Social Environment

Concept and Significance of Social Environment The social environment factors consist of human relationships and the development, form and functions of such a relationship have a bearing on the business of an organization. Some of the important factors and influences operating in the social environment are the buying and consumption habits of people, their languages, beliefs and values, customers and traditions, taste and preferences, education and all factors that affect the business.

1.

Significance of Social Environment The socio-cultural environment encompasses the economic, political, legal and technological factors i.e. the socio-cultural customs and beliefs of the people shape the economy, the political legal system and technology. For example, social pressure against environmental pollution has led to legislation and Government regulation which in turn stimulated new technology to reduce pollution. social changes also influence the business policies of an organization. It can be understood by following points: At one time, it was thought that the normal thing for a family unit was to have two to three children. Now people prefer 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 lived with their relatives. Now the trends is to live alone. This has a big impact on builders. At one time most married women stayed at home. Now, most of them work. This has caused problems for firms who had door-to-door sales.

Business and Society Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit. Businesses vary in size as measured by the number of employees or by sales volume. The purpose of business goes beyond earning profit. It is an important institution in society. It is for the supply of goods and services, creation of job opportunities, offer of better quality of life or contributing to the economic growth of the country and putting it on the global map, the role of business 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 ecological view 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 and values are a source of institutional drive.

2. Viability: Viability is the drive to live and grow, to accomplish the potential not yet reached and to achieve all that a living system is capable of becoming. If a business is to be viable, it must initiate its share of forces in its own environment rather than merely adjust to outside forces. 3. Public Visibility: The term public visibility refers to the extent that an organization's activities are known to persons outside the organization. The importance of public visibility is that it subjects business activities to public examination, discussion and judgment.

Culture and Organization Organization culture refers to the pattern of shared values, 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 and opportunities that confront the firm. Organization culture is the personality of the firm. Employees demonstrate organizational culture by using the firms common language and accepting rules and norms, such as the pace and amount of work expected and the degree of cooperation between management and employees.

Japanese electronics giant Canon, CEO Fujio Mitarai has developed an organizational culture that emphasizes science and technology. The focus extends from product development to the way goods are made on the factory floor. Recent innovations have slashed production time and costs. Canon invests billions in R&D and is the worlds second largest recipient of new U.S. patents. This orientation has allowed Canon to become a world leader in digital cameras, copiers, printers and flat-screen TVs. Today management at firms like Canon and Toyota seek to build a global organizational culture an organizational environment that plays a key role in the development and execution of corporate global strategy. Companies that proactively build a global organizational culture:

 Value and promote a global perspective in all major initiatives. Value global competence and cross-cultural skills among their employees. 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 led to more leisure time for culture-oriented pursuits and to the invention of computers, multimedia and communications systems that encourage convergence in global culture.

The rise of the transnational media, high-tech communications and modern transportation systems has 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 from the rise of world cinema and television. Movies and TV provide artists with tools for expressing themselves and facilitate contact with consumers. In a similar way, communications technology permits us to choose our information sources.

Social Responsibility of Business social responsibility of managers particularly in business organization 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 on the 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 has reason to exits. Once society ceases to have any use for business, it has no place and reason to live. Being so much dependent, business has definite responsibility towards society.

In the age of globalization, corporations and business enterprises have crossed the national boundaries to become international. Business enterprises have been using natural resources in a big way of maximisation of their profit. Business enteprise intervene in so many areas of social life and hence their responsibility towards society and environment has emerged. In India and elsewhere there is growing realisation that business enterprises are after all created by society and must 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 social responsibility of business becomes necessary as follows: 1. A societal approach to business is the contemporary business philosophy, which demands business organisations to be responsive to social problems. 2. As a result of globalisation of business, global companies and MNCs operate in a big way in their host countries. In order to establish a good corporate image, they include social responsibility as a corporate objective. 3. In terms and conditions of collaboration agreements, very often social welfare terms are included which necessitates the collaborating company to take up the social responsibility of business.

