Fundamentals of Business Management-Part-4.ppt

Subject-Fundamentals of
Business Management
Unit-4
Trends in Management
Prepared by,
Dr.Pratibha A.Jagtap
Assistant Professor
Rajarambapu Institute of Technology,Rajaramnagar

Unit-4- Trends in Management
A) Business Ethics
B) Social Responsibility
C) Strategic Management

What is Responsibility?
• Responsibility is commitment between people, businesses or
organizations that must be adhered to and completed in order to
satisfy the terms of the commitment.
• It is considered a duty.
Responsibility is the state or fact of having a duty to deal with
something or of having control over someone.
(Adhere-to be abide by rules, principles)
(Commitment-promise, liable to do)
(Duty-one’s work)
4

Definition Of Responsibility
Responsibility-
A duty or obligation to satisfactorily perform or complete a task (assigned
by someone, or created by one's own promise or circumstances) that one
must fulfill, and which has a consequent penalty for failure.
Examples of Responsibility –
• Getting work done in time
• Taking care of children properly
• Paying rent
• Paying taxes
• Taking care of old people
• Doing study
5

Social Responsibility
• Social Responsibility is the duty to do
what is best for the good of society.
6

Auhtority vs.Responsibility
Authority
1.Meaning
It is the right of a superior to give orders
and instructions to subordinates.
2.Basis
It generally arises either from legal
provisions and formal contract.
3.Delegation
It can be delegated from a superior to a
subordinate.
Responsibility
1.Meaning
It is the duty or obligation of a
subordinate to perform an assigned
task.
2.Basis
It arises from superior subordinate
relationship.
3.Delegation
It cannot be delegated.
7

• Social Responsibility is an ethical framework which
suggests that an entity, be it an organization or
individual, has an obligation to act for the benefit of
society at large.
• Social Responsibility is a duty, every individual has to
perform so as to maintain a balance between the
economy and the ecosystems.
8
Entity-Something that has real existence

Definition of Social Responsibility
‘Social Responsibility is the personal obligation of
everyone as the acts for his own interests to assure
that the rights and legitimate(appropriate)interests
of all others are not impinged(disturbed).’
Prof.Koontz and O’Donell,
(impinged-to be forced)
(Legitimate-Legal)
9

Definition of Social Responsibilities
According to R. Joseph Monsen , there are four
stages for development of the concept of Social
Responsibilities.-
• Stage 1-Compliance of legal obligations
• Stage 2-Supply of Public Demands
• Stage 3-Forecasting of public expectations
• Stage 4-New creation for public expectations
10

Social Reformers Quotes for

Social Responsibility Quotes:
• “I am of the opinion that my life belongs to the whole community and as
long as I live, it is my privilege(special right) to do for it whatever I can. I
want to be thoroughly used up when I die, for the harder I work, the more
I live.”
~George Bernard Shaw
• “The impersonal(not personal) hand of government can never replace
the helping hand of a neighbor.”
• ~Hubert H. Humphrey
12

Social Responsibility Quotes:
“Each of us is a being in himself and a being in society, each of us needs
to understand himself and understand others, take care of others and
be taken care of himself.”
~Haniel Long
• “One is a member of a country, a profession, a civilization, a
religion. One is not just a man.”
• ~Antoine de Saint-Exupéry
13

Mahatma Gandhiji View for Social
Responsibility(Trusteeship)
• Trusteeship is a socio-economic philosophy that was propounded by Mahatma Gandhi . It
provides a means by which the wealthy people would be the trustees of trusts that looked
after the welfare of the people in general.
• Gandhi believed that the rich people could be persuaded to part with their wealth to
help the poor.
• Putting it in Gandhiji's words "Supposing I have come by a fair amount of wealth –
either by way of legacy, or by means of trade and industry – I must know that all that
wealth does not belong to me; what belongs to me is the right to an honourable
livelihood, no better than that enjoyed by millions of others. The rest of my wealth
belongs to the community and must be used for the welfare of the
community.“ (Gandhiji along with his followers, after their release from the prison
formulated a "simple" and a "practical" formula where Trusteeship was explained.)
14

