Entrepreneurship PBL trigger 2
Problem
-
The role of business in
solving social problems
Learning objectives
-
How a company should
choose which social problems to address?
-
The ways companies
profit from solving social issues?
-
Examples of companies
successfully solving social issues
Keywords
-
Profit, social
responsibility, fair trade, shared value
How
a company should choose which social problems to address?
Social
problem is any condition or behavior that affects large
number of people in a negative way and is generally recognized as a condition
or behavior that needs to be addressed. Poverty, hunger, racism, sexism, drug
use and violence, climate change etc.
While deciding on which social problems to address
companies should think of their market area and on what volume they can impact
on things. For a smaller company maybe just using environmentally friendly
fuels/raw materials/ recycled materials or recycling efficiently is enough or
if it is about and globally succeeded company which has outsourced production
you can maybe easily take stand on human rights or some bigger global issues.
Things a company can think of are
-
Are you solving a real
need in a society? Has there been discussion about issues that needs to be
solved. Is there a real need.
-
Are you taking part in
an issue that you can stand for. Are the values easy to follow for you.
-
Do you have the talent
to address the issues and passion for it.
If there is a passion for some issue or some expertice
for it, it is usually easier to benefit from it eventually.
The
ways companies profit from solving social issues?
Reduce costs, mitigate risks, increase profits and
building long-term value and sustainability by improving energy efficiency,
recycling materials and ensuring that families gain access to healthcare services
for example. Investing in health care reduces sick days and makes employees
more productive
The best opportunity to profit is emerging markets
where are a lot of people are entering the middle class in next two decades.
Africa for example.
Also using clean energy sources is sometimes more
expensive in the beginning but in the long-run companies can save money because
they don’t need to deal with governmental regulations and fines about not being
conscious about this stuff.
Businesses have more assets to impact on social issues
because they have money to use versus governments and nonprofits. And also
taking a statement on issues one can raise more customers that stand behind the
same values.
Shared
value is “policies and operating practices that enhance the
competitiveness of a company while simultaneously advancing the economic and
social conditions in the communities in which it operates.” (earning profit
while doing good)
Companies such as TOMs shoes create impact while
selling a product but instead of relying on donors they are self-sustaining
through sales.
Examples
of companies successfully solving social issues
Nike needed
to make a turnaround after 1990`s problems with social issues and using cheap
labor and after all it damaged the company´s image so that the sales dropped.
Nike´s
business model was to outsource its manufacturing using the saved money on
marketing campaigns.
- First Nike´s contractors move to
Indonesia, China and Vietnam to get cheaper prices
- In 1991 activist Jeff Balinger
publishes a document about Indonesias poor working conditions and low wages.
- He exposes Nike that they’ve used
labor for 14 cents an hour and documented other abuses as well
- At Olympics in BCN in 1992 there are
activists to protest Nike and the issue gets mainstream media attention
- 1996 Nike founds a department to
improve the lives of factory laborers
- 1997 there are a lot of talk about
Nike and abuses of their factory workers. Also college students start
protesting Nike.
- 1998 sales drop and Nike needs to
lay off workers and realize they need to change.
- CEO Phil Knight gives a speech and
promises that Nike will raise the minimum age of workers, increase monitoring
and will adapt to U.S OSHA clean air standards in all factories.
- 2002-2004 600 factories are audited and
repeat visits to problematic factories. Human activists notice this.
- 2005 Nike is the first to publish a
list of factories it contracts with and publishes a report of conditions and
pay in its factories. It continues publishing this data as part of its
corporate social responsibility reports.
Sources:
What are
some good social issues to address in our local communities? Low, Timothy.
9.5.2014
accessed
4.4.2018
How
companies profit by solving global problems. Korngold, Alice. 5.12.2014. http://www.corporateecoforum.com/better-world-inc-companies-profit-solving-global-problems/
Accessed
3.4.2018
Solving
social issues = good business. Nunez, Christian. 15.6.2015 https://www.globalcitizen.org/en/content/solving-social-issues-good-business/ accessed 4.4.2018
How Nike
solved its sweatshop problem. Nisen, Max. 9.5.2013
http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5?r=US&IR=T&IR=T accessed 4.4.2018
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