Traditionally, the term business commonly referred to commercial activities aimed at makinga profit or to organisations formed to make a profit. Indeed, in the past, economic theory madea fundamental assumption that profit maximisation was the basic objective of every firm. Themodern outlook, however, is different. For them, profit is only secondary. There are, moreover, many organisations, both private and public, which do not aim at profit from their business. In short, the definition of a business as a commercial activity to make a profit or an organisationformed to make a profit is a narrow one. Yet, to a layman, business still means industry andcommerce. The old concept of business, confining it to commerce and private profit, has undergone aradical change. Today, business is regarded as a social institution forming an integral part of thesocial system. As Davis and Blomstorm observe, business is “social institution, performing a social mission and having a broad influence on the way people live and work together.”1 As Calkinsremarks: “It is now recognised that the direction of business is important to the public welfare,that businessmen perform a social function.”2 Thus, “viewed in a broad way, the term business typically refers to the development andprocessing of economic values in society. Normally, we use the term to apply to the private (nongovernment)portion of the economy whose primary purpose is to provide goods and services tocustomers at a price, but the lines of distinction are getting hazy as business and government overlap their functions in organisations such as the Communications, Satellite Corporation and the Tennessee Valley Authority. In addition, business is a term applied to economic and commercial activities of institutions having other purposes, such as the business office of an opera association. Thus, organisations which do not aim of making a profit, like the Delhi Development Authority,charitable hospitals, or other institutions, public relations organisations, government departments,etc., invest capital, price and market their products, services or ideas, manage their human resources, and so on.According to Davis and Blomstorm, “our modern view of society is an ecological one. Ecology is concerned with the mutual relations of human populations or systems with their environment. It is necessary to take this broad view because the influence and involvement of business are extensive. Business cannot isolate itself from the rest of society. Today, the whole society is a business’s environment Davis and Blomstorm point out that, in taking an ecological view of business in a systemrelationship with society, three ideas are significant in addition to the systems idea. The three ideas are values, viability and public visibility Values Business, like other social institutions, develops certain belief systems and values for whichthey stand, and these beliefs, and values are a source of institutional drive. These values deriv

1. • Business may be defined as the collection of private, commercially oriented
(profit-oriented) organizations, ranging in size from one-person proprietorships
(such as Sons of Italy Pizzeria, Gibson’s Men’s Wear, and Zim’s Bagels) to
corporate giants (such as Johnson & Johnson, GE, Coca-Cola, Dell Inc., and
UPS).
Between these extremes, of course, are many medium-sized proprietorships,
partnerships, and corporations.
An organization or economic system where goods and services are exchanged
for one another or for money. Every business requires
some form of investment and enough customers to whom its output can be sold
on a consistent basis in order to make a profit. Businesses can be privately
owned, not-for-profit or state-owned. An example of a corporate business
is PepsiCo, while a mom-and-pop catering business is a private enterprise.
BUSINESS AND SOCIETY

2. BUSINESS AND SOCIETY
Society may be defined as a community, a nation, or a broad grouping
of people having common traditions, values, institutions, and collective
activities and interests.
As such, when we speak of business and society relationships, we may
in fact be referring to business and the local community (business and
Atlanta), business and the country as a whole, business and the global
community, or business and a specific group of people (consumers,
investors, minorities).

3. Relationship between Business and
Society
Business: Any organization that is engaged in making a product or
providing a service for a profit
Society: Human beings and the social structures they collectively create
Business and society are highly interdependent

4. Relationship between Business and Society
We borrow “General Systems Theory (GST)” from Biology to explain this
relationship; first introduced in 1940’s
◦ Theory posits that organisms cannot be understood in isolation, even though they
have clear boundaries; they can only be understood in relationship to their
surroundings
Adapted to management theory means that business firms are embedded in
a broader social environment with which they constantly interact
◦ Business and society together form an interactive social system (shown graphically
in the following slide)

5. Relationship between Business
and Society

6. Relationship between Business and Society
Systems theory helps us understand how business and society, taken together,
form an interactive social system .
Each needs the other, and each influences the other. They are entwined so
completely that any action taken by one will surely affect the other. They are
both separate and connected.
Business is part of society, and society penetrates far and often into business
decisions.
In a world where global communication is rapidly expanding, the connections
are closer than ever before. Throughout this book we discuss examples of
organizations and people that are grappling with the challenges of, and helping
to shape, business–society relationships.

7. Business in Society

8. Looking at a variety of perspectives
◦ Shareholders / Managers
◦ Employees
◦ Unions
◦ Government
◦ Environmentalists
◦ Media
◦ Other businesses
◦ Consumers

9. Culture is…
“ Collective programming of the mind which distinguishes the
members of one human group from another... Includes system of
values; and values are among the building blocks of culture...”
(Hofstede, 1980)
Glue that binds groups together. Without cultural patterns, organized
system of significant symbols, people would have difficulty living
together (De Mooij, 2004)
Set of control mechanisms – plans, recipes, rules, instructions – for
governing behavior (Geertz, 1973)
Includes shared believs, attitudes, norms, roles and values found
among speakers of a particular language who live during the same
period in a specific geographic region (Triandis, 1995).
And soo much more…

10. Characteristics of culture
1. Culture is learned
2. Common to members of a certain group
3. Determines the behavior of group members
4. Culture (customs, values, habits) makes life more effective
AN INDIVIDUAL DOESN’T HAVE
CULTURE!
AN INDIVIDUAL HAS A PERSONALITY!

