social envmnt

8/3/2019 Social Envmnt

http://slidepdf.com/reader/full/social-envmnt 1/40

Social Environment

• Concept and Significance of Social Environment

• The social environment factors consist of humanrelationships and the development, form and functionsof such a relationship have a bearing on the business ofan organization.

• Some of the important factors and influences operatingin the social environment are the buying andconsumption habits of people, their languages, beliefsand values, customers and traditions, taste and

preferences, education and all factors that affect thebusiness.



• Significance of Social Environment

• The socio-cultural environment encompasses theeconomic, political, legal and technological factors i.e.

the socio-cultural customs and beliefs of the peopleshape the economy, the political legal system and

technology.

• For example, social pressure against environmentalpollution has led to legislation and Government

regulation which in turn stimulated new technology toreduce pollution.

• social changes also influence the business policies ofan organization. It can be understood by following

points:1. At one time, it was thought that the normal thing for a

family unit was to have two to three children. Now peopleprefer to have small family with one child, male or female.This change has a big impact on baby food, toys and other

such items.



2. At one time, retired people, widows and widowers livedwith their relatives. Now the trends is to live alone. Thishas a big impact on builders. At one time most marriedwomen stayed at home. Now, most of them work. Thishas caused problems for firms who had door-to-doorsales.



• Business and Society

• Business may be understood as the organized efforts ofenterprises to supply consumers with goods and services

for a profit. Businesses vary in size as measured by thenumber of employees or by sales volume.

• The purpose of business goes beyond earning profit. It isan important institution in society. It is for the supply ofgoods and services, creation of job opportunities, offer ofbetter quality of life or contributing to the economic growthof the country and putting it on the global map, the role ofbusiness is crucial.

• Society cannot do without business. It needs no emphasis

that business needs society as much.



• Interdependence of Business and Society

• Davis and Blomstorm point-out that, in taking an ecologicalview of business in a systems relationship with society,

three ideas are significant in addition to the system idea.1. Values: Business, like other social institutions, develops

certain belief systems and values and these beliefs andvalues are a source of institutional drive.



2. Viability: Viability is the drive to live and grow, toaccomplish the potential not yet reached and to achieve allthat a living system is capable of becoming. If a business isto be viable, it must initiate its share of forces in its ownenvironment rather than merely adjust to outside forces.

3. Public Visibility: The term public visibility refers to theextent that an organization's activities are known topersons outside the organization. The importance of public

visibility is that it subjects business activities to publicexamination, discussion and judgment.



• Culture and Organization

• Organization culture refers to the pattern of sharedvalues, norms of behavior, systems, policies and

procedures that employees learn and adopt.• Employee acquire them as the correct way to perceive,

think, feel and behave in relation to new problems andopportunities that confront the firm. Organization culture

is the personality of the firm.• Employees demonstrate organizational culture by using

the firm’s common language and accepting rules and

norms, such as the pace and amount of work expectedand the degree of cooperation between managementand employees.



• Japanese electronics giant Canon, CEO Fujio Mitaraihas developed an organizational culture thatemphasizes science and technology. The focus extends

from product development to the way goods are madeon the factory floor. Recent innovations have slashedproduction time and costs.

• Canon invests billions in R&D and is the world’s second

largest recipient of new U.S. patents. This orientationhas allowed Canon to become a world leader in digitalcameras, copiers, printers and flat-screen TVs.

• Today management at firms like Canon and Toyotaseek to build a global organizational culture – an

organizational environment that plays a key role in thedevelopment and execution of corporate globalstrategy. Companies that proactively build a globalorganizational culture:



– Value and promote a global perspective in all major initiatives.

– Value global competence and cross-cultural skills among theiremployees.

– Adopt a single corporate language for business communication.

– promote interdependency between headquarters and subsidiaries

– Subscribe to global accepted ethical standards.

• Technological Development and Social Change

• Technological development are a key determinant of

culture and cultural change. These advances have ledto more leisure time for culture-oriented pursuits and tothe invention of computers, multimedia andcommunications systems that encourage convergence

in global culture.



• The rise of the transnational media, high-techcommunications and modern transportation systemshas brought geographically separated cultures in closer

contact than ever before.• Technology also provides the means to promote

culture. For example, local artistic traditions from Africa,Asia and Latin America have received a big boost fromthe rise of world cinema and television.

