Maharaja Surajmal Institute

(Affiliated to GGSIPU,Delhi)

Course: Department of Business Administration

Subject Module

on

BUSINESS ETHICS & CORPORATE SOCIAL

RESPONSIBILITY (BBA/BBA(B&I)

Module Contributors:

Mr. Paramveer Singh Dr Abheyender Singh

Asst. Prof. Asst. Prof.

1
 JULY 2021

Business Ethics and Corporate Social Responsibility

Module Objectives: This module consists of four units related to assessment of

Learning. Every unit is divided into sections and sub sections.

Unit-I: In this unit you will be acquainted with different concepts associated with
the business, business as a system, objectives of business. Students will be able
to understand the concept and scope of external environment affecting business
and introduction to business ethics and corporate social responsibility.

Unit-II: This unit will make you enable to understanding the different types of
business organisations, types of companies and concept of Start-ups.

Unit-III: In this unit students will get acquainted with the terms transformation,
success, progress and successful stories of Business Gurus.

Unit-IV: In this unit concepts of Corporate social responsibility, responsibility

of business towards different stakeholder groups, Corporate Governance,
Consumer Protection Act, Unethical Issues in Business will be understood.

2
 CONTENTS

S.No Unit Name Page Number

1 Introduction 4-38
2 Knowledge and Wisdom, Stress 39-62
Management, Dhrama & Karma Yoga
3 Understanding Progress & Success 63-75
4 Corporate Social Responsibility & 76-101
Corporate Governance
Additional MCQs 102-148
Additional Questions 149-168
References and Further Readings 168

3
 UNIT-I: INTRODUCTION

Learning Objectives of the unit:

After completing this unit, the students will be able to:

• Define the concept of value

• Explain the types and formation of values
• Understand values of Indian manager
• Relevance of Ethics and Values in Business
• Explore Ethos of Vedanta

VALUES AND ETHICS

Importance of Values And Ethics in Business Ethics is important not only in business but in all
aspects of life because it is the vital part and the foundation on which the society is build. A
business/society that lacks ethical principles is bound to fail sooner or later. According to
International Ethical Business Registry, “there has been a dramatic increase in the ethical
expectation of businesses and professionals over the past 10 years. Increasingly, customers,
clients and employees are deliberately seeking out those who define the basic ground, rules of
their operations on a day today….” Ethics refers to a code of conduct that guides an individual
in dealing with others. Business Ethics is a form of the art of applied ethics that examines
ethical principles and moral or ethical problems that can arise in business environment. It deals
with issues regarding the moral and ethical rights, duties and corporate governance between a
company and its shareholders, employees, customers, media, government, suppliers and
dealers. Henry Ford said, “Business that makes noting but money is a poor kind of business”.
Ethics is related to all disciplines of management like accounting information, human resource
management, sales and marketing, production, intellectual property knowledge and skill,
international business and economic system. As said by Joe Paterno once that success without
honor is an unseasoned dish. It will satisfy your hunger, but won’t taste good. In business world
the organization’s culture sets standards for determining the difference between good or bad,

4
right or wrong, fair or unfair. “It is perfectly possible to make a decent living without
compromising the integrity of the company or the individual, wrote business executive R.
Holland, “Quite apart from the issues of rightness and wrongness, the fact is that ethical
behavior in business serves the individual and the enterprise much better in long run.”, he
added. Some management guru stressed that ethical companies have an advantage over their
competitors. Said Cohen and Greenfield, “Consumers are used to buying products despite how
they feel about the company that sells them. But a valued company earned a kind of customer
loyalty most corporations only dream of because it appeals to its customers more than a
product”. The ethical issues in business have become more complicated because of the global
and diversified nature of many large corporation and because of the complexity of economic,
social, global, natural, political, legal and government regulations and environment, hence the
company must decide whether to adhere to constant ethical principles or to adjust to domestic
standards and culture. Managers have to remember that leading by example is the first step in
fostering a culture of ethical behavior in the companies as rightly said by Robert Noyce, “If
ethics are poor at the top, that behavior is copied down through the organization”, however the
other methods can be creating a common interest by favorable corporate culture, setting high
standards, norms, framing attitudes for acceptable behavior, making written code of ethics
implicable at all levels from top to bottom, deciding the policies for recruiting, selecting,
training, induction, promotion, monetary / non-monetary motivation, remuneration and
retention of employees. “Price is what you pay. Value is what you get” – Warren Buffet. Thus,
a manager should treat his employees, customers, shareholders, government, media and society
in an honest and fair way by knowing the difference between right or wrong and choosing what
is right, this is the foundation of ethical decision making.

REMEMBER: GOOD ETHICS IS GOOD BUSINESS. “Non-corporation with the evil is

as much a duty as is co-operation with good” – Mahatma Gandhi. Values and ethics in simple
words mean principle or code of conduct that govern transactions; in this case business
transaction. These ethics are meant to analyze problems that come up in day to day course of
business operations. Apart from this it also applies to individuals who work in organizations,
their conduct and to the organizations as a whole. We live in an era of cut throat competition
and competition breeds enmity. This enmity reflects in business operations, code of conduct.
Business houses with deeper pockets crush small operators and markets are monopolised. In
such a scenario certain standards are required to govern how organizations go about their
business operations, these standards are called ethics. Business ethics is a wider term that

5
includes many other sub ethics that are relevant to the respective field. For example there is
marketing ethics for marketing, ethics in HR for Human resource department and the like.
Business ethics in itself is a part of applied ethics; the latter takes care of ethical questions in
the technical, social, legal and business ethics. Origin of Business Ethics When we trace the
origin of business ethics we start with a period where profit maximization was seen as the only
purpose of existence for a business. There was no consideration whatsoever for non-economic
values, be it the people who worked with organizations or the society that allowed the business
to flourish. It was only in late 1980’s and 1990’s that both intelligentsia and the academics as
well as the corporate began to show interest in the same. Nowadays almost all organizations
lay due emphasis on their responsibilities towards the society and the nature and they call it by
different names like corporate social responsibility, corporate governance or social
responsibility charter.

In India Maruti Suzuki, for example, owned the responsibility of maintain a large number of
parks and ensuring greenery. Hindustan unlevel, similarly started the e-shakti initiative for
women in rural villages. Globally also many corporations have bred philanthropists who have
contributed compassion, love for poor and unprivileged. Bill gates of Microsoft and Warren
Buffet of Berkshire Hathaway are known for their philanthropic contributions across globe.
Many organizations, for example, IBM as part of their corporate social responsibility have
taken up the initiative of going green, towards contributing to environmental protection. It is
not that business did not function before the advent of business ethics; but there is a regulation
of kinds now that ensures business and organizations contribute to the society and its well
being. Nowadays business ethics determines the fundamental purpose of existence of a
company in many organizations. There is an ensuing battle between various groups, for
example between those who consider profit or share holder wealth maximization as the main
aim of the company and those who consider value creation as main purpose of the organisation.
The former argue that if an organizations main objective is to increase the shareholders wealth,
then considering the rights or interests of any other group is unethical. The latter, similarly
argue that profit maximization cannot be at the expense of the environment and other groups
in the society that contribute to the well being of the business. Nevertheless business ethics
continues to a debatable topic. Many argue that lots of organizations use it to seek competitive
advantage and creating a fair image in the eyes of consumers and other stakeholders. There are
advantages also like transparency and accountability.

6
SOURCES OF BUSINESS ETHICS

Ethics in general refers to a system of good and bad, moral and immoral, fair and unfair. It is a
code of conduct that is supposed to align behaviors within an organization and the social
framework. But the question that remains is, where and when did business ethics come into
being? Primarily ethics in business is affected by three sources - culture, religion and laws of
the state. It is for this reason we do not have uniform or completely similar standards across
the globe. These three factors exert influences to varying degrees on humans which ultimately
get reflected in the ethics of the organization. For example, ethics followed by Infosys are
different than those followed by Reliance Industries or by Tata group for that matter. Again
ethical procedures vary across geographic boundaries. Religion It is one of the oldest
foundations of ethical standards. Religion wields varying influences across various sects of
people. It is believed that ethics is a manifestation of the divine and so it draws a line between
the good and the bad in the society. Depending upon the degree of religious influence we have
different sects of people; we have sects, those who are referred to as orthodox or
fundamentalists and those who are called as moderates. Needless to mention, religion exerts
itself to a greater degree among the orthodox and to lesser extent in case of moderates.
Fundamentally however all the religions operate on the principle of reciprocity towards ones
fellow beings! Culture Culture is a pattern of behaviors and values that are transferred from
one generation to another, those that are considered as ideal or within the acceptable limits. No
wonder therefore that it is the culture that predominantly determines what is wrong and what
is right. It is the culture that defines certain behavior as acceptable and others as unacceptable.
Human civilization in fact has passed through various cultures, wherein the moral code was
redrafted depending upon the epoch that was. What was immoral or unacceptable in certain
culture became acceptable later on and vice versa. During the early years of human
development where ones who were the strongest were the ones who survived! Violence,
hostility and ferocity were thus the acceptable. Approximately 10,000 year ago when human
civilization entered the settlement phase, hard work, patience and peace were seen as virtues
and the earlier ones were considered otherwise. These values are still pt in practice by the
managers of today. Still further, when human civilization witnessed the industrial revolution,
the ethics of agrarian economy was replaced by the law pertaining to technology, property
rights etc. Ever since a tussle has ensued between the values of the agrarian and the industrial
economy! Law Laws are procedures and code of conduct that are laid down by the legal system
of the state. They are meant to guide human behavior within the social fabric. The major

7
problem with the law is that all the ethical expectations cannot be covered by the law and
specially with ever changing outer environment the law keeps on changing but often fails to
keep pace. In business, complying with the rule of law is taken as ethical behavior, but
organizations often break laws by evading taxes, compromising on quality, service norms etc.

CONCEPT OF VALUES, ETHICS & BEHAVIOR

Values are defined as perspectives about an appropriate course of action. If a person

values honesty, then he or she will strive to be honest. People who value transparency will
work hard to be transparent. Values are one important element that affects individual character
and behavior towards others. The relationship between values and behavior is intimate, as
values create a construct for appropriate actions.

Ethics is defined as a moral philosophy or code of morals practiced by a person or group of

people.

An example of ethics is the code of conduct set by a business.

Behavior is defined as acting in ways consistent with what society and individuals typically
think are good values.
Ethical behavior tends to be good for business and involves demonstrating respect for key
moral principles that include honesty, fairness, equality, dignity, diversity and individual
rights.

IMPORTANCE OF ETHICS

Most of us would agree that it is ethics in practice that makes sense; just having it carefully
drafted and redrafted in books may not serve the purpose. Of course all of us want businesses
to be fair, clean and beneficial to the society. For that to happen, organizations need to abide
by ethics or rule of law, engage themselves in fair practices and competition; all of which will
benefit the consumer, the society and organization.

1. Primarily it is the individual, the consumer, the employee or the human social unit of the
society who benefits from ethics. In addition ethics is important because of the following: 1.
Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs.
Every employee desires to be such himself and to work for an organization that is fair and
ethical in its practices.

8
2. Creating Credibility: An organization that is believed to be driven by moral values is
respected in the society even by those who may have no information about the working and the
businesses or an organization. Infosys, for example is perceived as an organization for good
corporate governance and social responsibility initiatives. This perception is held far and wide
even by those who do not even know what business the organization is into.

3. Uniting People and Leadership: An organization driven by values is revered by its

employees also. They are the common thread that brings the employees and the decision
makers on a common platform. This goes a long way in aligning behaviors within the
organization towards achievement of one common goal or mission.

4. Improving Decision Making: A man’s destiny is the sum total of all the decisions that he/she
takes in course of his life. The same holds true for organizations. Decisions are driven by
values. For example an organization that does not value competition will be fierce in its
operations aiming to wipe out its competitors and establish a monopoly in the market.

5. Long Term Gains: Organizations guided by ethics and values are profitable in the long run,
though in the short run they may seem to lose money. Tata group, one of the largest business
conglomerates in India was seen on the verge of decline at the beginning of 1990’s, which soon
turned out to be otherwise. The same company’s Tata NANO car was predicted as a failure,
and failed to do well but the same is picking up fast now.

6. Securing the Society: Often ethics succeeds law in safeguarding the society. The law
machinery is often found acting as a mute spectator, unable to save the society and the
environment. Technology, for example is growing at such a fast pace that the by the time law
comes up with a regulation we have a newer technology with new threats replacing the older
one. Lawyers and public interest litigations may not help a great deal but ethics can. Ethics
tries to create a sense of right and wrong in the organizations and often when the law fails, it is
the ethics that may stop organizations from harming the society or environment.

VALUES, ETHICS AND BEHAVIOR IN THE WORKPLACE

A work environment should strive to encourage positive values and discourage negative
influences that affect behavior. All individuals possess a moral compass, defined via values,
which direct how they treat others and conduct themselves. People who lack strong

9
or ethical values may participate in negative behavior that can hurt the organization. While a
company cannot do anything about the influences that shape a person's values and behavior
before hiring, the organization can try to influence employee behavior in the workplace.

FORMATION OF BEHAVIOR

Training programs, codes of conduct, and ethics committees can inform employees of the types
of behavior that the company finds acceptable and unacceptable. While these efforts will not
necessarily not change an individual's values, they can help them decide not to participate in
unethical behavior while at work. Managers must emphasize not only an
employee's responsibilities, but also what the organization expects with respect to values and
ethics. Ethics statements and vision statements are useful tools in communicating to employees
what the company stands for and why.

A system of punishments and rewards can also help foster the type of values the company
wants to see in its employees, essentially filtering behavior through conditioning. If people see
that certain behaviours are rewarded, then they may decide to alter their behavior and in turn
alter their values. In addition, a gap sometimes exists between a person's values and behavior.
This gap can stem from a conscious decision not to follow a specific value with a
corresponding action. This decision can be influenced by how deeply this value affects the
person's character and by the surrounding environment.

Culture is also largely relevant to how values shape behavior, as a given organizational culture
can create camaraderie and social interdependence. Conforming to the expectations and values
of the broader organization is a common outcome of organizations with strong ethos and vision.
Such an organization promotes passion and positive behavior in their employees. Of course, a
company's culture can work in both directions. Some industries are inherently competitive,
valuing individual dominance over other individuals (for example, sales, stock trading, etc.).
While some may view such a culture as objectively negative, it is subjectively useful for the
organization to instil and develop these values to create certain behaviours (such as hard work
and high motivation).

Values are life-style priorities. Since values lie behind the all the choices we make, it follows
they lie at the very core of the life we’ve created for ourselves through the choices we’ve made.
Thus, through values we express what is important in our life and, when we are true to our

10
values, the life-style we live is our expression of these values. By walking through the diagram
in Figure 1.1

If you know what values a person holds, you will have a general idea of what they want to do
in their life. For example, if a person’s highest priority value is Achievement/Success you
would expect them to be striving towards one or more goals and doing what ever they can to
achieve them. Likewise, if a person’s highest priority value is Research/Knowledge, you would
expect them to be in an occupation such as medical research, social research, etc.

From knowing the values alone, we cannot know how, specifically, the person is going to
behave. Some people, driven by their high priority value Achievement/Success, will do
anything it takes to achieve their goal – some athletes, for example, will take illegal drugs to
boost their chances of success. On the other hand, we all know people driven by the same value,
who do not cheat to win. Let’s now take the value, Research/Knowledge. If the person is a
medical researcher, we cannot know from the value alone if they undertake their research by

11
 experimenting, or not experimenting, on animals. Both examples on the previous page illustrate
there’s more to the picture than values. Because we live in a society, we cannot live our values
any way we want. The impact of how we live our values on other people and the environment
must be considered. This is where codes of behaviour (i.e. ethics, morals, norms of behaviour,
laws, and the like) come in. As the diagram in Figure 1.3 depicts, codes of behaviour spell out
how we are expected to live our values.

VALUES OF INDIAN MANAGERS

• Integrity. Honesty and integrity are the cornerstone of sustainable success.

• Willingness to take Risk. Leaders are not afraid of taking risks or making
mistakes

• Optimism and Enthusiasm.

• Commitment to Growth.

• Vision.
• Pragmatism.

• Responsibility

• Hard Work and Conscientiousness

12
BUSINESS ETHICS

Business ethics are moral principles that guide the way a business behaves. The same principles
that determine an individual’s actions also apply to business

Acting in an ethical way involves distinguishing between “right” and “wrong” and then making
the “right” choice. It is relatively easy to identify unethical business practices. For example,
companies should not use child labour. They should not unlawfully use copyrighted materials
and processes. They should not engage in bribery.

FEATURES OF BUSINESS ETHICS

1. Ethical Values: Business ethics is concerned with morality in business in today’s business
world, community firms is large part of society and its action is bond to have a direct impact
on the wellbeing and welfare of the society. Business affects society in terms of what
products it supplies. Therefore, it is necessary that business community conduct its activities
with self control, self check, and self scarifies .i.e. acting with less concern for yourself than
for the success of the joint activity. And keeping always in mind the interest of community at
large signifies ethical values.

2. Relative term: Ethics is a relative term in the concept of morality and immorality. It
differs from one individual to another or from society to society. What is moral to one may be
immoral to another.

3. Interest of society: Business ethics implies that business should first do good to the
society and then to itself. Business is an important institution and has a social responsibility
to protect the interest of all those groups who are directly or indirectly related to the
organization like employees, shareholders and consumers etc. to contribute to the success of
business.

4. Business social relationship: Business ethics set the terms and standards to understand the
societal relationship of business. It indicates what society expects from business and what it
thinks about the business.

5. Provides the framework: Like an individual, business is also bound by social rules and

13
regulations. Business is expected to restrict its activities within the limits of social, legal,
cultural, and economic environment.

6. Facilitates protection of social groups: Business ethics gives protection to consumers and
other social groups such as shareholders, employees and the society at large. Business should
give priority to social interest or social good. Such ethical approach creates good name, add
status to business and helps in its growth and expansion.

7. Not against profit making: Business ethics is not against fair profit making. However, it
is against making profit by cheating and exploiting consumers, employees or investors. It
supports expansion of business activities but by fair means and not through illegal activities
or corrupt practices.

8. Needs willing acceptance: Business ethics cannot be imposed by law or by force. It must
be accepted as self-discipline by businessmen. It should come from within. Businessmen
should go for ethical trade practices on their own and not by force of law.

IMPORTANCE OF BUSINESS ETHICS

Ethics concern an individual's moral judgements about right and wrong. Decisions taken within
an organisation may be made by individuals or groups, but whoever makes them will be
influenced by the culture of the company. The decision to behave ethically is a moral one;
employees must decide what they think is the right course of action. This may involve rejecting
the route that would lead to the biggest short-term profit.

Ethical behaviour and corporate social responsibility can bring significant benefits to a
business. For example, they may:

• attract customers to the firm's products, thereby boosting sales and profits

• make employees want to stay with the business, reduce labour turnover and therefore
increase productivity

• attract more employees wanting to work for the business, reduce recruitment costs and
enable the company to get the most talented employees

14
 • attract investors and keep the company's share price high, thereby protecting the
business from takeover.

Unethical behaviour or a lack of corporate social responsibility, by comparison, may damage

a firm's reputation and make it less appealing to stakeholders. Profits could fall as a result.

