Contemporary Development

Questions: 1: Discuss the external environmental factors and PESTEL analysis of boots.2: Desribe about ethics and corporate social responsibility. Answers: Introduction Boots is a United Kingdom based pharmacy company. It has a chain of stores across Ireland and United Kingdom that sells products of health care and beauty and provides hearing care and optician service for its customers. The company was founded in 1849 in Nothingham, United Kingdom by John Boot. It has a long history of changing ownership. The company was sold to an American company in 1920 but later again sold back to British owner, the grandson of the founder, who renamed the company in 1971 as The Boots Company Limited. It then started its own research and development unit and found out several important medicines. It also diversified its business into several other products like, health care and optical. The report studies the external business environment factors that affect the companys business and examines the responses and positions of the organization. It gives the overview of the manner in which the external environmental factor affects the business or organization and explains the importance of the factors to the organization. Later, the paper discusses the business ethics of Boots and the corporate social responsibility of the company. It studies whether the CSR and business ethics has an influence on the policies and decision making of the organization. Further, the paper critically evaluates the effectiveness of the companys responses towards the CSR activities and business ethics. The report is divided into sections. In the first section all the environmental factor that affects the business are discussed and the responses of the company boots is analysed and then in the second part corporate social responsibility and business ethics of the Boots are discussed. Further, the effectiveness of the companys responses are evaluated External environmental factors and PESTEL Analysis of Boots The Boots Limited is a multinational company in the pharmaceutical industry with reputed goodwill and customer recognition. It has outlets in nearly 20 countries and annual revenue is more than 22.5 billion pound annually. The company has merged with Alliance Unichem and Walgreens in 2006 and became more aggressive in global business. The aim of the company is to provide full assistance to customer in terms of health care by providing pharmacy, health care and beauty products and optician services. It has its own research and development units and believes in innovating new products for the betterment of the consumers. Some of the known products that were innovated by the company are Botanics 17, Altiva, Almus, Soltan and others (Seok et al. 2012)[1]. The external environmental factors are important for any organization for doing business successfully in the global economy. The factors that affect the business are political, economical, social, technological, environmental and legal factors. The political factors that affect the business refer to political condition of the country and the world. Some of the political factors are policies of the government that has an impact on the growth, prospects and new availability of opportunities for the business. The taxes and tariff set by the government for the business of the country such as sales tax, custom duties, property tax and other corporate taxes effects the earnings of the business (Wetherly and Otter 2014)[2]. Further a stable government always attract the investors to invest in the country and bring more business opportunities and growth. Moreover, the entry and exit policies and regulation of the government for the foreign investors in the country affects the decision of the corporate sector to start the business in the country or not. The economic factors that affect the business refers to the factors that affects the growth of the economy and decides the future of the economy. It indicates the factor that has an impact on the major indicators of an economy, If the indicators does not reflect healthy economy then the business companies will be reluctant to invest in the country. Some of the economic factors that affect the business and decision of the organization to invest in the country or not are the interest rate of the country, the prevailing inflation rate, the rate of unemployment, the consumers demand and the availability of disposable income with them, the accessibility of credits, the foreign exchange rates, the fiscal and the monetary policies of the country (Wild, Wild and Han 2014)[3]. The inflation rate and the interest rate affects the organization cost of production and their earnings, so higher is the rate, lower is the earning as cost of production increases. If the disposable income is high then consumer will demand more and higher demand in the market will lead higher sale for the organization and will be profitable for them to invest in the market. The business is not possible without the credit availability from the financial institutions. The easier the availability of finance the more the company will be inclined to invest in the country (Tsavdaridou and Metaxas 2015)[4]. The unemployment rate is high means the availability of labours are easier and cheaper which will lower the cost of production and again the company will be beneficial by investing in the market. Further, the foreign exchange rate reflects the value of the currency. Lower the rate, stronger is the currency and higher is the rate weaker is the currency. A foreign company will always exam ine the stability of the currency value before investing in the country as it affects the stability of their earnings. Lastly, the fiscal and monetary policy controls and direct the movement of the economical variables and pave path for future development of the country, hence it is equally important for the growth of the organization. The social factors that affect the organization growth are cultural background of the people residing in the country, the gender and other related demographics, the lifestyle of the people, the educational levels and literacy among the people, the distribution of wealth and the domestic structure of the society. The consumer demand is affected by their cultural background, lifestyle, wealth, gender and literacy levels. Different country will have different sets of social factors and hence different types of preferences for the products (Yu and Ramanathan 2012)[5]. A