• Movies and TV provide artists with tools for expressingthemselves and facilitate contact with consumers. In asimilar way, communications technology permits us tochoose our information sources.



• Social Responsibility of Business

• social responsibility of managers particularly in businessorganization has been one of the most talked about and

widely supported subjects.• Business depends on the society for the needed inputs

like money, men and skills. Business also depends onthe society for market where products may be sold to

their buyers.• Dependence of business on society is so complete that

as long as the latter wants the former, business hasreason to exits. Once society ceases to have any usefor business, it has no place and reason to live. Beingso much dependent, business has definite responsibilitytowards society.



• In the age of globalization, corporations and businessenterprises have crossed the national boundaries tobecome international. Business enterprises have been

using natural resources in a big way of maximisation oftheir profit.

• Business enteprise intervene in so many areas of sociallife and hence their responsibility towards society andenvironment has emerged.

• In India and elsewhere there is growing realisation thatbusiness enterprises are after all created by society andmust therefore, serve it and not merely profit from it.Thus, the role of business in a society has been put

under “corporate social responsibility (CSR)”



• Need for Social Responsibility of Business

• There are many situations where the socialresponsibility of business becomes necessary as

follows:1. A societal approach to business is the contemporary

business philosophy, which demands businessorganisations to be responsive to social problems.

2. As a result of globalisation of business, global companiesand MNCs operate in a big way in their host countries. Inorder to establish a good corporate image, they includesocial responsibility as a corporate objective.

3. In terms and conditions of collaboration agreements, veryoften social welfare terms are included which necessitatesthe collaborating company to take up the socialresponsibility of business.



4. On the basis of legal provisions, companies have toconcentrate on social problems. For example, an industrialorganisation in India must obtain a certification from the

Pollution Control Board.5. Corporate donations to social welfare projects of approved

NGOs are exempted from income tax in India.

6. An organisation’s commitment to social responsibility

creates good corporate image and thereby a betterbusiness environment.

7. Social responsibility of business enables the organisationto improve its products positioning and thereby improvemarket share.

8. The organisational culture of certain organisations makes itnecessary for them to take up the social cause as theirmoral responsibility.



• Social Responsibility towards different groups

1. Responsibility towards the customers: In a competitivemarket, the customer is the king and is the company’s first

priority as the company exists for the customers only.Earlier, the product-selling approach was the basicapproach of the managers. The managers real job now isto identify the actual demand and target customers and toproject a product that would provide maximum satisfactionto the customer needs.

2. Social Responsibility to community: A community is apart of the society at large which provides the immediatesocial environment to the company. The company must,

therefore, be committed to the welfare of the environment,since it has an important social role to play in thecommunity.



• Companies should focus on a pollution free andenvironment-friendly technology, social afforestation etc notonly to satisfy the government or legal provisions, but

because of commitment to the community welfare andenvironmental protection.

3. Responsibility to Society and Ecological Environment:An organisation owes social responsibility not only to theimmediate social framework called community but to thesociety at large and the ecological environment itself. In aglobal business environment, the whole globe can be thesociety for an organisation.

4. Responsibility to Government: Responsibility of a

business enterprise towards the government is to pay taxesand duties in time, cooperate with the government in theirsocial policies and to follow all laws laid down by thegovernment.



• Trusteeship Management

• Trust is a fund or asset created for some specific purpose.A wealthy person may set aside some funds for specific

purpose and appoint a trustee to manage it and make surethat the benefits are available to the specific beneficiaries.

• A trustee is one who self-consciously assumesresponsibility for upholding, protecting and putting to gooduse whatever he possesses, acquires or earns.

• For an individual to be a trustee in any meaningful senseimplies that he is self-governing and morally sensitive. Atrustee is entitled to take a fee for his services.

• Trusteeship of Gandhiji

• The theory of Trusteeship Management aims at adistribution of material prosperity keeping in mind, onlyhuman dignity. Besides trusteeship also aims at the risingof the morale of the people by giving them a sense of

security in the hands of the trustee.



• Business Ethics

• Ethics is the degree of faith that one bestows upon oneself.Ethics involves learning what is right or wrong. Ethics I the

discipline dealing with what is good and bad, or right andwrong or with moral duty and obligation.