COMPONENTS OF A CODE OF ETHICS IN BUSINESS

The code of ethics is the set of behavioral rules employees should follow to ensure the
company's values are reflected in all business dealings. Regardless of the size of the business,
clearly defined codes and closely monitored transactions should keep your company from
violating laws and make it a place where employees feel comfortable doing the right thing.

Values

Business values typically are expressed in terms of how the company performs its day-to-day
interactions with suppliers, employees and customers. A primary objective of the code of ethics
is to define what the company is about and make it clear that the company is based on honesty
and fairness. Another commonly defined value is respect in all interactions, regardless of the
circumstances.

Principles

Principles are used to further support the business values by including operational credos
employees should follow. Customer satisfaction, business profitability and continuous
improvement are key factors in documenting business principles. Corporate responsibility to
the environmentally friendly use of natural resources is another business principle that often is
found in code of ethics.

Management Support

Manager support of the values and principles may be documented in the code of ethics. Open
door policies for reporting ethics violations can be included in the code, along with a process
to anonymously report any code of ethics issues. To reflect how seriously management
considers the code, some businesses display the code of ethics with management signatures in
prominent areas, such as the break room, where employees will see it on a daily basis.

Personal Responsibility

15
Another component is a statement regarding each employee's personal responsibility to uphold
the code of ethics. This may contain information regarding both the legal and moral
consequences if an employee violates the code. The requirement to report any violators is
normally a component of the ethics code's personal responsibility. This is meant to show that
it is not sufficient to merely adhere to the values and principles but to help ensure every
employee supports the code of ethics by reporting violators.

Compliance

Any laws or regulations may be referenced as rules to adhere to as part of daily business
interactions. Compliance to all financial reporting and any licensing requirements such as ISO
9000 by the International Organization for Standardization can be documented, along with the
expectation that all licenses will be maintained and legal regulations met.

Approaches to Business Ethics

philosophies, environment means humanity. Today’s ethics approaches note depending on

keeping human wants under pressure for the benefits of all human beings. By these words
environment includes not only men, but also animals, plants i.e., the nature. Ethics occurs by
relations of humans with themselves and their physical and social environment. Therefore, the
origin of the problems and solution is human. The philosophies note many approaches in these
relations. These approaches can be grouped into three groups:

– The human-oriented approach

– The living oriented approach
– The environment oriented approach.

Normative Ethics:- Ethics is a normative science. It means it lay down the norms or standard
of what is good and what is bad. It specifies what we ought to do and what we ought not to do,
in a certain situation. Normative ethics is the branch of philosophical ethics that investigates
the set of Questions that arise when we think about the question “how should one act, morally
speaking?” Normative ethics is the discipline that produces moral norms or rules as it end
product. Normative ethics prescribe moral behaviour. It is a branch of ethics concerned with
classifying actions as right and wrong, attempting to develop a set of rules governing human
conduct, or a set of norms for action.’

16
Traditionally, normative ethics (also known as moral theory) was study of what makes actions
right and wrong. These theories offered an overarching moral principle to which one could
appeal in resolving difficult moral decisions.

Normative ethical systems can generally be broken down into three categories: deontological,
teleological and virtue ethics. The first two are considered deontic or action-based theories of
morality because they focus entirely upon the actions which a Person performs. When actions
are judged morally right based upon their them consequences we have teleological or
consequentiality ethical theory. When actions are judged morally right, based upon how well
they conform to some set of duties; we have a deontological ethical theory.

Prescriptive Ethics:- Business ethics is a branch of ethics which prescribes standards of how
the business is to be carried out. It lays down guidelines for the company’s response and
accountability to its various stakeholders. It has to maintain a fine balance and take care of the
interest of the shareholders on one hand and other like the employees, suppliers, customers and
community at large on the other hand. All the stakeholders have different objective of what
they expect from the company and at times these objectives may be conflicting in nature.

Applied Ethics:- Applied ethics is a branch of ethics that deals with specific, often
controversial moral issues such as abortion, female feticide and infanticide, displacement of
tribal people due to huge hydro- electric projects, cloning, testing drugs on animals, etc.
Business too faces many controversial moral choices such as misleading advertising, insider
trading bribery, corruption etc.

Ethical theories lay down certain moral standards that provide a reference point for judging the
moral value of a decision. When applied to business, these theories should enable the manager
to distinguish between right and wrong and to make morally acceptable decision.

COMMON ETHOS IN INDIA

In spite of different outlooks developed by Indian communities, the following traits are
common throughout India:

(1) It is still generally a taboo in India for lovers or spouses to kiss or embrace each other in
public.

17
(2) Guests are always welcome, though to limited extent.

(3) Showing respects to parents, elders, teachers, etc.

(4) Offering donations to poor.

(5) God fearing — whatever may be the name of god.

(6) Marriage is considered to be a lifelong affair not only between two individuals but also
between two families.

(7) Children are well taken care of until they are married or even after that.

(8) Relationship is considered to be of permanent nature.

Characteristics of Indian Ethos

(1) Know Oneself: In Indian Ethos, a great emphasis is placed on knowing oneself. It is
emphasised that self is a part of supreme self "PARAM BRAHMA" or Supreme conscience.
Supreme Self is also known as Divine. It is also believed that divine qualities like integrity,
honesty, patience, loyalty, forgiveness, compassion, selfless service are within us. Only these
latent qualities in human beings are to be aroused through inner purification. This also indicates
that every human being has immense potential for development and therefore, he must strive
for excellence in the field of his choice. This results in inner motivation, and increases the
productivity, not only in personal life but also in the society and the organisation he serves.

(2) Self-realisation: Indian Ethos believe in individual development. Though all human beings
are part of Supreme Self, they have to tap their dormant potential. They have to act accordingly
and inculcate the divine qualities within themselves. Apart from higher productivity, it results
in better effectiveness, peace, balance and harmonious growth in all spheres of life. An
individual has different role to play in life: (i) for self — good mental and physical health, to
acquire power and prestige, to earn money, (ii) as father/mother, brother/sister, wife/ husband,
as a friend, relative, (iii) in office, as peer, junior, boss, (iv) for the society/nation, etc. Indian
ethos emphasise that each individual must have a balanced growth. An individual has to act to
realise all the goals which an individual has set for himself. It must be remembered that the
goals must lead to overall peace, and happiness.

(3) Self-management: Swami Vivekananda said: "If you cannot manage self, you cannot
manage others". Once selfrealisation comes, then self-management is easily achieved, because

18
it is said that once issues are identified, it is easier to find solutions to them. Self-management
also stresses not only on developing and managing skills, but also on all the inner divine
qualities lying dormant within us. It also emphasizes self-discipline and control. Accordingly,
the individual thinks last about himself. Self-management also implies to act voluntarily
accordingly to ethics and not by force or by circumstances. A self-managed person accepts the
total responsibility for whatever happens in his life. He looks at every opportunity as an
exciting and new life experience.

(4) Holistic Approach: Indian Ethos also emphasise holistic approach to life. It states that all
living beings — humans and other living objects, like animals, insects, etc., are part of Supreme
Soul. We must, therefore, live in harmony with each other.

(5) Team Spirit: The Verse "Om Sahana Vavatu, Sahnau Bhunaktu, Sahviryam Karvavahe,
Tejasvina Vadhitamastu, Maa Vidvisha Wahe" gives the essence of Indian Ethos for teamspirit.
The Verse means: "may He protect us, may He help us to enjoy, may we work together, may
our efforts be thorough and faithful, and may we never misunderstand each other".The
emphasis here is on team spirit. It suppresses I and believes in "We approach".

(6) Service Attitude: Indian Ethos believe in giving with humility. Service without ego is basic
to Indian Ethos. Indians believe that we are only means, actual giver is Supreme Soul and we
are grateful to the one who receives from us. Because he has given us a chance to have inner
peace. Giving itself gives us peace and we should not expect anything in return. This also
embodies the spirit of sacrifice or "Yagna" attitude.

(7) Spirit of Sacrifice: Indian Ethos believe in sacrifice for the sake of others. In the 21st
century, a person wants to acquire more and more for himself without bothering about others.
This results in unhealthy competition and people resort to unethical means to acquire wealth,
fame, position, power etc. Needs become greed and the persons start developing satanic
qualities, like anger, jealousy, hatred, etc. Organizational goals, which include family and
social goals, are not taken into consideration and are put at the back burner. Human technology
is misused to serve human ego. Indian Ethos demand that we should look from others'
perspective before we start fulfilling our needs, because all human beings are part of Supreme
Soul. Also, we must be responsible for our action. If failure comes to us, we must internalise it
and find out why we failed. If we succeed, we should give the credit to others, including God.
This is a part of our responsibility and it builds team spirit. The Spirit of Sacrifice is also in the

19
rituals of "Yagna",wherein we offer our choicest material and prayers to God and offer "Prasad"
to all the members of the community.

(8) Chitta Shuddhi (Purification of Mind): Indian Ethos believe in developing a pure mind,
which implies purifying emotions, feelings, impulses, etc., the things which are related to heart.
Christ has also said: "Blessed are those who are pure by heart". Medical mystic Thomas Kepis
states that a pure heart penetrates heaven and hell. Swami Vivekananda said that begin your
work with pure body and mind. Mind purification should be given preference over body.

(9) Unity in Diversity: In India, people from different religions have different rituals, customs
and beliefs. They have different lifestyles, yet they coexist in India because of holistic approach
that all human beings are a part of Infinite Self.

(10) Tolerance: Indians listen and understand others' point of view. They have respect for each
other. It is a common sight to see Church, Mosque, Temple, Gurudwara, etc. in the same
neighbourhood. Also, people from different religions take part in various functions and
festivals. Indians believe in "Live and Let Live".

(11) Peace: Basically, Indians are peace loving. Great Indians, like, Gautam Buddha, Mahavir
Swami, Mahatma Gandhi, Swami Vivekananda, etc. have advocated peace for human beings.
For many centuries, our scriptures have recommended Yoga (including Meditation and
Contemplation) for peace of mind. Peace is tolerance based and stems from love for all and the
idea of mutual coexistence.

(12) Humanity: On the basis of belief that all living beings are part of Supreme Self, Indians
have developed a humane approach to life.

(13) Cooperation and Mutual Trust: God has designed human being on the principle of
cooperation and thus, cooperation has become a way of life for a human being. If we look to a
man, his all the organs (namely, ears, eyes, mouth, nose, lungs, nerves, etc.) are designed to be
cooperative with each other and subserve the main purpose of keeping the human body healthy
and working properly. Each organ works on the basis of mutual trust and believes in giving.
Cooperation is working together, sharing the resources together, and getting the peace and
happiness. The benefits of cooperation are as follows:

(a) Promotes teamwork.

(b) Enables a person to view things from other's viewpoint.

20
(c) Makes one less self-centered by widening his area of concern.

(d) Brings in concept of 'US' and 'WE' in our mind and dissolve 'I' and ‘THEM'.

(e) Cooperation gives in happiness, everlasting peace, friendship, lots of love and relationship.

(14) Adopt and Adapt: Indian Ethos, right from earlier days, have adopted and adapted
various traditions and customs from various civilisations. Through this process of absorption,
Indian culture has become rich and survived much embarrassment.

VEDANTA MANAGEMENT

Vedanta is based on the philosophy of Upanishads. It is collection of moral precepts that aims
to guide an individual in attaining a state of spiritual divinity. Vedanta is derived from two
words, Veda (knowledge) and Anta (end). Vedanta means the culmination of knowledge. It is
the ancient Indian philosophy which answers the fundamental questions of life. It is the art of
relating to the world and enables to develop the intellect – the capacity to think, reason, judge
and decide.

Vedantic Management is based on the message from Bhagavad Gita that human beings are
responsible only for action and the results are given at HIS discretion. This statement is proved
repeatedly in our personal, social, political and professional life. It is impossible to guarantee
success in any field with 100%certainty. Western Management assumes that the managerial
talent is inadequate in case of failures. Similarly, it assumes that the success is the result of
hard work, careful planning and such mundane efforts. The fact remains that there is no
apparent linear relationship between efforts and results. Recognizing this truth, Vedantic
Management gives emphasize only on the process in which work is carried out. It does not
judge the performance based on the results. It is of course a difficult task to educate the
employee and give clarity on the goal and means. However, when it is done, there is nothing
more to be done to motivate the employee. He will perform to the best of his ability without
ever requiring any prompting from the organization. Vedantic Management prescribes that the
employees are compensated at industry standards and they are provided with a work
environment that is conducive for performing Karma Yoga. This will ensure that the employee
is retained in the organization. In such an environment, the performance of the individual will
continuously increase, without any expressed or implied demand .This phenomenon happens

21
because as a part of Karma Yoga, the employee is expected to increase his performance
continuously.

The basic features are

1. Ego: Becomes an impediment in achieving spiritual divinity. Dropping one's ego is
mandatory to achieve spiritual success. We should aim at identifying ourselves as infinite
spirit rather than with our body and mind
2. Truth: All actions and thoughts are directed at achieving the truth required for achieving
the ultimate goal of spiritual divinity.
3. Unselfishness: Emphasis on unselfish activities like love, compassion, sympathy, empathy
help us in reaching closer to truth and focussing on selfish ones takes us away from it.
4. Precepts: Become a means to achieve spiritual beneficial habits. They form patterns to be
followed/emulated rather specific goals to be attained.

Vedanta is considered fundamental to achieve spiritual success. We should strive to study

and incorporate its philosophy in our thoughts and actions.

Vedantic Management creates a win-win scenario in which the employees enjoy working for
the organization resulting in increased productivity. Quality of life will be improved since it is
independent of the material success. An organization following the principles of Vedantic
Management will be a great asset to the society since it opens up the possibility of merging

WORK ETHICS: Industry and Society are the two systems which interact with each other
and are interdependent. Society requires industry/business system which provides
manufacturing, distribution and consumption activities. It needs investment (capital input),
labor (input), supply (raw materials), production (industries, business organizations),
marketing and distribution (transport), and consumption (public, customer). A lot of
transactions (and interactions) between these sub-systems involving people are needed for the
welfare of the society. It is here, the work ethics plays an essential role.

Work ethics is defined as a set of attitudes concerned with the value of work, which forms the
motivational orientation. It is a set of values based on hard work and diligence. It is also a belief
in the moral benefit of work and its ability to enhance character. A work ethic may include
being reliable, having initiative, or pursuing new skills. The ‘work ethics’ is aimed at ensuring
the economy (get job, create wealth, earn salary), productivity (wealth, profit), safety (in
workplace), health and hygiene (working conditions), privacy (raise family), security

22
(permanence against contractual, pension, and retirement benefits), cultural and social
development (leisure, hobby, and happiness), welfare (social work), environment (anti-
pollution activities), and offer opportunities for all, according to their abilities, but without
discrimination. Workers exhibiting a good work ethic in theory should be selected for better
positions, more responsibility and ultimately promotion. Workers who fail to exhibit a good
work ethic may be regarded as failing to provide fair value for the wage the employer is paying
them and should not be promoted or placed in positions of greater responsibility. Work ethic
is not just hard work but also a set of accompanying virtues, whose crucial role in the
development and sustaining of free markets.

ETHICAL DECISION MAKING

An ethical decision is one that engenders trust, and thus indicates responsibility, fairness and
caring to an individual. To be ethical, one has to demonstrate respect, and responsibility.
Ethical decision-making requires a review of different options, eliminating those with an
unethical standpoint, and then choosing the best ethical alternative.

Ethical decision-making refers to the process of evaluating and choosing among alternatives in
a manner consistent with ethical principles. In making ethical decisions, it is necessary to
perceive and eliminate unethical options and select the best ethical alternative.

The process of making ethical decisions requires:

• Commitment: The desire to do the right thing regardless of the cost

• Consciousness: The awareness to act consistently and apply moral convictions to daily
behavior

• Competency: The ability to collect and evaluate information, develop alternatives, and
foresee potential consequences and risks

Good decisions are both ethical and effective:

• Ethical decisions generate and sustain trust; demonstrate respect, responsibility,

fairness and caring; and are consistent with good citizenship. These behaviors provide
a foundation for making better decisions by setting the ground rules for our behavior.

• Effective decisions are effective if they accomplish what we want accomplished and if
they advance our purposes. A choice that produces unintended and undesirable results

23
 is ineffective. The key to making effective decisions is to think about choices in terms
of their ability to accomplish our most important goals. This means we have to
understand the difference between immediate and short-term goals and longer-range
goals.

The "Character-Based Decision-Making Model" model, can be applied to many common

problems and can also be used by most individuals facing ethical dilemmas.

It involves three steps:

1. All decisions must take into account and reflect a concern for the interests and
well being of all affected individuals ("stakeholders").

The underlying principle here is the Golden Rule — help when you can, avoid harm when you
can.

2. Ethical values and principles always take precedence over no ethical ones.

Ethical values are morally superior to no ethical ones. When faced with a clear choice between
such values, the ethical person should always choose to follow ethical principles.

Perceiving the difference between ethical and no ethical values can be difficult. This situation
often occurs when people perceive a clash between what they want or "need" and ethical
principles that might deny these desires. If some rationalization begins to occur, this situation
is probably present.

3. It is ethically proper to violate an ethical principle only when it is clearly necessary

to advance another true ethical principle, which, according to the decision-
maker's conscience, will produce the greatest balance of good in the long run.

Some decisions will require you to prioritize and to choose between competing ethical values
and principles when it is clearly necessary to do so because the only viable options require the
sacrifice of one ethical value over another ethical value. When this is the case, the decision-
maker should act in a way that will create the greatest amount of good and the least amount of
harm to the greatest number of people.

Why are business ethics important ?

• We are responsible for upholding the public trust.

24
 • We are accountable to spend and use our resources the way they were intended.

• We are accountable to our “stakeholders” — donors, funding agencies, students, and

parents.

Public employees are expected to be examples of responsible citizenship. Employees of the

University have a responsibility to make all professional decisions based on merit, unimpeded
by conflicting personal interests. Our reputation is important because it affects the University's
ability to attract students, faculty, and staff. Our reputation also impacts the quality of research
performed, the community's perception of us, and our standing as a renowned public institution.

Consequences of unethical behaviors:

• Criminal charges and/or fines

• Lawsuits

• Ruined careers

• Injured organization reputation

• Wasted time

• Low morale

• Recruiting difficulties

• Oppressive legislation

• Fraud and scandals

How do we cultivate an ethical institution?

• Emphasize good internal controls. Our control environment sets the tone for our
organization. The Office of the Controller offers information on best practices for
incorporating internal controls into daily processes and creating an effective control
environment. Control environment factors include integrity, ethical values, and
competence of our staff and faculty.

• Promote an ethical environment. Our organization embraces ethical values and

practices we deem central to a healthy environment.

25
COMMON ETHOS IN INDIA
In spite of different outlooks developed by Indian communities, the following traits are
common throughout India:
(1) It is still generally a taboo in India for lovers or spouses to kiss or embrace each other
in public.
(2) Guests are always welcome, though to limited extent.
(3) Showing respects to parents, elders, teachers, etc.
(4) Offering donations to poor.
(5) God fearing — whatever may be the name of god.
(6) Marriage is considered to be a lifelong affair not only between two individuals but also
between two families.
(7) Children are well taken care of until they are married or even after that.
(8) Relationship is considered to be of permanent nature.

