Fiscal and Monetary Policy Impacts on Social Media Sector

This report addresses the impact of fiscal and monetary policy on the social media sector. It also evaluates how corporate social responsibility and ethics shape the activities of social media organizations.

Introduction to Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO4..................................................................................................................................................3
Fiscal and Monetary Policy and its impacts of on Social Media Sector -..................................3
LO5. ................................................................................................................................................5
Corporate social responsibility and ethics have shaping the activities of various organisations
in Social Media sector..................................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Social Media is the computerized technology that assist the sharing of information, ideas
and thoughts by building virtual network and communities. It attributes user generated content
and customize profiles. Now-a days social media play essential role as it allows to increase the
reach, nuture and engage with the target audience anywhere in the world. Businesses today use
social media platform to generate brand awareness, to increase its sales, revenues and leads.
This report addresses about knowledge and understanding of Fiscal and Monetary policy and
impact of monetary policy and fiscal policy on social media sector as a whole. It also evaluates
and analyse with the examples how corporate social responsibility and ethics have shaped the
activities of various organizations in Social Media sector.
MAIN BODY
LO4.
Fiscal and Monetary Policy and its impacts of on Social Media Sector -
Fiscal Policy-
Fiscal policy refers to policy by which government regulates its spending levels and tax rates to
observe and influence a country's economy (Bauer and et.al., 2018). Fiscal policy is carried out
for two reasons -
 To maximize demand and economic growth for that government of country basically cut
the taxes and increase spending which leads to higher budget deficit.
 To minimize demand and decrease inflation for that government increases tax rates and
cut spending which leads to smaller budget deficit.
The following are the three types of Fiscal Policies – Expansionary fiscal policy, neutral fiscal
policy and Contractionary fiscal policy.
Expansionary Fiscal Policy – It is used by government to promote growth during an economic
recession or downturn. This policy usually involves greater spending in excess tax revenues than
during normal period especially on measures that increase employment (Belke, Dubova, and
Osowski, 2018).
Contractionary Fiscal Policy – This policy is used in period of during high economic growth and
full employment on expanding economy especially when there is concern of rising inflation.
Neutral Fiscal Policy – Fiscal policy can also be determined as neutral when the level of
government spending in relation to tax revenue is stable over the period.

Monetary policy -
Monetary Policy belongs to demand side of economic policy it denotes to the action undertaken
by the country's central bank to manage money supply and attain macro economic goals that
encourage sustainable economic growth. Monetary policy is mutation of the supply of money
that is printing more currency or decreasing the money supply by changing interest rates or
removing excess reserves (Blot and et.al., 2020)Monetary policy can be either expansionary or
contractionary -
Expansionary Policy – This policy takes place when a monetary authority like Bank of England
uses its procedures to stimulate the economy. It maintains short term interest rates at a lower that
current price or increases the supply of money in the economy.
Contractionary Policy – It helps in maintaining short term interest rates, slower the rate of
growth of the money supply, even minimises it to slow short term economic growth and lessen
inflation. It can also result into unemployment, and may also result in economic recession.
Objectives of monetary and fiscal policy of UK-
Low inflation CPI = 2%.
Strong economic growth, no inflationary growth.
Reduce unemployment.
Avoid large deficit on current account balance of payments.
Maintain sustainable public finance.
Impact of fiscal and Monetary policy on Social Media -
Fiscal and Monetary policies are the influential tools that are concerned with the government and
Bank of England authorities which influences the every sector of economy as like Social Media.
Social Media Sector recently has started growing and gained many user base as the customer
using it for various purposes like networking, businesses, messaging etc. Any changes in the
fiscal and monetary policy impacts the sectors, the following discussed below are the impacts -
Fiscal Policy And Monetary Policy Impacts -
With the growing no. of users of social media in UK, the government introduced taxes on
Internet services, which led to rise of costs for internet access and call making.
Because of the taxes imposed on internet, broadband adoption would decrease and this would
impact the operaters and there will be less revenue generated for the social media companies, and
thus low tax revenue to government.