• Business ethics is nothing but application of ethics inbusiness. The need for business ethics springs from thephilosophy that since business operates and exists withinthe society and is a part of the subsystem of society, itsfunctioning must contribute to the welfare of the society.

• Importance of Business Ethics

1. Business ethics helps us to understand why some thingshappen strangely, what their implications might be and howwe should address such situations.

2. Business has the potential to provide a major contributionto our society, in terms of producing the products and

services that we want, providing employment.



3. The demand being placed on business that it should beethical, by its various stakeholders, are constantlybecoming more and more complex and challenging.Business ethics provides the means to appreciate andunderstand these challenges more clearly, so that the firmscan meet these ethical expectations more effectively.

4. Few business people have received formal business ethicseducation or training. Business ethics can help to improve

ethical decision making by providing managers with theappropriate knowledge and tools that allow them tocorrectly identify and provide solutions to the ethicalproblems.

5. Business ethics can provide us with the ability to assessthe benefits and the problems that are associated withdifferent ways of managing ethics in organisation.



• Managing Ethics: Managing ethics in the workplace holdstremendous benefit for both leaders and managers, as itbenefit both of them, morally and practically. Organizationscan manage ethics in their workplace by establishing anethics management programme.

• Ethics programs convey corporate values, often usingcodes ad policies to guide decisions and behaviour andcan include extensive training and evaluating, depending

on the organisation.

• Factor influencing ethical environment in anorganisation

1. The ethical vision of the management which may need a

review.

2. The holistic human values the organisation has developed.

3. The ethical code acquired within the organisation.

4. The individual inspiration source.

5. The managerial character and ethical deduction.



6. The workplace environment and the compulsion to followthe ethical norms.

• Business Ethics in India

• Business in the Indian context has changed drastically inthe 1990s when globalisation and FDI inflows have createdimmense prosperity in some segments, while many areasare underdeveloped with hunger, starvation etc.

• Companies normally expected to invest 3% to 5% of theirprofits into corporate responsibility programmes. Thepresent scenario ranges from 0.1% to 2% and anexceptional 14% by Tata steel.

• In India, CR is not merely a function of wealth or size of acompany. Although India has the lowest level of per capitaincome among the seven Asian countries, it has thehighest level of CR practices. Education, health andcommunity development are some of the most popular

areas of CR.



• The corporate are created by the society and therefore, must

have a vision beyond profits and immediate stakeholders andmore companies need to take a stand on issues such ascommunal violence, misuse of technology, human rights etc.

• Management Education in India

• The present educational system of India is an implantation ofBritish rulers. Before the advent of British in India, educationsystem was private one.

• Today, education system in India can be divided into manystages:

1. Pre-primary

2. Primary

3. Middle

4. Secondary

5. Higher secondary

6. Under-Graduate

7. Post-Graduate



• Evolution of Management Education in India

• Management education in India was being imparted intraditional times. In fact, it is really the teaching of commercewhich was christened as Business Administration. The objectwas to meet the demand of trade, commerce and industry for

trained personnel soon after India became independent.

• In most universities the teaching of Business was done by thefaculty drawn from the Department of Commerce. In recent

years, however, tremendous strides have been made in theteaching of Business Education in India.

• The scenario of Business teaching in India in early 30s wascharacterized by a predominance of Polytechnics mainly set

up in European countries. But teaching of Commerce in Indiabegan to make its presence felt. The Indian Statistical Institutewas set-up in Calcutta in 1932 to teach statistics withbusiness emphasis. It was followed by the Tata Institute ofSocial Sciences in Bombay in 1936.



• The first to be set-up were the IIMs of Ahmedabad (withHarvad Collaboration) and Calcutta (assisted by MIT) in1962. IIM, Bangalore was started in 1972 and Lucknow in1964. Two more IIMs – Indore and Kozhikode (Cochin)have been set up. These IIMs are considered as eliteinstitutions. With minor differences, the emphasis is ongeneral management and corporate and non-corporatemanagement.

• The 60s witnessed an acceleration of managementeducation in India with many universities starting MBAclasses while the Andhra University had already startedManagement teaching in 1957. The 60s has been very

crucial for the development of Management Education inIndia. This decade saw the explosion in the teaching ofmanagement.



• Education Policy

• The national policy of education (1986) and program ofaction (1992) lay-down the objectives and features of

Indian education policy. It includes:1. Development of International cooperation and peaceful co-

existence through education.