Characteristics of Indian Ethos

(1) Know Oneself: In Indian Ethos, a great emphasis is placed on knowing oneself. It is
emphasised that self is a part of supreme self "PARAM BRAHMA" or Supreme
conscience. Supreme Self is also known as Divine. It is also believed that divine qualities
like integrity, honesty, patience, loyalty, forgiveness, compassion, selfless service are
within us. Only these latent qualities in human beings are to be aroused through inner
purification. This also indicates that every human being has immense potential for
development and therefore, he must strive for excellence in the field of his choice. This
results in inner motivation, and increases the productivity, not only in personal life but also
in the society and the organisation he serves.
(2) Self-realisation: Indian Ethos believe in individual development. Though all human
beings are part of Supreme Self, they have to tap their dormant potential. They have to act
accordingly and inculcate the divine qualities within themselves. Apart from higher
productivity, it results in better effectiveness, peace, balance and harmonious growth in all
spheres of life. An individual has different role to play in life: (i) for self — good mental
and physical health, to acquire power and prestige, to earn money, (ii) as father/mother,
brother/sister, wife/ husband, as a friend, relative, (iii) in office, as peer, junior, boss, (iv)
for the society/nation, etc. Indian ethos emphasise that each individual must have a

26
balanced growth. An individual has to act to realise all the goals which an individual has
set for himself. It must be remembered that the goals must lead to overall peace, and
happiness.
(3) Self-management: Swami Vivekananda said: "If you cannot manage self, you cannot
manage others". Once selfrealisation comes, then self-management is easily achieved,
because it is said that once issues are identified, it is easier to find solutions to them. Self-
management also stresses not only on developing and managing skills, but also on all the
inner divine qualities lying dormant within us. It also emphasizes self-discipline and
control. Accordingly, the individual thinks last about himself. Self-management also
implies to act voluntarily accordingly to ethics and not by force or by circumstances. A self-
managed person accepts the total responsibility for whatever happens in his life. He looks at
every opportunity as an exciting and new life experience.
(4) Holistic Approach: Indian Ethos also emphasise holistic approach to life. It states that
all living beings — humans and other living objects, like animals, insects, etc., are part of
Supreme Soul. We must, therefore, live in harmony with each other.
(5) Team Spirit: The Verse "Om Sahana Vavatu, Sahnau Bhunaktu, Sahviryam
Karvavahe, Tejasvina Vadhitamastu, Maa Vidvisha Wahe" gives the essence of Indian
Ethos for teamspirit. The Verse means: "may He protect us, may He help us to enjoy, may
we work together, may our efforts be thorough and faithful, and may we never
misunderstand each other".The emphasis here is on team spirit. It suppresses I and believes
in "We approach".
(6) Service Attitude: Indian Ethos believe in giving with humility. Service without ego is
basic to Indian Ethos. Indians believe that we are only means, actual giver is Supreme Soul
and we are grateful to the one who receives from us. Because he has given us a chance to
have inner peace. Giving itself gives us peace and we should not expect anything in return.
This also embodies the spirit of sacrifice or "Yagna" attitude.
(7) Spirit of Sacrifice: Indian Ethos believe in sacrifice for the sake of others. In the 21st
century, a person wants to acquire more and more for himself without bothering about
others. This results in unhealthy competition and people resort to unethical means to
acquire wealth, fame, position, power etc. Needs become greed and the persons start
developing satanic qualities, like anger, jealousy, hatred, etc. Organizational goals, which
include family and social goals, are not taken into consideration and are put at the back
burner. Human technology is misused to serve human ego. Indian Ethos demand that we
should look from others' perspective before we start fulfilling our needs, because all human

27
beings are part of Supreme Soul. Also, we must be responsible for our action. If failure
comes to us, we must internalise it and find out why we failed. If we succeed, we should
give the credit to others, including God. This is a part of our responsibility and it builds
team spirit. The Spirit of Sacrifice is also in the rituals of "Yagna",wherein we offer our
choicest material and prayers to God and offer "Prasad" to all the members of the
community.
(8) Chitta Shuddhi (Purification of Mind): Indian Ethos believe in developing a pure
mind, which implies purifying emotions, feelings, impulses, etc., the things which are
related to heart. Christ has also said: "Blessed are those who are pure by heart". Medical
mystic Thomas Kepis states that a pure heart penetrates heaven and hell. Swami
Vivekananda said that begin your work with pure body and mind. Mind purification should
be given preference over body.
(9) Unity in Diversity: In India, people from different religions have different rituals,
customs and beliefs. They have different lifestyles, yet they coexist in India because of
holistic approach that all human beings are a part of Infinite Self.
(10) Tolerance: Indians listen and understand others' point of view. They have respect for
each other. It is a common sight to see Church, Mosque, Temple, Gurudwara, etc. in the
same neighbourhood. Also, people from different religions take part in various functions
and festivals. Indians believe in "Live and Let Live".
(11) Peace: Basically, Indians are peace loving. Great Indians, like, Gautam Buddha,
Mahavir Swami, Mahatma Gandhi, Swami Vivekananda, etc. have advocated peace for
human beings. For many centuries, our scriptures have recommended Yoga (including
Meditation and Contemplation) for peace of mind. Peace is tolerance based and stems from
love for all and the idea of mutual coexistence.
(12) Humanity: On the basis of belief that all living beings are part of Supreme Self,
Indians have developed a humane approach to life.
(13) Cooperation and Mutual Trust: God has designed human being on the principle of
cooperation and thus, cooperation has become a way of life for a human being. If we look
to a man, his all the organs (namely, ears, eyes, mouth, nose, lungs, nerves, etc.) are
designed to be cooperative with each other and subserve the main purpose of keeping the
human body healthy and working properly. Each organ works on the basis of mutual trust
and believes in giving. Cooperation is working together, sharing the resources together, and
getting the peace and happiness. The benefits of cooperation are as follows:
(a) Promotes teamwork.

28
 (b) Enables a person to view things from other's viewpoint.
(c) Makes one less self-centered by widening his area of concern.
(d) Brings in concept of 'US' and 'WE' in our mind and dissolve 'I' and ‘THEM'.
(e) Cooperation gives in happiness, everlasting peace, friendship, lots of love and
relationship.
(14) Adopt and Adapt: Indian Ethos, right from earlier days, have adopted and adapted
various traditions and customs from various civilisations. Through this process of
absorption, Indian culture has become rich and survived much embarrassment.

PROGRESS CHECK

Q1. 'Basic conviction that a specific mode of conduct is personally or socially

preferable to an opposite mode of conduct'. Which concept is being highlighted?
A. Attitudes

B. Preferences

C. Values

D. Law
Answer-C

Q2. The factor contributing to formation of values through interaction with

peers and subordinates is:-
A. Personal factor

B. Social factor

C. Organisational factor

D. None of the above

Answer-C

29
Q3. Which value system is characterized by low tolerance for ambiguity and
difficulty in acceptance of divergent values according to the Graves model?
A. Manipulative

B. Sociocentric

C. Reactive

D. Conformity
Answer-D

Q4. An enduring cluster of values is:-

A. Belief

B. Value system

C. Attitude

D. Behavior
Answer-B
Q5. Misrepresentation of facts in comparative advertisements is likely to
directly impact which groups?
A. Customers and government

B. Customers and competition

C. Government and investors

D. Competition and employees

Answer-B

30
Q6. The content attribute of value addresses the question :-

A. How important a particular conduct is

B. When a particular conduct is important

C. Whether a particular conduct is important

D. None of the above

Answer - C

Q7. Predisposition to respond in a particular manner is:-

A. Attitudes

B. Values

C. Ethics

D. Law
Answer- A

Q8. What is the total number of values under each value set of the Milton
Rokeach model?
A. 20

B. 22

C. 18

D. 16
Answer- C

31
Q9. Which of the following is a result of implementation of the concepts of
Western management in the Indian business culture?
A. Efficiency in mgt

B. Increased productivity

C. Dualism in mgt

D. All of the above

Answer - C

Q10. The principle of ego-less cooperation is based in two Vedic concepts.

These are:-
A. Nishkam Karma and Sakam Karma

B. Sakam karma and karma yoga

C. Loksanghraha and Nishkam karma

D. Sakam karma and Loksanghraha

Answer - C

Q11. What should a manager do before selecting the best solution for a business
problem?
A. Develop alternative solutions

B. Define the problem

C. Evaluate the alternatives

32
D. All of the above
Answer - D

Q12. _refers to the value system and beliefs that create behavioural norms
to guide the actions of the members of an organization.
A. Organisational behavior

B. Corporate culture

C. Work ethics

D. Business ethics
Answer - B

Q13. 'Values maybe moral, amoral or immoral'. Moral values are called:-

A. Value system

B. Ethics

C. Law

D. Attitudes
Answer- B

Q14. The term “Vedanta” comes from Sanskrit word “Vid”, which means:

A. To understand

B. To learn

C. To know

33
D. To create
Ans) C

Q15. India ethos define holistic life as:

A. Spiritual life

B. Life dedicated to achieve worldly goals

C. Close inter relation between spiritual and worldly life.

D. Life dedicated to social work

Ans) c

Q16. Nishkam Karma means:

A. Work done with greed

B. Detached involvement and self-less work

C. Selfish deeds

D. None of the above

Ans)b

Q17. What does Sarvatra-sam-darsandh means:

A. Seeing the same self in onself and in that of others

B. Doing good for all

C. Differentiating between people on various basis

D. Being respectful towards all

34
Ans. A

Q18. Of the four styles of dealing with people according to the hindu
scriptures, what does daam means:
A. Treating equally

B. Rewarding

C. Punishment

D. Discrimination
Ans. B

Q19. Management of organisation on basis of vedantic principles and values

help in achieving what?
A. Public Image

B. Teamwork and productivity

C. Avoidance of legal sanctions and fines

D. All of the above

Ans.d

Q20. What does P in PLUS Approach means:

A. Profit

B. Person

C. Policies

35
D. Prescribed behaviour
Ans.c

Q21. What constitute unethical behaviour:

A. Asking labour to do overtime with decent wages

B. Spending large amount on environmental conservation techniques in

business.
C. Unlawful practice for welfare of organisation

D. All of the above

Ans c

Q22. Ethics is:

A. Normative

B. Descriptive

C. Neutral

D. Both 1&2
Ans. A

Q23. Ethics is broader than:

A. Law

B. Morals

36
C. Customs

D. All of the above

Ans.d

Q24. Business ethucs came into recognition after social responsibility

movement in:
A. 1940s

B. 1870s

C. 1990s

D. 1960s

Ans. D

Q25. Business ethics are concerned with:

A. Micro ethics

B. Macro ethics

C. Personal ethics

D. Both 1&2
Ans. D

LONG ANSWER QUESTIONS:

1. What are the ethical theories and approaches for decision making? Explain.

2. Explain various ethical theories

37
3. Discuss various principles of ethics and is implications in the modern business world.

4. What are the stages in modern decision making process?

5. Write in detail about modern ethical models for decision making.

6. What are the theories in ethics, particularly at Meta Level? Comment on them.

7. Define Indian Ethos and explain them articulately.

8. What are all the ethical concerns for a manager in an organization?

9. Write about “ethics in business competition”.

10. Why ethics are much important in business world?

38
 UNIT-II: KNOWLEDGE, WISDOM, STRESS,
DHARMA & KARMA YOGA

Learning Objectives of the unit:

After completing this unit, the students will be able to:

• Define the concept of knowledge and wisdom

• Differentiate between knowledge and wisdom
• Explain the concept of Knowledge management
• Understand the concept of Wisdom based management
• Explain meaning, sources and consequences of Stress
• Understand the concept of Karma, Karma Yoga
• Explain the concept of Total Quality Management
• Understand Quality of Work life

KNOWLEDGE AND WISDOM

KNOWLEDGE is stored information. It is whatever you ‘know.’ Knowledge does not require
that information which you hold be true, it simply requires that you know something.
Knowledge comes exclusively from learning. This means you can gain knowledge in school
or from books. You can learn from experiences you have or from observing the experiences of
others. The single defining factor of knowledge is that it is data which is stored in your brain—
on your hard drive.

WISDOM is far different from knowledge. Wisdom is the ability to process knowledge. To
play on the hard drive analogy, wisdom is the software that is able to organize the data on the
hard drive and put it into practice. In a practical sense, wisdom still does not require that the
data you are processing be truth, it simply is the ability to put knowledge into practice. From a
philosophical stance, wisdom requires that data be true. To process information which is false
and apply it would be foolish. Think about statistics. Say I interview three people and ask what
their favorite color is. The first person says that his favorite color is green. Not wanting to be
left out, the second and third person also says green even though their favorite colors are yellow

39
and red respectively. As the statistician, I conclusively state that all mankind has the favorite
color of green. This is obviously wrong so philosophically this is not a wise conclusion
Difference between Knowledge and wisdom Knowledge... knowledge is the appropriate
collection of information, such that it's intent is to be useful. Knowledge is a deterministic
process. When someone "memorizes" information (as lessaspiring test-bound students often
do), then they have amassed knowledge. This knowledge has useful meaning to them, but it
does not provide for, in and of itself, an integration such as would infer further knowledge. For
example, elementary school children memorize, or amass knowledge of, the "times table".
They can tell you that "2 x 2 = 4" because they have amassed that knowledge (it being included
in the times table). But when asked what is "1267 x 300", they cannot respond correctly because
that entry is not in their times table. To correctly answer such a question requires a true
cognitive and analytical ability that is only encompassed in the next level... understanding. In
computer parlance, most of the applications we use (modeling, simulation, etc.) exercise some
type of stored knowledge. Wisdom... wisdom is an extrapolative and non-deterministic, non-
probabilistic process. It calls upon all the previous levels of consciousness, and specifically
upon special types of human programming (moral, ethical codes, etc.). It beckons to give us
understanding about which there has previously been no understanding, and in doing so, goes
far beyond understanding itself. It is the essence of philosophical probing. Unlike the previous
four levels, it asks questions to which there is no (easily-achievable) answer, and in some cases,
to which there can be no humanlyknown answer period. Wisdom is therefore, the process by
which we also discern, or judge, between right and wrong, good and bad. I personally believe
that computers do not have, and will never have the ability to posses wisdom. Wisdom is a
uniquely human state, or as I see it, wisdom requires one to have a soul, for it resides as much
in the heart as in the mind. And a soul is something machines will never possess (or perhaps I
should reword that to say, a soul is something that, in general, will never possess a machine).

Definition of Knowledge

The term ‘knowledge’ simply refers to the understanding or awareness, about a person, thing
or subject, such as facts, skills, information, etc. It is the state of what you know about a
particular topic. It is the familiarity with different objects, ways of doing things, places,
cultures, events, facts, ideas, etc. It can be theoretical or practical proficiency gained over time
through education or experience by learning, observing, researching, discussing, studying and
so on.

40
Definition of Wisdom

Wisdom is a wider term than knowledge and intelligence. It is the quality of person to think,
act or discern what is best, right, true and enduring. It is the application of common sense,
knowledge and experience, at the right time, place, manner and situation so as to follow the
best possible course of action. It develops the ability to judge and make beneficial and
productive decisions in life.

KNOWLEDGE WORKER VS WISDOM WORKER

A knowledge worker is anyone who works for a living at the tasks of developing or using
knowledge. For example, a knowledge worker might be someone who works at any of the tasks
of planning, acquiring, searching, analyzing, organizing, storing, programming, distributing,
marketing, or otherwise contributing to the transformation and commerce of information and
those (often the same people) who work at using the knowledge so produced. A term first used
by Peter Drucker in his 1959 book, Landmarks of Tomorrow, the knowledge worker includes
those in the information technology fields, such as programmers, systems analysts, technical
writers, academic professionals, researchers, and so forth. The term is also frequently used to
include people outside of information technology, such as lawyers, teachers, scientists of all
kinds, and also students of all kinds.

CONCEPT OF KNOWLEDGE MANAGEMENT

The term knowledge management is something which is difficult to define. In an organization

which is giving preference to knowledge based working, the knowledge is managed in a better
way in terms of quantity and quality in compliance with the organization policies to achieve
the ultimate goal of the organization. Knowledge is everywhere and it is scattered. In
knowledge management, the people are treated as assets and they are termed as human assets.
Business organizations which have given importance to knowledge have become a success by
implementing new knowledge based methods. The instruments of knowledge management The
process of knowledge management is never complete with the following heads. • Change
management • Best practices • Risk management • Benchmarking Change management:
Change is inevitable. An organization undergoes change due to so many reasons. It might
happen because of environmental, economical, legal, political and technological factors. The
organization which adopts change quickly will be able to cope with the new developments. In

41
change management the business becomes sensitive to change. The business might be able to
achieve the good results on the basis of how sensitive they were in adapting to changes. Best
practices: The best practices in business mainly consist of a leader who leads the organization.
He or she should be able to lead the human assets by example. The best practices include
establishing attainable targets, flat management structure, transparent and flawless
communication from top to bottom level and vice versa and constructing futuristic plans for
generating positive results. Risk management: Presence of a good risk management system will
help in the smooth flow of the business for a longer period. A good risk management system
should be able to understand and measure the risks. The management should sketch new
policies and the policies have to be executed on the right time to overcome the risks. When the
risks are monitor periodically, then the business is able to diminish various kinds of risks.
Benchmarking: Benchmarking, in simple terms is the process of setting standards. The set
standards are practiced in the future for better productivity both in qualitative and quantitative
terms. Knowledge for business: Knowledge is power. The time has gone when people carried
their businesses with good old principles. It is time to adopt quality information and knowledge
of the related areas to run business in a better way. Knowledge management The knowledge
management might be treated as a new concept. With knowledge management, the
conventional business activities are getting a paradigm shift.

Advantages

The primary advantages are: • The business can get an advantage in the competitive
environment by the implementation of knowledge management and • The tricky situations and
stress of the business are minimized There are several different, and sometimes quite confusing
statements that claim to be a definition of Knowledge Management' and there are different
perspectives on what Knowledge Management is. For example: ▪ KM is about systems and
technologies ▪ KM is about people and learning organisations ▪ KM is about processes, methods
and techniques ▪ KM is about managing knowledge assets ▪ KM is a holistic initiative across
the entire organisation ▪ KM is not a discipline, as such, and should be an integral part of every
knowledge workers daily responsibilities What is most important is for you to have your own
definition of Knowledge Management; what KM is to you and your organization. What is even
more important is that you and your colleagues have a 'common shared understanding' of what
KM means for you all. To help you get started, we have included immediately below a few
definitions of what KM means to some organizations. We suggest you consider them, together
with any other definitions you may have, and see if there are any words or phrases that

42
particularly 'resonate' with what you are trying to do. This will help you formulate your own
definition of knowledge management. At the end of this page, we invite you to share with us
all, any definitions you have discovered and/or formulated. We can then all comment and rate
the usefulness of each definition as we wish.

This then provides us, at the bottom of this page, with a list of KM Definitions, listed in highest
rated/ranked order, to help us even further. So please share your definitions and/or any
comments or rating to definitions.

