bussiness economics

8/9/2019 Bussiness economics

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Business Ethics

Q. 1 What do you understand by CSR? Discuss.

Corporate Social Responsibility:

Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a

business model. It is a concept whereby organizations take responsibility for their impact on

society and the environment. It is the awareness, acceptance and management of the

implications and effects of all corporate decision making. It is the decision-making and

implementation process that guides all company activities in the protection and promotion of

international human rights, labour and environmental standards and compliance with legal

requirements. Essentially, CSR is the deliberate inclusion of public interest into corporate

decision-making, and the honoring of a triple bottom line: People, Planet, Profit

Corporate Social Responsibility (CSR) is becoming an increasingly important activity to

businesses nationally and internationally. With globalization and large corporations serving

globally, these corporations have progressively recognized the benefits of providing CSR

programs in their various locations. CSR activities are now being undertaken throughout the

globe.

Rationale for CSR:

The rationale for CSR has been articulated in a number of ways. In essence it is about building

sustainable businesses, which need healthy economies, markets and communities. The key

drivers for CSR are:-

1. Enlightened self-interest - creating a cohesive society and a sustainable economy

where markets, labour and communities are able to function well together.

2. Social investment - contributing to physical infrastructure and social capital

3. Transparency and trust - There is increasing expectation that companies will be more

open, more accountable and be prepared to report publicly on their performance in

social and environmental arenas

4. Increased public expectations of business - globally companies are expected to

do more than merely provide jobs and contribute to the economy through taxes and

employment.
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In recent years CSR has become a fundamental business practice and has gained much

attention from chief executive management teams of larger international companies. They

understand that a strong CSR program is an essential element in achieving good business

practices and effective leadership.

Potential Benefit from Corporate Social Responsibility

The scale and nature of the benefits of CSR for an organization can vary depending on the

nature of the enterprise. The benefits are difficult to quantify. However, businesses do not look

at short-run financial returns when developing their CSR strategy.

CSR lends itself to good news stories. Publicity like this can be a key part of using CSR to win

contracts. People want to buy from businesses they respect. CSR can be particularly effective

for targeting ethical companies, the public sector and not-for-profit organisations. CSR feeds

through into customer service, sales and profits. As well as affecting the way you behave, CSRcan lead to new products and services that reflect your values and those of your stakeholders.

Over time, it can all add up to a powerful brand - and a winning business.

There are other benefits:

1. A good reputation makes it easier to recruit employees.

2. Employees may stay longer, reducing the costs and disruption of recruitment and

retraining.

3. Employees are better motivated and more productive.4. CSR helps ensure you comply with regulatory requirements.

5. Activities such as involvement with the local community are ideal opportunities to

generate positive press coverage.

6. Good relationships with local authorities make doing business easier.

7. Understanding the wider impact of your business can help you develop new products

and services.

8. CSR can make more competitive and reduces the risk of sudden damage to reputation

Investors recognise CSR and are more willing to finance.

Corporate Social Responsibility unlocks the value

According to the results of a global survey in 2002 by Ernst & Young, 94 per cent of

companies believe the development of a Corporate Social Responsibility (CSR) strategy can

deliver real business benefits.


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While companies recognize the value of CSR strategy, the majority are failing to maximise the

associated business opportunities. Corporate Social Responsibility is now a determining factor

in consumer and client choice which companies cannot afford to ignore. Companies who fail to

maximize their adoption of a CSR strategy will be left behind.

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Q. 10 Write short notes on any two:

(a) Whistle Blowing

Whistle-blowing is a term used for what is legally known as a Public Interest Disclosure, which

is when an employee discloses information about malpractice. A whistleblower is a person who

raises a concern about wrongdoing occurring in an organization or body of people, usually this

person would be from that same organization. Whistleblower is an informant who exposes

wrongdoing within an organization in the hope of stopping it. The essential feature of whistle

blowing is the disclosure by organisation members of illegal, immoral or illegitimate practices

under the control of employers, to persons or organizations that may be able to effect action.