multinational company has to study the social factor of the country thoroughly before entering the market as it is one of the main reasons which affects their sale in case of many corporate firms The technological factor helps to keep the organization updated and the factors that affect their business are any new discoveries, rate of technological advancement, technological obsolescence and the availability of the platform for innovative technology (Srensen 2012)[6].In todays competitive world, without technology, a successful business is not possible and so any change or the current status of technological adoption of the country affects the efficiency and growth of the organization. The legal environmental factors refer to the legal rules and regulation that the organization need to follow to do business in the country. Any violation of rules may lead to unfavourable legal consequences for the organization (Sena et al. 2012)[7]. Some of the areas of legal regulation that the company needs to follow are in respect of product developments, employment of the staff and the regulation related to it, patent regulations, health and safety regulation for the employees and competitive regulation. The organization has to be compliance their corporate policies with the legal regulations otherwise they may face consequences that may affect the companys growth and development in future. The environmental factors of a country that affects the business are the climate and weather of the country, their geographical location, the laws for the waste disposal, the attitude of the people towards the environment and the regulation for energy consumption. The climate and geographical location affects the well being of the organization in terms of cost product development decisions and others (Siewiorek et al. 2012)[8]. Energy consumption is one of the major costs of any organization, if the laws are not favourable to the company, then it affects their production and cost. Further peoples attitude towards environment brings sustainability of the environment. Higher is the sustainability, better is the profit and cost structure of the company. As Boots is a United Kingdom based company, the policies of its government affect the business prospects of the company. One of the political factors that has made the company open various outlet of pharmacy in the country is the conducive business policy of the UK government towards the some major supermarkets and stores. The government has encouraged the opening of major supermarkets and stores to enhance the National Health Service and develop better health care system in the country (Park and Chon 2015)[9]. The policy has helped the company to start various stores and expand its business in the country The global recession is one of the economic factor that has affected the health care industry deeply and many business including Boots Limited has faced the set back in companys growth and development. The prices of health care products had globally increased and have affected the spending of the consumer, leading to the fall in profit of the company. Further, the rise in the fuel price was another economic factor that has increased the cost of managing supply chain channel of the company. The higher costs lead to increase in prices and increase the burden for the consumer The social factor has affected the sales of the company. In United Kingdom, the government has started campaigns for the citizens to create awareness about good health, good eating habits due to rising problem of obesity. The awareness programs has made the people realize the importance of being healthy and boosted the sales of the company, boots (Mellahi and Frynas 2015)[10]. The company started attracting customers by selling healthier products at a lower price than its competitors and hence it helped the company to increase the sales and profit. The technological factor that has helped the company to boost its sale in the country is the evolution of internet in the form of online retail sales. Boots have used the facility of online sales and taken full advantage of this opportunity. It targeted to generate one-third of income from online sales of its product and services. The environmental factors of United Kingdom have also affected the companys business in the sense that United Kingdom and many other countries are making themselves committed to green energy due to increasing problem of global warming. The company also had to adopt the green practices according to the rules and regulation of the country and had to make more investment on green and healthy products, for example, investing inorganic products and reducing the affect of carbon footprints on the environment (Kim, Kang and Mattila 2012)[11]. The legal environmental factors of United Kingdom have also affected the companys growth and development. The government of United Kingdom keeps taking out new laws about the health care products and so Boots need to change their products labelling and packaging according to the laws that increases the cost of sale for the company. However, change in legal laws for the packaging and labelling of the products has to be followed by the company to avoid any unfavourable legal consequences which may lead to huge long run loses Ethics and Corporate Social Responsibility In this part of the paper the ethics and Corporate Social Responsibility (CSR) of the company boots is discussed. In other words, CSR activity refers to the practices of the business that benefits the society. It refers to the initiative taken by the corporate to benefit the society by their business activities. The CSR activities are carried out in different ways. It can be by volunteering for doing good deeds without any expectation of returns. It can be also by following ethical labour practices especially in countries where the labour laws are different from domestic countries. CSR activity can be also to improve the environment by using products that reduce the carbon footprints. Lastly, CSR activity can be done by providing donation to local and national charities and several businesses does this as they do have several resources that may benefit the charitable organization. Corporate Social Responsibility has become one of the major concerns of the organization as through this the firm can succeed and win the heart of the people. It has been linked to sustainability and every organization today tries to attain sustainability by adopting some green practices