Areas/Scope /Types Of Social Responsibilities
1.Responsibility towards self
2.Responsibility towards owners/shareholders
3.Responsibility towards employees
4.Responisibility towards customers
5.Responsibility towards creditors
6.Responsibility towards suppliers
7.Responsibility towards other business institutions
8.Responsibility towards local community/society
9.Responsibility towards govt.
10.Responsibility towards Depositors
11.Responsibility towards professional institutions
12.Responsibility towards world society.
15

1)Responsibility towards self(Business)
1.To direct and control the business efficiently by doing best
administration.
2.To provide the preference for privileges(advantage) in the public
interest.
3.To maintain image of professional management.
4.To take membership of professional institutions and to follow its code
of conduct.
5.To make the policies and to take the decisions in the purview of
‘Social Justice’.
6.To make the ‘safety-funds’ for future uncertainties or for
rationalization (improvement in efficiency)in the plant.
16

1)Responsibility towards self(Business)
7.To earn profit as a consideration of capital invested in the
enterprise.
8.To adopt new innovations, new machinery, new equipments,
and new working process for ‘work-culture’ in the institution.
9.To motivate healthy and fair competition for long-term
development and expansion of business itself.
10.To encourage the investigation for continuous reforms in
business activities to promote its capacity in national and
international markets.
11.To enter into new markets and not to create monopoly.
17

Areas/Scope /Types Of Social
Responsibilities
2.Responsibility towards owners/shareholders
1.To ensure safety of investment and must give the fair and
reasonable return on the capital invested by them.
2.To understand and to behave equally with shareholders.
3.To inform them for the progress of business.
4.Not to be fraudulent acts with shareholders and not to earn
secret profits.
5.Political and economic security for investment through a
stable govt.,good law and order situation and stable tax
policies and fiscal measures.
18

• To recognize ,appreciate and encourage for capabilities of the employees
• To issue the orders of promotions of employees according to their negotiations.
• To give the new occasions for personality development to them ,by encouraging
their morale.
• To provide the compensation for accidents ,at the time of working in institutions
• To oblige and to give respect to the employee’s organization.
• To make a code of conduct for employees service conditions ,by creating cordial
relations with employees and their associations.
19

1. To pay fair and reasonable rates of remuneration to them.
2. To establish the work-standards and norms.
3. To recognize the social needs of personnel and provide participation in
management and profit regularly to them.
4. To arrange the training programmes to educate them for their self reliance.
5. To create a healthy work climate, improving working conditions and making the
work place safe.
6. To provide the labour welfare facilities to the extent possible.
7. To provide social security like pension, gratuity, insurance ,provident fund etc
.time to time and as per the revisions made by the govt. so on.
8. To delegate the work to the employees as per their interests.
20

Responsibilities
4.Responsibility towards customers
1. To increase productivity ,improve quality and reduce prices.
2. To avoid deceitful(duplicate,wrong) and false publicity gimmicks(trick,idea)
aimed at wooing(attracting, pursueing) the customers.
3. To ensure that the product supplied has not adverse effect on the
consumer’s health.
4. The management should not indulge(give way to) in anti-social like black
marketing and bribery(offer, tempt with, pay) etc.
5. To avoid misleading the consumers by improper advertisements.
6. To provide the ’After-sale-Service’ to the customers.
7. To provide an opportunity for being heard and to redress all kinds
of the complaints.
21
Continued………………..

4.Responsibility towards customers
8. To take accurate steps to remove the
imperfections in the distribution system of the
organization.
9. To provide products and services which can
satisfy the needs of various classes of customers.
10.To ensure regular and adequate supply of goods
during the period of shortage.
22

Responsibilities
5.Responsibilities towards creditors
1. To provide the fair and faithful information regarding the financial
health of organization.
2. To pay timely the principal amount and interest of loan to the
creditors.
3. To determine fair terms and conditions for getting the loans.
4. To maintain the cordial(warm and healthy) relations with creditors.
5. To comply the business ethics.
6. Not to misuse the amount of finance.
7. To protect and prevent the property pledged for loans.
8. To make secrets about the creditors.
23

6.Responsibilities towards Suppliers
1. To ensure a reasonable price for the articles supplied by them.
2. To make prompt payment within the time limit of contracts.
3. To motivate for improvements in the quality of the articles or
goods/raw materials.
4. To make and maintain the healthy competition in between the
suppliers.
5. To give the occasion to the suppliers for innovative raw material.
24