STRESS MANAGEMENT

Stress is the body's reaction to a change that requires a physical, mental or emotional
adjustment or response. Stress can come from any situation or thought that makes you feel
frustrated, angry, nervous, or anxious. Stress is caused by an existing stress-causing factor or
"stressor." Dealing with a serious illness or caring for someone who is can cause a great deal
of stress. Stress is often thought about from three different perspectives: an event, a reaction or
a transaction. When we associate stress with an event, that event is called a stressor. Examples
of stressors include getting divorced, being laid off or being diagnosed with a serious illness,
although minor hassles can also have an impact. People with OCD often report experiencing
an increase in the number or severity of stressors just prior to their symptoms becoming worse.
Stress can also be thought of as our reaction to an event. The classic stress response is the
"flight or flight" reaction in which your body activates a number of physical and behavioral
defense mechanisms to deal with an impending threat. It is often the physical and psychological
sensations associated with these mechanisms that we are detecting when we say that we "feel
stressed." Finally, stress can be defined as a state that results from a transaction between you
and the things around you. In this model, people or circumstances are constantly making
demands on you such as getting to work on time, paying monthly bills, resolving conflicts with
friends or co-workers or parenting children. If you believe that you do not have the resources
you need to deal with the demands placed on you, you feel stress. A feature of this model of
stress is that it accounts for why different people react differently when faced with the same
challenges -- there are as many different reactions to potentially stressful conditions as there
are people.

SOURCES AND CONSEQUENCES OF STRESS

43
Stress is a normal physical response to events that make you feel threatened or upset your
balance in some way. When you sense danger – whether it’s real or imagined – the body's
defenses kick into high gear in a rapid, automatic process known as the “fight-or-flight”
reaction, or the stress response. The stress response is the body’s way of protecting you. When
working properly, it helps you stay focused, energetic, and alert. In emergency situations, stress
can save your life – giving you extra strength to defend yourself, for example, or spurring you
to slam on the brakes to avoid an accident. The stress response also helps you rise to meet
challenges. Stress is what keeps you on your toes during a presentation at work, sharpens your
concentration when you’re attempting the game-winning free throw, or drives you to study for
an exam when you'd rather be watching TV. But beyond a certain point, stress stops being
helpful and starts causing major damage to your health, your mood, your productivity, your
relationships, and your quality of life. Causes of stress The situations and pressures that cause
stress are known as stressors. We usually think of stressors as being negative, such as an
exhausting work schedule or a rocky relationship. However, anything that puts high demands
on you or forces you to adjust can be stressful. This includes positive events such as getting
married, buying a house, going to college, or receiving a promotion. What causes stress
depends, at least in part, on your perception of it. Something that's stressful to you may not
faze someone else; they may even enjoy it. For example, your morning commute may make
you anxious and tense because you worry that traffic will make you late. Others, however, may
find the trip relaxing because they allow more than enough time and enjoy listening to music
while they drive.

Common external causes of stress Not all stress is caused by external factors. Stress can also
be self-generated: • Major life changes • Work • Relationship difficulties • Financial problems
• Being too busy • Children and family Common internal causes of stress Not all stress is caused
by external factors. Stress can also be self-generated: • Inability to accept uncertainty •
Pessimism • Negative self-talk • Unrealistic expectations • Perfectionism • Lack of
assertiveness Dealing with stress and its symptoms While unchecked stress is undeniably
damaging, there are many things you can do to reduce its impact and cope with symptoms.
Learn how to manage stress You may feel like the stress in your life is out of your control, but
you can always control the way you respond. Managing stress is all about taking charge: taking
charge of your thoughts, your emotions, your schedule, your environment, and the way you
deal with problems. Stress management involves changing the stressful situation when you can,
changing your reaction when you can’t, taking care of yourself, and making time for rest and

44
relaxation. Learn how to relax You can’t completely eliminate stress from your life, but you
can control how much it affects you. Relaxation techniques such as yoga, meditation, and deep
breathing activate the body’s relaxation response, a state of restfulness that is the opposite of
the stress response. When practiced regularly, these activities lead to a reduction in your
everyday stress levels and a boost in your feelings of joy and serenity. They also increase your
ability to stay calm and collected under pressure. Learn quick stress relief Everybody has the
power to reduce the impact of stress as it’s happening in that moment. With practice, you can
learn to spot stressors and stay in control when the pressure builds. Sensory stress-busting
techniques give you a powerful tool for staying clear-headed and in control in the middle of
stressful situations. They give you the confidence to face challenges, knowing that you have
the ability to rapidly bring yourself back into balance.

STRESS MANAGEMENT

Stress management refers to a wide spectrum of techniques and psychotherapies aimed at

controlling a person's levels of stress, especially chronic stress, usually for the purpose of
improving everyday functioning. In this context, the term 'stress' refers only to a stress with
significant negative consequences, or distress in the terminology advocated by Hans Selye,
rather than what he calls eustress, a stress whose consequences are helpful or otherwise
positive. Stress produces numerous symptoms which vary according to persons, situations, and
severity. These can include physical health decline as well as depression. According to the St.
Louis Psychologists and Counseling Information and Referral, the process of stress
management is one of the keys to a happy and successful life in modern society. Although life
provides numerous demands that can prove difficult to handle, stress management provides a
number of ways to manage anxiety and maintain overall well-being. Despite stress often being
thought of as a subjective experience, levels of stress are readily measureable using various
physiological tests, similar to those used in polygraphs. Many practical stress management
techniques are available, some for use by health practitioners and others for self-help, which
may help an individual to reduce stress, provide positive feelings of being in control of one's
life and promote general well-being. The effectiveness of the different stress management
techniques can be difficult to assess, as few of them have received signifcant attention from
researchers. Consequently, the amount and quality of evidence for the various techniques varies
widely. Some are accepted as effective treatments for use in psychotherapy, whilst others with

45
less evidence favouring them are considered alternative therapies. Many professional
organisations exist to promote and provide training in conventional or alternative therapies.

DETACHED INVOLVEMENT

Detached Involvement requires a leader to be aware of his/her own emotions at all times and
how they are changing. At its best, a leader practicing detached involvement is engaged in
Level 3 Listening. Level 1 listening often results in being drawn into the drama because the
listener is relating his/her own emotional experience to what's being said. Just because someone
else is feeling angry, and understandably so, does not mean that you too should feel angry. The
key to successful detached involvement is to remain emotionally connected while being
separate. For many of us, we've been taught from a young age that in order to be emotionally
connected to someone else, we need to be feeling the same emotions. And so we search for
similar experiences we've had to conjure up the emotions we perceive the other to be
experiencing. However, when you start to think about this, it really is not a genuine connection.
In that moment you are creating a parallel experience, and so you are not really present, and
often your efforts fall short. By working to become increasing aware of your emotions at any
moment and how they are influenced by your experiences throughout the day, you take a step
toward practicing detached involvement. Own your feeling, recognize when your emotions are
being influenced, accept that and let it go. This takes practice and vigilance and with time and
practice you can become a master.

CONCEPT OF KARMA

Karma is a concept in Hinduism which explains causality through a system where beneficial
effects are derived from past beneficial actions and harmful effects from past harmful actions,
creating a system of actions and reactions throughout a soul's reincarnated lives forming a cycle
of rebirth. The causality is said to be applicable not only to the material world but also to our
thoughts, words, actions and actions that others do under our instructions. When the cycle of
rebirth comes to an end, a person is said to have attained moksha, or salvation from samsara.
Not all incarnations are human. The cycle of birth and death on earth is said to be formed from
8.4 million forms of life, but only in human life is an exit from this cycle possible. "Karma"
literally means "deed" or "act", and more broadly names the universal principle of cause and
effect, action and reaction, which Hindus believe governs all consciousness. Karma is not fate,
for we act with what can be described as a conditioned free will creating our own destinies.

46
According to the Vedas, if we sow goodness, we will reap goodness; if we sow evil, we will
reap evil. Karma refers to the totality of our actions and their concomitant reactions in this and
previous lives, all of which determine our future. The conquest of karma lies in intelligent
action and dispassionate reaction. Not all karmas rebound immediately. Some accumulate and
return unexpectedly in this or other lifetimes. Human beings are said to produce karma in four
ways: • through thoughts • through words • through actions that we perform ourselves • through
actions others perform under our instructions Everything that we have ever thought, spoken,
done or caused is karma, as is also that which we think, speak or do this very moment. Hindu
scriptures divide karma into three kinds: • Sanchita is the accumulated karma. It would be
impossible to experience and endure all karmas in one lifetime. From this stock of sanchita
karma, a handful is taken out to serve one lifetime and this handful of actions, which have
begun to bear fruit and which will be exhausted only on their fruit being enjoyed and not
otherwise, is known as prarabdha karma. • Prarabdha Fruit-bearing karma is the portion of
accumulated karma that has "ripened" and appears as a particular problem in the present life. •
Kriyamana is everything that we produce in the current life. All kriyamana karmas flow in to
sanchita karma and consequently shape our future. Only in human life we can change our future
destiny. After death we lose Kriya Shakti (ability to act) and do (kriyamana) karma until we
are born again in another human body. The concept of “Karma Yoga

Karma Yogi should be absolutely free from lust, greed, anger and egoism. Even if
there are traces of these Doshas, he should try to remove them. He should not expect any
kind of fruits for his actions herein and hereafter. He should not have any desire for
name and fame, approbation, appreciation, thirst for applause, admiration and gratitude.
He must have a spotless character. He should try to possess this gradually. He should
be humble and free from hatred, jealousy, harshness, etc. He should always speak
sweet words. How can a proud and jealous man, who expects respect and honour from
others, serve others? He should be absolutely fearless. A timid man is absolutely unfit
for Karma Yoga. He is fit to assist his Wife in cleaning utensils in the kitchen “I the
morning and in washing her clothes in the evening.

All work/Karma to manifest divinity, hence these must be pure, good, honest and sincere.
Indian philosophy also teaches to perform every work without having any attachment to result,
because results do not fall under the jurisdiction of a doer. Such thinking and understanding

47
will change the whole attitude. Now the results will become a PRASAD-gratitude – coming
from the God himself. You can now accept the result with open mind without apprehensions-
just as you accept members into Karma Yoga. It states that immense potential, energy and
talents for perfection as human being has the spirit within his heart and become “Karmic Yogi”
by following:

1. Holistic approach indicating unity between the Divine (The Divine means perfection in
knowledge, wisdom and power), individual self and the universe.

2. Inner resources are much more powerful than outer resources. Divine virtues are inner
resources. Capital, materials and plant & machinery are outer resources.

3. Karma Yoga (Selfless work) offers double benefits, private benefit in the form of self
purification and public benefit.

4. Excellence at work through self-motivation and self-development with devotion and without
attachment.

5. Co-operation is a powerful instrument for team work and success in any enterprise involving
collective work. Indian ethos demands a subjective management system which leads to an
understanding of the following –

a. Management Attitude

b. Humanizing the Organization

c. Interiorizing Management

d. Self-introspection

e. Brain-stilling

f. Stepping Back (for a while)

g. Self-dynamising Meditation

h. Role of Intuition

A Karma Yogi should have an amiable, loving, sociable nature. He should be able to
move and mix with everybody without distinction of caste, creed or colour. He should
have perfect adaptability, mercy and cosmic love. He should be sympathetic and tolerant,

48
He should be able to adjust himself to the habits and ways of others. He should have an
all-embracing and all—inclusive he rt. He should always have a cool and balanced mind,
He should have presence of mind also. he should have equal vision. He should rejoice in
the welfare of others A man who is easily irritated and who can be easily offended Over
trifling things is absolutely unfit for the path of Karma Yoga. He should burn his
selfishness to the very root.

A Karma Yogi should have a sound, healthy and strong physical body, He should
take great care of the body, but he should not have the least Moha or attachment for it.
He should never say: “This body is mine.” He should take good, nourishing and
substantial food.

He should bear insult, disrespect, dishonour, harsh words, censure, infamy, disgrace)
heat and cold. and the pain of diseases. He should have power of endurance. He should
have absolute faith in himself, in God, in the scriptures and in the words of his Guru.

Such a man only can become a good Karma Yogi. Such a man only can do real and
useful service to the country and to suffering humanity. It is always difficult to find an
ideal Adhikari. Even if you possess a few of the above qualifications, the other
qualifications will come to you by themselves, when you earnestly work in the field of
Karma Yoga. You need not be discouraged, Plunge yourself in the service of God. Forget
the body.
The concept of Karma Yogi 'T‘ranscends Time and Place
Karma yoga is the yoga of action or work; specifically, karma yoga is the path of
dedicated work, renouncing the results of our actions as a spiritual offering rather than
hoarding the results for us. Karma means action, while karma yoga is a way to take
these actions to the path of salvation. Karma yoga is primarily based on the teachings
of holy book of the Hindu’s the Bhagavad-Gita and is meant with the “discipline of
action”. The essence of Karma yoga lies in eulogizing action regardless to the fruit of
action. Karma yoga is believed to be one of the four pillars of yoga. Karma is both action
and the result of action. Just as devotees offer flowers and incense in their loving
worship of God, so can actions and thoughts be offered as divine worship. Knowing that
the Lord exists in the hearts of all creatures, devotees can and should worship God by
serving all beings as his living manifestations.

49
Karma is of three kinds, viz. Sanchita or the accumulated works, Prarabdha or
the fructifying works, and Kriyamana or the current Works. Sanchita is all the
accumulated Karmas of the past. Part of it is seen in the character of man, in his
tendencies 'and aptitudes, capacities, inclinations and desires. Prarabdha is that portion
of the part of Karma which is responsible for the present body. It is ripe for reaping. It
cannot be avoided or changed. It is only exhausted by being experienced. You pay your
past debts. Kriyamana is that Karma which is now being made for the future. It IS also
called Agami or Vartamana. .

In Vedantic literature, there is a beautiful analogy. The bow-man has already sent
an arrow; it has let his hands. He cannot recall it. He is about to shoot another arrow bundle
of arrow in the quiver on his back is the Sanchita. The arrow he has shot is Prarabdha . and
the arrow which is about to shootfrom his bow is Agami.

- Karma-yoga of Bhagavadgita - is not simple to say "do your work without expecting results".
It is mostly probably "doing every work for GOD only, dedicating work and its result to GOD
- detaching our ego completely and attaching GOD to get your sacrifice of work. The concept
of Karma Yoga is like water cycle in nature - water from seas evaporating & going to clouds
and clouds raining water again to seas. Work and its result should be given as sacrifice to gods
and their effect / result will come to Karma yoga in indirect way. Desire is the glue which sticks
every Karma to soul. When soul gets attached to every karma of desire, it will have a snow-
balling effect. To ensure lesser luggage in spiritual journey to reach destiny at the earliest - may
be the need of hour for every soul on earth.

Work is worship. Work is meditation. Serve all with intense love without any idea
of agency and without expectation of fruits or reward. You will realise God. Service of
humanity is service of God.
Work elevates when done in the right spirit without attachment or egoism. If you
are a Bhakta (devotee), feel you are a Nimitta or instrument in the hands of God. If you
adopt the path of Jnana, feel that you are a silent Sakshi (witness) and that Prakriti
does everything. All work is sacred. There is no menial work from the highest viewpoint
(from the view-point of the Absolute, from the view-point of Karma Yoga). Even

50
scavengering, when done with the right mental attitude as described above, will become
a Yogic activity for God-realisation.

It is selfishness that has deplorably contracted your heart. Selfishness is the bane
of human life. Selfishness clouds the understanding. Selfishness is petty-mindedness.
Bhoga (sensual enjoyment) increases selfishness and selfish Pravritti. It is the root
cause of human sufferings. Real spiritual progress starts with selfless service.
The ‘Nishkam Karma’ or ‘disinterested action’ or ‘work for work sake/Duty for duty’s
sake’ ——the moral insight has been reemphasized in “Bhagvad Gita”. It counsels about
the “duty to act, but not the right to claim personal fruits from it”. When an act
has been performed by an individual for the sake of one’s duty rather than for a personsonal
reward from it, the perso'n is likely to do the right thing — act as per his Dharrm. and
thus develop tremendous character. Across the very rich and diverse religious and
philosophical history of India throughout the past thousands of years, Nishkam Karma
has been interpreted more or less as an immutable way of life. Likewise. there is
enough for our present day leaders in all walks of life to learn from these ancient
scriptures, which have as much relevance today as it would have been two millenium
years ago.
The" modern era - often said these are testing times; of extreme materialism.
wrenching changes, contradictions and despondency all around is wielding psychological
and physical pressures and leading us to delusions, continual pln‘sicsl sufferings and
'mental agonies % there is a need to heed the call of “Nishkam Karma “% “Be intent on
action not on the fruits of action; avoid attraction to the fruits and attachment to inacton
The Bhagwat Gita has proclaimed the path of nishkama karma as the royal road to
' perfection. It exhorts man not to crave for the fruits of action and merely perform one‘s
duties in a detached manner, leaving the results there of to the Lord. God does not
enjoin man to do any work in particular. He is only the dispenser of the results of the
deeds done by humans. He gives the fruits of actions according to the kind of work
performed by man.

It is yoga of moral Endeavour, self-less service to others. It brings about union of human being
with the Divine. Work is done as workshop to the Divine in human beings who is also all
pervading in the universe. Gita evolves the moral and ethical theory of human conduct and
expounds the art of right living – the doctrine of duty with discipline and devotion without
attachment to work and agency.

51
Karma Yogi should be absolutely free from lust, greed, anger and egoism. Even if
there are traces of these Doshas, he should try to remove them. He should not expect any
kind of fruits for his actions herein and hereafter. He should not have any desire for
name and fame, approbation, appreciation, thirst for applause, admiration and gratitude.
He must have a spotless character. He should try to possess this gradually. He should
be humble and free from hatred, jealousy, harshness, etc. He should always speak
sweet words. How can a proud and jealous man, who expects respect and honour from
others, serve others? He should be absolutely fearless. A timid man is absolutely unfit
for Karma Yoga. He is fit to assist his Wife in cleaning utensils in the kitchen “I the
morning and in washing her clothes in the evening.

Karma Yoga is a good pathway for :

1. Self-purification and self-development.

2. Individual growth and welfare

3. Collective growth and welfare

4. Minimum play of passion, jealousy, hated, greed, anger and arrogance.

5. Team spirit, team work.

6. Autonomous management, minimum control and supervision.

7. Manager acts as mentor and facilitator

8. Self-motivation or Inspirational motivation.

9. Perfection or excellence in products and services.

10. Skills and values united.

11. All round happiness and prosperity

12. Conflicts resolved by integration

52
NISHKAM KARMA & SAKAM KARMA

There are two aspects to Karma Yoga - Sakam Karma and Nishkam Karma. Sakam Karma is
to work with selfish expectations and your own interests in mind. Nishkam Karma on the other
hand is working with unselfish/selfless motives. You have to pay back all Karmas in this life
or in future lives, good or bad. It could be good Karma, but if it is selfish it is a chain that binds
you. Nishkam Karma also still binds you to the Karmic law. It doesn't matter if the chain is
made of iron or gold, it binds you in same way. Good and bad, both Karmas will bind you, put
you into bondage. Of course negative Karma is harder, and good Karmas are softer. Nishkam
Karma means free or without desire. Karma comes from the root word “kama” which means
desires. Karma comes from the root word "kriya" which means to do. In the act of Nishkam
Karma you have no selfish expectation, you are only giving. Give with love, devotion and
happiness. What should we give? Whatever you can! But observe your limitations, don’t
overdo it! Nishkam Karma means doing Seva (selfless service), without the expectation of
receiving acknowledgement, reward or a word of thanks. When you have even just one thought
that someone should have said "Thank you", this is not Nishkam Karma. In Vedic culture there
is no tradition of saying 'Thank you', only 'Blessing'. This can be a problem for westerners
when they go to India, that whatever you may do, Indians will never say thank you. But with
modern education the word thank you has spread everywhere. However, when you say thank
you, it means you don’t accept this Seva and you give back some fruits. Nishkam Karma leads
to liberation. Selfless service bears fruit similar to Raja Yoga, Bhakti Yoga and Gyana Yoga.
The fruits of Sakam Karma will be paid for in this life and the fruit of Nishkam Karma will be
returned after this life. Here you enjoy a life of luxury, but in another life you will have empty
hands. What will go with you? Don’t just think of this life, think also of your future lives.
Therefore, in Yoga and Indian culture there is less focus on past lives, but more on future lives.
Past is past, you no longer have any control over it. In a past life you were king and now you
are a cook. Suddenly you gain knowledge of the past life when you were a king but nobody
will give your kingdom back to you, instead you will be taken to a psychiatric hospital.