11. Levels of culture
TRANSNATIONAL CULTURE
NATIONAL CULTURE
INDUSTRY CULTURE
PROFESSIONAL CULTURE
ORGANIZATIONAL CULTURE
SUBCULTURES
INDIVIDUAL

12. Culture and its impact on
business
Culture is
the context
in which a
company
(people)
operates!
STRATEGY
ORG.
CULTURE
STRUCTURE
& SYSTEMS
coordination
NATIONAL CULTURE
Competitive
environment
Competitive
environment

13. Impact of Culture on Business
Culture creates people
Culture and Globalization
Culture determines Goods and Services
People’s attitude to Business
Attitude to work
Education
Ambitious or Complacent
Ethics in business
Cultural resources

14. Culture and Globalization
Business units go international
Work force diversity has important implication for
management practices
Managed diversity can increase creativity, innovation &
decision making from different perspective
Culture shock: any move from one country to another will
create a certain amount of confusion, disorientation and
emotional upheaval

15. Impact of culture on business
Differences in consumer behavior:
◦ Segmentation
◦ Positioning
◦ Marketing mix
◦ Buying habits
Business customs and etiquette:
◦ Negotiation styles
◦ Communication
◦ Business protocol
◦ Level of formality of arrangements
◦ Payment
◦ etc

16. Business System
Public
Sector
Private
Sector
Nonprofit
Sector

17. Types of Businesses
Sole / Single Proprietorship
◦ One owner
Partnership
◦ Two or more owners
Corporation
◦ Separate legal entity
◦ Private or public

18. Forces That Shape the Business
and Society Relationship

19. Forces That Shape the Business and Society
Relationship
The figure above shows the six dynamic forces that powerfully shape
the business and society relationship.
These dynamic forces, the constant changes in ethical and societal
expectations, the global economy, government policies, natural
environment, and technology create the setting in which businesses
interact with their many stakeholders such as employees, customers,
stockholders, suppliers, creditors, communities, media, governments,
and others.
This relationship between businesses and society is continually
changing in uncertain ways.

20. Society’s Expectations
Complex
Not focusing on right and wrong
Analysis of problems and issues from a variety of perspectives

21. Changing social expectations – growing
emphasis o ethical values
More than simply a legal or moral responsibility, ethics need to become an
organizational priority. Organizational leaders have a lot on their minds in
today’s highly competitive world. They must keep abreast of rapid
technological advancements, competitor’s products and services, the effects
of globalization, and opportunities and threats within their own industry, to
name the most obvious.
Leaders must also keep a constant eye on the mission, vision, values, culture,
strategy and goals of their own organizations. In the midst of all of this
complexity, it’s not easy to find room on the organizational plate for another
major priority. However, to succeed in the 21st century, organizations will
have to figure out how to make ethics a priority.
Priorities are those few things that are deemed most important. Many things
are important, some more and some less important, but only a few things are
most important. Ethical values need to achieve recognition as among the
elite, most important success factors in modern organizations.

22. Changing social expectations – growing
emphasis o ethical values
As an organizational priority, ethics will not only affect decision-making
but also, and ultimately, institutional culture. To achieve this ideal, there
must be an alignment process that integrates business ethics with
mission, vision, values, strategies and goals. Ethical values are
essentially social in nature, therefore, this alignment process will be
concerned with relationships and defining relational expectations. The
goal of an ethical organizational culture is the greater good of all.
Internal relationships between leaders and followers, as well as external
relationships with clients, customers, vendors and the community are
all prized. As a result, people are treated well consistently and an ethical
culture emerges.

23. The changing workplace – external factors
influencing the workplace
The uncontrollable forces in the external environment are:
 Competition
Government policies
 Natural forces
social and cultural forces
Demographic factors
Technological changes

24. What is Social Audit?
A process by which people , the final beneficiaries are
empowered to audit, the scheme, programme, policy or
law.
Checking and verification of a programme implementation
and its results by the community with the involvement of
primary stakeholders.
Ongoing process
Involvement of stakeholders from planning to monitoring
and evaluation

25. Social Audit in Democracy
Governance – manner in which power exercised-
should revolve around accountability and
responsibility towards public actions and policies
Social audit means continuous public vigilance under
the domain of civil society
Participatory auditing in democratic set up, active and
empowered society
Citizens’ Charters

26. Basic Principles of Social Audit
Responsive governance
Social objectives
Transparency and disclosure
Participation and connectivity of
stakeholders, polyvocal
Bottom up Accountability
Regular

27. Upholding Universal Values of Social Audit
equity, social responsibility, trust, accountability, transparency,
inclusive, caring, peoples’ well being
Universal
Values
Pillars of
social audit
Foundation of
Social Audit
Specific socio cultural, administrative, legal and democratic setting
Polyvocal
Multi-dimensional
Participatory
Comprehensive
Comparitive
Regular
Verification
Disclosure
Source: Centre for Good Governance