Responsibilities
7.Responsibility towards other business institutions
1. To make and maintain the healthy competition and not to
critisize to the another businessmen.
2. To co-operate in between the public and private sector.
3. To do efforts for total industrial developments.
4. Not to misuse of ‘Trade-Informations’ of the market.
5. To follow the code of conduct as possible as.
6. Not to fluctuate the prices artificially by speculation
activities.
7. Not to use the brand and trademark of other business.
25

Responsibilities
1. To take the steps to conserve scare resources and developing
alternatives whenever possible.
2. To inform the community about the company’s activities ,problems
and its contribution towards the society.
3. To provide safe living life with good housing and efficient
transportation.
4. To contribute for research investigation, innovations and
development of community
5. To promote socio-cultural institutions like schools ,hospitals ,sports,
religious institutions and rest-houses/retiring rooms etc.
26
Continued………….

6. To help the weaker sections and to develop the backward areas of
the society.
7. To take appropriate steps to prevent environmental pollution and
to preserve the ecological and physical balance.
8. To participate in welfare activities of the society as contributing to
the national effort to build-up a better community.
27

Areas/Scope /Types of Social
Responsibilities
9.Responsibilities to the govt.-
1. To pay the taxes within the time with honesty and loyalty as a good
citizen.
2. To follow up the Acts and Laws relating to business in the benefits of the
public.
3. To follow the fair trade policies and practices and discourage all kinds of
unfair trade activities.
4. Not to misuse the relations with the political parties by giving the
bribery to the officials.
5. To help the govt. to prevent the red-tapism(excessive) and economic
uncertainties.
6. To act as per the govt. policies so that the goals of economic planning
may be achieved timely.
• Red tapism-excessive regulation or rigid conformity
28

Areas/Scope /Types of Social Responsibilities
10.Responsibilities towards Depositors
1. To safeguard the money deposited by the investors in their
different accounts.
2. To pay regular interest on their amount.
3. To create a system of drawing the amount so that a customer
can draw his/her money from his account easily.
4. To call the deposits more and more, attractive schemes of
savings must be introduced, time to time to gain the capital
for development of the organization.
29

11.Responsibilities towards Professional
Institutions
1. To accept membership of professional institutions of
compliance of code of conduct.
2. To take part in seminars, conferences and meetings to
represent the valuable ideas for development of business.
3. To provide employment for those persons who have passed
and trained by these institutions.
4. To provide economic assistance and charity to the
professional institutions.
5. To assist in research and investigation
30

12.Responsibilities towards World
Society
1. To co-operate the businessmen of alien-friend countries(foreign).
2. To buy and sell the goods on fair and reasonable rates in international
markets.
3. To establish the business in under-developed and undeveloped countries.
4. To make healthy competition with foreign businessmen.
5. To exchange the newly technical know-how to each other.
6. To comply the political and mercantile rules and regulations of concerned
countries.
7. Not to interface the economic and political policies of other countries,
also not to effect adversely the socio-cultural values of them.
8. To follow the ethics and code of conduct by multinational corporations in
the business transactions.
31

Corporate Social
Responsibilities
(CSR)

New concept of Social Responsibility-
Corporate Social Responsibilities(CSR)
• Concept became popular in the 1960s
• CSR is one of the newest management strategies
where companies try to create a positive impact on
society while doing business.
• Corporate Social Responsibility refers to doing
business in ways that benefit, rather than harm society
and the environment.
33

Definition of Corporate Social
Responsibility
“CSR is about how companies manage
the business processes to produce an
overall positive impact on society.”
34

CSR Management:
Plan, Do, Check, Act method
Plan
• Consult stakeholders
• Establish code of conduct
• Set targets
Do
• Establish management
systems and personnel
• Promote code compliance
Check
• Measure progress
• Audit
• Report
Act
• Corrective action
• Reform of systems
35

CSR is also known as-
• Sustainable Development
• Corporate Citizenship
• Triple Bottom Line
• Business Ethics
• Sustainable Business Practices
36

