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The demography of a particular place has huge impact on the business organization. The demographic changes affect the business activities and force to change its strategy. The organizations which dont have knowledge of demographic techniques, and who cannot adapt to new ways of thinking driven by demography and demographers, will face significantly disadvantaged in today's competitive business environment.
The government creates the rules and regulations for business organizations in which the businesses compete with each other. The businesses are forced to change the way they operate when these rules are changed from time to time by the government. So that the business organizations are directly affected by government policy such as economic policy, legal policy, etc.
Based in Germany, Volkswagen (VW) is the largest automobile manufacturers in Europe. It was established in 1937 by the German Labour Front. Volkswagen is made up of nine different brands from seven European nations: Audi, Volkswagen, Bugatti, Bentley, SEAT, Skoda, Scania, Lamborghini and Volkswagen Commercial Vehicles. Each brand name has its own feature and operates as an independent body on the market. Volkswagen is a global brand operating in more than 150 countries and having more than 360,000 people involved in production process directly or indirectly. The company is growing rapidly since UK Volkswagen Ltd became the official UK importer in 1953. As part of the Volkswagen Group, Volkswagen UK is one of the country's largest importers of vehicles, employing nearly 600 people across the country
The UK population and the world population is increasing day by day. The current UK population is more than 60 million and it is projected that it will exceed 65 million by 2050. The numbers of people aged 65 and above have increased and is still likely to grow. Similarly, the people aged between 20 and 64 has remained almost the same while the number of children have declined over the 10 years time period compared to 2001 population data. This trend is likely to continue by 2051 as well.
The organizations are normally governed according to a set of policies. These rules and regulations are expected to protect the assets and resources of the company and hold top managers and executives responsible for their decisions and actions. The positive effect of corporate governance on different stakeholders may bring positive change as it ultimately strengthens the economy. So good corporate governance is a tool for social and economic development.
Current and likely future demographic trends in the United Kingdom and internationally
The current UK population is more than 61 million which shows an increase of more than 9% compared to 1983. It is expected to reach 71.6 million by 2033, an increase by 17% compared to the current population. Between 1983 and 2010, the number of people aged 16 or less in the UK fell from 21 per cent to 19 per cent of the total population. The number of people aged 16 to 64 rised from 64 to 65 per cent, when the number of people aged 65 and over also rised slightly to 16 percent. But the number of old citizens has increased dramatically over the few years and is likely to increase in the future also. Higher birth rate, lower death rate, and migration have resulted increase in population in United Kingdom.
The proportion of people aged 16 and less has dropped below those over state pension age. In UK, life expectancy at birth has risen. Many studies show that younger people spend more time in formal education and the size of labour force has increased as the population has rised. The current employment rate in UK is 72.1 percent and 28.82 million people are employed, highest record since 1996. The number of both full time and part time workers have declined compared to previous years. On the other hand, unemployment rate is 8 percent and there are 2.50 million unemployed people. Similarly, 21.5% people are inactive which is equal to 8.16 million people. When the unemployment rate increases, people won't be able to buy luxurious goods such as car. For example, because of the economic recession and high unemployment rate, the sales of Volkswagen cars have declined in United Kingdom.
The world population is still growing although the growth rate has declined since 1970. It must be because of decline in infant mortality rate and fertility rate in both developed and developing countries. The growth rate of developing countries is higher than the growth rate of developed countries. So population of less developed countries covers a large proportion of world population. The number of old people in the world is increasing. However this growth rate in developed countries is larger than in developing countries. Such demographic trends have huge impact on organizations.
The companies are facing strong competition than ever due to globalisation of markets. People can easily move from one place to another which has resulted change in population structure. It has also facilitated the change in social attitudes as different people from different places with different race, culture, religion, and language live together and interact each other. So the companies have to deal with the complex and diverse customer groups. The trend of migrating from developing countries to more developed countries has facilitated increased density of population in developed countries. The concept of free trade and globalisation has affected many countries and the organizations of those countries as it has created serious issues and problems in different countries. However, the organizations in developed countries are more likely to be benefited than in developing countries from such act.
Business Ethics and Corporate Social Responsibility
The organizations operate in the social and natural environment. Therefore, the organizations have to be accountable to the social and natural environment in which it exists. Because of the demand and pressure an organization faces, it has to be ethical for the reason that whatever the business does affects the stakeholders and the way an organization selects ethical alternatives to survive. One of the reasons that have brought business ethics is the increasing number of multinational companies and declining number of small-scale, high trust and face-to-face enterprises. In today's globalised market, the need for business ethics processes and actions is increasing. Hence, the organizations face pressure to improve the business ethics through different public initiatives and laws.
Business ethics is the study of good and evil, right and wrong and just and unjust actions in business (Steiner and Steiner, 2003, p: 198). The business ethical values arise from religion, philosophy, cultural experience and law. Today, many companies set up ethical programs, or coordinated applications of management techniques designed to install values and promote more ethical behavior. Ethical managers try to do good and avoid doing evil. Using ethical ideas in the business is an art, an art requiring judgment about both the motivations behind an act and the act's consequences.