4. On the basis of legal provisions, companies have to concentrate on social problems. For example, an industrial organisation 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 organisations commitment to social responsibility creates good corporate image and thereby a better business environment. 7. Social responsibility of business enables the organisation to improve its products positioning and thereby improve market share. 8. The organisational culture of certain organisations makes it necessary for them to take up the social cause as their moral responsibility.

 Social Responsibility towards different groups 1. Responsibility towards the customers: In a competitive market, the customer is the king and is the companys first priority as the company exists for the customers only. Earlier, the product-selling approach was the basic approach of the managers. The managers real job now is to identify the actual demand and target customers and to project a product that would provide maximum satisfaction to the customer needs. 2. Social Responsibility to community: A community is a part of the society at large which provides the immediate social 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 the community.

Companies should focus on a pollution free and environment-friendly technology, social afforestation etc not only to satisfy the government or legal provisions, but because of commitment to the community welfare and environmental protection. 3. Responsibility to Society and Ecological Environment: An organisation owes social responsibility not only to the immediate social framework called community but to the society at large and the ecological environment itself. In a global business environment, the whole globe can be the society for an organisation. 4. Responsibility to Government: Responsibility of a business enterprise towards the government is to pay taxes and duties in time, cooperate with the government in their social policies and to follow all laws laid down by the government.

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 sure that the benefits are available to the specific beneficiaries. A trustee is one who self-consciously assumes responsibility for upholding, protecting and putting to good use whatever he possesses, acquires or earns. For an individual to be a trustee in any meaningful sense implies that he is self-governing and morally sensitive. A trustee is entitled to take a fee for his services. Trusteeship of Gandhiji The theory of Trusteeship Management aims at a distribution of material prosperity keeping in mind, only human dignity. Besides trusteeship also aims at the rising of 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 and wrong or with moral duty and obligation. Business ethics is nothing but application of ethics in business. The need for business ethics springs from the philosophy that since business operates and exists within the society and is a part of the subsystem of society, its functioning must contribute to the welfare of the society. Importance of Business Ethics 1. Business ethics helps us to understand why some things happen strangely, what their implications might be and how we should address such situations. 2. Business has the potential to provide a major contribution to 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 be ethical, by its various stakeholders, are constantly becoming more and more complex and challenging. Business ethics provides the means to appreciate and understand these challenges more clearly, so that the firms can meet these ethical expectations more effectively. 4. Few business people have received formal business ethics education or training. Business ethics can help to improve ethical decision making by providing managers with the appropriate knowledge and tools that allow them to correctly identify and provide solutions to the ethical problems. 5. Business ethics can provide us with the ability to assess the benefits and the problems that are associated with different ways of managing ethics in organisation.

1. 2. 3. 4. 5.

Managing Ethics: Managing ethics in the workplace holds tremendous benefit for both leaders and managers, as it benefit both of them, morally and practically. Organizations can manage ethics in their workplace by establishing an ethics management programme. Ethics programs convey corporate values, often using codes ad policies to guide decisions and behaviour and can include extensive training and evaluating, depending on the organisation. Factor influencing ethical environment in an organisation The ethical vision of the management which may need a review. The holistic human values the organisation has developed. The ethical code acquired within the organisation. The individual inspiration source. The managerial character and ethical deduction.

6. The workplace environment and the compulsion to follow the ethical norms. Business Ethics in India Business in the Indian context has changed drastically in the 1990s when globalisation and FDI inflows have created immense prosperity in some segments, while many areas are underdeveloped with hunger, starvation etc. Companies normally expected to invest 3% to 5% of their profits into corporate responsibility programmes. The present scenario ranges from 0.1% to 2% and an exceptional 14% by Tata steel. In India, CR is not merely a function of wealth or size of a company. Although India has the lowest level of per capita income among the seven Asian countries, it has the highest level of CR practices. Education, health and community development are some of the most popular areas of CR.

1. 2. 3. 4. 5. 6. 7.