General Goals of CSR
• Eradicate extreme poverty and hunger.
• Achieve universal primary education.
• Promote gender equality and empower women.
• Reduce child mortality(death).
• Improve maternal health.
• Combat(fight) HIV/ AIDS, Malaria & other
fatal(harmful) diseases.
• Ensure environmental sustainability.
• Develop a global partnership.
37

Types of CSR
1.Ethical CSR
2.Altruistic(selflessness) CSR
3.Strategic CSR
• Altruistic(selflessness)
• Philanthropy
• Philanthropy means "love of humanity" in the sense of caring, nourishing, developing and
enhancing "what it is to be human" on both the benefactors' (by identifying and exercising their
values in giving and volunteering) and beneficiaries' (by benefiting) parts.
38

Types of CSR
1.Ethical CSR
It’s about the responsibility to avoid harms or social injuries. Legal and ethical requirements that a
business must fulfill.e.g. Installing Pollution control equipments ,getting license for business
2.Altruistic(selflessness) CSR
Contributing to the common good at the possible expenses of the business for
altruistic(selflessness),humanitarian or philanthropic(charitable) causes. e.g. Organizing Fund
raising event for a local charity such as a raffle and a Food stall/Exhibition
3.Strategic CSR
It’s about firm’s social welfare responsibilities that benefit both the corporation and
stakeholders. e.g. A gym is installed for staff to use during their lunchtimes and flexible
working times.,
the company sponsors scholarships at a local college for a student to study relevant skills, with
the offer of a work placement at the company.
• Altruistic(selflessness)
• Philanthropy
• Philanthropy means "love of humanity" in the sense of caring, nourishing, developing and enhancing "what it is to be
human" on both the benefactors' (by identifying and exercising their values in giving and volunteering) and beneficiaries'
(by benefiting) parts.
39

BENEFITS OF CSR
 Increased employee loyalty and retention.
 Increased quality of products and services .
 Increased customer loyalty.
 Increased reputation and brand image.
 Greater productivity and quality.
 Reduced regulatory oversight .
 Access to capital and market.
 Product safety and decreased liability.
 Less volatile(changeable/flexible) stock value.
 Enhanced corporate image.
 Increased ability to attract, motivate and retain
employees.
 Increased appeal to investors and financial
analysts.
40

TRIPPLE BOTTOM LINE CONCEPT
OF CSR
• Economic Responsibility(Profit).
• Social Responsibility (People).
• Environmental Responsibility( Planet).
42

Triple Bottom Line
 The phrase was coined by John
Elkington in the year 1998 in his
book ’Cannibals with Forks: the Triple
Bottom Line of 21st Century Business’.
 The concept of TBL states that a
company's responsibility lies
with stakeholders rather
than shareholders.
 In this case, "stakeholders" refers to
anyone who is influenced, either directly
or indirectly, by the actions of the firm.
44

TRIPPLE BOTTOM LINE CONCEPT OF CSR
1.Economic Responsibility(Profit)
 Profit Generation, Economic Growth and Asset
Creation.
 Economic impact through business processes
such as outsourcing, knowledge innovation and
social investments ,Intellectual property rights-
patents, and trademarks etc.
45

2. Social Responsibility (People)
 Labor rights: Freedom from slave, forced child labor, non-
discrimination, equal opportunities, minimum wages ,health &
safety.
 Right to work :Protection against unjustified dismissals,
vocational training /guidance.
 Right to hold opinions :Freedom of expression, thought,
conscience and religion.
 Right to Privacy: Drug testing, Personal information,
Surveillance(monitoring attitude, behaviour) etc. Cultural
rights.
 Rights to take part in political life.
 Right to family life
46

3.Environmental Responsibility( Planet).
 "Planet" (Natural Capital) refers to sustainable
environmental practices.
 Do no harm and minimize environmental
impact.
47

Part-C
Strategic Management
Concept, Levels of Strategy,
Different type of Strategies.
48

What is Strategy?
The word ‘Strategy’ is derived from Greek word
‘Strategia’ which means generalship
i.e. the art or duties of exercising command of a
major military formation or formations
Strategy-actual direction of military force.
Strategy means course of action which is of vital,
pervasive or continuing importance to an
organization as a whole.
49

