Impact of Monetary and Fiscal Policies on the Social Media Sector in UK

This report discusses the impact of monetary and fiscal policies on the social media sector in UK, including the new Digital Services Tax and the role of Corporate Social Responsibility in shaping social media activities.

Introduction to the business
Environmental

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Impact of Monetary and Fiscal policies on the complete social sector.......................................3
Role of Corporate Social Responsibility and ethics in shaping the activities of social media
sector companies..........................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment deals with all the internal and external factors that impacts the
functioning of the company such as employees, supply, demand, management, customers and
even the business regulations (Hall, 2020). The example used to show the business environment
can be the extent to which the needs and demands of the customers are met. This report is based
on the social media sector of UK which is facing an expansion and progress rapidly. Various
aspects of this sector can be discussed. But the report will mainly describe the monetary and
fiscal policies of UK and its impact on the social media sector. Furthermore, it will also highlight
the importance of Corporate Social responsibility (CSR) and its impact on the activities of Social
media. In order to justify this, various examples of companies will be given to prove the same.
MAIN BODY
Impact of Monetary and Fiscal policies on the complete social sector
Monetary policies are basically the actions of central banks which are performed for achieving
the objectives of macroeconomic policy such as full employment, stable economic growth and
price stability. Fiscal policy means the tax and the spending policies made by the federal
government whose decisions are mainly determined by the Congress and the Administration.
Monetary and Fiscal policies both are the tools which influences the economic activity of the
nations. Monetary policies mainly focus on managing the interest rates and total money supply in
circulation and this is generally carried out by the central banks. Fiscal policy is used to describe
the taxing and the government’s spending actions and is used collectively. In many countries, the
national fiscal policy is mainly examined by the executive and legislative government’s branches
(Petrevski, Trenovski and Tashevska, 2019).
The central banks make the use of monetary policies for either stimulating an economy or
checking its growth. The main aim of these policies is to spur economic activity by incentivizing
the individuals and the businesses for borrowing and spending. So, on the other hand they can
also considered as a brake on the inflation and various other issues that have an association with
an overheated economy.
On the other hand, the focus of the fiscal policies is on targeting the total level of spending, the
total spending composition or both. The fiscal policies are affected by changes in the spending
policies of the government or its tax policies.
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Therefore, comprising all the points it can be described that monetary and fiscal policies helps in
shaping the economies of the country in different ways. Fiscal policies by influencing the
aggregate demand in the country and monetary policies by controlling the amount of money
which is available in the complete economy. In UK, the government implements the fiscal
policies in order to shape the number of products and services which can be demanded by people
whereas the central banks implement the monetary policies to analyse the ability of the person to
demand certain services.
These policies impact the social media sector of UK greatly and thereby affecting the businesses.
These include the new Digital Services Tax which came into force in UK. Under this tax, the
social media platforms, search engines and the online marketplaces that are able to make great
revenue from users have been subjected to 2% tax on their revenues (Hartmann and et.al., 2020.).
It was observed that the reason behind the introduction of the new tax is the misalignment
between the places where profits are created and where creation of value takes place. Many
companies in UK use social media such as social networking sites like Facebook, Instagram,
LinkedIn, Twitter etc. for extending the reach of their products and services to large number of
people. the people of UK are becoming more socially active which means they are updated on all
the social networking sites and search for their required products and services on the same
(Agustoni and Engel-Di Mauro, 2019). The social media users are increasing day by day which
is forcing the companies to use the online platforms to carry out various activities whether it is
advertising, promotion, production, packaging, delivery etc. Majority of the companies are
earning greater profits by using these online platforms but this revenue is not considered at the
time of allocation of profits of a business between different countries.
It is mainly applied on the companies which is able to generate the revenue of over £500m
through the digital activities along with approx. £25m must be derived from the users of UK
only. This means that this policy or tax is mostly applied to the multinational companies only. It
was also observed that the aim of the UK government is to raise £500m a year by collecting the
tax from such multinational companies (Ejiogu, Okechukwu and Ejiogu, 2020).