Due to imposition of Taxes, it is to born by the users like women and other groups who already
excluded by digital spaces or use less social media websites (Bowen, Appiah and Okafor, 2020).
In the recent pandemic Covid-19, the government must reduce the taxes on social media
websites, in order to leave citizens with more amount of money.
Bank of England, provides discounts or lower rates of interest in order to encourage more
borrowing, now-a-days many people have started their business online on social media
platforms, which will involve in borrowing and spending by using various quantitative tools such
consumer credit, direct action and rationing of credit etc.
If the government thinks that social media sector is growing very fast, and there are chances of
inflation, so government will decrease its spending by increasing the interest rates, so that people
are left with amount.
More of use of social media sector means that more hiring of employees in social media sector
which reduces the level of unemployment.
Thus, fiscal and monetary policies play vital role in keeping the social media sector secure and
strong. During the economic recession and boost in the economy the tools of monetary policy
are used by the Bank of England which majorly influences its business and the users. With
proper implications of taxes and interest rates by Bank of England and taxes and spending by
Government of UK can will have less impacts on the growth of social media sector.
LO5.
Corporate social responsibility and ethics have shaping the activities of various organisations in
Social Media sector.
Corporate social Responsibility and ethical behaviour brings benefits to corporates
(Bowen, Appiah and Okafor, 2020). Corporate social responsibility denotes to responsibilities of
organisation for their impact on society, and the outcomes for integration of environmental,
human rights, social, ethical and as well customer concerns into business activities and core
strategy, in close alliance with stakeholders. It can also be defined as the voluntary activities or
policies that enterprises engage with the aim of influencing positive social change and
environmental sustainability.
Ethics refers to the code of value and principles that control the action of a person , group of
people concerning to what is right versus what is wrong (Chae and Park, 2018). Thus, ethics

compact with internal values that are part of corporate culture and shapes decisions concerning
social responsibility regarding the external environment. The success of business organisation
relies on the sound ethical code of conduct set guide to both management and employees in day
to day activities. It provides benefits to organisation such as – retaining good employees, avoid
legal problems, build customer loyalty, positive work environment etc.
There are 3.499 billion users active users of social media globally and 45 million users in UK,
with such huge no. of users in the country it is essential and mandatory for the social media
companies like Facebook, Twitter, Instagram, YouTube etc. to follow its business operations in
ethical manner and contribute towards the corporate social responsibility (Ferrell and et.al.,
2019). These companies practices CSR and ethics embraces responsibilities for its actions and
through its activities, which positively influences the organizations environment, employees,
society, communities, consumers and many stakeholders. There are few types of CSR practises
done by social media companies -
Philanthropy – This CSR involves donating funds, goods or services to another organization or
cause. Companies increasingly hold charities accountable for the use donations and measuring
performance relative to their mission. For eg The leading company like Facebook invests in
philanthropic activities like in education, technology, social justice and economic opportunity.
Facebook CZI partners with, educators, students and families for creating programs which help I
learning tech and human development. One of the special Team of CZI works with social justice
forum which focus upon transforming prosecution and expanding opportunities.
Sustainability – It basically denotes to corporate capacity to undergo long term renewal,
prolongation and nourishment. While considering company's perspective, it includes stewardship
for sustaining not just the company but also its various stakeholders (Gomez, 2020). It is of three
types – environmental sustainability, social sustainability, economic sustainability. Facebook
excels in the area of sustainability. Environment is an essential concern and Facebook is
investing both cash and technological resources into it to solve the environmental challenges.
Ecocentric Management – This CSR refers to protect and amend the quality of nature, no matter
of the economic benefits to company. As integrated business activity , ecocentric management
may also assimilate life-cycle assessment (Igwe, Icha-Ituma and Madichie, 2018). Social media
companies through its advertising campaign make sure that the users using its platform for
various business activities are using its platform are prohibited from dealing any ban or

