Facebook Inc.: Analyzing Impact of Policies, Ethics and Global Factors

This report assesses the impact of monetary and fiscal policies on Facebook's business environment, including the influence of corporate social responsibility (CSR), ethics, and regional and global factors. It explains how fiscal and monetary policies, managed by the government and central bank respectively, affect Facebook's operations through tax rates, interest rates, inflation, and GDP. The report also details how CSR and ethical practices shape Facebook's activities, focusing on areas like economic opportunity, technology, social justice, and education. Furthermore, it examines the influence of global factors such as political conditions, legal liabilities, and technological advancements, as well as regional factors like competition and customer base, on Facebook's business strategies and overall performance. Desklib provides a platform for students to access similar solved assignments and study resources.

INTRODUCTION TO BUSINESS
ENVIRONMENT

CONTENTS
INTRODUCTION......................................................................................................................1
IMPACT OF MONETARY AND FISCAL POLICY ON THE BUSINESS............................1
Understanding about fiscal and monetary policy...................................................................1
Impact on business.................................................................................................................1
HOW CSR, ETHICS, REGIONAL AND GLOBAL FACTORS SHAPES THE ACTIVITIES
OF FACEBOOK INC................................................................................................................3
SUMMARY & CONCLUSION................................................................................................5
REFERENCES...........................................................................................................................6

INTRODUCTION
Business environment is collection of all external and internal factors which can
impact the company's business operations and it also involves competitors, stakeholders,
customers, rules and regulations, customer trends and other technological factors. The
purpose and aim of this report is to assess the impact of monetary policy and fiscal policy.
The present study will be based on popular social media platform Facebook. In addition to
this, it will provide detailed information on how regional factors and global factors as well as
corporate social responsibilities impact the business operations and activities in the company.
IMPACT OF MONETARY AND FISCAL POLICY ON THE BUSINESS
Understanding about fiscal and monetary policy
Fiscal policy- It addresses government spending and taxation which is generally determined
by the rules and regulation of government. They decide about the tax rates in the country and
a small change in this policies may impact the business operation of the firm. This policy has
an impact on the budget deficit.
Monetary policy- It addresses the supply of money and interest rates in circulation, basically
this policy is managed by central bank of the country. A slight change in the monetary policy
might affect the business activities. This policy has an impact on the borrowing in an
economy.
In the case of the UK, these policies is decided by the Bank of England, Therefore,
the company needs to keep track on changing policies, regulation and legislation (Chugunov
and et.al., 2021). The UK monetary policy is maintained to meet the target related to inflation
of 2% which helps them to achieve successful growth and sustain employment.
Impact on business
Economic growth and development of the country is driven by various factors like
population growth, technological change and human capital. It has been noted that both fiscal
and monetary policy are used in order to regulate the activity of economy. An effective
executed monetary policy and fiscal policy can be beneficial for economic growth. While on
the other side poorly executed policies can persistently impede economic growth and
development. They are used in order to enhance growth and development (Bonam and
Lukkezen, 2019). It can be used to redistribute wealth and increase the income level of
people. Both of the policy is capable of affecting the long run price level via the money
creating procedure. When the bank raises its rates all the company tweak the rates they
1

charge all of their clients. This will impact the borrowing power of customers. On the other
side, if the bank lowers its rates, then the customer have more power the purchase services
from company. On the positive side, by managing the money supply in the country, bank of
England aims to influence factors such as economic growth, liquidity, cash flow, inflation
and consumption rate. On the top of that, the central bank of the UK may purchase or sell
bonds of government, revise the cash amount that the banks are required to manage as
reserves and regulated other rates such as foreign exchange rates. This will provide long-
lasting positive impact on the overall UK's economy as well as on Facebook.
It has been noted that the average engagement rate on a video post is 6.96%,
Facebook post is 3.82 % and for photo post is 5.48%. If there is a change in monetary and
fiscal policy then it will impact engagement rate of the cited organization.
Tax rates- when central bank of UK announce any kind of changes in their tax rate
and interest rates this will impact the performance of Facebook. As the company has to pay
more rates and this will affect the economic activity and organisation market position. As
Facebook has announced about its new launch which is Libra a new digital currency in the
year 2020, a change in monetary policy will influence the payments systems. At that time if
central bank of UK, announce changes in their interbank interest rate, this will impact the
lending rates. Due to this, the interest rate on loans and bank deposits might be impacted.
Rate of inflation- It has been noted that an increase in money growth leads to a
higher inflation rate which can impact the rate of return on amount of money. This will
ultimately impact the economic growth of the country and the companies. The most essential
contribution bank of England can make to growth is stable inflation rate. If the central bank
of UK increase interest rates then Facebook has to decline its business investment because it
is less attractive for them to borrow money at high interest rate.
GDP- higher interest rates will discourage borrowing behaviour of company and this
can impact the GDP of the country. The monetary and fiscal authority aims to look at the
factors like GDP and growth rates in order to keep unemployment rate low and maintain
economic condition stable.
Unemployment- if the unemployment rate is high in the country, then company will
face lots of challenges such as shortage of skilled labour. With the help of expansionary
policy related to monetary policy, the monetary authority can increase economic activity.
This can be done when the company or country is facing high unemployment rate because of
2

