environment A health and safety regulation is an external factor that influences the internal environment of business operations. Additionally, some external factors are beyond your control. These factors are often called external constraints. Business ethics refers to contemporary organizational standards, principles, sets of values and norms that govern the actions and behavior of an individual in the business organization.

5. Two Dimensions of Business Ethics Business ethics have two dimensions, normative business ethics or descriptive business ethics . As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns.

6. Key Environment of Business

7. Demographic It refers to the human population characteristics that surround a firm or nation and that greatly affect markets. The demographic environment includes such factors as age distributions, births, deaths, immigration, marital status, sex, education, religious affiliations, and geographic dispersion characteristics that are often used for segmentation purposes

8. PESTEL It is a framework or tool used to analyses and monitor the macro-environmental factors that may have a profound impact on an organization’s performance.

9. Political Factor Political factors are governmental activities and political conditions that may affect your business. Examples include laws, regulations, tariffs and other trade barriers, war, and social unrest.

10. Economical Factor Macroeconomic Factors are factors that affect the entire economy, not just your business. Examples include things like interest rates, unemployment rates, currency exchange rates, consumer confidence, consumer discretionary income, consumer savings rates, recessions, and depressions.

11. Economical Factor Microeconomic F actors are factors that can affect your business, such as market size, demand, supply, relationships with suppliers and your distribution chain, such as retail stores that sell your products, and the number and strength of your competition.

12. Social Factors Social factors are basically sociological factors related to general society and social relations that affect your business. Social factors include social movements, such as environmental movements, as well as changes in fashion and consumer preferences. For example, clothing fashions change with the season, and there is a current trend towards green construction and organic foods.

13. Technological Factors This refers to technology incentives, the level of innovation, automation, research and development (R&D) activity, technological change and the amount of technological awareness that a market possesses. These factors may influence decisions to enter or not enter certain industries, to launch or not launch certain products or to outsource production activities abroad.

14. Environmental Factors Environment have become important due to the increasing scarcity of raw materials, pollution targets and carbon footprint targets set by governments. These factors include ecological and environmental aspects such as weather, climate, environmental offsets and climate change which may especially affect industries such as tourism, farming, agriculture and insurance.

15. Legal Factors Legal factors are external factors which refer to how the law affects the way businesses operate and customers behave. It includes more specific laws such as discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright and patent laws, and health and safety laws. It is clear that companies need to know what is and what is not legal in order to trade successfully and ethically.

16. Ethics at Workplace Workplace ethics also referred to as business ethics. It describes the ethical dimensions of organizations and company activities. The term comprises every issue that may arise in a business, including production, distribution, marketing, sale, and consumption of the goods and services being offered.

17. Ethics at Workplace Workplace ethics are the rules and procedures that should be carried out in an office by the employer and the employees to maintain a professional company culture and to build a better relationship with their customers by providing better services. Ethical lapses of any kind have the tendency to snowball in a work environment. Once employees see others breaking the rules without repercussions, they may start to think it’s excusable for them to do so as well.

18. The Role of Work Ethic  Managerial style can work to improve an employee’s work ethic by establishing systems and habits for accomplishing tasks efficiently and interacting effectively in the workplace. The 8 main characteristics of strong employee work ethic are as follows: Punctuality Accountability Focus Initiative Productivity Professionalism Dedication Desire to Improve  

19. The Role of Work Ethic  Punctuality : Completing projects when due, Showing up on time, Following break-time protocol, and Informing supervisors of challenges in a timely manner are all efforts that respect the value of time in the workplace . Accountability: Employees and employers both should be accountable in their work efforts, It means they shoulder the responsibility for ongoing projects and take the blame for errors when necessary.

20. The Role of Work Ethic  Focus: An employee must remain focused and avoid the distractions of chatter, social media, technology, etc. in order to efficiently accomplish a task . Initiative: This is when an employee does something productive or useful to the company without being asked. Showing initiative in work efforts indicates to management that an employee values success. 

21. The Role of Work Ethic  Productivity: Productivity hinges upon an employee’s ability to overcome distractions, ignore external influences, and conquering obstacles that inhibit them from performing their task.  Professionalism: Employees who exhibit professionalism show up and take their work seriously, staying respectful of others and dressing appropriately. 

22. The Role of Work Ethic  Dedication: Dedication means consistency and showing up ready to accomplish tasks daily while maintaining focus and productivity.  Desire to Improve: Employees who embrace feedback and learning moments show that they are willing to work to grow in their careers.  

23. Ethics Vary by Industry Business ethics differ from industry to industry and nation to nation. The nature of a business's operations has a major influence on the ethical issues with which it must consider. For Example: An ethical problem arises for an investment brokerage when the best decision for a client and their money does not agree with what pays the brokerage the highest commission . A media company that produces TV content aimed at children may feel an ethical obligation to promote good values and eschew off-color material in its programming.

