Environment Business Stakeholder Assignment Help
Why the Environment is considered a business stakeholder, and what are the consequences for business and for society of ignoring it?
Environment includes different internal and external factors that can impact any business; natural environment is affected by the business operations however it is not considered an important stakeholder in the businesses (Freeman, 1984). This essay explains why environment is an important stakeholder for businesses and if it is ignored what consequences can result. Starting with brief literature review, it discuses different cases that highlight importance of environment as a business stakeholder. All businesses operating anywhere in the world are linked to many other variables and entities. These entities are complex and are not constant, hence managing them is important for organizations. Mangers consider level of control these entities have before managing them, and they have classified different stakeholders accordingly like there is an internal environment within an organization, then there is an operating environment and finally there is an external environment, which is also knows as macro environment. Internal factors include all factors that are under an organizations control, and hence straightforward decisions for them are made. However these entities are important for the business and it includes employees, shareholders and board of directors etc. Operating environment includes those entities with which business regularly interact here level of control is comparatively less. It includes entities like competitors, suppliers, banks, government and pressure groups etc. The macro environment includes economy, laws, government polices etc, and here control is minimal. All of these are stakeholders for any business. Importance to them is given based on risk attached to them. On the other hand environment in which business operates should also be included as it has major implications but it has not received any attention as a stakeholder for many reasons and some of them are mentioned below, (Environment and stakeholder).
There are different stakeholders in any business and all of them exert different extend of power on the organization, similarly there is disagreement among scholars regarding environment being a business stakeholder or not. A stakeholder is any individual or a group that can impact or is impacted by the firm’s business, (Freeman, 1984), this however suggest that stakeholders include only living beings. On the other hand some other scholars argue that environment should be considered as a business stakeholder, as it can impact the business’s performance or even it may be impacted by the business (Starik, 1995). It was explained that mostly it is believed that stakeholders only include humans and it was further argued that environment is also a business stakeholder. The argument was based on the observations that as environment is affected by the business operations hence it must be considered as a stakeholder. Moreover it was explained that if environment is also considered as a stakeholder, this will benefit both environment and the business (Starik, 1995). Similarly Carroll (1993) also claims that environment is one of the major stakeholders that a business must consider.
On the other hand there are different researches in this field that claim that most important stakeholders for any business are living beings, and environment is not considered important. This is based on the idea that “greatest good should be for greatest number” (Kant, 1788). This is the main reason why environment has always been affected by businesses in negative way without considering them important stakeholder. Another major issue here was that no one speaks for the environment and only some people were concerned, but with time things have improved as people have started taking nature and environment an important thing.
Woodward & David (2002) argued inclusion of environment into the business stakeholders, and there proposal was focused on addition of environment into the “organization stakeholder management process”, which indicate that people became more concerned about the environment with the passage of time.
Philips & Reichart (2005) claimed that the traditional “stakeholder theory” does not clearly describe who stakeholders are and who are not. It fails to separate those individuals that are stakeholders from others. However if we link stakeholder theory to the fairness principle, we come to know that environment should also be one stakeholder. Although environment is not part of stakeholder in the broader sense but if it is analyzed properly we come to understand how environment is an important factor and it impacts the operations of any business as described later in this report. Moreover environment is not treated fairly even if law states that it should be treated equally among other stakeholders.
In decision-making, since environment and even future generations (that will be most impacted by poor handling of current environment) do not speak for their right now, are ignored. They are ignored both by the business and also by other macroeconomic variables that are present, and hence there is need to voice for them. Environment is and should further be considered a business stakeholder (Jacobs, 1997).
A case study “The importance of social responsibility, A Coca-Cola Britain case study” is considered to further explain the situation and importance of environment as a business stakeholder. According to which any good business must also be a good citizen, it must make profits by satisfying the needs and wants of the society in which it operates. Moreover any progressive business understands that being socially responsible will help it grow and expand, because these days’ investors, suppliers, employees and even customers are more attracted towards socially responsible firm. TCCC is proud of the fact that in addition to being a big brand it also contributes socially in the local environment in which it operates. It believes it has a duty towards the society which is depicted clearly in the Britain market. It is member of the group of companies which are motivated to contribute towards the environment in which it operates. Since different stakeholders have different interests that business needs to fulfill, Coca-Cola has rightly developed efficient strategies, which clearly work towards achieving the objective that is assigned to them. TCCC has developed strategies particularly towards environment and the community. The eKOsystem is the environmental management system of Coca-Cola, and the company operates in a way that they also firstly “Protect”, then “Preserve” and finally, “Enhance” the environment in which it operates. They claim that they cooperate with public and the organizations to solve environmental challenges, and they work towards bringing about a positive change. They further claim that they know the importance of doing business in a right way. Now for above past 30 years company contributes and helps local communities in cleaning the local environment. Then there is a “Just Bin It” program that is done in April with a motive of cleaning schools and organizations. It is also one of the fonder member of “Environment 21 Club of going green”
The valued youth program is specially designed for people who cannot enjoy benefits of happy life. It gives opportunities to all and not just privileged members of the society. This program is successful carried in USA from last 15 years now. It is important to mention the results of all the strategies adopted by TCCC. It has comprehensive system for performance measurement of all the strategies. There are community performance indicators that indicate the impact of the social work on their own business and on the environment. Overall the company promises to benefit everyone surrounding it. Hence it will continue its business as a socially responsible company committed towards well being of all the stakeholders including the environment, as it has various programs that work towards cleaning the environment. It has benchmarks to measure its performance against others.
According to BSP, there are various issues in relationship between business, its society and the government. Modern capitalism has changed the way of doing business, and the way in which stakeholders of the business interact with the organization. Now businesses need to consider environment as a business stakeholder. There are increased social pressures on the businesses to work in a socially responsible way. People and businesses take initiatives to be socially responsible as we saw in the above mentioned case of The Coca-Cola Company. Businesses do not operate in vacuum but instead they operate in the surroundings of economy including environment, and hence environment is the stakeholder that businesses consider. If environment is ignored there may arise serious issues for the company as its brand reputation and even profits will decline. The new demands have shifted the ways businesses function today. If they do not there will be risk of not considering some of the important opportunities in life. However it also means that not all companies are responsive to these new changes, and some of the cases show many businesses that had to face serious consequences if they do not respond properly or if they ignore surrounding environment. With all others one of the most important new trends is that consumers demand “ethical and socially responsible” behavior by all the businesses. New global system also provides major challenges to the business operating in it (The BSP Triangle in the global context).
The global economy has shifted the ways in which business contact and interacts with their stakeholders. It provides flexibility in the relationship between employees and its stakeholders. With the more global environment things have become more complex and they require stakeholders to be treated properly. It further explains employee’s relationship also varies with global environment. There are flexible employee arrangements and labor force. Different stakeholders are treated differently, there are some actions or strategies to overcome inequality by businesses policies, like having proper strategies that can be applied and evaluated. Some other actions are also taken by government like social policies that are used for overcoming inequalities; similarly there are different laws that work towards it. Still there are other actions that can be employed by the society, these are most effective as they provide most results, pressure groups support the discriminated party and hence discrimination is reduced. Similarly other social groups also work towards welfare. Although government have made polices and laws to eliminate any kind of discrimination still employees themselves work towards it and improve the situation. Environment can be considered as an important stakeholder like employees and discrimination towards it can also be reduced in this way (BSP Lecture notes, Impacts of business on primary stakeholders in the workplace).