and having a transparent system which has a positive impact on the society and it brings well being to the environment. CSR activities have become more important today due to the increasing awareness of the consumer regarding the well being of the environment. Todays consumer prefers to buy those goods that help in maintaining sustainability of the environment. The CSR activities have become more important after the increase of the awareness of the consumer for having a healthy environment (Lim and Yang 2016)[12]. Ethics and Corporate Social Responsibility of Boots Boots is a healthcare company of United Kingdom and is associated with the welfare of the people so being healthcare to be its prime area of activity and being a people oriented business, the CSR is its integral part of the company which changes the manner it works at different levels of the company. The main aim of the company is to ensure that the business practices are economically, socially and environmentally sustainable. The mission of Boots Company is to become most efficient, flexible and responsive healthcare solutions company in United Kingdom with providing the best services and logistics to the consumers (Lee, Park and Lee 2013)[13]. Its desires to give the best healthcare services to the patients and believes in dedication, innovation and trustworthy services. The Corporate Social Responsibility mission of the company is to be the worlds best beauty and health care retailer store and to make everyone feel good. It CSR purpose was to become the most socially responsible health care retailer store. It believes in protecting the environment, giving better and improves services to the customer and the society. It produces sustainable products and tries to develop them further in their laboratory The company Boots Limited has used CSR in four areas. They are in the market, communities, people and environment .In the market, the company wanted to imply CSR activity by making its mission as CSR oriented which says, to do a fair business with integrity. The aim of the company is to be lead the cause related marketing through which they desire to expand health care by entering into partnership with charities and other business activities. They have made Health care as their brand and essence of the company. Another area of CSR that they concentrated and reflected through the business decision is the communities for whom they feel responsible. They wanted to be a responsible neighbour and always went beyond their stores to help the people sustain good health. They aim to be leaders by working with charities and requesting expertise to give some of their valuable time to provide service for charity. They wanted to go beyond the sale of products and service and so started working with charity (Kim, Suresh and Kocabasoglu 2013)[14]. The company Boots Limited desired believed in treating people with respect and dignity. They considered another area of CSR as the people whom they can change or influence to sustain environment and develop the people by treating the women of the society with dignity and helping them to be financially independent by providing them job and today around 80% of the employees in the company are female (Granger and Schroeder 2013)[15]. The companys next area of CSR activity is to protect the future generation by selling quality and genuine products so that the customer generate trust on the company and believes them for any change of new products. They made their production system safe by ensuring the safe use of chemical in their raw materials and products. Hence, the CSR activities have affected the policies and company decision making in areas of market place, where it the company adopted actions like customer satisfaction, suppliers verification, cause-related marketing, ethical investment and corporate governance. In area of communities, the actions were charitable giving, employee fundraising, community healthcare, education and employee volunteering. In areas of environment the companys actions were with respect to transport, energy biodiversity, waste and recycling, chemicals and sustainable products. In regard to our people, the actions were towards employee forum, diversity, health and safety, training and development and women in the workplace (Fryzel and Seppala 2016)[16]. Evaluation of Effectiveness of CSR in Boots In order to assess the CSR activity of the company, it took out measures to evaluate its own CSR activities through collection of data from the relevant respondents and then evaluating them to understand the success or failure of their activities. The company has adopted action plan for five years on several CSR issues and target several goals to reach within the stipulated time period. To ensure successful implementation of the CSR activities, the company had appointed executive personnel at every stage of the programs and at for individual issues of CSR. The issue owners were had specific goals and they were made accountable for achieving that goals. Boots also had subjected itself to prosecution if the goals of CSR issues were not attained and if the standards of conduct were not met (Gupta 2013)[17]. The company tried to maintain compliance with the Global Reporting Initiative Guidelines (GRI) to meet CSR requirements. They believed in raising the CSR bars further and bring transparency and disclosure in the activities. To assess their own report and activities they collected data from the reliable sources such as employees, government, shareholders, media, academics, customers, local communities, suppliers, non-governmental organizations and socially responsible investment. The assurance of the data was given by the internal audit team of the company which was again verified by external audit team, KPMG. The company had maintained dialogues and relations with the stakeholders to understand the success o failure of the CSR related activities. They appointed CSR issue owners for each issues who were responsible to maintaining good relation with the stakeholders and ensures that their views and concerns are noticed and taken good care off. They believed in listening to their stakeholders and take learning from them, In case of difference in opinion they try to find a common solution which is acceptable to both and that minimises the conflicts (Ebert et al. 2014)[18]. The company has further added the local communities as new stakeholders as they also gets affected by the companys business and CSR activities. The