2. Promotion of equality. It could be achieved by providing

equal access and equal condition of success to children.3. A common educational structure (10+2+3) for the whole

India.

4. Education for women’s equality. The Indian education

should be used as a tool to change the status of women inthe society.

5. Equalization of SC population with others in the matter ofeducation.

O i f i h l i ib l f i f



6. Opening of primary schools in tribal area for promotion ofeducation in ST people.

7. Development of curriculum and study material in the

language of tribal people.8. Emphasis on the education of minorities.

9. Adult education – initiation of National Literacy Mission, forteaching illiterate people of age group 15-35.

10. Special emphasis on early childhood care and educationby opening up of day care centers, promotion of childfocused programs.

11.Secondary education curriculum should expose the

students to differentiated role of science, the humanitiesand social science.

12. Re-designing of courses of higher education to meet theincreasing demand of professionalism.

Wh lk f d i b i ll



• When we talk of management education, we are basicallyreferring to shaping-up the students aimed towardsdeveloping their competency and capability either as amanager, fit to join an organisation and help it to grow or asentrepreneur to establish and grow one’s own business.

• This capability does not come from possessing amanagement diploma or degree but also requiresdeveloping in the students the will and skill to contribute for

self-sustenance an nation building.

• Population and Census

• Population can be defined as the total number of personsinhabiting a country, city or any district or area. It can also

be defined as all the individuals of one species in a givenarea. For example, population of India, population of Chinaetc.

P l ti G th d E i D l t



• Population Growth and Economic Development

• Population growth has its own effects on economic growth ofa country which can be described as follows:

1. Due to increase in population, consumption increases whichwill decrease GNP/GDP and imports will increase and exports

fall-down.

2. Misuse or overuse of natural resources. Due to increase inpopulation, man to land ratio decreases.

3. Raw material or primary goods are used or processed either

directly or indirectly which produce finished goods and alsoyield residues some of it is recycled and some is disposed tonature which affect it negatively.

4. Unemployment increases due to increase in population.5. Population increase decreases capital formation.

6. Population increase results in brain drain.

7. Population increase negatively affect environment as urban

slums increase.

I di ’ P l ti Si d G th T d



• India’s Population: Size and Growth Trend

• The size of population is concerned, India ranks second in theworld next only on China. India’s landscape is just 2.4% of the

total world area, whereas its population is nearly 16.85% ofthe world population. India accounted for 19.96% of the world

population.

• India accounted for 19.96% of the estimated population ofdeveloping countries in 2001. These facts clearly indicate that

the pressure of population on the land in this country is veryhigh.

• Causes of the Rapid Growth of Population

• A high birth rate

• A relatively lower death rate• Immigration

• Effects of population growth & Remedies

C



• Census

• The Indian Census is the largest single source of a variety ofstatistical information on different characteristics of the peopleof India. With a history of more than 130 years, this reliable,

time tested exercise has been bringing out a veritable wealthof statistics every 10 years beginning from 1872 when the firstcensus was conducted in India.

• To scholars and researchers in demography, economics,

anthropology, sociology, statistics and many other disciplines,the Indian Census has been a fascinating source of data . Therice diversity of the people of India is truly brought out by thedecennial census which has become one of the tools tounderstand and study India.

• Importance of Census Data

• Census data are used in many ways that can improve life formembers of the Asian community and their families:

1 H l l d d t i h t b ild h l d



1. Help leaders determine where to build new schools, roads,

health care facilities, child care and senior centers and more.

2. Help fund important community initiatives and programsimportant to the Asian population including education and

English-language learning programs.

3. Aid local emergency services responders in reacting efficientlyin times of need, thanks to better maps and information.

4. Guide implementation and evaluation of programs like the

Equal Employment Opportunity Act, the Civil Rights Act andthe Fair Housing Act.

5. Assist with planning for education, housing, health and otherprograms that reflect diversity in the community.



• Consumerism and Business

• Consumerism is a movement to inform consumers andprotect them from business malpractices. The

movement focuses on inferior and dangerousmerchandise, unfair business practices and false ormisleading advertisement.

• Businessmen should realise their moral responsibility

and avoid indulging in practices that are harmful toconsumers. Such enlightened self-realisation isunfortunately lacking. Government regulation becomesnecessary to protect consumer interest.