Legal Protection

The law gives little protection to whistleblowers who feel the public has a right to know what is

going on.

L egislative responses to whistle blowing: The objectives of the legislation are:

1. to facilitate public interest disclosuresthat is, to encourage whistle blowing.

2. to ensure that disclosures by whistleblowers are properly dealt withthat is, properly

assessed, investigated and actioned

3. to ensure the protection of whistleblowers from reprisals taken against them as a result

of their having made the disclosure.

What constitutes wrongdoing? : Examples of malpractice/ wrongdoing may include:

a. Financial malpractice

b. Breach of any regulations

c. Endangering health and safety

d. Criminal activity

e. Professional malpractice etc.


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Scope

The procedure is used where there are issues of poor performance or a lack of professionalism.

It should not be used to resolve personal disputes. It should only be used where there is

wrongdoing whether it is intentional or done unknowingly.

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Q. 10(c) Workers Participation

Workers participation is a joint consultation prior to decision making. For workers it means co

determination For government it is an association of labour with management without the final

authority or responsibility in decision making. Participation is generally conceived of as a way of

reducing power difference and stressing equality. Participation is a means to reduce power

inequity.

Elements of workers Participation:a). The amount of verbal interaction between a supervisor and his subordinates.

b) The degree to which a supervisors is active in making decisions and setting goals for his

work units.

Effectiveness of Workers Participation

a. The degree of effectiveness varies directly with the degree with which the participation

meets the motives of the participants.

b. The greater of the clarity of goals the higher the effectiveness, provided conformity to

goals is a strong motive among the participants.

c. Settlement of relatively difficult issues leads to greater effectiveness.

d. The higher the viability of the activity of participative decision-making the greater the

effectiveness

e. Effectiveness varies directly with the number of administrative levels subsumed by the

programme.

f. Amount of useful information influences the effectiveness of participative decision-

making; the more useful the information, the greater the effectiveness.

Failure of workers' participation in India : Following factors seems to account for the relative

failure of workers' participation in India


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1. Workers' participation has suffered largely at the hands of employers and to some

extent by large-scale Government interference,

2. Information -sharing has not been liberal. Workers' representatives have often not been

informed about manpower and production schedules, creating an attitude of indifference

and even hostility among the representatives.

3. In most cases, joint boards, councils, etc., find themselves dealing with personnel and

welfare matter rather than with production and efficiency. This, to a large extent, has

been responsible for the dissatisfaction of employers whose concerns rests relatively

more with production and efficiency.

4. In some cases, there is found very little evidence of active communication and feedback

between the electors and their representatives.

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Q.3 Discuss how the eight fold path leads to cessation of suffering according to Lord Budha.

Ans:

In Buddhism, the noble eightfold path is the way to end suffering as described by Gautama

Buddha. Buddhism faith believes in empowering its followers to live the best life possible. The

eightfold path is to help mankind end suffering. The path consists of eight ways that lead to

cessation of suffering.

The four Noble Truths are the foundation of Buddhist beliefs and teachings. The four Noble

Truths are:

1. Suffering

2. The cause of suffering

3. The cessation of suffering

4. The path that leads to the cessation of suffering

The eightfold path is, therefore, the path that leads to the cessation of suffering. It is also known

as the Middle Path since it avoids the two extremes of achieving happiness through either

overindulging the senses or following rigid asceticism.


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The Eight Divisions of the Path

The eight noble paths are not sequential steps. They are rather components that are

interdependent and intertwining that requires the contribution of all. The eight steps are:

1. Right view This is the starting point of the eightfold path. Right view is being able tosee that the whole world is filled with suffering and discontent. The way to improve the

situation is to cultivate the insightful wisdom that maintains this correct view.

