Business environment ppt on social responsibility covering a vast part of the subject

1. SOCIAL RESPONSIBILITY OF
BUSINESS

2. ⦁ Social responsibility is an ethical or ideological
theory that an entity whether it is a government,
corporation, organization or individual has a
responsibility to society.
⦁ While primarily associated with business and
governmental practices, activist groups and
local communities can also be associated with
social responsibility, not only business or
governmental entities.

3. ⦁ Corporate social responsibility (CSR, also called corporate
responsibility, corporate citizenship, and responsible
business) is a concept whereby organizations consider the
interests of society by taking responsibility for the impact
of their activities on customers, suppliers, employees,
shareholders, communities and other stakeholders, as well
as the environment.
⦁ This obligation is seen to extend beyond the statutory
obligation to comply with legislation and sees
organizations voluntarily taking further steps to improve
the quality of life for employees and their families as well
as for the local community and society at large.

4. • Social responsibility is voluntary; it is about going above
and beyond what is called for by the law (legal
responsibility).
• Social responsibility means eliminating corrupt,
irresponsible or unethical behavior that might bring harm
to the community, its people, or the environment before
the behavior happens.
• The shareholders, suppliers of resources, the consumers,
the local community and society at large are affected by
the way an enterprise functions. Thus a business
enterprise should be able to strike a balance between
these divergent groups.
.

5.  There has been greater consensus around the fact that the
business enterprise which makes use of the resources of
society and depends on society for its functioning, should
discharge its duties by enhancing the overall welfare of
society
 The nature of social responsibility can be classified into:
⦁ Manner in which a business carries out its own activity.
⦁ Welfare activity that it takes upon itself as an additional function

6. Businesses can use ethical decision making to
strengthen their businesses in three main ways
⦁ To use their ethical decision making to increase
productivity. This can be done through programs that
employees feel directly enhance their benefits given
by the corporation, like better health care or a better
pension program.
⦁ One thing that all companies must keep in mind is
that employees are stakeholders in the business.
They have a vested interest in what the company
does and how it is run.
⦁ When the company is perceived to feel that their
employees are a valuable asset and the employees
feel they are being treated and such, productivity
increases.

7. CLASSICAL AND CONTEMPORARY
VIEWS

8. Classical view
• The classical view is best expressed in terms of the work of the economist
Milton Friedman who believed it was wrong for corporate officials to
extend their social responsibilities beyond serving the interests of their
shareholders.
• Friedman said:
“There is one and only one social responsibility of business – to use its
resources and to engage in activities designed to increase its profit so long
as it stays within the rule of the game, which is to say, engages in open and
free competition without deception and fraud.”

9. Contemporary view
• Business is an ecological one according to which business is an integral
part of a society to serve social purposes.
• Business is a social institution performing social mission
• It have a broad influence on the way people behave and work

10. According to Steiner and Steiner
• Each business must take into account the situation which it finds
itself in meeting stakeholder expectations.
• Business is an economic entity and cannot jeopardize its
profitability meeting social needs.
• Business should recognize that social good benefit to all.

11. • Directly related to social power to influence outcomes.
• Related to size of company and to thee industry
• Should tackle only social problems in which it has competence.
• Business must assume its share of the social burden and be willing to
absorb reasonable social costs.

12. SOCIAL ORIENTATION
OF BUSINESS

13. SOCIAL RESPONSIBILITY
MODLES
• There are mainly three models which describe evolution and extent
of social orientation of companies.
• Carroll’s model
• Halal’s model
• Ackerman’s model

14. Mode
l
• Corporate social responsibility is the entire range of obligations
business has to society
• A firm has the following four categories of obligations of corporate
performance
• Economic
• Legal
• Ethical
• Discretionary

15. William E Halal’s
model
• A firm can only attempt to unite the diverse interest of various social
groups to form a workable coalition engaged in creating value for
distribution among members of the coalition. Beyond a certain level
of economic activity ,the social issues at stake may become
conflicting.

16. Ackerman’s
Mode
l
• There are three phases in development of the social responsiveness
of a company
• First phase: top management recognizes the existence of a social
problem which deserves the company’s attention and acknowledges
the company’s policy towards it by making an oral or written
statement

17. • Second phase: company appointing staff specialists or external
consultants to study the problem and suggest way of dealing with it
• Third phase: Implementation of social responsibility programmes

18. EXTENT OF SOCIAL ORIENTATION AND
INVOLVEMENT
• Extent of social orientation and involvement of companies is classified
into following categories
• Anti-social
• Indifferent
• Peripheral
• Socially oriented
• Committed and very active

19. FACTORS AFFECTING SOCIAL
ORIENTATION
1.Promoters and Top Management
2.Board of Directors
3. Stake Holders and Internal Power
Relationship
4.Societal Factors
5.Industry and Trade Association
6.Government and Laws
7.Political Influences
8.Competitors
9Resources
10.Ethical Influences