The corporate are created by the society and therefore, must have a vision beyond profits and immediate stakeholders and more companies need to take a stand on issues such as communal violence, misuse of technology, human rights etc. Management Education in India The present educational system of India is an implantation of British rulers. Before the advent of British in India, education system was private one. Today, education system in India can be divided into many stages: Pre-primary Primary Middle Secondary Higher secondary Under-Graduate Post-Graduate

Evolution of Management Education in India Management education in India was being imparted in traditional times. In fact, it is really the teaching of commerce which was christened as Business Administration. The object was 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 the faculty drawn from the Department of Commerce. In recent years, however, tremendous strides have been made in the teaching of Business Education in India. The scenario of Business teaching in India in early 30s was characterized by a predominance of Polytechnics mainly set up in European countries. But teaching of Commerce in India began to make its presence felt. The Indian Statistical Institute was set-up in Calcutta in 1932 to teach statistics with business emphasis. It was followed by the Tata Institute of Social Sciences in Bombay in 1936.

The first to be set-up were the IIMs of Ahmedabad (with Harvad Collaboration) and Calcutta (assisted by MIT) in 1962. IIM, Bangalore was started in 1972 and Lucknow in 1964. Two more IIMs Indore and Kozhikode (Cochin) have been set up. These IIMs are considered as elite institutions. With minor differences, the emphasis is on general management and corporate and non-corporate management. The 60s witnessed an acceleration of management education in India with many universities starting MBA classes while the Andhra University had already started Management teaching in 1957. The 60s has been very crucial for the development of Management Education in India. This decade saw the explosion in the teaching of management.

1. 2. 3. 4.

5.

Education Policy The national policy of education (1986) and program of action (1992) lay-down the objectives and features of Indian education policy. It includes: Development of International cooperation and peaceful coexistence through education. Promotion of equality. It could be achieved by providing equal access and equal condition of success to children. A common educational structure (10+2+3) for the whole India. Education for womens equality. The Indian education should be used as a tool to change the status of women in the society. Equalization of SC population with others in the matter of education.

6. Opening of primary schools in tribal area for promotion of education 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, for teaching illiterate people of age group 15-35. 10. Special emphasis on early childhood care and education by opening up of day care centers, promotion of child focused programs. 11. Secondary education curriculum should expose the students to differentiated role of science, the humanities and social science. 12. Re-designing of courses of higher education to meet the increasing demand of professionalism.

When we talk of management education, we are basically referring to shaping-up the students aimed towards developing their competency and capability either as a manager, fit to join an organisation and help it to grow or as entrepreneur to establish and grow ones own business. This capability does not come from possessing a management diploma or degree but also requires developing 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 persons inhabiting a country, city or any district or area. It can also be defined as all the individuals of one species in a given area. For example, population of India, population of China etc.


1.

2. 3.

4. 5. 6. 7.

Population Growth and Economic Development Population growth has its own effects on economic growth of a country which can be described as follows: Due to increase in population, consumption increases which will decrease GNP/GDP and imports will increase and exports fall-down. Misuse or overuse of natural resources. Due to increase in population, man to land ratio decreases. Raw material or primary goods are used or processed either directly or indirectly which produce finished goods and also yield residues some of it is recycled and some is disposed to nature which affect it negatively. Unemployment increases due to increase in population. Population increase decreases capital formation. Population increase results in brain drain. Population increase negatively affect environment as urban slums increase.

Indias Population: Size and Growth Trend The size of population is concerned, India ranks second in the world next only on China. Indias landscape is just 2.4% of the total world area, whereas its population is nearly 16.85% of the world population. India accounted for 19.96% of the world population. India accounted for 19.96% of the estimated population of developing countries in 2001. These facts clearly indicate that the pressure of population on the land in this country is very high. Causes of the Rapid Growth of Population A high birth rate A relatively lower death rate Immigration Effects of population growth & Remedies

Census The Indian Census is the largest single source of a variety of statistical information on different characteristics of the people of India. With a history of more than 130 years, this reliable, time tested exercise has been bringing out a veritable wealth of statistics every 10 years beginning from 1872 when the first census 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 . The rice diversity of the people of India is truly brought out by the decennial census which has become one of the tools to understand and study India. Importance of Census Data Census data are used in many ways that can improve life for members of the Asian community and their families:

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 programs important to the Asian population including education and English-language learning programs. 3. Aid local emergency services responders in reacting efficiently in 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 and the Fair Housing Act. 5. Assist with planning for education, housing, health and other programs that reflect diversity in the community.