2. Right intentions This step involves giving up attitudes that are self-centered or

corrupt. Replacing these incorrect intentions or thoughts with ones of selflessness and

compassion will help in bringing happiness and ending suffering and distress.

3. Right speech This means that one should use the right or positive words when talking

to others or about them. Negative, harsh language reflects ones thoughts and inner

state. Therefore, it is important to replace it with pleasant, kind and compassionatewords.

4. Right action The right action means acting in a way that is positive to others and

brings joy and happiness.

5. Right livelihood While one can earn a living in a variety of ways, the right livelihood is

essentially a profession in which one can be of service to others or at least make sure

that ones work is honest and compassionate.

6. Right effort This step refers to ones spiritual practice. It is important to exert in a

wholesome manner to introspect and reflect on ones spiritual progress. The reason whyeffort is so crucial is that each person has to work out his or her own deliverance.

7. Right mindfulness Mindfulness is attentiveness or awareness. It is important not to

dwell in the past or imagine the future; rather one should focus on the present moment.

8. Right concentration Acute concentration is required in order to develop the insight

needed to understand reality. Right concentration means working on achieving a one-

pointed mind. In order words, it is being able to focus complete, unwavering attention on

any object or task.

The last three steps make up the Concentration group of the Eightfold Path. The noble eightfold

path is an important Buddhist teaching that describes in simple, practical terms the path to

happiness and a cessation of suffering. It is highly significant . The eightfold path is the Buddhist

code of conduct and helps practitioners and followers to walk in the footsteps of the Buddha and

develop a life-state that is free of discontent, suffering and sadness and instead, radiates joy,

kindness and compassion.


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Q. 4 Describe the Gandhian idea of Trusteeship

The four essential principles of Gandhi's philosophy are: Truth, Ahimsa, Trusteeship and

Constructive Action. Concept of trusteeship is a socio-economic philosophy propounded by

Mahatma Gandhi. This concept is based on the great philosophy of the Sanatan Dharma.

According to Gandhiji, economic equality is the master key to nonviolent independence.

Working for economic equality means abolishing the eternal conflict between capital and labour.

It means the leveling down of the few rich in whose hands is concentrated the bulk of the

nations wealth on the one hand, and the leveling up of the semi-starved naked millions on the

other.

Gandhijis idea of trusteeship serves as philosophical foundation for business and provides

requisite moral guidance. Gandhi deals with the concept of trusteeship at four different levels.

Firstly, he talks of Trusteeship as the sole means of continuously redistributing wealth and

generation and intelligent use of wealth. This is an outcome of non-violence, for wealth could be

redistributed coercively. The greed of many and the resentment of the displaced pave way for

social strife. The trusteeship therefore provides the owner the satisfaction of seeing himself as

trustees of the wealth of the society.

Secondly, the concept of trustee was based on Gandhis practical psychological intuition.

Gandhi understood the great value of acceptability in a stable social order. A proper

redistribution can only be achieved when the element of fear is no longer is a repealing factor.

Fear is weakness that creates an environment of distrust and hiding. This can be countered by

a fundamental change by creative, tolerant activity; sense of dignity and courage. The workers

realise their importance in society and shed the fear of and distrust of the rich while the latter will

no longer feel their existence threatened but would realise their great responsibility towardsupliftment of society.

Thirdly, the trusteeship concept could be achieved by implementing in degrees. He was bowed

down by the fear of failure considering that if it did fails it would be one of the many conventional

social proposals. But it was a success, its strength would be the principle and it would not have


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the weakness of inflexibility. Another strength of it was that action of a few towards it could

break mental barrier which so subdues progress.

Fourthly, the time of Gandhi, as presently, was characterized by spiritual poverty and

psychological failure. That made him visualize that the time was ripe for implementing a change.