• The government has appropriately passed severallegislations and issued notifications and orders torestrain businessmen from indulging in offense.Consequently, we have fifty laws which have beenenacted to protect their interest.



• The Consumer Protection Act, 1986 is the latest to beenacted by the Central Government. This is the mostpowerful piece of legislation which provides effective

protection against unfair trade practices, unsatisfactoryservices and defective goods.

• Apart from what the government does, the consumershould himself assert his rights and protect himself

against business malpractices. This is the genesis ofConsumerism. Various consumer movements havecome up in different parts of the country.

• A powerful consumer movement bestows certain

responsibility on business. Understanding consumerneeds and producing goods and services to satisfy theneeds do not complete the businessmen’s

responsibilities.



• Consumer Rights

• Important consumer rights includes:

1. Right against exploitation by unfair trade practices.

2. Right to protection of health and safety from the goodsand services the consumers buy

3. Right to be informed of the quality and performancestandards of the product or service

4. Right to be heard if there is any grievance or suggestion

5. Right to choose the best from a variety of offers

6. Right to get the genuine grievances redressed

7. Right to physical environment that will protect andenhance the quality of life.



• Responsibilities of consumers

1. The consumer should not make vague or generalcomplaints, but have a specific complaint, with supporting

information and proof such as a bill.2. The consumer should try to understand the view-point of

the seller before making a complaint.

3. In some situations, consumers have to cooperate with the

sellers.4. Consumers, in asserting their rights, should not

inconvenience or hurt others sections of the public.

5. The consumer should as a rule, complain against a

system and not attack individuals who are incumbents ofposts.



• Corporate Governance

• Corporate Governance is concerned with holding thebalance between economic and social goals and between

individual and communal goals.• This is a system by which companies are run and the

means by which they are responsive to theirshareholders, employees, and the society.

• The Need and Importance of Corporate Governance• It is the increasing role of Foreign Institutional Investors

(FIIs) in the emerging economies that has made theconcept of corporate governance a relevant issue today.

• The increasing concern of FIIs is that the enterprise inwhich they invest should not only be effectively managedbut should also observe the principles of corporategovernance. In other words, the enterprises will not do

anything illegal or unethical.



• Therefore, there is a need for corporate governancebecause of the following factors:

1. Liberalisation and deregulation all over the world have

given greater freedom in management. This would implygreater responsibility.

2. The market conditions are increasingly becomingcomplex in the light of global developments like WTO and

removal of barrier/reduction in duties.3. the failure of corporate due to lack of transparency,

disclosures etc has created the need for corporategovernance.



• Corporate Governance is important for the followingreasons:

1. It lays down the framework for creating a long-term trust

between companies and the external providers of capital.2. It improves strategic thinking at the top level by inducting

independent directors, who bring in a wealth ofexperience and a host of new ideas.

3. It rationalize the management and monitoring of risk thata firm face globally.

4. It limits the liability of top management and directors, bycarefully articulating the decision-making process.

5. It has long-term reputation effects among keystakeholders, both internally and externally.



• Factors influencing corporate governance

1. The Ownership Structure: The structure of ownership of acompany determines, how a corporation is managed and

controlled. The ownership structure can be eitherdispersed among individual and institutional shareholdersas in the US and UK or can be concentrated in the handsof a few large shareholders as in Germany and Japan.

• Our corporate sector is characterised by the co-existenceof state-owned, private an multinational enterprises. Theshares of these enterprises are held by institutional aswell as small investors.

2. The structure of Company Boards: Along with thestructure of ownership, the structure of company boardshas considerable influence on the way the companies aremanaged and controlled.

Th b d f di t i ibl f t bli hi



• The board of directors is responsible for establishingcorporate objectives, developing broad policies andselecting top-level executives to carry out thoseobjectives and policies.

• The board also reviews management’s performance to

ensure that the company is run well and shareholdersinterest are protected.

3. The Financial Structure: Along with the structure ofownership, the financial structure of the company i.e.proportion between debt and equity has implications forthe quality of governance. It is evident that the lendersexercise significant influence on the way a company is

managed and controlled.4. The Institutional Environment: The legal, regulatory and

political environment within which a company operatesdetermines in large measure, the quality of corporate

social envmnt

Documents