28. Relation with other Audits
Government/ Institutional Audit
Social Audit
People’s Audit
Social Audit conducted jointly by People and
Institution/Government
Higher levels of acceptability
Social audit complements financial audit
Gives more comprehensive picture

29. Objectives of Social Audit
Ensure public accountability
Popularise good governance
Assess physical and financial gap between needs and
resources
Awareness among beneficiaries & providers
Increase efficiency,effectiveness and ensure transparency
Scrutinize various policy decisions
Impart responsibilities among citizens

30. When to conduct Social Audit?
Planning Stage
Implementation Stage
Post Completion Stage
Who Conducts Social Audit?
Beneficiaries representatives and stakeholders’
groups

31. Benefits of Social Audit
Monitoring and Evaluation tool
Social benefits accrued
Awareness generation
Provides critical inputs and assesses impact
Grievance Redressal
Real time feed back mechanism
Redefines strategies
Increases transparency & accountability
Better allocation of resources

32. What is an ethic?
Ethics involves a discipline that examines good or bad practices
within the context of moral duty. but "the good practices" is not
nearly as straightforward as conveyed.
Many ethicists assert there’s always a right thing to do based on
moral principle, and others believe the right thing to do depend
on the situation – ultimately it’s up to the individual Ethics is
considered as "Science of Conduct.”
The need for a company to behave “ethically” is described in
terms of a company’s need to interact productively with its
stakeholders.

33. What are Business Ethics?
Business Ethics means conducting all aspects of business
and dealing with all stakeholders in an ethical manner…
Attention to ethics in the work place sensitizes leaders and
staff to how they should act.
It may be safe to assume that ethics involves some hard
features, like duties and rights (most of them legal), that are
mandatory for all, and soft components, like values,
aspirations or best practices, that are desirable but not
compulsory and can vary from one organization and person
to the next.

34. 7 Principals of admirable
business
Be Trustful
Keep an open mind
Meet Obligations
Have clear documents
Become community involved
Maintain accounting control
Be respectful

35. Guidelines for managing ethics
at workplace
Recognize that managing ethics is a process
The bottom line of an ethics program is accomplishing preferred
behaviors in the workplace
The best way to handle ethical dilemmas is to avoid their occurrence in
the first place
Make ethics decisions in groups, and make decisions public, as
appropriate
Integrate ethics management with other management practices
Use cross-functional teams when developing and implementing the
ethics management program
Value Forgiveness

36. Benefits of Managing Ethics at
the Workplace
Attention to business ethics has substantially improved
society
Ethics programs help maintain a moral course in turbulent
times
Ethics programs cultivate strong teamwork and productivity
Ethics programs support employee growth and meaning
Ethics program are an insurance policy – they help ensure
that policies are legal
Ethics programs help avoid criminal acts “of omission” and
can lower fines

37. What is Corporate
Governance?
According to Cadbury Report (UK), 1992 “Corporate Governance is the
system by which companies are directed and controlled…”
According to Sir Adrian Cadbury, in Reflections on Corporate Governance,
Ernest Sykes Memorial Lecture, 1993 “…to do with Power and
Accountability: who exercises power, on behalf of whom, how the exercise
of power is controlled.”
According to Preamble to the OECD Principles of Corporate Governance,
2004 “Corporate governance involves a set of relationships between a
company’s management, its board, its shareholders and other stakeholders
...also the structure through which objectives of the company are set, and
the means of attaining those objectives and monitoring performance are
determined.”
According to SEBI (Kumar Mangalam Birla) Report on Corporate
Governance, January, 2000 “…fundamental objective of corporate
governance is the ‘enhancement of the long-term shareholder value while
at the same time protecting the interests of other stakeholders.”

38. History of Corporate
Governance
1951 Industries (Development and Regulation) Act as well
as the 1956Industrial Policy –A turn towards socialism
Exorbitant tax structure encouraged creative accounting.
The Industrial Finance Corporation of India, The Industrial
Development Bank of India and The Industrial Credit and
Investment Corporation of India– Source of finance
Minority shareholders and creditors in India remained
effectively unprotected in spite of a plethora of laws in the
books.

39. AFTER LIBERLIZATION
Setting up of SEBI
In December 1995, CII set up a task force to design a voluntary code of
corporate governance

40. Kumar Mangalam Birla committee recommendations
Board of Directors are accountable to shareholders.
Board controls are laid down code of conduct and accountable to shareholders for
creating, protecting and enhancing wealth and resources of the Company reporting
promptly in transparent manner while not involving in day to day management.
Classification of non-executive directors into those who are independent and those
who are not.
Independent directors not to have material or pecuniary relations with the
Company/subsidiaries and if had, to disclose in Annual Report.
Laying emphasis on calibre of non-executive directors especially independent directors.

41. What is Demographic Environment?
The demographic factors like gender or ethnicity of the market are
useful to segment the target population for impactful marketing. The
focus lies mostly on the people who are most likely to buy the product.
This ensures that the company does not waste money in people who
have no interest in buying the product