20. 1.promoters and Top Management:
• The value and vision of Top management and promoters is one of the
very important factors that influence the corporate social responsibility
2.Board of directors:
• Board of directors decides major policies and resource allocation of a
company

21. 3.Stakeholders and internal power relationship:
• A firm can only attempt to unite the diverse interest of various social
groups to form a workable coalition
4.Societal factors:
• It is influenced by a certain characteristics of the society and general
attitude and expectation of the society regarding social responsibility of
business

22. 5. Industry and trade associations:
• It influence the behaviour of the firm by establishing professional and
ethical codes and norms education and collective decisions
6.Government and laws:
• Laws are society’s codification of right and wrong .business shall play the
rules of the game .

23. 7.Political influences:
• Pressure exerted by special interest groups in society and media to
control business practices .eg, Ngo’s like environmentalist, consumer
interest groups etc…
8.competitors:
• Social orientation of companies influence by the competitive forces .
some companies do good to the society and some are encourage to do
some thing.

24. 9.Resources:
• Social involvement of companies is also effected by the financial
position and the other resources of the company.
10.Ethical influences:
• Another factor influencing the social orientation is ethical decision
making and self-regulation of business conduct.

25. RESPONSIBILITIES TO DIFFERENT
SECTIONS

26. Social
responsibilities
of business
Share holders
Employees
Government
Society
Consumers
Local community

27. RESPONSIBILITY TO SHARE
HOLDERS
I. SHARE HOLDERS ARE THE REAL OWNERS OF THE COMPANY
II. PROFIT MAXIMIZATION AND WEALTH MAXIMIZATION
III. MAKING PROFIT AND DISTRIBUTE DIVIDENTS TO SHARE HOLDERS
IV. FINANCIAL INDIPENDANCE
V. INCREASING THE VALUE OF SHARES BY IMOROOVING IMAGE AND MARKET OF TH ECOMPANY

28. RESPONSIBILITIES TO
EMPLOYEES
I. PAYMENT OF FAIR WAGES
II. OFFERING BEST POSSIBLE WORKING ENVIORNMENT
III. ESTABLISHMENT OF WORKING STANDARDS AND NORMS
IV. PROVIDE SUFFICIENT LABOUR WELFARE AND RECREATIONAL PROVISIONS
V. PROPER TRAINING AND EDUCATION TO THE WORKERS
VI. OPPORTUNITIES FOR ACCOMPLISHMENT AND PROMOTIONS
VII. BENEFITS IN TERMS OF MONEY AND OTHERS
VIII. EFFICIENT GRIEVANCE HANDLING SYSTEM
IX. OPPORTUNITIES IN MANAGERIAL DECISION MAKING AS DESIRABLE

29. RESPONSIBILITY TO
CONSUMERS
 PROVIDE IMPROVED QUALITY GOOSDS AND
SERVICES,ENSURE EASLY AVAILABILITY AT
REASONABLE PRICE
II. PROVIDE ENOUGH SALES AND AFTER SALES SERVICE
CENTERS
III. ELIMINATE BLACK MARKETING, PROFITEERING BY
MIDDLEMEN AND ANTI-SOCIAL ELEMENTS
IV. PROVIDE SUFFICIENT INFORMATIONS AND
PRECUATIONS ABOUT THE PRODUCTS AND ADVERSE
THE USE
V. AVOIDE MISLEADING THROUGH ADVERTISEMENTS AND
OTHER WAYS
VI. UNDERSTAND THE NEEDS AND WANTS OF THE
CUSTOMERS AND MEET THEIR NEEDS
CONSUMER SATISFACTION IS THE KEY TO SATISFYING ORGANIZATIONAL GOALS
I.

30. RESPONSIBILITY TO
COMMUNITY
I. PREVENT ENVIORNMENTAL POLLUTION AND PRESERVE THE RESOURCES
II. REHABILATING THE PEOPLE DISPLACES BY THE OPERATON OF THE BUSINESS
III. ASSSISTING THE OVERALL DEVELOPMENT OF THE LOCALITY
IV. ENSURE CONSERVATION OF SCARCE RESOURCES
V. CONTRIBUTING TO RESEARCH AND DEVELOPMENT
VI. PROMOTION OF ANCILLARISATION AND SMALL SCALE INDUSTRIES
VII. MAKING POSSIBLE CONTRIBUTION TO THE SOCIETY
VIII. DEVELOPMENT OF BACKWARD AREA
IX. CONTRIBUTING TO THE NATONAL PRODUCTION