Corporate social responsibility is the obligation a corporation has to make wealth by using means that avoid harm to, protect, or enhance societal assets. Companies are economic institutions run for profit. However, they can not meet their financial objectives without fulfilling social responsibilities. These social responsibilities differ with company characteristics such as size, strategies, industry, marketing techniques, internal cultures, locations, manager's values, and stakeholders demand. Solving social problems can sometimes be profitable.
Enterprise is simply a business which is a legally recognized organization designed to provide goods and services to the customers. It refers to the entire organization, including all of its subsidiaries. It implies a large corporation or government agency, but it may also refer to a company of any size with many systems and users to manage (web-1). It can be broadly understood as 'making things happen, happen having ideas and doing something about them, taking advantage of the opportunities to bring about change. On the other hand, corporate governance is the overall control of activities in a corporation. It is concerned with the formulation of long-term objectives and plans and the proper management structure (organization, systems, and people) to achieve them (Steiner and Steiner, 2003, p: 668). It is about the way in which top managers execute their responsibilities and authority and how they account for that authority in relation to those that have entrusted them with assets and resources.
Business Regulation and Corporate Governance
The business organizations are regulated by the government bodies in order to control the monopoly system, achieve social goals, control negative externalities and control destructive competition. In business regulation can be understood as the use of laws or rules stipulated by a government or regulatory body, such as the Securities and Exchange Commission, to provide orderly procedures and to protect consumers and investors (web-2). The volume of government regulations historically has moved in a wave-like pattern. The government has started regulating the business since colonial times. The reason and need for more responsive and effective business regulation was for independence and to establish federal government. In the nineteenth century, as the United States economy grew so fast and became the most powerful nation, different business laws that privileged social reforms over the interests of big business were passed by the federal government. It was until 1970's, when the business and public parties started raising voice for less regulation by the government. Only at the beginning of the twenty-first century, the regulation on business practices came to light with the serious effects of regulation on California economy.
The number of laws regulating business activity has increased with the increase in economic power of private sector business over the past century. These laws have helped to promote market competition and control the market power of large businesses on customers and small business firms. The objective of these laws was to minimize the negative effects of business activities on individuals and other companies. The business regulations can have huge advantages on stakeholders such as customers, financial and corporate institutions, and public. But, such regulations on business can have both pros and cons. The disadvantages can be that it can bring civil or criminal penalties, increase in risk of litigation, etc. However, the small businesses seem to be more affected by such regulations as they are supposed to be less diversified and have less access to capital. Therefore, the small businesses can not easily adopt with the changing circumstances created by the regulations put on them.
Similarly, The organizations are usually governed by a set of rules and regulations which are supposed to have tighter control and are expected to save the assets and resources of the organization from being harmed. This helps to keep the top level manager and executive accountable for their actions and decisions. When there is corruption, company scandal, and fraud we can be pretty sure that the term 'corporate governance' will arise. It has been more familiar to us since the high profile energy company Enron in 2001 and communications giant WorldCom in 2002. Their collapse has created awareness on how companies are governed and how the managers are kept accountable.
Managing the Organizational Change
The rules and regulations on the organizations force to bring changes into it. Besides the regulations on organizations, the changes happen due to some internal management decisions or external forces like changes in economy. The changes within the organization could be organization-wide or sub-system change, transformational or incremental change, remedial or developmental change and even planned or unplanned change. Managing the organizational change is a difficult task. Firstly, the organization has to be ready for change in the organization and develop approaches to overcome resistance to change. The organization also has to have clear vision about the change in the organization, has to develop capacity for change.
The organizations use different strategies to manage the change such as directive strategy, expert strategy, negotiating strategy, educative strategy and participative strategy. Directive strategy highlights the manager's right to manage change and the use of authority to impose change with little or no involvement of other people (web-3). Similarly, the expert strategy approach refers to seeing the management change as a process of problem solving which requires to be solved by an expert. This strategy is useful for more technical and complex problems such as introduction of new learner management system. Negotiating strategy focuses the willingness of the top level managers to effect change. For this, the senior managers should also accept that the adjustments and concessions may need to be made in order to implement change. On the other hand, the educative strategy approach is related to bringing change in people's values and beliefs, winning their hearts so that they would support the changes. Where as the participative strategy encourages the full involvement of those who are affected by the changes. This strategy suggests that there should be participation of both top and lower level management and other parties while managing the organizational change.
Although there are different organizations have their own ways of handling the changes, it has never been so easy to handle with them. Different plans and procedures are being used to tackle the change situation. The effective change management process however could be these steps:
Be clear about the need of change that is going to happen and why it has to be happened in a certain time period.
Get involved everyone who are affected by the organizational change stakeholders, decision-makers, resource holders,etc.
Define the organizational outcomes in specific and measurable terms.
Make specific individuals responsible for different tasks and outcomes.
Build-up organizational systems and competencies of people for affecting the change.
Conclusions and recommendations
The world's population is changing and having a extraordinary demographic structure and will continue to have. The growth rate of world population was slow before 1900 and the age structure was relatively constant and few people lived beyond 65 years. in 20th century, population started to grow rapidly as the life expectancy increased. However, during second half of the 20th century, the fertility rate declined and so the growth rate also declined dramatically. Such demographic trends have huge impact on global business organizations and bring changes in organizations.
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