Also, the government of UK also committed that it can scrap the tax if the international
corporate’s tax rules by G7, OECD or G20 was going to take place. Online giants were also
targeted by the digital service tax. This idea was again presented back in 2018 which was also
included in the budget of 2020 but many people were against of it because they believe that it
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can lead to retaliation from countries like US, with the tech giants of Silicon Valley such as
Amazon, Facebook and Google which are much impacted by digital services tax. Some people
had fear that these online platforms can also impact the deals between UK and US after the
Brexit. This forced the president to impose the additional tariffs on the social media sector in
UK.
After all these taxes, it was observed that the internal tax scheme for a company like Big tech
could be a better approach especially in this crucial time of pandemic due to COVID-19. The
decision of pushing forward with the tax of digital services was not considered as a timely move
but the political activities could go on. Some companies like Big tech had to pay their fair share
but the commitment of OECD was such that the companies must deliver the multi-lateral tax
scheme which must be comprehensive also and the thing which they require is the support and
motivation which can enhance the use of social media among the people of UK.
The tech sector or the social media sector is also facing the monumental impact of COVID-19
pandemic along with all the sectors of UK economy (Loayza and Pennings, 2020). But social
media sector being the world’s biggest businesses in engaging the substantial resources and
expertizing with the start-ups of tech and the firms in the early stages in UK can be proved as
vital lifeline.
This could even pressurize the tech companies and the social media sector as the attempt for
negotiating the free trade of trans-Atlantic deal lead to the retaliation from US in the current
climate of social media sector.
Role of Corporate Social Responsibility and ethics in shaping the activities of social media sector
companies
The Social media sector activities impacts the millions of users worldwide, so it is must that
they follow the CSR initiative and ethics. Although, majority of the social networking sites have
been receiving the appraisals regarding the tools of CSR communication used by them. The
major activity in which the companies of UK make use of social media is marketing in order to
expand the reach of their products and services. CSR allows the businesses whether large or
small for enacting positive change (Bartsch and et.al., 2019). This is used by the companies not
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only when they decide to do right for bottom line but also to decide which can benefit them
financially along with building loyalty and trust with consumers.
The reason behind the consideration of CSR in shaping the activities of social media is that
it helps in building trust, encourage social change and raise awareness. The big well-known
companies like Google, Coca-Cola, Ford Motor company etc. implements the CSR initiative
doing their part and are getting various results that affects the major issues in the world such as
health and hunger to the global warming. It is not necessary for the implementation of CSR to
have a large capital (Jiang and Luo, 2020). Even small firms can adapt these by simply doing
small donation to the local food bank. The activities of social media are also impacted by CSR
initiative like community volunteering, improving labour policies, participating in fair trade,
reducing carbon footprints, corporate policies benefiting the environment, charitable giving and
conscious investments environmentally and socially.
It is believed that the companies must focus on bringing improvements in the society by
performing its various operations and also find certain solutions which can help in improving
them. The marketing activities which makes the use of social media in attracting the customers
from all over the world where the company cannot reach directly or in person. It influences the
buying or purchasing behaviour of employees in positive ways. This can also be observed that
the employees have strong intentions so that they can work as socially responsible corporations
which are able to communicate their initiatives of CSR to their employees through the different
online platforms and the social media (Kim and Stepchenkova, 2020). CSR helps in shaping the
activity of marketing as in the times of crisis, the companies makes use of social networking sites
so that they can deliver their products and services even in the times when the customers can’t
reach directly to the stores to make a purchase and the marketers were also not able to go to the
customers directly to promote the products and services (Online Media is vital for effective
CSR communications, 2015).
There are various examples of the companies which takes the CSR initiatives for shaping the
activities of social media which are as follows:
 Johnson & Johnson is the best example which is striving hard to reduce the negative
impact of its operations on the planet for almost three decades. They initiated this by
leveraging the wind power so that safe water can be provided to the companies which
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also helped in reducing the pollution. This also changed the way in which the company
promotes its services through the social media.