Consumerism and Business Consumerism is a movement to inform consumers and protect them from business malpractices. The movement focuses on inferior and dangerous merchandise, unfair business practices and false or misleading advertisement. Businessmen should realise their moral responsibility and avoid indulging in practices that are harmful to consumers. Such enlightened self-realisation is unfortunately lacking. Government regulation becomes necessary to protect consumer interest. The government has appropriately passed several legislations and issued notifications and orders to restrain businessmen from indulging in offense. Consequently, we have fifty laws which have been enacted to protect their interest.

The Consumer Protection Act, 1986 is the latest to be enacted by the Central Government. This is the most powerful piece of legislation which provides effective protection against unfair trade practices, unsatisfactory services and defective goods. Apart from what the government does, the consumer should himself assert his rights and protect himself against business malpractices. This is the genesis of Consumerism. Various consumer movements have come up in different parts of the country. A powerful consumer movement bestows certain responsibility on business. Understanding consumer needs and producing goods and services to satisfy the needs do not complete the businessmens responsibilities.

 1. 2. 3. 4. 5. 6. 7.

Consumer Rights Important consumer rights includes: Right against exploitation by unfair trade practices. Right to protection of health and safety from the goods and services the consumers buy Right to be informed of the quality and performance standards of the product or service Right to be heard if there is any grievance or suggestion Right to choose the best from a variety of offers Right to get the genuine grievances redressed Right to physical environment that will protect and enhance the quality of life.

 1.

2.
3.

4.
5.

Responsibilities of consumers The consumer should not make vague or general complaints, but have a specific complaint, with supporting information and proof such as a bill. The consumer should try to understand the view-point of the seller before making a complaint. In some situations, consumers have to cooperate with the sellers. Consumers, in asserting their rights, should not inconvenience or hurt others sections of the public. The consumer should as a rule, complain against a system and not attack individuals who are incumbents of posts.

Corporate Governance Corporate Governance is concerned with holding the balance 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 their shareholders, 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 the concept of corporate governance a relevant issue today. The increasing concern of FIIs is that the enterprise in which they invest should not only be effectively managed but should also observe the principles of corporate governance. In other words, the enterprises will not do anything illegal or unethical.

 1.

2.

3.

Therefore, there is a need for corporate governance because of the following factors: Liberalisation and deregulation all over the world have given greater freedom in management. This would imply greater responsibility. The market conditions are increasingly becoming complex in the light of global developments like WTO and removal of barrier/reduction in duties. the failure of corporate due to lack of transparency, disclosures etc has created the need for corporate governance.

 1.

2.

3. 4. 5.

Corporate Governance is important for the following reasons: It lays down the framework for creating a long-term trust between companies and the external providers of capital. It improves strategic thinking at the top level by inducting independent directors, who bring in a wealth of experience and a host of new ideas. It rationalize the management and monitoring of risk that a firm face globally. It limits the liability of top management and directors, by carefully articulating the decision-making process. It has long-term reputation effects among key stakeholders, both internally and externally.

 1.

2.

Factors influencing corporate governance The Ownership Structure: The structure of ownership of a company determines, how a corporation is managed and controlled. The ownership structure can be either dispersed among individual and institutional shareholders as in the US and UK or can be concentrated in the hands of a few large shareholders as in Germany and Japan. Our corporate sector is characterised by the co-existence of state-owned, private an multinational enterprises. The shares of these enterprises are held by institutional as well as small investors. The structure of Company Boards: Along with the structure of ownership, the structure of company boards has considerable influence on the way the companies are managed and controlled.

3.

4.

The board of directors is responsible for establishing corporate objectives, developing broad policies and selecting top-level executives to carry out those objectives and policies. The board also reviews managements performance to ensure that the company is run well and shareholders interest are protected. The Financial Structure: Along with the structure of ownership, the financial structure of the company i.e. proportion between debt and equity has implications for the quality of governance. It is evident that the lenders exercise significant influence on the way a company is managed and controlled. The Institutional Environment: The legal, regulatory and political environment within which a company operates determines in large measure, the quality of corporate governance.