QUALITY OF LIFE

The term quality of life is used to evaluate the general well-being of individuals and societies.
The term is used in a wide range of contexts, including the fields of international development,
healthcare, and politics. Quality of life should not be confused with the concept of standard of
living, which is based primarily on income. Instead, standard indicators of the quality of life

53
include not only wealth and employment, but also the built environment, physical and mental
health, education, recreation and leisure time, and social belonging. According to ecological
economist Robert Costanza: While

Quality of Life (QOL) has long been an explicit or implicit policy goal, adequate definition
and measurement have been elusive. Diverse "objective" and "subjective" indicators across a
range of disciplines and scales, and recent work on subjective well-being (SWB) surveys and
the psychology of happiness have spurred renewed interest. Also frequently related are
concepts such as freedom, human rights, and happiness. However, since happiness is subjective
and hard to measure, other measures are generally given priority. It has also been shown that
happiness, as much as it can be measured, does not necessarily increase correspondingly with
the comfort that results from increasing income. As a result, standard of living should not be
taken to be a measure of happiness.

QUALITY OF WORK LIFE Work is an integral part of our everyday life, as it is our livelihood
or career or business. On an average we spend around twelve hours daily in the work place,
that is one third of our entire life; it does influence the overall quality of our life. It should yield
job satisfaction, give peace of mind, a fulfillment of having done a task, as it is expected,
without any flaw and having spent the time fruitfully, constructively and purposefully. Even if
it is a small step towards our lifetime goal, at the end of the day it gives satisfaction and
eagerness to look forward to the next day.

The factors that influence and decide the Quality of work life are: 1. Attitude 2. Environment
3. Opportunities 4. Nature of Job 5. People 6. Stress Level 7. Career Prospects 8. Challenges
9. Growth and Development 10. Risk Involved and Reward Attitude: The person who is
entrusted with a particular job needs to have sufficient knowledge, required skill and expertise,
enough experience, enthusiasm, energy level, willingness to learn new things, dynamism, sense
of belongingness in the organization, involvement in the job, inter personnel relations,
adaptability to changes in the situation, openness for innovative ideas, competitiveness, zeal,
ability to work under pressure, leadership qualities and team-spirit. Environment: The job may
involve dealing with customers who have varied tolerance level, preferences, behavioral
pattern, level of understanding; or it may involve working with dangerous machines like
drilling pipes, cranes, lathe machines, welding and soldering machines, or even with animals
where maximum safety precautions have to be observed which needs lot of concentration,
alertness, presence of mind, quick with involuntary actions, synchronization of eyes, hands and

54
body, sometimes high level of patience, tactfulness, empathy and compassion and control over
emotions. Opportunities: Some jobs offer opportunities for learning, research, discovery,
selfdevelopment, enhancement of skills, room for innovation, public recognition, exploration,
celebrity-status and loads and loads of fame. Others are monotonous, repetitive, dull, routine,
no room for improvement and in every sense boring. Naturally the former ones are interesting
and very much rewarding also. Nature of Job:

For example, a driller in the oil drilling unit, a diver, a fire-fighter, traffic policeman, train
engine driver, construction laborers, welder, miner, lathe mechanic have to do dangerous jobs
and have to be more alert in order to avoid any loss of limb, or loss of life which is irreparable;
whereas a pilot, doctor, judge, journalist have to be more prudent and tactful in handling the
situation; a CEO, a professor, a teacher have more responsibility and accountability but safe
working environment; a cashier or a security guard cannot afford to be careless in his job as it
involves loss of money, property and wealth; a politician or a public figure cannot afford to be
careless, for his reputation and goodwill is at stake. Some jobs need soft skills, leadership
qualities, intelligence, decision making abilities, abilities to train and extract work from others;
other jobs need forethought, vision and yet other jobs need motor skills, perfection and extreme
carefulness. People: Almost everyone has to deal with three set of people in the work place.
Those are namely boss, co-workers in the same level and subordinates. Apart from this, some
professions need interaction with people like patients, media persons, public, customers,
thieves, robbers, physically disabled people, mentally challenged, children, foreign delegates,
gangsters, politicians, public figures and celebrities. These situations demand high level of
prudence, cool temper, tactfulness, humor, kindness, diplomacy and sensitiveness. Stress
Level: All these above mentioned factors are inter-related and inter-dependant. Stress level
need not be directly proportional to the compensation.

Stress is of different types - mental stress/physical stress and psychological or emotional stress.
A Managing Director of a company will have mental stress, a laborer will have physical stress,
a psychiatrist will have emotional stress. Mental stress and Emotional stress cause more
damage than physical stress. Career Prospects: Every job should offer career development.
That is an important factor which decides the quality of work life. Status improvement, more
recognition from the Management, appreciations are the motivating factors for anyone to take
keen interest in his job. The work atmosphere should be conducive to achieve organizational
goal as well as individual development. It is a win-win situation for both the parties; an
employee should be rewarded appropriately for his good work, extra efforts, sincerity and at

55
the same time a lethargic and careless employee should be penalized suitably; this will motivate
the former to work with more zeal and deter the latter from being so, and strive for better
performance.

Challenges:

The job should offer some challenges at least to make it interesting; That enables an employee
to upgrade his knowledge and skill and capabilities; whereas the monotony of the job makes a
person dull, non-enthusiastic, dissatisfied, frustrating, complacent, initiative - less and
uninteresting. Challenge is the fire that keeps the innovation and thrill alive. A
wellaccomplished challenging job yields greater satisfaction than a monetary perk; it boosts
the selfconfidence also. Growth and Development: If an organization does not give chance for
growth and personal development it is very difficult to retain the talented personnel and also to
find new talent with experience and skill. Risk Involved and Reward: Generally reward or
compensation is directly proportional to the quantum of work, man-hours, nature and extent of
responsibility, accountability, delegated powers, authority of position in the organizational
chart, risk involved, level of expected commitment, deadlines and targets, industry, country,
demand and supply of skilled manpower and even political stability and economic policies of
a nation. Although risk is involved in every job its nature and degree varies in them; All said
and done, reward is a key criteria to lure a prospective worker to accept the offer.

Knowledge and understanding are the basis of wisdom, but the experience is the key to
attaining wisdom. It unites knowledge and experience into insights and increases an
individual’s understanding of relationships and meaning of life.

PROGRESS CHECK

1. Which are the sources of Stress?

a. Individual Causes

B External Causes

b. Organisational Causes
c. All of the above

Answer: D

56
2. Which of the following statements is true
1. In small quantities, stress is good
2. Too much stress is harmful
3. All stress is bad
4. Only ‘1’ & ‘2’ are right
Answer : 4

3. Stress management is about learning

1. How to avoid the pressures of life
2. How to develop skills that would enhance our body’s adjustment when we are
subjected to the pressures of life
3. Both ‘1’ & ‘2’ are true
4. None of the above
Answer : 2

Q4. Which of the following statements is true about stress management

1. Stress management is learning about the connection between mind and body
2. Stress management helps us control our health in a positive sense
3. Stress management teaches us to avoid all kinds of stress
4. Only ‘1’ & ‘2’ are right
Answer : 4

5. Which of the following are the basic sources of stress

1. The Environment
2. Social Stressors
3. Physiological
4. All of the above
Answer : 4

Q6. Examples of environmental stressors are

1. Weather
2. Traffic
3. Financial problems

57
 4. Substandard housing
5. Only ‘1’ , ‘2’ & ‘4’ are right
Answer : 5

Q7. Examples of social stressors are

1. Financial problems
2. Divorce
3. Loss of a loved one
4. All of the above
Answer : 4

Q8. Examples of physiological stressors are

1. Menopause
2. Giving birth
3. Sleep disturbances
4. Relationship problems
5. Only ‘1’, ‘2’, & ‘3’ are true
Answer : 5

9. Which of the following is not true about coexistence approach to indigenous

knowledge (IK)?

a) It devalues Western or Indigenous resource management practices and the knowledge that
informs them

b) It does not devalue Western or Indigenous resource management practices

and the knowledge that informs them

c) It does not allow for the domination of one over the other

d) It values both systems

10. Which of the following best characterises traditional knowledge?

a) It is represented by a villager with a rich experiential traditional knowledge heritage

58
b) It is represented by a villager with a rich experiential modern knowledge heritage

c) It is represented by a scientist with a rich experiential traditional knowledge heritage

d) It is represented by a scientist with a rich experiential modern knowledge heritage

11. Knowledge represented by a scientist with his text-book based formulations in the

area of natural resource management is known as

a) Traditional knowledge

b) Tacit knowledge

c) Formal knowledge

d) Informal knowledge

12. How a quality can be quantified

A. Performance + Expectations

B. Performance X Expectations

C. Performance – Expectations

D. Performance / Expectations

Explanation:

Quality can be quantified by

Quality (Q) = Performance (P) /Expectations (E)

So option D is correct

13. Traditional culture of quality requirements focuses on

A. Product oriented

B. Process oriented

C. Customer oriented

D. Supplier oriented

59
Explanation:

Traditional culture of quality requirements is Product oriented, whereas TQM culture is

Process oriented.

So option A is correct

14. American quality guru who took the message of quality to Japan

A. Genichi Taguchi

B. Masaaki Imai

C. Shigeo Shingo

D. W. Edwards Deming

Explanation:

American quality Guru’s are W. Edward Deming, Walter Shewhart, Philip Crosby,
Joseph M Juran.

So option D is correct

15. PDCA cycle is the contribution of

A. Walter Shewhart

B. Philip Crosby

C. Genichi Taguchi

D. W. Edward Deming

Explanation:

W. Edward Deming contributions are

1. Deming’s 14 points route to quality

2. Deming Cycle or PDCA cycle

60
3. Seven deadly diseases of Management

4. System of profound knowledge

So option D is Correct

16 In TQM , the contributions of quality Guru W. Edward Deming

A. Deming’s 14 points

B. Deming’s Cycle

C. System of profound knowledge

D. All the above

Explanation:

W. Edward Deming contributions are

1. Deming’s 14 points route to quality

2. Deming Cycle or PDCA cycle

3. Seven deadly diseases of Management

4. System of profound knowledge

So option D is Correct

LONG ANSWER QUESTIONS

1. The concept of “Karma Yoga” transcends time and place. Explain.

2. Illustrate how the concept of” karma yogi” can be used by managers to be effective in
their managerial roles.
3. . “It is indeed very heartening to see a few women being recognized as
successful business leaders in Indian context.” Identify any one. such woman
and narrate her success story laying emphasis on why she is regarded successful and
her distinct path to success
4. Define Stress and its management

61
5. Define Knowledge and Wisdom worker. Explain suitability of a worker according to
the kind of job?
6. Define TQM. Define quality of life and work life balance

62
 UNIT-III: PROGRESS & SUCCESS

Learning Objectives of the unit:

After completing this unit, the students will be able to:

• Define the concept progress and results

• Explain the functions of Progress
• Understand the need for transformation
• Elaborate the process and challenges of Transformation
• Define success
• Explain the principles for Competitive Success
• List out prerequisites to create blue print for success
• Explore some successful stories of Business Gurus.

PROGRESS

Progress is difficult for most people to define. It’s relatively easy to come up with indicators of
progress like increased education, health status or income, but how do you characterize
the nature of progress?

We tend to think of progress as moving in an upward direction, where things just keep getting
better. However, human progress is much more complicated than this. What seems like
progress over the short term can end up being highly destructive over the longer term.
Furthermore, anytime we create new capacities or resources, we also introduce new threats –
so progress is not a simple forward movement. Most of the adaptive challenges facing humanity
today stem from the fact that we don’t define progress within a life frame, and do little to
understand the requirements of the largest situations in which we’re all embedded. Unless we
reconstruct our understanding and application of progress, and widen and deepen our
understanding of life, humanity will continue to be vulnerable. People have been thinking about
what progress means for at least two millennia. The concept has taken a variety of directions
and forms, with various notions gaining favour depending on prevailing political regimes,

63
cultural influences and environmental conditions. But, in all cases, the notion of progress has
been used to reflect those qualitative dimensions that are missed by more conventional and
quantitative definitions of economic growth. Progress, in other words, takes us back to a broad
notion of wellbeing and welfare, and to how these concepts are changing over time.

FUNCTIONS OF PROGRESS

• Accountability
• Communication
• Policies and procedures
• Social Responsibility

SUCCESS

Success is comprised of three things: being happy with what you’re doing, constantly
growing as an individual, and contributing to other people in meaningful ways. If these three
things are present, then you’re successful

TRANSFORMATION

Transformation is the process of changing from one qualitative state to another,

Transformation as a process of transmutation from one state to another can apply to an
individual or an organization or the product or service supplied by the organization. When
related to higher education, transformation usually refers to the transformation of the student
via learning or the transformation of the institution so that it is better able to provide
transformative outcomes, that is, transformative learning or research.

To grow one needs to transform:

Critical situations call for creative solutions. the need for managers and leaders to
be able to introduce and manage transformational change to ensure that organisational
Objectives are met. and they have to ensure that they gain the commitment of their
people. both during and after implementation. Often, at the same time, they also have
to ensure that business continues as usual.

64
Processes in transformation

1. Plan long-term broadly: A sound strategic vision, not a specific detailed plan
(the latter is impossible to predict reliably). Detailed five years plans are out of date
two weeks after they are written. Focus on detail for establishing and measuring delivery
of immediate actions, not medium—to long term plans.

2. Establish forums and communicating methods: To enable immediate review

and decision-making. Participation of interested people is essential. This enables their
input to be gained, their approval and commitment to be secured, and automatically
takes care of communicating the actions and expectations.

3. Empower people: To make decisions at a local operating level — delegate

responsibility and power as much as possible (or at least encourage people to make
recommendations which can be quickly approved).

4. Remove (as far as is possible) from strategic change:- And approval processes
and teams (or circumvent) any ultra-cautious, ultra-autocratic or compulsively—
interfering executives Autocracy and/interference are the biggest obstacles to
establishing a successful and sustainable dynamic culture and capability.

5. Encourage, enable and develop capable people:- To be active in other areas

of the organization via ‘virtual teams' and ‘matrix management’.

6. Scrutinise and optimise ICT:- (Information and communications technology)

systems to enable effective information management and key activity team-working.

7. Use workshop as a vehicle to review priorities -Agree broad medium—t0-

long-term vision and aims, and to agree short term action plans and implementation
method and accountabilities.

8. Adjust recruitment, training and development:- 'to accelerate the development

of people who contribute positively to a culture of empowered dynamism.

65
Role of transformational leadership in success of an organization
Transformational leadership is a vital role for effective managers because leader
effectiveness determines the success level of the organization. Because transformational

• Leadership covers a wide range “aspects within leadership, there are no specific steps
for a manager to follow. Becoming: an effective transformational leader is a process
This means that conscious effort must lie made to adopt a transformational style.

A transformational leader has the following qualities :

• Empowers followers to do what is best for the organization;
• Is a strong role model with high values
• Listens to all View points to develop a spirit of cooperation
• Creates a vision, using‘; people in the organization
• Acts as :i change agent within the organization by setting an example of how to
initiate and implement changes
• Helps the organization by helping others contribute to the organization.
The Components of Transformational Leadership

1. Intellectual Stimulation ~ Transformational leaders not only challenge the

status quo; they also encourage creativity among the followers. The leader encourages
followers to explore new ways of doing things and new opportunities to learn.

2. Individualized Consideration ~ Transformational leadership also involves

offering support and encouragement to individual followers. In order to foster supportive
relationships, transformational leaders keep lines of communication open so that
followers feel free to share ideas and so that leaders can offer direct recognition of each
follower’s unique contributions.

3. Inspirational Motivation — Transformational leaders have a clear vision that

they are able to articulate to followers. These leaders are also able to help followers
experience the same passion and motivation to fulfill these goals.

4. Idealized Influence - The transformational leader serves as a role model for

followers. Because followers trust and respect the leader, they emulate this individual

66
and internalize his or her ideals. '

Lets discuss- “It is indeed very heartening to see a few women being recognized as
successful business leaders in Indian context.” Identify any one. such woman
and narrate her success story laying emphasis on why she is regarded successful and her
distinct path to success.

Ans. It is indeed very heartening to see a few women being recognized as successful
business leaders in Indian context.

Women owned businesses are highly increasing in the economies of almost all countries. The
hidden entrepreneurial potentials of women have gradually been changing
with the flowing sensitivity to the role and economic status in the society,Skills
knowledge and adaptability in business are the main reasons for women to emerge into
business ventures. ‘Women Entrepreneur‘ is person who accepts challenging role to
meet her personal needs and become economically independent . A strong desire to do
something positive is an inbuilt quality of entrepreneurial women who is capable of
contributing Values in both family and social life.

They are flourishing as designers, interior decorators, exporters, publishers, garment

manufacturers And
still exploring new avenues of economic participation. In India, although women constitute
the majority of the total population, the entrepreneurial world is still a male dOminated
one. Women in advanced nations are recognized and are more prominent in the buSiness :
world.
Women started thinking that self—employment as an integral aspect of their life
They started thinking on the lines selecting their own careers. Adopting own occupation
for income generation without deviating much from the social system is becoming a key
factor in a woman‘s life. Besides having home and children, women have started thinking
to have an independent occupation. While accepting the traditional people behaviour
from older generation, women today expect understanding and support from their
husbands and children to have their occupational choice. As entrepreneurs, Women .
want their voice to be heard as leaders, as they are capable of contributing to the growth
and success of their enterprise. .

67
Chanda Kochhar -— Success Story
With a firm belief in her heart and living by her own belief that WOmen in any ;
organization can grow just by their merit and not by special favours and privileges due
to their gender - Chanda Kochhar has listed herself as one of the 50 most powerful
women in business in the Fortune Global 2014 analysis. This Indian lady is World "
renowned for her corporate leadership and bold decision making skills. She is the
current Managing Director and the Chief Executive Officer of the ICICI Bank which is
India’s largest privatised financial institution. She is the leading example of todays '
women and her empowerment to make the world a better place to live in.
Being an important persona of the core ICICI team she helped the organisation .
empower its wings and fly at distant skies. Her vision was far beyond the local level. It
was she had the courage to keep working hours of the bank be 12 hours whereas rest all
brands worked for 7 hours in a day. She is one of the few bankers who envisioned the
idea ot2000 ATM machine installations throughout India promoting electronic banking
in a large scale. ICICI bank received the recognition to be the “Best Retail Bank in
India” for the years 2001, 2003, 2004 and 2005 under her lead. ‘

Childhood — Chanda Kochhar, born on November 17 in the year 1961 in Rajasthan

completed her graduation from the Jai Hind College in Mumbai. She did cost accountancy
from I CWAI and learnt the various skills of management by pursuing a Master’s degree
at the J 8111118131 Bajaj Institute of Management Studies. She was an extremely
enlightened student and earned recognition of the Wochhardt Gold Medal for her
excellence in Management studies. She also received at the J .N .Bose gold medal award
for her outstanding performance in Cost Accountancy.
Achievements

• Retail banker of the year honour by the Asian Banker in the year 2004
• Business women of the year recognition by the economic times in the year 2005
• Rising Star Award by the Retail Banker International in 2006
• She was featured in the list of “30 most Powerful Women Leaders “ in business for
eight years continuously .
• Achieved 92nd rank in Forbes list of “Most Powwerful Women” for 2010
• The CNBC TV 18 awarded her in the year 2010 as the “Outstanding Woman
Business Leader of the Year”.

