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Business management is the functional application of marketing techniques. It refers to the analysis, planning, implementation, and control of programs designed to create, build, and maintain mutually beneficial exchanges with target markets. Perhaps, every organization wants to initiate a management system and strategy that could maintain the organization's capability, strength and competitiveness. It is important that the management team and the organization per se should always open their mind for changes that they might encounter in order to cope and adapt to the latest development that are happening within and outside their environment. Thus, this paper will discuss and evaluate business practices that would help an organization to achieve its mission and to survive with the stiff competition in consideration to the environmental impact of the business process. This will discuss the issues pertaining to organizations balance environmental concerns against economic profits.
Business Management and Ethics
With regards to the actions of companies which affect other companies and individuals, let us consider the issue concerning business management and ethics. In any contemporary operating business organisation, progress that the company is making is recorded as basis for, among a host of other essential things, decision-making and as a benchmark for measuring the business's performance for the period under scrutiny. Historically, the term business referred to activities or interests. By extension the word became (as recently as the 18th century) synonymous with "an individual commercial enterprise". It has also taken on the more general meaning of "a nexus of commercial activities" (Stabler, M 1997). Businesses are established to perform economic activities. With rare exceptions (such as cooperatives, corporate bodies, non-profit organisations and institutions of government), they are for-profit ventures. That is, one of the main objectives of the owners and operators of the business is to receive a financial return for their time, effort and capital.
Business activity has received a very diverse review from the ethicists of this generation (Cotton, 1998). In the age of the industrial and scientific revolution, people believed they could reason themselves toward better behavior, but today, having seen the horrors of what the industrial and scientific revolution has brought upon us, many have given up any hope of finding a unified answer for right and wrong (Cotton, 1998).
A business firm needs to ask itself three questions before proceeding with any activity: is the action profitable, is it legal, and is it ethical? If an action is not profitable, it will not be undertaken. If it would be profitable, then the decision-makers need to evaluate whether it also would be legal and ethical.
According to Suderman (1999), the need for business to act more socially responsible is increasing. Technology, international markets, and new social problems have magnified the awareness of what the function of business should be. Half a century ago, the mission was clear - profits. In the modern world, society has placed a great emphasis on social issues and because business touches every aspect of society, strict demands are placed on it. The controversy between business and social issues has long been debated, but is starting to meet level ground. Out of this understanding come some guidelines for every institution to ideally follow.
The first proposition is that "social responsibility arises from social power" (Davis, 1990: 166). This suggests that if a business has power, it should take responsibility for its actions. Business is anchored to an iron law of responsibility which states "in the long run, those who do not use power in a way that society considers responsible will tend to lose it" (Kreitner, 1998: 137). The business should take into account the effect its acts have on others and promote the quality of life as a whole (Suderman, 1999).
The second guideline is that "business shall operate as a two-way open system with open receipt of inputs from society and open disclosure of its operations to the public" (Davis, 1990: 166). This guideline indicates that business should listen to social needs and wants (Suderman, 1999). The communication between business and society demands improvement. It is claimed that business only reveals the good aspects, but rarely the bad aspects in its public relations. Business should undergo a social audit in much of the same way as it undergoes an accounting audit to accomplish this objective (Davis, 1990: 167).
The third proposition states that "social costs as well as benefits of an activity, product, or service shall be thoroughly calculated and considered in order to decide whether to proceed with it" (Davis, 1990: 167); which means that business should consider the long-term effects of its activities on society as well as short-term effects. A product may be considered beneficial today, but the long-term use of the product may be harmful to the environment (Suderman, 1999).
The fourth guideline is that the "social costs of each activity, product, or service shall be priced into it so that the consumer (user) pays for the effects of his consumption" (Davis, 1960: 168). The consumer will pay for all costs involved in goods and services, including social costs. Usually "society or someone else has had to bear these social costs while the consumer benefited from the reduced product price" (Davis, 1990: 168). The goal behind this proposition is the social costs are caused by the consumption of a good or service, so the consumer should be responsible for as much of it as possible. If the higher price deters consumers from buying a product or service, it is still beneficial to society because the social costs of consumption are averted.