What is Strategy?
 Every organization establish business
strategies that are designed to support
their mission, vision and achieve goals
specific to their market, business and
industry.
 Business leaders who take the time to
analyze and understand their market,
industry and the external environment and
accordingly develop strategies that are
most likely to promote business success.
 There are a variety of types of strategies
that businesses may apply.
50

What is Strategy?
Strategy consists of making choices among
alternative action programmes, commitment to
specific product markets, competitive moves and
on the part of the managers to achieve
organizational goals.
51

Examples of Strategies
Ch 1 -52
• Geographic Expansion
• Diversification
• Acquisition
• Retrenchment
• Liquidation
• Joint venture

Examples of Strategy
 LG Electronic India Ltd. signed a MOU with Maharashtra
Govt. to expand manufacturing facility at Pune for Rs.900
crores.
 Bharat Heavy Electrical Ltd.(BHEL) is now planning to
expand its range to 800 MW supercritical power projects.
 Maruti Udyog slashed (reduced))the price of maruti-800 by
Rs.16,000 in small car segment drastically.
53

Strategic Management-Definitions
Strategic Management is a stream of decisions
and actions that lead to the development of an
effective strategy or strategies to help to
achieve corporate objectives.’
Glueck
Strategic Management is the formulation and
implementation of plans and carrying out of
activities relating to the matters ,which are of
vital, pervasive or continuing importance to the
total organization.
Sharplin
54

Defining Strategic Management
 Analysis
 goals
 Internal and external environment of the firm
 Strategic decisions
 What industries should we compete in?
 How should we compete in those industries?
 Actions
 Allocate necessary resources
 Design the organization to bring intended strategies to
reality
1-55

Peter Drucker: --
Think through the overall mission of a business.
Ask the key question: “What is our
Business?”
Ch 1 -56
Prime Task of Strategic Management

The Strategic-Management Model
Where are we now?
Where do we want to go?
How are we going to get there?
1-57

Comprehensive Strategic Management Model
Ch 1 -58
External
Audit
2
Internal
Audit
3
4
Long-Term
Objectives
4
Generate,
Evaluate,
Select
Strategies
5
Implement
Strategies:
Mgmt Issues
6
Implement
Strategies:
Marketing,
Fin/Acct,
R&D
7
Measure &
Evaluate
Performance
8
Vision
&
Mission
1

Strategists –Various Job Titles for Strategist
• Chief Executive Officer (CEO)
• Chief Strategy Officer (CSO)
• President
• Owner
• Board Chair
• Executive Director

Levels and Types of strategy
Levels of Strategy Types of strategy
Corporate Level Corporate Strategy
Business Level Business Strategy
Operating Level Operational Strategy

1.Corporate Level Strategy
 It is action plan of the company i.e.-What the company wants to
achieve as a whole.
This level seeks to answer to the questions like-
 What is the purpose of the organization?
 What image should the organization projects?
 What are the deals and philosophy of the organization?
 How can the organization's resources be best utilized to fulfill
corporate purposes.?

2.Business Unit Level Strategy
• It covers resource allocation among business
units as .e.g. Production, Market operations
• This strategy is built to achieve the objectives
that are in line with the company objectives.

3.Functional Strategy Level
• It involves decision making about particular
functional sections such as administration,
purchase, store ,finance etc.

What is Ethics?
• The word’ Ethics’ is derived from
greek Word’ ethikos’ ,which has
come from the word’ ethos’, which
means character or manners.
• Ethics is thus said to be the science
of morals, moral principles,
recognised rules of conduct.

What is Ethics?
• Character(स्वभाववृत्ती, शील, व्यक्तिमत्व)
of a man is expressed in terms of his
conduct(Behaviourवर्तणूक.)
• Conduct of a person is a series of actions,
which when taken together, can be termed as
‘good’ or’ bad’, ’right’ or ‘wrong’, ’moral’ or
‘immoral’.

Business Ethics
• Thus, ’right', 'wrong’, ’good’ ,’bad’, ’moral’
,immoral’ are termed as Moral Judgements.
• Moral Judgments requires moral standards
by which, we judge human
conduct.(Behaviour).
• Thus, Ethics can also be termed as the
science of a person expressed as right or
wrong conduct or action.

