The Business Environment: Fiscal, Monetary, and Social Media

This report delves into the intricacies of the business environment, examining the influence of fiscal and monetary policies on the social media sector. It begins with an introduction to the business environment, including Next plc, and then dissects the tools of fiscal and monetary policy and their e...Read More

Introduction to the Business Environmental

Table of Contents
INTRODUCTION………………………………………………………………………………3
ASSESSING THE IMPACT OF FISCAL AND MONETARY
POLICY…………………………………………………………………………………………...4
ASSESSING THE IMPACT OF FISCAL AND MONETARY POLICY ON THE SOCIAL
MEDIA SECTOR…………………………………………………………………………………5
CORPORATE SOCIAL RESPONSIBILITY, ETHICS, GLOBAL AND REGIONAL
FACTORS………………………………………………………………………………………...6
CORPORATE SOCIAL RESPONSIBILITY AND ETHICS WORK IN GLOBAL AND
REGIONAL FACTORS IN THE SOCIAL MEDIA SECTOR………………..............................7
CONCLUSION…………………………………………………………………………………..10
REFERENCES..............................................................................................................................11

INTRODUCTION
The business environment is a combination of all the internal and external factors related to
business. It involves all factors which may or may not be under the authority of the organization,
but can influence the performance, profitability, and growth of the organization. (What is
Business Environment? 2019.) Next plc is a British multinational company founded in 1864 in
England. Its includes clothing, footwear, and other home retail product. The assignment will
explain fiscal and monetary policies and evaluate their impact on social media. It will also show
the effect of the social media sector on corporate social responsibility and ethics.
Assessing the impact of fiscal and monetary policy
Understanding fiscal and monetary policy and impact on social media sector
Fiscal and monetary policy are tools of government and the Federal Reserve which are
used to regulate the economy in the right direction. (Sims, 2016.) Monetary policy revolves
around the management of the supply of fund and rates of interest by central banks. While Fiscal
policy manages the fund spending on the economy. When the economy is growing at a very fast
rate, the government increases the interest rate and reduces the flotation of money. Fiscal policy
also decides the way the central government can earn with tax. When support the economy
government will reduce tax rates which will increase the flow of money in the market.
Both fiscal and monetary policy impact the business organization. The most impact of both
the policies is on the demand and supply of products of the organization. The effect is on
customers using their money spending on goods and services, contribution of fund on capital
products of business, government spending on products and services and money used in export
and import of various products. Fiscal policy and monetary policy impact the money supply in
the economy, which creates a big impact on interest rates and the inflation rate. (Bonam and
Lukkezen , 2019.) The growth of the business is also influenced by the increase and decrease in
the interest rate and changing the tax policy. For a retail business like Next, fiscal policy and

monetary policy broadly impact the demand of consumer, business related cost and expenses,
investment planning of business and to stand in the competition.
Customer Demand
Monetary policy tools are interest rate and money supply which are set by the central
government. They target directly of inflation. Fiscal policy tools are tax and government
spending prepared by the government. It targets healthy economic growth. When the interest rate
changes it reduces the flow of money in the market, which lowers the spending of customers.
When customers will spend less, demand will also decline. A fall in customer demand means
less production in any organization. The cost of credit and loans also reduces as customers more
focus on saving.
Cost of Doing Business
When interest rates get higher through fiscal policy, retailers prefer to spend more on
loan. An increase in interest rate brings more foreign investors, which gives more purchasing
power to retailers. As they can buy stock from foreign suppliers in local currency.
Investment Decisions
Fiscal policy decides how much risk a retailer can afford. Tax credits can be used in funding
business and tax incentives can be used to help in recruitment for the company. So, the company
can spend on new store or branch.
Competitiveness
Every retailer is cautious about changes in fiscal policy and monetary policy. As to
remain competitive in the market, a retailer has to lower the prices of its goods by cutting costs
or lowering the number of employees.