The final proposition is that "beyond social costs, business institutions as citizens have responsibilities for social involvement in areas of their competence where major social needs exist" (Davis 169). Business is not responsible for every social problem that arises, but should help to solve them. A business is part of society, so it should maintain the same responsibilities as an ordinary citizen. Business will benefit from the solutions to social problems, so it should apply its core competencies to help alleviate them (Suderman, 1999).
Business, Technology and Environment
The following discussions which concerning the issues of technology and environment highlighted the actions of individuals which affect companies and other individuals. Basically, a wide variety of technological breakthroughs in the late 19th and 20th centuries have transformed the human world. These breakthroughs include advances in media (e.g., the television), communication (e.g., the Internet), production (e.g., miniaturization), and others (e.g., the home computer). All of these breakthroughs have had the effect of "shrinking the world." Or, to use another cliché, these technological revolutions create a "global village." One consequence is that we realize that we are traveling on space-ship earth with only limited resources. Given this chain of events, a concern with environmental issues is heightened. As citizens and as consumers, we worry about the future and wonder whether or not there will be enough resources to ensure that everyone has a chance to achieve "the good life." As participants in a capitalist economy, we turn to corporations to transform our thoughts into goods and services. In this sense, corporations are the agents of our desires.
Basically, “environmental concerns” represents an opportunity for business development. That is, a corporation recognizes that its customers are not now environmentally concerned but would like to be. This situation could be interpreted as an opportunity to raise consumers' consciousness of environmental issues. In this context, business managers serve to lead a society toward a more ideal world.
Moreover, for consumer goods, what constitutes environment problems and issues at any moment keeps changing. This dynamic consumer market influence suggests that the brands that adapt fastest to consumer demands will be future leaders in the market (Ottman, 1992). Corporations can transform green into a competitive edge by integrating environmental planning into overall business strategies and forming alliances with environmental groups and regulators (Ottman, 1992).
Producers are finding that not all products that are good for our environment or the so-called green products are created equal. To stay competitive in the dynamic market, producers should be prepared to follow several pricing strategies. Green products can be divided into at least two groups: environmentally-friendly products, and recycled consumer goods. These groupings should be based on consumer perceptions of the products, and separate pricing strategies should be evaluated for each.
Today's market for recycled and recyclable goods is greater than ever (Griffin, 1992). To capitalize on this movement, managers and marketers must promote the environmental benefits of recycled goods and maintain prices in a range near that of the nonrecycled competitors. Promoting the environmental friendliness of recycled materials will be most attractive to some customers, while attributes aimed at convenience will be attractive to others. Although these aspects of the product mix are important, competitive pricing of recycled goods may be the key to capturing a significant market share. Once high market shares are reached, cost reduction programs should allow producers to increase profit margins from recycled products.
In a globalized economy where tough competitions occur among businesses, companies are exploiting the benefits of social responsibility. These social activities: include charitable contributions, discounts to senior citizens, expenditures on employee alcoholism and substance abuse treatment, responses to customer complaints, product warranties, processes for exchanging purchases, community service in volunteer or governance capacities, employee education, child care or flexible hours for employees with children, advertising or promoting community events, sponsoring sports teams, recycling, special services to the handicapped, and so forth (Smith & Thompson, 1991). From this lists of social activities, it is much better if business organization focus their concerns to our environment. Actually, it is much better if they included their concerns to the environment to the overall business process.
Actually, most companies view social responsibility as a corporate investment that will result in a long-run corporate profit and not a corporate expense. Businesses supporting social responsibility activities claim that it is in the best long-run interest of the business to become intimately involved in and to promote and improve the communities in which it does its business. Moreover, it can and should improve the corporate and local image of the company, and it is in the stockholders best interest. Further, companies believe that by making communities a better place to live in, it can entice superior and happier workers to the company who in turn will put out better products and increase profits.
However, it is important to point out that the primary reason why businesses turn into socially responsible activities is to maximize their profits; public interests comes in second.
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