68
 • Her name got the rank to be the 11th in the Financial Times list for the “Top 50
Woman in World Business .
• She was awarded the Padma Vibhushan in the year 2011.

A true inspiration for all men and women is Chanda Kochhan She has achieved a
perfect balance in between work and home. An optimistic for eternity, she is always up
for the challenge and faces criticism fearlessly and with humility- Women in our country
for ages has been struggling to play so many roles in their lives — as mothers, as
homemakers, as business women, as innovators and as dreamers to build a nation’s
destiny. It is one and only one who can Strike the balance 0f work and home can see the
fruit: of success and peace in life.

PROGRESS CHECK

Q1) According to Indian ethos, human transformation requires which of the following:

a) Gyana shakti
b) Ichchha shakti
c) Kriya shakti
d) All of the above

Q2) According to the gemini consulting model of transformation, should we renew:

a) Spirit
b) Mind
c) Environment
d) Body

Q3) According to the gemini consulting model of transformation, should we reframe:

a) Spirit
b) Mind
c) Environment
d) Body

69
Q4) According to the gemini consulting model of transformation, should we revitalize:

a) Spirit
b) Mind
c) Environment
d) Body

Q5) According to the gemini consulting model of transformation, should we restructure:

a) Spirit
b) Mind
c) Environment
d) Body

Q6) Alteration which occurs in the overall work environment of the organization is called:

a) Change
b) Progress
c) Transformation
d) None of the above

Q7) Advancement towards certain goals is known as:

a) Change
b) Progress
c) Transformation
d) None of the above

Q8) Thorough and qualitative change in personality is known as:

a) Change
b) Progress
c) Transformation

70
 d) None of the above

Q9) Which of the following are areas of transformation:

a) Structure
b) Technology
c) People
d) All of the above

Q10) What are the dimensions of human progress:

a) Economic
b) Social
c) Environmental
d) All of the above

Q11) What are the factors that come under individual economic progress:

a) Personal disposable income

b) Savings
c) Investments
d) All of the above

Q12) What are the factors that come under company social progress:

a) Availability of skilled labor

b) Social services
c) Non-interfering government
d) All of the above

Q13) What are the factors that come under society environmental progress:

71
 a) Cost of cleaning up
b) Sustainability of environment
c) All of the above
d) None of the above

Q14) What are the factors that come under company personal progress:

a) Employee’s well being

b) Productivity
c) Quality
d) All of the above

Q15) Success means achieving goals in life:

a) True
b) False
c) Can’t say
d) Don’t know

Q16) What are the components of success:

a) Happiness
b) Achievement
c) Significance
d) All of the above

Q17) Which of the following are some traits of successful people:

a) High achievement needs

b) Multiple goals
c) Integrity
d) All of the above

Q18) The components of transformational leadership are:

72
 a) Intellectual stimulation
b) Individualized consideration
c) Both a) and c)
d) None of the above

Q19) Which of the following are blueprint to success:

a) Strategic planning
b) Environmental analysis
c) Wide knowledge
d) All of the above

Q20) What are the factors that come under company economic progress:

a) Revenues
b) Sales
c) Goodwill
d) All of the above

Q21) What are the factors that come under individual social progress:

a) Access to education
b) Elimination of slavery
c) Basic rights
d) All of the above

Q22) What are the factors that come under society personal progress:

a) Patriotism
b) Non- violence
c) Effective communication
d) All of the above

Q23) What are the factors that come under company environmental progress:

73
 a) Freedom from all kinds of pollution
b) Environmentally friendly products
c) Safe and quality products
d) All of the above

Q24) what are the barriers to transformation:

a) Reformulation of vision
b) Problem of resources
c) Continuous fear of failure
d) All of the above

Q25) which of the following help to overcome barriers to transformation:

a) Aligning with corporate strategy

b) Developing a roadmap
c) Communication
d) All of the above

Q26) Success is -------------concept

A Multidimensional
b. Unidimensional
C. Bidimensional
D. None of the above

Q27) Which one of the following is not the component of Enduring Success

A. Prosperity
B. Legacy
C. Happiness
D. Significance

Answers:
1.d 2.a 3.b 4.c 5.d
6.a 7.b 8.c 9.d 10.d
11.d 12.d 13.c 14.d 15.a

74
 16.d 17.d 18.c 19.d 20.d
20-25 d , 26 A, 27 A

LONG ANSWER QUESTIONS

1. To grow is to transform” . state whether you agree with the situation or not answer to
substantiate your position.
2. What do you mean by Progress, what elements are involved in progress
3. Define transformation. Explain how it is different from progress.
4. What do you mean by success? Define elements of success
5. Define principles for competitive success
6. Elaborate successful stories of business gurus

75
 UNIT-IV: CORPORATE SOCIAL RESPONSIBILITY &
GOVERNANCE, CONSUMER PROTECTION

Learning Objectives of the unit:

After completing this unit, the students will be able to:

• Define the corporate social responsibility

• Explain CSR towards varied stakeholders
• Explore Corporate Governance
• Understand Consumer Protection Act
• List out Unethical issues in Business

Corporate social responsibility (CSR)

An obligation, beyond that required by the law and economics, for a firm to pursue long term
goals that are good for society • The continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life of the workforce
and their families as well as that of the local community and society at large • About how a
company manages its business process to produce an overall positive impact on society

Corporate social responsibility means: • Conducting business in an ethical way and in the
interests of the wider community • Responding positively to emerging societal priorities and
expectations • A willingness to act ahead of regulatory confrontation • Balancing shareholder
interests against the interests of the wider community • Being a good citizen in the community.

Is CSR the same as business ethics? • There is clearly an overlap between CSR and business
ethics • Both concepts concern values, objectives and decision based on something than the
pursuit of profits • And socially responsible firms must act ethically

The difference is that ethics concern individual actions which can be assessed as right or wrong
by reference to moral principles. CSR is about the organisation’s obligations to all stakeholders
– and not just shareholders.

76
There are four dimensions of corporate responsibility • Economic - responsibility to earn profit
for owners • Legal - responsibility to comply with the law (society’s codification of right and
wrong) • Ethical - not acting just for profit but doing what is right, just and fair • Voluntary and
philanthropic - promoting human welfare and goodwill • Being a good corporate citizen
contributing to the community and the quality of life.

CORPORATE GOVERNANCE

Corporate governance refers to the set of systems, principles and processes by which a
company is governed. They provide the guidelines as to how the company can be directed or
controlled such that it can fulfill its goals and objectives in a manner that adds to the value of
the company and is also beneficial for all stakeholders in the long term. Stakeholders in this
case would include everyone ranging from the board of directors, management, shareholders
to customers, employees and society. The management of the company hence assumes the role
of a trustee for all the others. Corporate governance is based on principles such as conducting
the business with all integrity and fairness, being transparent with regard to all transactions,
making all the necessary disclosures and decisions, complying with all the laws of the land,
accountability and responsibility towards the stakeholders and commitment to conducting
business in an ethical manner. Another point which is highlighted in the SEBI report on
corporate governance is the need for those in control to be able to distinguish between what are
personal and corporate funds while managing a company. Fundamentally, there is a level of
confidence that is associated with a company that is known to have good corporate governance.
The presence of an active group of independent directors on the board contributes a great deal
towards ensuring confidence in the market. Corporate governance is known to be one of the
criteria that foreign institutional investors are increasingly depending on when deciding on
which companies to invest in. It is also known to have a positive influence on the share price
of the company. Having a clean image on the corporate governance front could also make it
easier for companies to source capital at more reasonable costs. Unfortunately, corporate
governance often becomes the centre of discussion only after the exposure of a large scam.

Corporate governance is "the system by which companies are directed and controlled". It
involves a set of relationships between a company’s management, its board, its shareholders
and other stakeholders; it deals with prevention or mitigation of the conflict of interests of
stakeholders. Ways of mitigating or preventing these conflicts of interests include the
processes, customs, policies, laws, and institutions which have impact on the way a company

77
is controlled. An important theme of corporate governance is the nature and extent of
accountability of people in the business, and mechanisms that try to decrease the principal–
agent problem. Corporate governance also includes the relationships among the many
stakeholders involved and the goals for which the corporation is governed. In contemporary
business corporations, the main external stakeholder groups are shareholders, debt holders,
trade creditors, suppliers, customers and communities affected by the corporation's activities.
Internal stakeholders are the board of directors, executives, and other employees. It guarantees
that an enterprise is directed and controlled in a responsible, professional, and transparent
manner with the purpose of safeguarding its long-term success. It is intended to increase the
confidence of shareholders and capital-market investors.

SOCIAL RESPONSIBILITY FOR DIFFERENT INTEREST GROUP

• Responsibility towards society

• Responsibility towards government
• Responsibility towards owners 3
• Responsibility towards shareholders
• Responsibility towards employee
• Responsibility towards suppliers
• Responsibility towards consumers
• Responsibility towards society
• Business need to work in society, some importance of social responsibility is also
define from society point of view. The business provide good product, try to maintain
clean environment, provide opportunity to participate to business as well as work for
the overall development of society, these are the some example of it.

Responsibility towards government

When business pay regular taxes, follow the norms of government then it is consider as social
responsibility of business which is duly fulfill by it.

Responsibility towards Owners

Owners are the persons who own the business. They contribute capital and bear the business
risks. The primary responsibilities of business towards its owners are to • Run the business

78
efficiently. • Proper utilization of capital and other resources. • Growth and appreciation of
capital • Regular and fair return on capital invested.

Responsibility towards shareholders

Investors are those who provide finance by way of investment in debentures, bonds, deposits
etc. Banks, financial institutions, and investing public are all included in this category.

The responsibilities of business towards its investors are: • Ensuring safety of their investment,
• Regular payment of interest, • Timely repayment of principal amount.

Responsibility towards Employees

Business needs employees or workers to work for it. These employees put their best effort for
the benefit of the business. So, it is the prime responsibility of every business to take care of
the interest of their employees. If the employees are satisfied and efficient, then the only
business can be successful.

The responsibilities of business towards its employees include: 4 • Timely and regular payment
of wages and salaries. • Proper working conditions and welfare amenities. • Opportunity for
better career prospects. • Job security as well as social security like facilities of provident fund,
group insurance, pension, retirement benefits, etc. • Better living conditions like housing,
transport, canteen, crèches etc. • Timely training and development.

Responsibility towards Suppliers

Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders. Certain suppliers, called distributors, supply finished products to
the consumers.

The responsibilities of business towards these suppliers are: • Giving regular orders for
purchase of goods. • Dealing on fair terms and conditions. • Availing reasonable credit period.
• Timely payment of dues.

Responsibility towards Customers

No business can survive without the support of customers. As a part of the responsibility of
business towards them the business should provide the following facilities: • Products and

79
services must be able to take care of the needs of the customers. • Products and services must
be qualitative • There must be regularity in supply of goods and services

NATURE OF SOCIAL RESPONSIBILITY

CSR is normative in nature.

CSR is a relative concept.

CSR may be started as a proactive or reactive

NEED FOR CSR

Issues such as environmental damage, improper treatment of workers, and faulty production
leading to customer inconvenience or danger are being highlighted. } Investors and investment
fund managers have began to take account of a firm’s CSR policy in making investment
decisions. } Some consumers have become increasingly sensitive to the CSR program of the
firms from which they buy their goods and services. Need for CSR for consumers and society
} It is required to encourage businesses } Consumer preference } Consumer opinions } Issues
mainly emphasized on by consumers: ◦ Product quality ◦ Money value ◦ Technological
advancements } Leads to increase in the awareness of the society } Helps in dealing with
societal matters such as: ◦ Nutrition & health issues ◦ Human rights & gender ◦ Labour practices
◦ Involvement in community issue

BENEFITS OF CSR

• Improved public image: This is crucial, as consumers assess your public image when
deciding whether to buy from you. Something simple, like staff members volunteering an hour
a week at a charity, shows that you’re a brand committed to helping others. As a result, you’ll
appear much more favorable to consumers.

• Increased brand awareness and recognition: If you’re committed to ethical practices, this news
will spread. More people will therefore hear about your brand, which creates an increased brand
awareness.

• Cost savings: Many simple changes in favour of sustainability, such as using less packaging,
will help to decrease your production costs.

80
• An advantage over competitors: By embracing CSR, you stand out from competitors in your
industry. You establish yourself as a company committed to going one step further by
considering social and environmental factors.

• Increased customer engagement: If you’re using sustainable systems, you should shout it from
the rooftops. Post it on your social media channels and create a story out of your efforts.
Furthermore, you should show your efforts to local media outlets in the hope they’ll give it
some coverage.

Customers will follow this and engage with your brand and operations.

• Greater employee engagement: Similar to customer engagement, you also need to ensure that
your employees know your CSR strategies. It’s proven that employees enjoy working more for
a company that has a good public image than one that doesn’t. Furthermore, by showing that
you’re committed to things like human rights, you’re much more likely to attract and retain the
top candidates. •

More benefits for employees: There are also a range of benefits for your employees when you
embrace CSR. Your workplace will be a more positive and productive place to work, and by
promoting things like volunteering, you encourage personal and professional growth.

A Good CSR practices can only bring in greater benefits by fostering the below aspects, 1.
Attracting and retaining employees – Increasing the employee morale and sense of belonging
to the company 2. Enriching the corporate reputation – positive image and branding benefits
are created to place the company as a responsible corporate citizen in the world market. 3. Cost
savings 4. Revenue increase from higher sales and market share 5. Brand Value 6. Can avoid
negative press and customer boycotts (risk reduction/management)

IMPORTANCE OF CSR • CSR helps in strengthening the relationship between companies

and stakeholders. • It enables continuous improvement and encourages innovations. • Attracts
the best industry talent as a socially responsible company. Provides additional motivation to
employees. • Mitigates risk as a result of its effective corporate governance framework. •
Enhances ability to manage stakeholder expectations.

EVOLUTION OF CSR IN INDIA

PHASE 1 (1850 TO 1914) The first phase of CSR is known for its charity and philanthropic
nature. CSR was influenced by family values, traditions, culture and religion, as also

81
industrialization. The wealth of businessmen was spent on the welfare of society, by setting up
temples and religious institutions. In times of drought and famine these businessmen opened
up their granaries for the poor and hungry. With the start of the colonial era, this approach to
CSR underwent a significant change. In preIndependence times, the pioneers of
industrialization, names like Tata, Birla, Godrej, Bajaj, promoted the concept of CSR by setting
up charitable foundations, educational and healthcare institutions, and trusts for community
development. During this period social benefits were driven by political motives.

PHASE 2 (1910 TO 1960) The second phase was during the Independence movement.
Mahatma Gandhi urged rich industrialists to share their wealth and benefit the poor and
marginalized in society. His concept of trusteeship helped socio-economic growth. According
to Gandhi, companies and industries were the ‘temples of modern India’. He influenced
industrialists to set up trusts for colleges, and research and training institutions. These trusts
were also involved in social reform, like rural development, education and empowerment of
women.

PHASE 3 (1950 TO 1990) This phase was characterized by the emergence of PSUs (Public
Sector Undertakings) to ensure better distribution of wealth in society. The policy on industrial
licensing and taxes, and restrictions on the private sector resulted in corporate malpractices
which finally triggered suitable legislation on corporate governance, labour and environmental
issues. Since the success rate of PSUs was not 8 significant there was a natural shift in
expectations from public to private sector, with the latter getting actively involved in socio-
economic development. In 1965, academicians, politicians and businessmen conducted a
nationwide workshop on CSR where major emphasis was given to social accountability and
transparency.

PHASE 4 (1980 ONWARDS) In this last phase CSR became characterized as a sustainable
business strategy. The wave of liberalisation, privatisation and globalisation (LPG), together
with a comparatively relaxed licensing system, led to a boom in the country’s economic
growth. This further led to an increased momentum in industrial growth, making it possible for
companies to contribute more towards social responsibility. What started as charity is now
understood and accepted as responsibility

ADVANTAGES OF CSR:

82
• It improves value and profitability A CSR plan focuses on the energy-efficiency tactics, for
instance waste recycling that can diminish the operational costs, while offering advantage to
the environment. Continuing with that, it will enhance an entity’s transparency as well as
responsibility with the media coverage, capital analysts, investors or owners of the company,
and domestic societies. As an outcome, it improves the firm’s reputational image among the
owners that they integrating the similar plan and strategies into their shares selection tactics.

Hence, it would turn into a virtuous circle where the corporation’s shares’ value would
improve, with accessibility to capital investment being relieved.

• It enhances organisation’s reputation Mixed with genuine action, a policy regarding CSR can
serve to create or enhance the company’s reputational image. If it occurs that a brand is
experiencing from adverse reputation that has resulted in losses, particularly because of
environmental concerns, the CSR plan would be considered as effective solution to improve
the damaged image and ultimately increase the profitability. In various situations, applying the
CSR policy operates as part of the business model, where buyers are commonly seen showing
more loyalty to a specific brand that has the ability to show strong commitment to
environmental concerns.

• It assist to bring motivation among the employees Almost of the global corporations know
that employees or the staff of a company are considered as the most esteemed resources, which
can be regarded as a fundamental structure of a company in relation to the CSR compliance. In
other words, it means that treating the workforce with utter 9 dignity and respect, providing
them desirable office infrastructure, friendly working culture, developing fair and unbiased
hiring practices, as well as developing a workplace that does not promote work discrimination
(regarding race or gender) is a must. Hence, focusing these points enhances the teamwork and
confidence among the employees within a good office culture.

DISADVANTAGES OF CSR:

• It needs higher costs and expenses One of the major drawbacks of implementing CSR plans
and policy is to bear high costs in relation to install CSR strategies and implementing it,
particularly for small entities. Whereas, large companies have the ability to bear such high cost
regarding the allocation of a set budget to CSR reporting. Also, small entities that comprise of
only 10 to 200 staff commonly experience issues with bringing capital investment. Although
they can consider using media coverage to convey their policy to the domestic societies and

83
their potential buyers, it would be time consuming to handle the alterations, which would
involve hiring of additional staff, meaning further salaries expenses. Furthermore, there is a
common thinking that the high costs of CSR would result in the downturn of small entities as
majority of them cannot consider the required budget to be socially accountable. As per the
critics, these entities does not have ability to bear the high costs of social media solutions,
equipment, and training sessions required to fulfil the social responsibility.

• It can increase investor’s resistance While several investors are attracted to grab shares in
entities that are publicly responsible, majority of them would consider for investment with the
hope of generating high profits. Besides, while few organizations have created reasonable
profitability from CSR, others that consider such a plan always prove as probable to lose cash
resource. Considering the spotty path record of CSR in determining growth in earnings,
shareholders focus to restrict attempts by entity managers to progress their companies in that
path.