Gandhi based his system on a simple society but he did not just was biased towards an

agrarian economy. Contrary to popular belief he did not reject technology. He never talked

against the deployment of machinery and heavy engineering based industry. Rather he believed

that technology was good if people needed work. He believed in the concept of appropriate

technology and associated self reliance associated with it.Gandhi advocated the development

of village economy through setting up of village industries which would meet the huge demands

of rural markets and also ensure jobs. This becomes very significant in light of the huge

migration of labour__________________________________________________________________________

Q. 6 Show how culture functions promote the survival of a firm by influencing its external

and internal behaviour.

Ans

Organizational culture is the common set of assumptions, beliefs and values that have

developed within the organization to cope with the external and internal environments. Culture

as an organizational concept focuses on the beliefs, values, speech, and artifacts ofgroups ofpeople and the manner in which these traits are transmitted from generation to generation.

Organizations ahave certain common features that provide internal guidance There are two

levels of corporate culture. The deeper level of culture consistsofvalues that are shared. by

members of the organization. The values tend to be relatively stable overtime and are passed

on to new members as the composition ofthe organization changes. The values are generally

so deeply entrenched in the organization that members are often not even aware that they

exist.

The second level of culture consists of norms that guide the behaviour of organizational

members in their day-to-day activities. Behavioural norms are visible in the members' dress,

language and behaviour. They developfrom the shared values of the organization. Norms often

develop as a result-of a combination of values. Culture develops throughout the life of an.

organization. It originates as the beliefs and values of the founders are shared with other

members of the organization. The values of the founders provide the basis for an initial set of

beliefs concerning how the organization should relate to its-external environment. This includes


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the initial core mission, goals and strategy. It also involves the methods used to implement and

evaluate the strategy. These beliefs and values guide appropriate behaviour for the

organization's success and survival. For example, the founders may place a high value on

professionalism in dealing with customers. As this value develops into a shared value of the

firm, the belief may emerge as a professional image is critical to success.

In addition to the founder's influence, major developments in a firm's culture may also occur

when a dynamic new leader takes over charge. Cultural values also provide guidance for the

firm in integrating its internal environment. It provides common concepts necessary forinternal

communication. Culture defines who is included and who is excluded. The rules for acquiring ,

maintaining and losing power as well as for obtaining rewards and punishments are part of an

organization's culture. Culture provides an ideology for the firm. The internal environment is

organized to function successfully and to cope with the firm's external environment. The shared

beliefs concerning the relevant characteristics of the external environment guide the structure

and operating relationships created within the internal environment.

Thus, culturefunctions to promote the survival of the firm by influencing both its external and

internal behaviour. It promotes consistency of behaviour in a way that members of the

organization believe to be successful. When the environment changes, existing behaviour

ceases to be successful, culture then changes to meet the new environment

High performing cultures promote ethical behaviour. A value is defined as a lasting belief

that a certain mode of conduct is better than the opposite conduct . Business ethics has been

defined as the process of evaluating a business decision with respect to the moral standardsofa culture. Values that support moral standards will influence behaviourin a moral direction. The

common belief is that behaviour that supports the standards is better than behaviour that does

not. Ifthe sharedvalues of an organization are consistent with moral standards of the culture,

the organization's culture will support ethical behaviour . A key factor in the ethics of a firm is

the set of values considered important by the members of the firm. If the shared values of the

firm support standards, culture support ethical decision making, if the values do not support the

standards, culture does not. support ethical decision-making

Three conditions are necessary forthe good performance of a firm. First, the firm must have

a strong corporate culture. This is a necessary but not sufficient condition Second, the culture

needs to fit the environment in which the firm operates. A firm operating in a rapidly changing

environment requires a culture significantly different from a firm operating in a stable

environment. Third, the culture must be able to help the firm anticipate environmental changes

and adjust successfully -to those changes. The culture should encourage good leadership, for

it is leadership that provides the change mechanism forkeeping the culture abreast with its


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environment.A strong case of high-performance companies is being ethical firms. This is the

strongest justification for the statement that good ethics is good business.

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