restrictive product. Company like YouTube ensure that in its internal management all the waste
is recycled and the things used are recyclable.
The following discuss below are the factors which shape social media sector business activities -
Attract talents and intensify reputation – Social media companies in UK offers strong and well
communicated CSR program that help them to transform their business into a magnet for best
talent. Many graduates now prefer to work with companies, having CSR policy, which helps in
improving the staff perception of business and motivate employees , for example through
fundraising and volunteering activities.
Boost employee Retention – It is key of success for companies like Facebook and Instagram,
these companies makes adjustments to improve employee's work life. They focus on investing in
those people and which can invest you. By offering strong and well communicated CSR
programmes success to every employee by working responsibly and sustainably.
Creates a Culture for engagement – Social media companies focuses on taking such initiatives
which creates a culture where everyone working or using feels proud of getting involved the
company (Shim, Chung and Kim, 2017). Company takes initiatives like volunteering, charities
for the cause, come up with social and environmental conscious policies which shape its business
activities and motivate them to take better steps.
Increased Users and Customer Loyalty – When global companies such as Facebook, Instagram
YouTube are involved in CSR initiatives it not only increases its user base because today every
users share its feedback regarding the platform, negative feedbacks may ruin the company's
reputation so there is indirect pressure from the users to take initiatives.
Easier access to capital – Shareholders and other investors more likely to finance in the
company doing CSR initiatives and have reputation and goodwill in the market. Social media
companies involved in taking good CSR initiatives such as by taking part in community
activities social or environmental gain good relationships with people and can encourage people
to invest in their company.
Few initiatives of social media company -
LinkedIn – LinkedIn launched its mission “LinkedIn for Good” to connect those from
underserved communities to economic opportunity by providing them skills, networks and
opportunities which they need to succeed.

Twitter – Twitter launched 'Hope140.org' to help in raising funds for Haiti and to end malaria.
Company also offers Tweet for Good program where non-profits can ask for free advertising
through their Promoted Tweets.
YouTube/Google – Company donated huge amount for medical cause and also offers free
advertising to non-profits through their free Google Grants Program.
CONCLUSION
In the Report above, it can be understood in detail about the fiscal and Monetary policy and its
impact the on growing Social Media Sector, either it negatively influence the sector or can have
positive influence as well. In the later part of the report, it can be analysed in detail that how
corporate social responsibility and ethics helps in shaping the business activities of various social
media giants such as Facebook, LinkedIn, Twitter, YouTube etc by following the rules and
regulations of UK. It also discusses various steps in order to fulfil their growth objective and
initiatives that these companies successflly undertake to follow the CSR.

REFERENCES
Books and journals
Bauer, G., and et.al., 2018. The global financial cycle, monetary policies, and macroprudential
regulations in small, open economies. Canadian Public Policy. 44(2). pp.81-99.
Belke, A., Dubova, I. and Osowski, T., 2018. Policy uncertainty and international financial
markets: the case of Brexit. Applied Economics. 50(34-35). pp.3752-3770.
Blot, C., and et.al., 2020. The role of ECB monetary policy and financial stress on Eurozone
sovereign yields. Empirical Economics. 59(3). pp.1189-1211.
Bowen, G., Appiah, D. and Okafor, S., 2020. The Influence of Corporate Social Responsibility
(CSR) and Social Media on the Strategy Formulation Process. Sustainability.
12(15).pp.6057.
Chae, B.K. and Park, E.O., 2018. Corporate social responsibility (CSR): A survey of topics and
trends using Twitter data and topic modeling. Sustainability. 10(7). p.2231.
Dell'Ariccia, G., Rabanal, P. and Sandri, D., 2018. Unconventional monetary policies in
the euro area, Japan, and the United Kingdom. Journal of Economic Perspectives, 32(4),
pp.147-72.
Ferrell, O.C., and et.al., 2019. Business ethics, corporate social responsibility, and brand
attitudes: An exploratory study. Journal of Business Research. 95. pp.491-501.
Gomez, L.M., 2020. The State of Social Media Research in CSR Communication. The Palgrave
Handbook of Corporate Social Responsibility, pp.1-23.
Igwe, P.A., Icha-Ituma, A. and Madichie, N.O., 2018. The evaluation of CSR and social value
practices among UK commercial and social enterprises. Entrepreneurial Business and
Economics Review. 6(1). pp.37-52.
Shim, K., Chung, M. and Kim, Y., 2017. Does ethical orientation matter? Determinants of public
reaction to CSR communication. Public Relations Review.43(4). pp.817-828.
(Chae, B.K. and Park, E.O., 2018)
1

2