• It promotes Greenwashing As per the critics, CSR can be considered a practice that might
result in ineffectiveness, debating that it can result to green-washing. They shows that an
entity’s management workforce has inefficient responsibility to its investors, which is directly
contradicting by CSR plans. They further focus that the accountability of senior management
to their investors is to increase profitability, and executives who emphasize on creating huge
revenue for the society and their 10 employment. Hence, this is the main motive why some
entities argue about such policy, but would do nothing or take action regarding it.

Criteria for determining the social responsibility of business } Realisation of social

responsibilities } Profit Motive } Long-term interests of the business } Greater social power,
larger shall be the social responsibilities } Larger the size, greater shall be the social
responsibilities } Social responsibility vary with the type of the company } Attracting
investment } Internalize more of its external costs

TYPES OF SOCIAL RESPONSIBILITY

Economic Responsibility What is a business? The business itself is an economic activity. Its
main function is to earn profits. To earn profits means to understand the needs and demands of
consumers whether it is regarding the quality of the product or its price. While understanding
the perspective of the consumer and meeting their needs and demand to earn a profit is the
economic responsibility of a business. When a business earns a profit, it also means that the

84
employees earn the profit in terms of incentives. The economic growth of a business is not
restricted to it but affects the society as a whole.

Legal Responsibility Legal responsibilities are not only liable to the individuals in the society
but also to the businesses in the society. As business is an entity itself, it must also follow laws
and rules. Every business has a responsibility to operate within the boundaries set by the
various commissions and agencies at 11 every level of the government. These rules and
regulations are set for maintaining balance and the greater good of the society. A law-abiding
enterprise is a socially responsible enterprise as well. The business is free to do business
however it wants but only within the boundaries of regulations of various laws such as labour
law, environmental law and criminal law. For example, it’s a business’s duty to pay taxes to
the government and keep its account books clean as it helps the government to track the
economic state of the company.

Ethical Responsibility Ethical responsibilities include the behaviour of the firm that is expected
by the society but not codified in law. The factors of ethical responsibility include that the
business must be environmentally friendly. The business should always be aware of its
activities and how do they affect the environment. It is the moral and ethical responsibility of
every human and every business.

Philanthropic Responsibility Business is one the most important pillar of the society. And
therefore it should support and improve the society whenever it can. If a business is making
significant profits it is the business responsibility that it should be philanthropic towards the
society by donating funds or its goods and services. It’s the philanthropic responsibility of the
business to help different groups of the society. It should also work towards providing free
education by opening educational institutes and training institutes or helping the people
affected by natural calamities such as floods and earthquakes. It is the responsibility of the
company management to safeguard the capital investment by avoiding speculative activity and
undertaking only healthy business ventures which give good returns on investment.

CONSUMERISM

Consumerism is a social and economic order that encourages the purchase of goods and
services in ever-greater amounts. The term is often associated with criticisms of consumption
starting with Thorstein Veblen. Veblen's subject of examination, the newly emergent middle
class arising at the turn of the twentieth century, comes to full fruition by the end of the

85
twentieth century through the process of globalization. Sometimes, the term "consumerism" is
also used to refer to the consumerists movement, consumer protection or consumer activism,
which seeks to protect and inform consumers by requiring such practices as honest packaging
and advertising, product guarantees, and improved safety standards. In this sense it is a
movement or a set of policies aimed at regulating the products, services, methods, and
standards of manufacturers, sellers, and advertisers in the interests of the buyer. In economics,
consumerism refers to economic policies placing emphasis on consumption. In an abstract
sense, it is the belief that the free choice of consumers should dictate the economic structure of
a society (cf. Producerism, especially in the British sense of the term). The term "consumerism"
was first used in 1915 to refer to "advocacy of the rights and interests of consumers".

UNETHICAL ISSUES, IN SALES, MARKETING AND TECHNOLOGY

Ethics in marketing deals with the principles, values and/or ideals by which marketers (and
marketing institutions) ought to act. Marketing ethics is also contested terrain, beyond the
previously described issue of potential conflicts between profitability and other concerns.
Ethical marketing issues include marketing redundant or dangerous products/services
transparency about environmental risks, transparency about product ingredients such as
genetically modified organisms possible health risks, financial risks, security risks, etc., respect
for consumer privacy and autonomy, advertising truthfulness and fairness in pricing &
distribution. Markets present a clash of interest between various players. There is competition
for resources, customers and price etc, which breeds ground for activities that may not get
ethical sanctions. A certain code of conduct, policies and practices called ethics are required to
manage markets and marketing. Marketing is the heart of all businesses and all other functions
depend upon the same for keeping the business moving. It is one business function that interacts
the most with markets, in fact markets are meant to sell and they exist only when they sell! In
such a scenario there are bound to be multiple players and a clash is inevitable. Such clash
leads to malpractices like hoarding, price competitions, brand wars and use of unfair tactics,
which is precisely where marketing ethics come into play. Simply put, ethics means principle
or values by which marketing ought to be conducted in the market place. Logically also when
there are huge number of transactions involved, a certain code or guiding principles are
required to ensure that operations and industry competitiveness is fair and beneficial to the end
user. There are different philosophies or schools of thought for ethics in marketing, one is the
political philosophy and the other is the transaction focused. Whereas one school of thought

86
says that all marketing efforts should be focused on maximizing the shareholder value and that
this is the only marketing ethics; the other believes that that marketing and market is equally
responsible to consumers, other stake holders and the shareholders. The tactic of targeting
targeted segments, creating needs that were inexistent till now, transparency about the source
of labor and environmental risks, transparency about the use of source and the ingredients,
appropriate labeling, mentioning associated health risks, advertising jurisprudence and not
making false promises fall within the ambit of marketing ethics. Lots of marketing and
promotion was carried out for goods and services that were not a need till yesterday and only
a luxury. Today cell phones have become a need and a status symbol! These are issues that are
being discussed in marketing ethics nowadays. Marketing ethics is in its budding stage only
considering that it came into being only in late 1990s. Like other ethical disciplines, marketing
ethics is also looked up from various perspectives. There is the perspective of virtue,
expediency and other perspectives. But like other ethics there is also the difficulty of deciding
the agency responsible for ethical practice. Since there is not one single agency responsible for
ethics this gives the independence to an individual or to any marketing agency to act on its own
and be ethical. Marketing ethics unlike other business ethics is not only restricted to the field
of marketing alone. It influences many aspects of our life and especially in developing
perceptions in the minds of people and creating identities, classes and sections in the society.
The visual channels of communication used for marketing sometimes lead to closure of
knowledge, opinions, ideas and beliefs. It creates prejudices in the mind of people.

UNETHICAL ISSUES IN TECHNOLOGY

Scientific advances allow businesses to use technology to reach goals more easily and more
completely than ever before. In some areas, however, such applications of technology start
infringing on the rights of individuals and may be unethical. Governments and ethically
operated companies are aware of these limitations. Governments have passed privacy laws and
regulated communication companies. Some companies self-censor and apply internal policies
to limit unethical behavior. Businesses that wish to be considered ethical must look at whether
applying certain technologies may harm some individuals and constrain such applications to
what is absolutely necessary. Privacy Individual privacy is one area that has been identified
clearly as a base for unethical business behavior through the application of technologies.
Companies can track Internet usage, buying habits and individual movement as well as collect
personal information about millions of customers or even potential clients. While governments

87
have passed legislation restricting the collection of personal data and allowing individuals some
control over what companies can collect and store, ethical businesses must decide --
independently of legislation -- what is appropriate behavior. Security Companies monitor
employees and visitors and collect much additional information in the name of security. Ethical
issues arise from the continuous monitoring of employee activity and the recording of security
camera images. An unjustified level of employee surveillance is ethically questionable; the
ethical company must try to establish a level of monitoring it can justify. The surveillance of
non-employees, such as visitors or suppliers' representatives, must be constrained to an even
lower level to be ethically acceptable. Businesses today are technology and innovation driven.
There is huge competition in the sphere and therefore like other industry or business function
ethics is essential here also. Specially because ethics by itself is only a tool to create and doesn’t
know ethics or morals. Every day we have innovative products and services that announce their
arrival in the market place and others that go obsolete. It is this technology and innovation that
leads to ethical issues, considering the competition to stay ahead by innovating is immense.
Issues like data mining, invasion to privacy, data theft and workplace monitoring are common
and critical. In technology we speak of ethics in two contexts; one is whether the pace of
technological innovation is benefiting the humankind or not, the other is either severely
empowering people while choking others for the same. Technology, for example, has
drastically replaced people at work. In the first case we are compelled to think about the pace
at which technology is progressing. There are manifold implications here, be it things like
computer security or viruses, Trojans, spam’s that invade the privacy of people or the fact the
technology is promoting consumerism. Nowadays data storage is primarily on computer
systems. With the advent of internet technology the world has got interconnected and data can
be accessed remotely by those who are otherwise unauthorized to do the same. This is one of
the pitfalls of innovation. The other one i.e. the pace of technological change also raises the
question of ethics. New products make their way and leave the existing ones obsolete. In fact
technological change and innovation is at the heart of consumerism, which is bad for economy
and environment in general. The recent economic downturn makes up for a very good example.
Increasingly technological products are adding up to environmental degradation. Computer
screens, keyboards, the ink used in the printers are some of the ways in which technology is
polluting the environment. All these produce toxins that cannot be decomposed easily. The
other major issue in technology that brings in ethics is interface between technology and the
computers. Many scientists are of the opinion that the world will come to an end with a war
between the humankind and the technology. Technology they say will advance to an extent

88
beyond the control of those who have made it! No doubt technology has replaced people at
work and made certain others redundant. On the flip side many people have been raised to
power while others have been severely handicapped. The latter is especially true for third world
countries. New manufacturing processes that are outsourced either replace manpower there or
either exploits the latter in the name of employment by engaging them cheaper prices.
Technology has also made inroads into the field of medicine and life care. New cloning
techniques, genetic modifications or other life saving drugs need continuous monitoring and
surveillance. Bioethics has thus emerged as ethics in the field of medical technology. Whereas
we cannot talk of controlling technology and innovation, the better way is to adapt and change.
The role of ethics in technology is of managing rather controlling the same. Continuous
monitoring is required to keep track of latest innovations and technological changes and for
ensuring fair practices.

FEATURES OF CSR LAWS

The broad and important features of the CSR laws are as follows:

Quantum of money utilized for CSR purposes are to be compulsorily included in the annual
profit-loss report released by the company.

• The CSR rules came into force on 1st April 2014 and will include subsidiary companies,
holdings and other foreign corporate organizations which are involved in business activities in
India.

• CSR has been defined in a rather broad manner in Schedule VII of Companies Act, 2013. The
definition is exhaustive as it includes those specific CSR activities listed in Schedule VII and
other social programmes not listed in schedule VII, whose inclusion as a CSR activity is left to
the company’s discretion

PROFIT MAXIMIZATION VS SOCIAL REPONSIBILITY

Being a socially responsible business is a concept that includes a variety of options, including
helping advance a cause or profession, donating time, reducing environmental impacts,
pursuing more diversified hiring or making monetary donations. Some capitalists believe that
their existence is enough of a social contribution because they create jobs and provide tax
money for municipalities and state and local governments. The more profits they generate, the
more they benefit society. Some entrepreneurs feel they can better help advance causes than a

89
government bureaucracy can. Other business owners limit their social activities to reducing
waste, pollution and other environmental problems their business might cause. CSR IN 2020
The verdict is out. Infosys has beaten Tata Chemicals for the Number 1 position in our 2020
India sustainability and CSR chart. Tata Chemicals held the top spot for three consecutive
years, until now. Infosys was the second ranker in 2019, and has risen to numero uno for CSR
in 2020. Infosys Foundation Chair Sudha Murthy’s loving perseverance in supporting the most
deserving has left a deep impact on other businesses to do social good.

All the companies mentioned in this list are responsible businesses that place corporate social
responsibility (CSR) high on the agenda. Implementation in 2020 is a mixed bag, what with
COVID-19 activities taking up the biggest chunk of funding. A number of cyclones and floods
wreaked havoc in large parts of the subcontinent. As a result, funds were also directed to
disaster relief operations in Assam, Kerala, Bihar, Odisha and West Bengal. Sustainability and
CSR in 2020 is a work in progress, since we haven’t reached the year-end yet. However, these
rankings take into account the FY 2019-20 CSR 14 projects which have been running since
last year. Factors we took into account were impact assessment, compliance, funding and
implementation on ground. Which Indian companies topped CSR in 2020? Tata Chemicals has
dropped to the third position after being No. 1 for the past three years. Infosys has climbed one
spot. Mahindra & Mahindra has climbed two spots to claim the second rank in the top 10 Indian
companies for CSR in 2020. ITC has also climbed up from No. 5 to the fourth position this
year. The Vedanta Group has outdone itself in the corporate citizenship realm, making it to the
top 5, from its previous 8th rank. A new entry on the chart is Grasim Industries. The part of the
Aditya Birla Group, Grasim won numerous awards for its flagship programmes. Without
further adieu, here’s our top 10 for CSR in 2020. 1. Infosys Limited “CSR can’t be merely a
job, it’s a passion,” says Sudha Murthy, Chairperson, Infosys Foundation, the CSR arm of IT
services conglomerate Infosys. The company spent nearly Rs. 360 crore towards various CSR
schemes this year. COVID-19 relief work dominated the activities, with education and health-
related programmes following after. Among the main CSR initiatives in the financial year 2019-
20 were a 100-bed quarantine setup in Bengaluru in partnership with Narayana Health City, and
another one which had 182 beds for COVID-19 patients for Bowring and Lady Curzon
Medical College & Research Institute. Infosys Foundation primarily works with
nongovernmental organizations as the nodal agency for implementing projects. Highlights of
the Foundation’s interventions in the past include the introduction of Aarohan Social
Innovation Awards, restoration of water bodies in Karnataka, enabling the pursuit of access

90
and excellence in sports through the GoSports Foundation, and disaster relief efforts in Tamil
Nadu, Karnataka and Kerala. 2. Mahindra & Mahindra Ltd. Anand Mahindra, Chairman of the
Mahindra Group, declared a series of interventions after the pandemic hit the nation, from
manufacturing ventilators to using Mahindra Holidays resorts for COVID-19 patient care.

Project teams have assisted the Government and the defence forces to build quarantine
facilities. The company has set up a special fund through the Mahindra Foundation to assist
small businesses and professionals who have been affected financially. The chairman donated
100% of his salary to the fund, and urged his colleagues to volunteer their contributions. 15
Mahindra & Mahindra spent INR 93.50 crores on CSR initiatives during the financial year
2018- 19, according to the annual report published by the company. The company spent INR
8.36 crore on Project Nanhi Kali which provides educational support to underprivileged girls
in India through an afterschool support programme. Through Mahindra Hariyali 0.95 million
trees were planted which contributed to improving green cover and protecting bio-diversity in
the country. Of these, 0.83 million trees were planted in the Araku valley, which besides
greening the environment also provided livelihood support to tribal farmers growing coffee in
this region. 3. Tata Chemicals Ltd. Although the prescribed CSR for 2019-2020 was 21.39
Crores, the company went on to spend 37.81 crores on community development projects.
Improving the quality of life and fostering sustainable and integrated development in the
communities where it operates is central to Tata Chemicals’ corporate philosophy. Tata
Chemicals spends INR 12 crores on CSR annually, and wildlife conservation accounts for 30%
of the budget of the TCSRD. The spend is distributed over the three places the company has
operations — Mithapur in Gujarat, Haldia in West Bengal and Babrala, Uttar Pradesh. Tata
Chemicals established Tata Chemicals Society for Rural Development (TCSRD) in 1980 as a
society and trust. It lays emphasis on the spirit of participatory development by involving the
beneficiaries at each stage of the development process which ensures viability and
sustainability of the programmes. 4. ITC Ltd. The Indian multinational conglomerate company
headquartered in Kolkata has spent more than the prescribed CSR budget in the last three
financial years. CSR of ITC Limited set up a COVID Contingency Fund of INR 215 crores for
those affected. Together with local authorities, they distributed cooked meals, food and hygiene
products across 25 States and Union Territories. Responding to the needs arising out of the
unprecedented lockdown, ITC has spearheaded a CSR initiative to enable the creation of an
eco-system that would lead to significant livelihood generation for farmers and daily wage
earners under the ambit of the Government’s MGNREG Scheme. ITC is among the top Indian

91
companies for CSR because it believes that in the strategic context of business, enterprises
possess, beyond mere financial resources, the transformational capacity to create game-
changing development models.
PROGRESS CHECK:

1. states that a consumer should know the reliefs available to him in case a
product or service falls short of his expectations .
(a) Right to Safety (b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (d)

2. The Consumer Protection Act provides relief to customers such as replacement of product
, removal of defect in the product, compensation for any loss or injury suffered by the
consumer. Which consumer right has been highlighted in this statement.
(a)Right to Safety (b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (b)

3. states that, the consumer has a right to pick a product from a variety of products
at competitive prices.
(a)Right to Safety (b) Right to choose (c) Right to be informed (d) Right to Consumer
Education
Ans- (b)

4. Most of the reputed firms have set up consumer service and grievance cells to listen to
the consumers complaints and take appropriate steps to redress their grievances. Which
consumer right been highlighted in this statement. Which consumer right has been
highlighted in this statement.
(a) Right to heard (b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (a)

92
5. States that , the consumer has a right to file a complaint and to be heard in case of
dissatisfaction with a product.
(a) Right to heard(b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (a)

6. Mahesh bought a packet of chips from a local shopkeeper and found that the ingredients
given on the labels were not legible. He complained about it to the company . The company
sent a written apology stating that they will make sure that existing packets are withdrawn
from the market and new packets with legible labels are soon made available. Which
Consumer right has been Mahesh exercised.
(a) Right to heard(b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (b)

7. Rajesh Pal, a marketing manager is a patient of diabetes for which he takes medicines
regularly . One day, on his tour to Patna , he had an accident and was hospitalized. Due to
doctors negligence a delicate nerve of his right leg was cut rendering him crippled
throughout his life. Which consumer right that has been violated by the doctors under the
Consumer Protection Act , 1986 in the above situation.
(a) Right to heard(b) Right to Seek Redressal (c) Right to safety (d) Right to Consumer
Education
Ans- (c)

8. Which of the following is not a reason for importance of consumer protection from the
point of view of consumers?
(a) Consumer ignorance (b) Consumer Apathy (c) Consumer Exploitation (d) Unorganised
Consumers.
Ans- (b)

93
9. From the point of view of business which one of the following is a reason because of
which consumer protection is important?
(a) Dynamic Environment (b) Fast Technological Development (c) Government intervention
(d) Competitive Market
Ans- (c)
10. Which one of the following is not a consumer right?

(a) Right to heard(b) Right to Seek Redressal (c) Right to be seek discount (d) Right to
Consumer Education
Ans- (c)

11. Which of the following cannot file a complaint under Consumer Protection Act,1986?

(a) Any consumer under the definition of Consumer Protection Act

(b) Central or State Government

(c) Legal heir of a deceased consumer

(d) A person who obtains the goods with no consideration.

Ans- (d)

12. An appeal for the compensation by a consumer can be made to the Supreme court.

(a) Where the value of goods along with compensation claimed exceed 1 crore

(b) When the appeal has been made at state Commission but the aggrieved party is not
satisfied with the decision of National commission.
(c) Where the aggrieved party is not satisfied with the decision of national commission and
the value of goods along with the compensation claimed exceeds 1 crore.
(d) Where value of goods along with the compensation exceeds 1 crore irrespective of the
appeal made at any level.
Ans- (c)

13. Which of the following statements is false about responsibilities of a consumer :

94
(a) Consumer must follow the instructions and use the product safely .