main aim is to build healthy and happy communities and recognising their responsibilities towards the stakeholders and serving them better in the future (Cho 2016)[19]. The company has also launched a website for their CSR activities that helped them to maintain transparency in their activities and build effective communication with the stakeholders so that their feedbacks can be taken on issues and it can be resolved with immediate action . The products produced by the company always took care sustainability. They were of higher safety standards and served better quality. The product goes through robust checking of quality and product development and the company has ensured that the product serves best to the customers (Chen and Hung 2014)[20]. The sustainability actions were taken in the product development process so that the environment does not get affected and also assessing the suppliers of material through robust checking of standards so that they also maintain quality and follow sustainability measures Boots Limited, believed in building their relationship with the customers, partners, suppliers and other shareholders on the basis of trust. They believe in to be true to their stakeholders for deepening their relationship with them and on the strength of the relationship, the success of the company depends. The company innovated new products to capture the market by understanding the timely requirement of the market. The cause related marketing was highly successful as it not only helped the company to meet its goal but also to win the heart of the people by fallowing CSR activities. It was a perfect strategic plan that met the objectives, engaged the customers, promoted the health care products and involved employee priorities (Cavusgil et al. 2014). The company not only followed ethical rules and CSR activities but also tried to influence and train other companies to do the same. In this respect, the company has conducted training classes and shared their success plans with the peer groups so that they can also think in terms of CSR and mould their objectives to achieve CSR influenced goals and profit (Campbell 2016). Boots Limited ha takes out its own operating and financial reviews. To create awareness and knowledge about carbon management which is the most harmful material for damaging the environment, the company has conducted seminars and did personalised briefing to the peer groups and also consumers so that they get aware of it and start practicing it in their firm Boots Limited created awareness about several chronic diseases like breast cancer which was on hike in United Kingdom. It had made a huge project named as 41000 Faces which aimed at creating the awareness of the disease and precautionary measures that should be taken to avoid the disease. It started a partnership with the Cancer Research UK and raised a good amount of fund through integrated and successful campaign for raising awareness among the people (Cai and Yang 2014)[21] The company started the concept of ethical shopping and made the people understand that Boots product are produced by keeping in mind human rights and welfare of the consumers. The companys method of assessing their suppliers is the unique way of spreading the knowledge about the product quality and sustainable practices. They follow a distinctive process (Botha Kourie and Snyman 2014)[22]. They judge the suppliers on the companys own ethical code of conduct which is based on Ethical Trading Initiative (ETI) code that aims to support the laws of labour rights for the workers that produce goods in the market. The ethical code also includes the environmental checking based on the attainment of the necessary criteria and further the company has its own team for conducting the assessment check on the suppliers. Boots Limited has taken care of the disabled consumers and made special arrangement in their stores for such consumers so that even they can enjoy shopping around with assistance from trained staff who underwent special training for handling and meeting the needs of different types of disable consumers. The company is perfect in maintaining the corporate governance polices that their standard does not fall and they keep transparency in their activities for effective communication. However, the company do face certain challenges in meeting the requirements of CSR activities but they have been successful in managing the risk (Bondy Moon and Matten 2012)[23]. Conclusion The report discusses the external environmental factors that affect an organization growth and development process. It studies the Boots Pharmacy Company and the impact on its business due to the external environmental factors of United Kingdom. The external factors that are discussed are political, economical, social, technological, environmental and legal factors. In the later part of the report, the ethical and corporate social responsibility activities of Boots Limited are studied and analysed. The evaluation process and assessment of the CSR activities are studied. Boots Limited has followed CSR activities effectively and has moulded its goals and objectively through the attainment of CSR activities. However, few suggestions can be given in terms of getting more prompt in understanding the updated and current deteriorating situations of environment and make more robust plan for sustainable development. The global warming and depletion of natural resources are some of the serious issues that need to be taken care of by the company. The increasing complication with diseases due to changing life styles of the people should also be addressed under CSR issues of the company. Further CSR issues should also take care of demographic affect on the environment and the company should create more awareness plan for sustainability so that it become a common practice for all including the consumers, producers, suppliers and government. References Bondy, K., Moon, J. and Matten, D., 2012. An institution of corporate social responsibility (CSR) in multi-national corporations (MNCs): Form and implications. Journal of Business Ethics, 111(2), pp.281-299. Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business environment: knowledge management and knowledge management technology. Elsevier. Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive priorities: The role of performance frontiers. International Journal of Production Economics, 151, pp.131-145. 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