Assessing the impact of fiscal and monetary policy on the social media sector
Social media is the most successful business in today's world. There are several social
platforms like Facebook, Instagram, Pinterest, Youtube, Linkedin, Twitter, and many more.
(Bernanke, 2020.) The impact of fiscal and monetary policy on the social media sector can be
explained with the following points -
When the supply of money is more on the market due to tax rates reduction by the
government, the business can spend more money on paid social media marketing. There are
many options available in the digital world like Google ads, Facebook paid marketing, and
Instagram paid option. The marketing fund of the company can be invested in the digital
platform due to more supply of money in the economy.
 As monetary policy controls the supply and demand for money in the market,
there will be less floatation of money in the market. The customer will spend less
on products and services and will use more free services available in the market.
As social media is free for users people will spend more time on social media. It
will increase the count and engagement of people on social media.
 When the supply of money is less in the economy, the business can boost its sale
with social media. Social media has some free platforms to start the business with
them, like the Facebook page, Instagram business page, and Pinterest. Once a
business is set up on a social platform one has to only spent on marketing.
 The new social platform will get an opportunity to enter the market when people
are spending more time on social media. New businesses like online teaching,
digital marketing, online stores enter the market. This business aid a benefit in
boosting the economy.
 Taxes on income affects customer needs. When the tax rate increases people spent
less on non-essentials items. For a business also cost-cutting is the only method to

save the funding of the business. The organization can plan Organic Marketing
Strategies which help them to stay in the market.
 Social media like Linkedin help people and organization to search for the job and
build connection, which supports the business. This platform promotes
humanizing the brand of your company. A real-human connection is built on
social media which actually increases the followers of your product.
 Social media also contribute a significant percentage of GDP, which is good for
the growth of the economy. (Indaco, 2020.) In the last 5 years, the users on social
media have increased in a vast range. There are around 3.499 billion social media
users all over the worldwide. The UK has about 45 million people who actively
uses social media. Social media contribute nearly 5.8% of the global gross
domestic product (GDP).
Analyze how corporate social responsibility, ethics, global and regional factors
Analyzing corporate social responsibility in the Social Media sector.
Corporate Social Responsibility (CSR) means that corporates are responsible and
accountable towards the society and environment for its sustainability. CSR involves liability for
protecting the environment and contributing to social welfare. Every organization needs to
follow there a social duty of modern business. CSR operates ahead of earning profit for
shareholders. (Advantage, 2020.) The main function of CSR to be a part of social contribution
for organizations to the people, economy, and environment. For examples, diminishing carbon
waste, practicing fair trade, charity, participating in the social welfare program, volunteering for
social causes. Some people dispute that companies owe no obligation to society, they think that
the only moto of organization is to earn profit, but that is not true. Corporates are accountable
toward the environment and people.

Business Ethics are rules which are to be followed by organization, it is moral duty of
business to practise fair business without any fraud. Most businesses works by their own morals
in making business policy-making, but business ethics is beyond that. Trustworthiness, honesty,
integrity, loyalty, and respect are some of the basic principles of Business Ethics. The purpose of
business ethics is to maintain a uniform ethics within the company, from top to bottom level of
company. It makes sure that every employee of organization should get respect, no matter what
is the position of employees. Businesses develop a “code of conduct” document that shows the
ethical standards to be followed by the company and its employees. ( Sroka, and Szántó, 2018.)
There are various ways to maintain a business ethic in the organization which include,
addressing conflicts among employees, responsible for company assets and property,
maintaining diplomacy with delicate information, practicing virtue, following dress-code, and
many more.
Analyzing how corporate social responsibility and ethics work in global and
regional factors in the social media sector.
As per corporate tradition view, there are three theory of analysis of corporate social
responsibility and business ethics which are followed by various organizations in the social
media sector.
1. Corporate social responsibility (CSR) - CSR theory included four aspects of
responsibility.
Economic responsibility - Every organization economic obligation is to make money. It explains
that while making money social responsibility should be considered by the company while also
following business ethics. Profit-making is important as without it, there will be no business
involved and not the chances of business ethics. Social media should also make a profit but
ensuring the code of conduct.