recession. To support, the authority lowers the rate of interest and promote spending money.
With this support, Facebook can easily encourage their staff to get loans on favourable terms.
HOW CSR, ETHICS, REGIONAL AND GLOBAL FACTORS SHAPES
THE ACTIVITIES OF FACEBOOK INC.
In the current communities, there has been increasing interest as well as demand for
corporate social responsibility and ethical practices. This is due to several reasons however
the most important among them being growing impact of multinational corporations on the
economy of the globe along with the revealing of horrible scandals in the working conditions
in various industries. Even though it is a known fact that the demand of corporate social
responsibility is increasing at a tremendous pace, it surrounds with certain critics as well.
Some authors stated that ethics and CSR is a waste of money of the business organizations.
Nonetheless, some articles also claims that CSR helps in augmenting the financial
performance of the company (Capaldi, 2015). Thus, it becomes quite essential to understand
about the manners in which the corporate social responsibility and ethics, global and regional
factors impacts and shapes the activities of the current case company that Facebook Inc.
Corporate social responsibility is self-regulation made by company with the aim of
creating a positive effect its business operations and activities on its staff members, labour,
customers, communities and the environment. In the western countries, the concept of CSR
and ethics is well-established by the companies' owner (Xia and et.al., 2018). Nowadays, it is
becoming a popular topic among all especially developing areas. With the help of CSR and
ethics, the Facebook is embracing responsibility for business actions (Hur, Moon and Kim,
2020). They company supports its social media platform through CSR activities and ethical
consideration. In addition to this, Facebook is focusing on CSR programs and policies in
order to provide support stakeholders such as businesses, customers and groups. By having
CSR and ethics, the company is able to shape its important decisions concerning social
responsibilities with respect to the external environment in the world (Gillan, Koch and
Starks, 2021). It is important to have ethical consideration to run business smoothly and
effectively. As per the new guidelines of government, it is important for all the business
entity to follow CSR activities and maintain ethics to enhance the organizational culture.
Furthermore, government are being regarded as one of the most important corporate
social responsibility stakeholder of the company as they impose different requirements on
Facebook Inc. Considering the illustration of the case of China, Facebook is continuously
making efforts and involving in different corporate citizenship strategies for convincing the
3

Chinese government to open the gate for them. This clearly proves that how CSR and ethics
impacts in keeping the firm in compliance with the interest and policies of the government.
Every organization and their department needs to focus on CSR activities. By doing so, the
firm can improve its brand image and also improve value added contribution to the society.
With the help of higher innovation and research and development method, the cited
organization can easily gain return on equity and gain profits margins. By adopting R&D
method, company can improve their financial performance (Barnett, Henriques and Husted,
2020). Due to this, the company can get high reputation and gain competitive advantages. For
example- If the Facebook concentrate on using CSR and take ethical consideration seriously
them they can easily make effective decisions. Nowadays, Facebook is focusing on different
field of CSR such as economic opportunity, technology, social justice and education. The
firm is strictly following ethics and CSR policies to engage with their group of people or
interest groups. They are establishing effective programs related to CSR in order to enhance
business image and competence (Safdar, Banja and Meltzer, 2020). The employees of this
company is completing work on time and do their work in a way that is based on integrity
and honesty which helps them to shape business activities. By adopting good ethical
consideration, the company is able to increase their productivity and overall motivation level
of the staff members (Suri, 2020). They can easily make effective and better decision which
helps them to gain good market position.
Talking in relation with the global factors such as technology, political condition,
legal liabilities and other environmental factors highly impacts the functioning of the
company and also helps in shaping the business activities of Facebook Inc. In the developed
nations, the political conditions are quite stable and this offers great opportunities to the
company to steadily diversify their business in such kind of markets. Further, with the
support of the government, the firm is also expanding their social media along with display
advertising services across the globe (Crane and Matten, 2016). Nonetheless, considering the
example of political barriers being faced by Facebook Inc. in China, the probable global
growth of the firm might suffer due to the censorship of China. Other than this, there are
many companies, for example Analytica and Cambridge which have limited their online
information collection as well as sharing due to the issues related to data privacy and security.
In this regards, Facebook has enhanced their security and privacy and is still negotiating with
the government of China for opening up display advertising market in the nation.
Furthermore, another important global factors such as legal liabilities also impacts the
operations of organization effectively. Facebook Inc. has innovated their existing products
4