31. INDIA

32. INTRODUCTION
CSR is not a new concept in India. Ever since their inception,
corporates like the Tata Group, the Aditya Birla Group,and Indian Oil
Corporation, to name a few, have been involved in serving the
community. Through donations and charity events, many other
organizations have been doing their part for the society. The basic
objective of CSR in these days is to maximize the company's overall
impact on the society and stakeholders. CSR policies, practices and
programs are being comprehensively integrated by an increasing
number of companies throughout their business operations and
processes. A growing number of corporates feel that CSR is not just
another form of indirect expense but is important for protecting the
goodwill and reputation, defending attacks and increasing business
competitiveness.[6]

33. Companies have specialised CSR teams that formulate policies,
strategies and goals for their CSR programs and set aside
budgets to fund them. These programs are often determined by
social philosophy which have clear objectives and are well defined
and are aligned with the mainstream business. The programs are
put into practice by the employees who are crucial to this process.
CSR programs ranges from community development to
development in education, environment and healthcare etc.[7]

34. A more comprehensive method of development is adopted by
some corporations such as Bharat Petroleum Corporation
Limited, Maruti Suzuki India Limited. Provision of improved
medical and sanitation facilities, building schools and houses, and
empowering the villagers and in process making them more self-
reliant by providingvocational training and a knowledge of
business operations are the facilities that these corporations focus
on. Many of the companies are helping other peoples by providing
them good standard of living.
Also, corporates increasingly join hands with non-governmental
organizations (NGOs) and use their expertise in devising
programs which address wider social problems.
EXAMPLE

35. CSR has gone through many phases in India. The ability
to make a significant difference in the society and improve
the overall quality of life has clearly been proven by the
corporates. Not one but all corporates should try and bring
about a change in the current social situation in India in
order to have an effective and lasting solution to the social
woes . Partnerships between companies, NGOs and the
government should be facilitated so that a combination of
their skills such as expertise, strategic thinking, manpower
and money to initiate extensive social change will put the
socio-economic development of India on a fast track.[8]

36. ARGUMENT FOR AND AGAINST SOCIAL
INVOLVEMENT

37. ARGUMENT FOR SOCIAL
RESPONSIBILITY
•Public Image: Social responsible firm gain more
customers and employees are motivated
•HANDLING GOVERMENT REGULATION:
Government seeks to regulate business in public
interest.
•PREVENTION IS BETTER THAN CURE: problems with
labour union should be handled tactfully

38. •Stock holders interest: social responsibility will improve
the price of business’s stock in the long run the stock market
will view the socially responsible company as less risky and
open to public attack there for it will award it’s stock a higher
price earning ratio
•Possession of resources : business has the financial
resources, technical experts and managerial talent to provide
support to public and charitable project that need assistance
•Better environment: involvement by business can solve
difficult social problems those creating better quality of life
and more desirable community in which to attract a and hold
skilled employees

39. ARGUMENTS AGAINST
SOCIAL RESPONSIBILITY
•Profit maximization is the ultimate goal: since business
operates in a world of poverty and hunger, the economic
efficiency of business in the sole priority
•Lack of social skills: business people do not possess social
skills to solve social problems
•Social over head cost: costs on social responsibility will not
immediately benefits the business
• Lack of board support

40. COST: many socially responsible activities
do not pay their own way. Some one has
to pay this cost . Business must absorb
this cost or pass the on to consumer in
higher prices
Too much power: business already one of
the most power full institution in our
society . If it pursued social goals, it would
have even more power. Society has given
business enough power

41. SOCIAL
AUDIT

42. Social
auditing
• Social audit is a tool for evaluating how satisfactorily a company has
discharged its social responsibilities.
• Social audit enables the public as well as the company to evaluate the
social performance of the company.
• It is similar to that of financial auditing

43. Steps involved in social
auditing
• Identification of the firms activities.
• Assessment and evaluation.
• Measurement of the social costs and benefits.
• reporting

44. Objectives and benefits of social
auditing
objectives
• to evaluate the social dimension
of the performance of the
company.
• Take measures to improve the
social performance of the
company on the basis of audit.
benefits
• Social audit increases the public
visibility of the organisation.
• It will help to boost the public
image of the company.

45. Methods of social
audit
• Social process audit
• Financial statement format
audit
• Micro macro social indicator
audit
• Constituency group audit
• Partial social audit
• Comprehensive audit
• Corporate rating approach
whether objectives met
attitude
total

46. Obstacles to social
audit
• being a new concept, social audit is yet to gain wide appreciation and acceptance.
• A clear and generally well accepted methodology for conducting the social audits
is not available.
• There is no agreement as to the items to be included for social audit.
• There may be resistance within the company to social audit because of difficulty
involved in the task.
• There may be resistance because of the fear of unsatisfactory picture that may be
presented by the social audit.

47. Social auditing in
India
• Idea of social audit originated in USA centuries ago.
• But received attention recently.
• First comprehensive social audit was conducted by TISCO in 1980.
• It was done by board of directors of the company to examine the
extent to which the company has fulfilled its objectives.