Business Environment and Sustainability

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Business Environment and Sustainability
I. Environmental Aspects of Business Sustainability
I.1. Socio-Technical Systems
In the development of managerial science, corporate sustainability has been the core
subject of discussion for the last several years. The tendency is created along with the
increasing awareness that companies are inseparable parts of their environments. In other
words, managers and the society at large realized that the only path to genuine corporate
success is to interact properly with the surrounding environment. Companies can no
longer exploit their environment without considerations of long-tern social and
environmental affects of their business operations (Rondinelli, 2000).
In order to understand the increasing attention toward corporate sustainability, it is better
to see business organizations as a socio-technical system. A socio technical system is a
system composed of technical and social subsystems (Web Dictionary, n.d). A socio-
technical system could be in the form of factories, departments or the entire group of
corporations (Deverell, n.d).
A socio technical system consists of the technical dimension, in which the company is
seen as a prescriptive structure, with emphasizes on scientific analysis and
methodological process in performing daily activities. For instance, the technical
dimension might consist of hardware, software, data and network. On the other side, the
socio technical system also consists of the social dimension, in which the company is
seen as an incremental, interactive and within a continuing relationship with complex
environmental settings around them. The important aspects of the social dimension are
people, social structure, culture and tradition in performing business processes.
Companies as a socio technical system are influenced by macro environmental aspects
like politic, economic, social and technical aspect (‘Principles’, 2007).
I.2. How Socio-Technical Systems Affect the Environment
There are several ways of how the socio-technical system to have negative implications
toward the environmental sustainability. First, In the midst of receiving the influence
from many factors mentioned above, socio-technical systems are very much fragile to
imbalances that result one aspect of the environment left unattended in the sake of other
concerns (‘Principles’, 2007).
For examples, in companies that engage in mass production activities, the general
tendency to managerial weakness is that the managers become less aware of the amount
of resources ad energy they consumer to fulfill the needs of corporate stakeholders.
Another example is in the mineral and agricultural industry. Companies that are
extracting resources from the environment can become dangerously insensitive toward
the long term environmental effects of their actions (‘Principles’, 2007).

A second example of how the socio-technical systems could fail is because of the rapid
changes that occurs within the increasingly globalize world today. Most of us are aware
that technology, more than other factors, has been the strongest motor of changes.
Technological innovation brought by internal members of the socio-technical system as
well as external factors of the system could result significant changes on the socio-
technical system that are sufficient to disrupt the harmonic relationship between the
company and its environment. For instance, when the first modern mass production
machine was created, companies focuses on making as much product as possible without
considerations of labor’s welfare or how such mass production would influence
environmental balance.
II. Vodafone
Nevertheless, such imbalances in the socio-technical system as mentioned above are not
intended to happen in the normal course of corporate evolution. As a socio-technical
system, companies are originally designed to see all of the factors within their
environment as a whole rather than viewing them as individual aspects. Thus, companies
must find a way to prevent such imbalances from taking place and create negative effects
to surrounding environment. In this paper, we will observe how multinationals deal with
such considerations in their strategic operations. I will use the Vodafone group Plc, the
multinational telecommunication company as a case example.
Viewed as a socio-technical system, the company is influenced by various external
factors. Being a multinational mobile telephone operator, the company is politically
influenced by government regulations on mobile telecommunications. For instance, in
some countries, foreign providers are not allowed to enter the market without specific
permits or without collaborating with local partners. In terms of economic, the company
is bound by the nature of its industry. Because of the high capital cost of the business, the
company must gain significant amount of market share before it can gain profit. In fact,
within the last periods, the company has declared significant amount of losses because
inability to deal with the burdensome costs.
In the social aspect, the company is influenced by the general tendency to use mobile
phone instead of land-based network phones. In this respect, the company is fortunate
because the tendency to use mobile communication devices is growing rapidly. In the
operating level, Vodafone is evaluated to be highly profitable. The environmental
challenges came from the last aspect of the socio-technical concept. Vodafone is a
company closely involved with technological advancement and technological innovation
in its daily operations.
Furthermore, recent development indicated that technological innovation in the
communication business is one of the most active in the world. Vodafone is facing the
challenge to remain creative and one step ahead in Research and Development in order to
maintain its presence in its markets. This rapid development of communication
technology is one of several reasons why many assumed that Vodafone are being
insensitive toward its environmental aspects in order to focus on dealing with

technological development.
Vodafone managers, on the other hand, believed they have addressed the environmental
issues and performed their role as a socio-technical system quite adequately. In its pubic
statement, the company revealed its strategy toward corporate sustainability and
environmental responsibility.
Vodafone realizes that mobile telecommunications has been a part of daily life for
millions of people. For instance, in Ireland, Vodafone’s home market, more than 85% of
the population uses mobile phones. In Ireland, Vodafone has become the leader of the
mobile phone industry with over two million subscribers. Therefore, the company
realizes that they also have considerable responsibility to the society in terms of
environmental issues.
In 2005, the company announces a five-year strategy for corporate responsibility. For
Vodafone, a strategy for corporate responsibility means that the company strives to
operate in manners that reduce the negative effects of its operations. The company stated
that they focus their corporate responsibility efforts on three areas:
• Social responsibility, where the company supports community activities
• Ethical behavior, where the company strive to eliminate illegal business practices and
maintaining the highest standards of corporate governance
• Environmental responsibility, where the company stated their commitment to reduce
environmental impact of all elements of corporate operations.
(‘Engaging’, 2006)
Vodafone realizes that the corporate responsibility programs effected corporate
stakeholders in many ways. Therefore, Vodafone directly engage with its stakeholders,
including customers, media, analysts and policy makers to discuss health and
environmental issues. Vodafone’s involvement with health and environmental issues
enhanced its relationship with stakeholders. Some of Vodafone’s famous environmental
programs include: reuse and recycling mobile phones, Vodafone’s energy efficiency
program, and Vodafone’s waste management program.
Deverell, Andrea. N.d. ‘Socio-Technical Environment’. Retrieved February 6, 2007 from Technical Environment_CS4925.pdf
‘Engaging with Stakeholders to Protect the Environment’. 2006. Vodafone. Retrieved
February 6, 2007 from
‘Principles of Socio-Technical System Design’. N.d. Retrieved February 6, 2007 from
Rondinelli and Berry, Michael A. 2000. ‘Environmental Citizenship in Multinational
Corporations: Social Responsibility and Sustainable Development. Retrieved February 6,
2007 from
Web Dictionary. N.d. ‘Socio-technical systems’. Retrieved February 6, 2007 from