24. Business Ethics & Environment Protection The underlying principle of environmental ethics is that nature has intrinsic value. This means that nature and its parts are not merely means for accomplishing one’s purposes but are ends in and for themselves. Businesses are run by human beings whose decisions and actions can create changes in the society or sometimes be not in accordance with the society.

25. Business Ethics & Environment Protection A firm might be excellent in economic conditions such it’s financial stability, increased profits and good revenue but poor in terms of social performance such as not understanding the effect of its activities and supplying products at reasonable prices and quality. A business enterprise is a part of the society and influenced by society and should adjust to the preferences and values of society. So the main purpose of business ethics is to draw a line between individual betterment and social betterment.

26. Barriers to Considering Environmental Ethics One study found that 78% of small businesses had no environmental management system. Most business owners wanted to reduce their environmental impact but were held back by “resource constraints” as well as other factors like lack of support or guidance.

27. Barriers to Considering Environmental Ethics Competitive pressure is where If your competitors are importing low-cost goods with no regard for environmental sustainability. If a business is not all about profit, it does need to make a profit to survive. Although some environmental policies can also have a positive bottom-line impact, others can add to cost.

28. Benefits of Considering Environmental Ethics Company may enjoy a positive brand image so that customers will buy products even if they’re a little more expensive than competing ones . Example: UK company  Brothers We Stand  sells men’s clothing that comes with a full breakdown of the social and environmental impact of its production. Anyone can easily find cheaper shirts from retail chains with looser standards, but plenty of customers are willing to pay more for the peace of mind that comes from buying something in tune with their own values.

29. Benefits of Considering Environmental Ethics Reducing the environmental impact of your business will improve the sustainability of your business. If you are less dependent on natural resources than your competitors and have ways to deal with rising costs due to climate change, your business will have a greater chance of long-term success Company may also be able to attract better employees if someone appeal to their own values and position himself as a great place to work for ethical as well as financial reasons.

30. Improve Environmental Practices Full Cost Accounting Full cost accounting aims to capture a business’s true costs by measuring the resources it uses, the waste and pollution it generates, and other social and environmental impacts .

31. Improve Environmental Practices Energy Efficiency Reducing the energy use can lower the amount of electricity, utility needs to produce, which can effectively reduce personal greenhouse gas emissions and carbon footprint with energy efficiency measures. In addition to the direct financial and environmental benefits of implementing energy efficiency measures, coupling energy efficiency with other green practices can offer even further advantages

32. Improve Environmental Practices Energy Sources Company could evaluate the sources of energy as well as looking that energy usage. There are plenty of alternatives to fossil fuels these days, and business could switch to an energy supplier that generates its energy from renewable sources . For example, in the UK, there are several companies, such as  Ecotricity  and  Good Energy, that provide electricity for homes and businesses from sources like wind power and solar panels .

33. Improve Environmental Practices The Supply Chain When businesses look at their environmental impact, they often focus on their own direct contributions. An ethical supply chain focuses on the need for corporate social responsibility, working to produce products and services in a way that treats its workers and the environment ethically. It can help protect brand reputation, build long-term loyalty, and provide a better customer experience.

34. Improve Environmental Practices Packaging In business, it is important to sell the product to make profit, but it is also important to build trust with the consumer, and be responsible in using environmentally friendly materials. S ometimes company might choose what is best for their product and neglect what is good for the environment. Unfortunately, packaging is something that people discard of to get to the product. Cut out unnecessary packaging of the products and replace plastic packaging with eco-friendly materials that will decompose quickly or, ideally, durable containers that can be reused .

35. Improve Environmental Practices Pollution Pollution is the most important and most concern today. The environment pollution becomes a harmful level of pollutants in the natural resources – air, water, and land (soil), which these three natural resources is the main, causes the global warming .

36. Improve Environmental Practices Transportation Transportation is a major source of pollution and other negative environmental effects, so examine the way people and products are transported within the company. Reduce the need for transportation for example, by switching to a local supplier or switch to more eco-friendly transportation. Also consider ways to encourage staff to use eco-friendly transport options.

37. Improve Environmental Practices Putting It Into Practice It means creating a clear environmental policy for the business, incorporating all of the points discussed, along with any others that could be added. Then company will need to support that with staff training and reinforce your commitment by constantly emphasizing the importance of environmental ethics in communication with employees. Business can use Earth Day itself as a great way to kick things off . It’s easy to say the right thing, but doing the right thing involves embedding respect for the environment in all aspects of the business, and that takes time, effort, and organization.