What is Business Ethics?
• Business Ethics is nothing but the application of
ethics in business.
• Business Ethics are moral principles that guide the
way a business behaves.
• Business Ethics include practices and behaviors that
are good or bad in business.
69

What is Business Ethics?
Business Ethics represent the
moral duty of an organization
towards its employees, to their
customer/ clients and wider society.

Managerial Dilemmas and Business Ethics
Many managerial decisions have ethical
implications and these decisions give rise to
managerial dilemmas.
Many times ,managerial choices represent
Managerial Dilemmas between Profit
Consideration(commercial concern) and social
consideration(Welfare concern).

Managerial Dilemmas and Business
Ethics
Examples-1
Suppose there is big loss to business due to fire and also employees are
injured and died .
Here ,business has to suffer financial loss as well as talent loss.
Dependants/Survivors of injured or died employees may face a trauma in
their life due to financial as well as mental disturbances.
Organization can assist employees family either by way of financial
support or providing employment to dependants.
Thus ,their trauma(an emotional/Physical wound or shockआघार्) and
upheaval (उलथापालथ)is kept at a minimum.

Example-2
Adopting advanced technology for better life
is a ethical way of business.
But conventional /traditional businesses get
affected and face problems of earning and
survival.
e,g, If bridge is constructed ,boatman get
threatened as suppose his occupation is to
transport people across the local river.

• Example-2
• However, consideration should also be given to see
whether alternative means of arrangements can be
made so that people are not unduly disturbed or that
their trauma(an emotional/Physical wound or
shockआघार्) and upheaval (उलथापालथ)is kept at a
minimum.
In this case of the boatman ,an ethical and effective
solution lies in providing him with alternative employment
on the bridge itself –as a security man ,toll tax collector
etc.
• Note: Upheaval -a sudden big change, especially one that causes a lot of trouble

Approaches to Ethics In Management
• 1. Consequence-Based Approach
• 2. Moral Rights Approach
• 3. Social Justice Approach

Approaches To Ethics In Management
1. Consequence-Based Approach
• In this approach, managers analyze the potential options before taking a specific
action. Managers check their decisions as consequences.
• e.g. An organisation can generate more revenue from donations by organising
an event in a city. It can be an adventure programme or competition such as
boxing, but it will have a harmful effect on a number of residents. They might
fear noise pollution or harm from competitors or loss of property during the
programme.
• Here, the manager would look at this event from a cost-benefit viewpoint.
• He will conclude that most people in the group would appreciate this activity and
that the company would make more money from providing the programme.
• The manager will also ignore the neighbours concerned about potential damage
and noise.
• It will bring more money to the organisation. But the disappointed residents
could sue for property damage. Moreover, it might lead to an expensive case for
the organisation.

• 2. Moral Rights Approach
• In this strategy, managers adopt a moral code that takes care of natural and moral rights.
• It includes the right to speech, life, and protection, as to express emotions, etc.
• The moral rights approach includes helping coworkers with challenges they may have
• E.g., a manager may see that it is difficult for some of the workers to engage in
official training. It might be because they lack the necessary skills. Or, they
might have a different challenge in participation. Some might even have a
financial crisis.
• Managers with the moral rights approach should determine specific
responsibilities. They should help group members who are facing issues.
• One clear advantage of this approach is supporting the disadvantaged person.
The manager can make some reasonable settings for the same. The downside
is that it may put the disadvantaged in the limelight. It will make them feel
unjust.

3. Social Justice Approach
• Its about equality and fairness. No one is discriminated against based
on caste, religion or gender. But differences are justified based on
skills or performance.
• E.g., Workers belonging to any gender, with the same abilities are
equal.

Perspectives of Business Ethics
• 1.Corporate Culture-Building ethical standards in
business
• 2.Strategy and Performance-Functional Strategy,
Business Strategy, Corporate Strategy
• 3.Individual Characteristics-Build trust, No biasness,
No politics, Do mutual help always, Related to society
and environment, Set himself as ideal.
• 4.Leadership-Lead as a Guide ,Director for proper co-
ordination
• 5.Environment-Ethical attitudes of top management,
Building as ethical culture, Socially responsible to all
parties concerning with a company
79

Fundamentals of Business Management-Part-4.ppt

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