and have also introduced many new products considering the laws related to legal protection
on the basis of making improvement in the patent laws across the globe. Additionally, they
have also grabbed the opportunity of increasing coverage of free Wi-Fi as one of the most
advantageous trend (Purnell and Yuniar, 2015). This evidently reflects the manners in which
the global factors has shaped the activity of the company.
Moving further, there are many regional factors as well which influences the working
of the company and the most important among them is regional competition. The level of
competition in the market helps in determining the risk and opportunities of Facebook Inc. to
grow in the market. There are many competitors of the company and they also highly
influence the working of the company. However, the competitive advantage of the company
stems from their sheer numbers of active users. In addition to this, customers also had a great
effect in shaping the activities of the company. The base of customers that the Facebook Inc.
have today majorly impacts the value of the organization. Since, the clients of the Facebook
are being built on different element and some are quite vital as compared to others such as
loyalty, stickiness and concentration (Waddock, 2018). Thus, it can be said that the strength
of the correlation of the company business cycle is majorly relied on the relative significance
of global as well as regional factors.
SUMMARY & CONCLUSION
To conclude, Facebook is following ethics, so they are able to make better decisions
in less time. It is important to keep track on changing policies such as fiscal and monetary.
By adopting ethics and CSR activities, the company is able to gain trust from their
stakeholders such as customers and investors. By evaluating the study, it has been concluded
that, with the help of ethics, the firm build good relationship with other people and maintain
mutual trust.
5

REFERENCES
Books and journals
Barnett, M. L., Henriques, I. and Husted, B. W., 2020. Beyond good intentions: Designing
CSR initiatives for greater social impact. Journal of Management. 46(6). pp.937-964.
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.
Brittain, S. and et.al., 2020. Ethical considerations when conservation research involves
people. Conservation Biology. 34(4). pp.925-933.
Capaldi, N., 2015. Corporate social responsibility and the bottom line. International Journal
of Social Economics, 32(5).
Chugunov, I. and et.al., 2021. Fiscal and Monetary Policy of Economic
Development. European Journal of Sustainable Development. 10(1). pp.42-42.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Gillan, S. L., Koch, A. and Starks, L. T., 2021. Firms and social responsibility: A review of
ESG and CSR research in corporate finance. Journal of Corporate Finance. 66.
p.101889.
Hur, W. M., Moon, T. W. and Kim, H., 2020. When and how does customer engagement in
CSR initiatives lead to greater CSR participation? The role of CSR credibility and
customer–company identification. Corporate Social Responsibility and Environmental
Management. 27(4). pp.1878-1891.
Purnell, N. and Yuniar, R.W., 2015. Things to Know about Facebook’s Internet Initiative.
The Wall Street Journal.
Safdar, N. M., Banja, J. D. and Meltzer, C. C., 2020. Ethical considerations in artificial
intelligence. European journal of radiology. 122. p.108768.
Suri, H., 2020. Ethical considerations of conducting systematic reviews in educational
research. Systematic reviews in educational research, pp.41-54.
Waddock, S., 2018. Beyond CSR to System Change: Creating a New Socio-economic
Narrative. In Corporate Social Responsibility. Emerald Publishing Limited.
Xia, B. and et.al., 2018. Conceptualising the state of the art of corporate social responsibility
(CSR) in the construction industry and its nexus to sustainable development. Journal of
cleaner production. 195. pp.340-353.
6

7