Legal responsibility - Legal responsibility means to stick to rules and regulations. Social media
are not allowed to post or support any such content which harms society. If they do so, legal
action should be conducted by the organization.
Ethical responsibility – It refer to the responsivity of company to be take care of environment,
no matter what the law says. (Getele and et.al., 2020.) The concept says that every company
should be ethical and make it mandatory for employees to follow ethics. Social media like
Facebook should themselves raise voice against anything illegal posted on the profile.
Philanthropic responsibility - It explains an organization is responsible to contribute and do
charity for the people in need and helps other without any self-benefits. Social media Instagram
hides the sensitive content from its post.
2. The Triple Bottom Line
A triple bottom line is a type of corporate social responsibility managing organization
should calculate the cost and revenue keeping in mind the amont to be used in social caused or
charity without providing any harm to environment. (Svensson and et.al., 2018.) The theory
includes three sustainability factors to maintain the balance between company and CSR-
Environmental sustainability - The approach is to stop wasting natural resources in production. If
those things finish significantly, the coming generation will not be able to use the resousces
which today’s generation is using like water. Preserving natural resources is the responsibility of
the organization. Ecolab Foundation uses social media to educate the customer about water
scarcity and food safety.
Economic sustainability - It focus on long-term financial profit and strength over short-term
profit. According to the triple-bottom-line model, large organizations are obligated to creates
business strategy that providing constant and protracted plan. . (Muñoz-Pascual and el.al.,

2019.) Social media like LinkedIn focus on the long-term relationship with users than short-
basis.
Social sustainability - It maintains sustainability among the life of people, as how they live there
life. As the imbalances increases, the rich will get wealthier and the poor lives became more
miserable. So a balance between people remains equal. For organizations doing trading,
managing fair-trade practices is the best example of Social sustainability.
3. Stakeholder Theory
Stakeholder theory, introduced by Edward Freeman and others, says that rather than
commencing with a business and sees at other organizations ethical responsibilities, start own
theory. The stakeholder theory includes company owner, whether a private individual or
shareholders, looking at promising customers, suppliers which are dedicated to the company,
people living in the country who are suffering from any disease during working in the
organization. The theory involves the people who are directly or indirectly link with the
company. The money used for a mortgage for business use, any government rules and regulation
like tax policy, company restaurants or cafe that provide food services to employees and other
organization which is connected with the company or do the same kind of business.
(Freudenreich and et.al., 2020.) Stakeholder theory forces corporate executives to request the
people involved should support everyone’s benefits and welfare while making the most profits.

CONCLUSION
In this assignment, it is concluded that changes in fiscal and monetary policy affect the
business, as it changes the customer's needs due to the supply of money in the market. The report
also explains the influence of fiscal and monetary policy in investing in new business, and cost-
cutting of resources during no demand of customers. Monetary and fiscal policy also put an
impact on social media. While managing a business adopting CSR and ethics approaches is very
important. In this report, different theories were analysed of corporate social responsibility and
business ethics which are followed by various organizations in the social media sector.

REFERENCES
Books and journals
Sims, C.A., 2016. August. Fiscal policy, monetary policy and central bank independence.
In Kansas Citi Fed Jackson Hole Conference.
Bonam, D. and Lukkezen, J., 2019. Fiscal and monetary policy coordination, macroeconomic
stability, and sovereign risk premia. Journal of Money, Credit and Banking. 51(2-3).
pp.581-616.
Bernanke, B.S., 2020. The new tools of monetary policy. American Economic Review. 110(4).
pp.943-83.
Indaco, A., 2020. From twitter to GDP: Estimating economic activity from social
media. Regional Science and Urban Economics. 85. p.103591.
Advantage, C., 2020. Corporate Social Responsibility. CSR and Socially Responsible Investing
Strategies in Transitioning and Emerging Economies. p.65.
Sroka, W. and Szántó, R., 2018. Corporate social responsibility and business ethics in
controversial sectors: Analysis of research results. Journal of Entrepreneurship,
Management and Innovation. 14(3). pp.111-126.
Getele, G.K., and et.al., 2020. Corporate culture in small and medium enterprises: Application of
corporate social responsibility theory. Corporate Social Responsibility and
Environmental Management. 27(2). pp.897-908.
Svensson, G., and et.al., 2018. Framing the triple bottom line approach: Direct and mediation
effects between economic, social and environmental elements. Journal of Cleaner
Production. 197. pp.972-991.

Muñoz-Pascual, L., and el.al., 2019. The triple bottom line on sustainable product innovation
performance in SMEs: A mixed methods approach. Sustainability. 11(6). p.1689.
Freudenreich, B., and et.al., 2020. A stakeholder theory perspective on business models: Value
creation for sustainability. Journal of Business Ethics. 166(1). pp.3-18.
Online
What is Business Environment? 2019. [ONLINE] Available through: <
http://www.businessenvironment.org/dyn/be/docs/detail2/309/6>