 The another important example can be of Google which always takes the initiatives
which are environment friendly. The main reason behind this is the CEO of the company
who is outspoken and stands up against all the social issues including the anti-Muslim
comments. Its data centre is also using the half energy than others in the world. These
CSR initiatives and ethics changed the way of the company who is totally depended on
social media (Wang and Huang, 2018).
 The one more reason can be of Netflix & Spotify which provide numerous benefits to its
employees and their families. It also provides its employees 52 weeks of paid parental
leaves which is taken according to the needs of the employees.
 Another example where CSR initiative can be proved beneficial for shaping the social
media activity is TOMs whose mission is to donate the shoes for every pair of shoes
sold by them. The total number of pairs donated by them till now is 60 million to
children in need. In order to set examples of ethical behaviour, the company also fight
against the bullying and also work with certain non-governmental organisations ((16
brands doing corporate social responsibility successfully, 2020).).
The above mentioned examples helped in analysing that CSR initiative helps in shaping the
activities of social media.
CONCLUSION
The above report basically focussed on the social media sector in UK. It discussed various
monetary and fiscal policies in UK and also identified the differences between both. It also
highlighted the impact of these policies on the social media sector of UK. Both the policies work
in different ways and impacts the social media including the social networking sites in
completely distinct ways. The social media sector is expanding day by day and its users in UK
are increasing rapidly which forces the companies to expand their reach of products and services
through the online platforms. Furthermore, the role of Corporate Social Responsibility was
highlighted in shaping the social media activities in UK. Various examples were given to support
this point such as Google, Netflix etc.
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REFERENCES
Books and Journals
Agustoni, A. and Engel-Di Mauro, S., 2019. From The Fiscal Crisis of the State to the Second
Contradiction of Capitaism: James O’Connor’s Intellectual Journey. Capitalism Nature
Socialism. 30(4). pp.36-41.
Bartsch, E. and et.al., 2019. Dealing with the next downturn: From unconventional monetary
policy to unprecedented policy coordination. Macro and Market Perspectives.
Ejiogu, A., Okechukwu, O. and Ejiogu, C., 2020. Nigerian budgetary response to the COVID-19
pandemic and its shrinking fiscal space: financial sustainability, employment, social
inequality and business implications. Journal of Public Budgeting, Accounting &
Financial Management.
Hartmann, P. and et.al., 2020. Explaining Viral CSR Message Propagation in Social Media: The
Role of Normative Influences. Journal of Business Ethics, pp.1-21.
Jiang, H. and Luo, Y., 2020. Driving Employee Engagement through CSR Communication and
Employee Perceived Motives: The Role of CSR-Related Social Media Engagement and
Job Engagement. International Journal of Business Communication,
p.2329488420960528.
Kim, M. and Stepchenkova, S., 2020. Do consumers care about CSR activities of their favorite
restaurant brands? Evidence from engagement on social networks. Journal of Hospitality
Marketing & Management, pp.1-21.
Loayza, N.V. and Pennings, S., 2020. Macroeconomic policy in the time of COVID-19: A
primer for developing countries.
Petrevski, G., Trenovski, B. and Tashevska, B., 2019. The effectiveness of fiscal and monetary
policies in a small open economy–the case of Macedonia. Post-Communist
Economies. 31(6). pp.805-821.
Wang, R. and Huang, Y., 2018. Communicating corporate social responsibility (CSR) on social
media. Corporate Communications: An International Journal.
Online
16 brands doing corporate social responsibility successfully, 2020. [ONLINE]. Available
through :< https://digitalmarketinginstitute.com/blog/corporate-16-brands-doing-
corporate-social-responsibility-successfully>
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Hall, L., 2020. Tying Together Social Media and Corporate Social Responsibility. [ONLINE].
Available through :< https://www.convinceandconvert.com/guest-posts/tying-together-
social-media-and-corporate-social-responsibility/>
Online Media is vital for effective CSR communications, 2015. [ONLINE] Available through :<
https://thecsrpractice.wordpress.com/2015/11/30/online-media-is-vital-for-effective-csr-
communications/#:~:text=From%20raising%20awareness%2C%20to
%20connecting,the%20brand%20that%20dives%20in.>
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