(b) Consumer must ask for cash memo . i.e proof of purchase

(c) Consumer must file a complaint in a consumer court even if the amount of loss is small.

(d) A consumer must encourage unethical practices like black marketing , hoarding etc.

Ans- (d)

14. Who cannot file the complaint under the Consumer Protection Act:

(a) Any consumer Protection Council

(b) The Central Government or any State Government

(c) One or more consumers, on behalf of numerous consumers having the same interest

(d) A legal heir or representative of a deceased consumer.

Ans- (a)

16. “ Consumer organisations help a consumer to complain by performing the function of

encouraging consumers to strongly protest and take an action against unscrupulous,
exploitative and unfair trade practices of the seller." Which consumer right has been
highlighted in this statement
(a) Right to heard(b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer
Education
Ans- (d)

17. The National Commission consists of a President and other members. One of
whom should be a women.
(a)At least six (b) At least four (c) at least two (d) at least three
Ans- (b)
18. Rights of Consumer protection are protected under

(a) Consumer protection Act , 1988

(b) Consumer protection Act , 1984

95
(c) Consumer protection Act , 1982

(d) Consumer protection Act , 1986

Ans- (d)
19. The objectives of corporate governance include

(a) To align the company's goals with the stakeholders'

(b) To specify the responsibility of the Board of Directors and the Chief Executives

(c) To improve the image of the corporate sector and enable it to raise capital in domestic
and foreign capital markets.
(d) All of the above
Ans- (d)
20. Which of the statements about corporate governance is untrue?

(a) Corporate oligarchy and corporate scandals have been one of the reasons for need for
corporate governance.
(b) Social responsibilities lie at the essence of corporate responsibility.
(c)Global capital flows can't be sustained through corporate governance.
(d)Market-driven economies require higher standards of corporate governance.
Ans-(c)
21. Which one of the following is not a pillar of corporate governance?

(a) Transparency

(b) Impunity

(c) Independance

(c) Reporting
Ans- (b)
22. Which of the following is a reason for the ineffectiveness of independent directors

96
(a) Many of them have full-time responsibilities and are on several boards.

(b) They have little at stake at the company on whose board they sit.

(c) They are often friends of the promoters.

(d) All of the above.

Ans- (d)

23. Which of the following isn't a stakeholder group?

a) Suppliers

b) Consumers

C) Government

d) Leftists
Ans- (d)
24. The idea of compassionate capitalism was propounded by

a) Bill Gates

b) Donald Trump

c) Ratan Tata

d) Narayan Murty
Ans- d)
25. The theory of trusteeship was propounded by
a)Kumar Mangalam Birla
b) Narayan Murty

c) Mukesh Ambani

d) Mahatma Gandhi
Ans- d)

97
26. Which of the following is capable of doing maximum good to society?

(a) Business success

(b) Laws and regulations

(c) Ethics

(d) Professional management

Answer: (c) Ethics

27. Social responsibly of a corporation means obligation to act in a manner which will serve
the best interest of the
(a) Owners

(b) Workers

(c) Consumers

(d) Society
Answer: (d) Society

28. Which of the following is false in case of Corporate Social Responsibility towards
Suppliers
(a) Giving regular orders for purchase of goods.

(b) Dealing on unfair terms and conditions.

(c) Availing reasonable credit period.

(d)Timely payment of dues.
Answer: (b) Dealing on unfair terms and conditions.

98
29. is the standardized mark on jewelry

(a) ISI

(b) FPO

(c) Hallmark

(d) CERC

Answer: (c) Hallmark

31. Which of the following factors encourage good ethics in the workplace?

(a) Transparency

(b) fair treatment to the employees of all levels

(c) both (a) and (b)

(d) bribe

Answer: (c) both (a) and (b)

32. Which of the following are ethical issues in financial markets-?

(a) Churning

(b) Illegal dividend payment

(c) creative accounting

(d) none of these

Answer: (d) none of these

33. To promote and raise the Standard of Corporate Governance among the companies
listed in Indian Stock Exchanges, the SEBI appoints a governance under the chairmanship of

99
(a) Kumar Mangalam Birla

(b) Ajay Tyagi

(c) T.S.Vijayan

(d) A. K. Mathur

Answer: (a) Kumar Mangalam Birla

34. SEBI issued certain guidelines for corporate governance which were incorporated in
of the listing agreement between the company and the stock exchange.

(a) Clause 59

(b) Clause 49

(c) Clause 50

(d) Clause 45
Answer: (b) Clause 49

35. Which among these is/are Corporate Social responsibility towards investors

(a) Ensuring safety of their investment

(b) Regular payment of interest

(c) both (a) and (b)

(d) none of these

LONG ANSWER QUESTIONS

1. What is the purpose of corporate governance?

100
2. What do you mean by corporate social responsibility? Why has it gained
a lot of significance these days in policy discourse of both government of India
and Indian Business Community
3. Describe various theories of corporate governance.
4. “Directors are the key persons in corporate governance structure”. Comment.
5. Explain about Nature and evolution of corporate governance..
6. What is the difference between Corportate governacnce and management?
7. Define Coprorate governance. Explain its importance in business
8. Explain the appointment, duties and responsibilities of auditors of limited company.
9. What do you mean by stake holders? Who are the major stake holders involved in
business?

101
REVISION

PROGRESS CHECK:

Q.1. What is meant by the phrase CSR?

a) Corporate Social Responsibility

b) Company Social Responsibility

c) Corporate Society Responsibility

d) Company Society Responsibility

Q.2. What is meant by the phrase 'teleological ethics'?

a) Is used to judge is an action is right, fair and honest.

b) An action can only be judged by its consequences.

c) Developing the individual personal characteristics.

d) The key purpose of ethics is to increase freedom.

Q.3. What does Milton Friedman believe to be the sole responsibility of business?

a) The only social responsibility of business is to its shareholders.

b) Managers should act in ways that balance the interest of society and

shareholders.

c) The primary responsibility organizations have is to its employees.

102
d) The primary responsibility organizations have is to its stakeholders.

Q.4. Why, according to stakeholder theory, is it in companies' best interests to

pay

attention to their stakeholders?

a) If firms only act in their own self-interest employees may feel exploited.

b) If firms only act in their own self-interest government might put more

regulation on them.

c) If firms only act in their own self-interest customers might not like the

image that the company portray.

d) If firms only act in their own self-interest and inflict harm on stakeholders

then society might withdraw its support.

Q.5. What is the enlightened self-interest model of CSR?

a) That it is in an organization's own best interest to put itself first rather than

its ethics.

b) That it is in an organization's best interest to consider what a shareholder

would want.

c) That it is in an organization's own best interest to act in an ethical way.

d) That it is in an organization's own best interest to follow the legislation

and abide by the law.

103
Q.6. What is green washing?

a) Transforming products to be more ethical.

b) Making a product appear more ethical that it really is.

c) Converting the company to green production methods.

d) Convincing customers to buy ethically.

Q.7. What is triple bottom line?

a) An accounting tool that looks at the impact on people, planet and profits.

b) A management strategy which states all the attention should be on profits.

c) An accounting tool that looks at cost, profit and loss.

d) A management strategy which focuses on corporate social responsibility.

Q.8. Why do alternative organizations run differently from conventional

shareholder led approach?

a) They do not have shareholders.

b) They are run in non-hierarchical ways which aim to provide a positive

impact on society rather than to make profit.

c) They priorities corporate social responsibility.

d) They aim to give money to charities and good causes.

104
Q.9. What does and Ethical Foundation for an organisation embody?

a) The structure, operational and conduct of the activities of the organization

b) The basic principles which govern the external and internal relations of

the organization

c) Neither of the above

d) All of these

Q.10.A _ sets out the purpose and general direction for the

organisation?

a) Mission statement b) Purpose statement

c) Vision d) Profit statement

Q.11. Which of the following would most effectively act as the primary objective
of

a business organisation?

a) To make a profit

b) To procure resources

c) To communicate with shareholders

d) To mediate between the organisation and the environment

105
Q.12. Which of the following does the term Corporate Social Responsibility relate

to?

a) Ethical conduct b) Environmental practice

c) Community investment d) All of the above

Q.13. Who are organisational stakeholders?

a) Government b) c) Employees

d) Customers e) f) All of the above

Q.14. What is Ethics to do with?

a) The wider community b) Business

c) Right and wrong d) Nothing

Q.15. Which of the following is an example of an area where business ethics

apply?

106
a) Conduct of international operations

b) Nowhere

c) In the personal life of staff

d) None of the above

Q.16. The four types of social responsibility include:

a) legal, philanthropic, economic, and ethical

b) ethical, moral, social, and economic

c) philanthropic, justice, economic, and ethical

d) legal, moral, ethical, and economic

Q.17. The dimension of social responsibility refers to a business's

societal contribution of time, money, and other resources.

a) Ethical b) Philanthropic

c) Volunteerism d) Strategic

Q.18.A stakeholder orientation includes all of the following activities except:

a) generating data about stakeholder groups

b) assessing the firm's effects on stakeholder groups

107
c) distributing stakeholder information throughout the firm

d) minimizing the influence of stakeholder information on the firm

Q.19. Stakeholders are considered more important to an organization when:

a) they can make use of their power on the organization

b) they do not emphasize the urgency of their issues

c) their issues are not legitimate

d) they can express themselves articulately

Q.20. is a problem, situation, or opportunity requiring an individual,

group, or organization to choose among several actions that must be

evaluated as right or wrong.

a) Crisis b) ethical issue

c) indictment d) fraud

Q.21. Which moral philosophy seeks the greatest good for the greatest number of

people?

108
a) Consequentialism b) Utilitarianism

c) Egoism d) Ethical formalism

Q.22. Better access to certain markets, differentiation of products, and the sale of

pollution-control technology are ways in which better environmental

performance can:

a) increase revenue b) increase costs

c) decrease revenue d) decrease costs

Q.23. Atmospheric issues include all of the following except:

a) acid rain b) global warming

c) air pollution d) water quantity

Q.24. To be successful, business ethics training programs need to:

a) focus on personal opinions of employees.

b) be limited to upper executives.

c) educate employees on formal ethical frameworks and models of ethical

decision making.

109
d) promote the use of emotions in making tough ethical decisions.

Q.25. Most companies begin the process of establishing organizational ethics

programs by developing:

a) ethics training programs.

b) codes of conduct.

c) ethics enforcement mechanisms.

d) hidden agendas.

Q.26. The ability to interpret and adapt successfully to different national,

organizational, and professional cultures is called:

a) national competitiveness. b) global development.

c) cultural intelligence. d) stakeholder sensitivity.

Q.27. Which of the following is a problem presented by ethics audits?

a) They may be used to reallocate resources.

b) They identify practices that need improvement.

c) Selecting auditors may be difficult.

110
d) They may pinpoint problems with stakeholder relationships.

Q.28. The first step in the auditing process should be to secure the commitment
of:

a) employees. b) top executives and directors.

c) stockholders. d) customers.

Q.29. Codes of conduct and codes of ethics

a) are formal statements that describe what an organization expects of its

employees.

b) become necessary only after a company has been in legal trouble.

c) are designed for top executives and managers, not regular employees.

d) rarely become an effective component of the ethics and compliance

program.

Q.30. An organisation's obligation to act to protect and improve society's welfare

as well as its own interests is referred to as

a) organisational social responsibility

b) organisational social responsiveness

c) corporate obligation

d) business ethics

111
Q.31. External audit of the accounts of a limited company is required

a) because it is demanded by the company’s bankers

b) by the Companies Act 2013

c) at the discretion of the shareholders

d) to detect fraud

Q.32. Directors’ responsibilities are unlikely to include.

a) a fiduciary duty

b) a duty to keep proper accounting records

c) a duty to propose high dividends for shareholders

d) a duty of care

Q.33. A company may become insolvent if it

a) has negative working capital

b) cannot meet its budgeted level of profit

c) makes a loss

d) cannot pay creditors in full after realisation of its assets

Q.34. Fraudulent trading may be

a) a civil offence committed by any employee

112
b) a criminal offence committed only by directors of a limited company

c) a civil and a criminal offence committed only by directors of a limited

company

d) a civil and a criminal offence committed by any employee

Q.35. Which of the following actions will not help directors to protect themselves

from non-compliance with their obligations and responsibilities?

a) keeping themselves fully informed about company affairs

b) ensuring that regular management accounts are prepared by the

company

c) seeking professional help

d) including a disclaimer clause in their service contracts

Q.36. The view that sees profit maximization as the main objective is known as:

a) Shareholder theory b) Principal-agent

problem

c) Stakeholder theory d) Corporation theory

Q.37. Where an organization takes into account the effect its strategic decisions

have on society, this is known as:

113
a) Corporate governance

b) Business policy

c) Business ethics

d) Corporate social responsibility

Q.38. A is a formal statement of an organization primary values

and the ethical rules it expects its employees to follow

a) mission statement b) statement of purpose

c) code of ethics d) vision statement

Q.39. Which of these is a factor that affects ethical and unethical behaviour?

a) Ethical dilemma b) Diversity

c) Teamwork d) Open communication

Q.40. The term refers to principles, values and beliefs that define

right and wrong behaviour

a. Ethics

b. Values

114
c. Morals

d. CSR

Q.41. are those individuals who raise ethical concerns or issues

to others inside or outside the organisation.

a. Entrepreneur

b. Whistle blowers

c. Social entrepreneur

d. Social impact management

Q.42. CSR is mandatory under which section of the Companies Act 2013.

a. 135

b. 49

c. 2A

d. 245

Q.43. Philanthropy is derived from which Greek word

a. Philantry

b. Philosophy

c. Philanthropos

115
d. Physiology

Q.44. Triple Bottom Line consist of

a. Profit, Production , People,

b. People, Planet, Profit

c. Period, People , Planet

d. Production, Profit, People

Q.45. J.R.P. Daza developed which model

a. Ripple Effect model

b. Analytical model

c. Reference model

d. Pearl model

Q.46. CSR 2.0 Model was developed by:

a. G.K. Kanji and P.K Chopra

b. C Marsden and J. Andiof

c. Wayne Visser

d. C.H. Chen

116
Q.47. Which of the below is not a general models of CSR

a. Stakeholder Model

b. Ethical Model

c. Statist Model

d. Company Model

Q.48. Which of the following are Category under FICCI Corporate Social

Responsibility Award.

a. Women Empowerment

b. Environment Sustainability

c. Health, Water and Sanitation

d. Marketing Excellence

Q.49. What percentage of average net profits shall be spent on CSR as per

provisions of the Companies Act 2013.

a. 3%

b. 2%

c. 1.5%

d. 3%

Which of these activities are listed in Schedule VII of Companies Act 2013

117
a. Promotion of Education

b. Rural Development Projects

c. Eradicating extreme hunger and poverty

d: Production of resources

Q.51. NGO stands for

a. National Government Organisation.

b. Non-governmental Organisation

c. National governmental Officer

d. Non-governmental Official

Q.52. Which of the following standards are not internationally recognised CSR

Standards.

a. ISO 14000

b. SA 8000

c. AA 1000

d. AGMARK

Q.53. How many principals for social responsibility are laid in UN Global

Compact

a: 5

118
b. 10

c.7

d. 18

Q.54. Which award is an initative of NGOBOX

a. CSR Impact

b. Global CSR

c. FICCI-CSR

d. Golden Peacock

Q.55. Rules & Norms for interacting with others on internet is called

a. Nanotech

b. Plagiarism

c. Code

d. Netiquettes

Q.56. Study of ethical issues arising out of the case & development of electronic

technologies is known as

a. Marketing Ethics

119
b. HRM Ethics

c. IT Ethics

d. Sales Ethics

Q.57. Which of the below term places emphasis on meeting the needs of the

present and future generations

a. Education

b. Sustainable Development

c. Healthy Living

d. Physiological Development

Q.58. Act of copying another persons ideas , words or work and pretending as if

they are tour own is known as

a. Plagiarism

b. Duplication

c. Editing

d. Rewriting

Q.59. Gandhian principle concerning wealth and wealth creation was based on

a. Trusteeship

120
b. Fellowship

c. Capitalism

d. Socialism

Q.60. The reduction of employees through VRS and CRS schemes is called

a. Outsourcing

b. Reducing

c. Downsizing

d. Layoff

Q.61. The tool used by management to track various data pertaining to an

organisation is known as

a. BIS

b.CRM

c. MIS

d. CSR

Q.62. The bundle of rights given by law to the creators of musical and artistic

121
works is called

a. GIS

b. Trademark

c. Copyright

d. Patent

Q.63. In which Country was the Ethical Trading Initative initiated Ethical Trading

Initative initiated in 1998

a. England

b. France

c. China

d. USA

Q.64. Chairman of audit committee is an Director

a. Executive

b. Independent

c. Nominee

d. Representative

Q.65. What enlists principle of responsible investment

122
a. SA 8000

b. PRI

c. OHSAS

d. GRI

Q.66. Netwoth of companies undertaking CSR as per Companies Act 2013

should be

a. 500 crore

b. 50 crore

c. 5 Crore

d. 5000 crore

Q.67. Which legislation in India mandates compulsory undertaking of CSR

activities by prescribed companies

a. Companies Act 1956

b. Companies Act 2013

c. Prevention of Water Pollution Act

d. Environment Protection Act

Q.68. Which legislation in India mandates compulsory undertaking of CSR

activities by prescribed companies

123
a. Companies Act 1956

b. Companies Act 2013

c. Prevention of Water Pollution Act

d. Environment Protection Act

Q.69. ISO 14000 standard deals with

a. Production Management

b. Environmental Management

c. Ethics Management

d. Total Quality Management

Q. 70. Dow Jones Sustainability Indices

a. Companies forming part of BSE Sensex

b. Companies forming part of MCX

c. Companies forming part of NSE Nifty 50

d.Companies in terms of economic, environmental and social criteria.

Q. 71. CSR is positively correlated with revenue and profit because:

a. Consumers do not respond positively to links between the organization and

124
ethical and environmentally acceptable outcomes

b. Consumers respond positively to links between the organization and ethical

and

environmentally acceptable outcomes

c. Being ethical costs money

d. An increase in demand will reduce revenue and profitability

Q. 72. Themes which emphasise the existence of universal principles to be

followed because of their intrinsic 'rightness' are called:

a. Ethical learning and growth

b. Deontological ethics

c. Virtue ethics

d. Teleological ethics

Q 73. Themes which see institutions as necessary to achieve desirable ethical

outcomes are called:

a. Deontological ethics

b. Ethical learning and growth

c. Virtue ethics

d. Teleological ethics

125
Q 74. A set of rules or instructions which identify specific and detailed actions
that

must be undertaken or avoided is called a:

a. Code of conduct

b. Auditor's report

c. Mission statement

d. Chairman's report

Q 75. Which of the following word refers to 'doing business with your

grandchildren's interests at heart'?

a. Responsibility b. Sustainability

c. Agility d. Integrity

Q 76. Which of the below is not social responsibility of business towards the

owners of business includes

a. Maximum ROI. b. Report about progress.

c. Report of Profit. d. Negative Networth

Q 78. Which of these is not an ethical issue in Marketing.

a. Unhealthy Competition b. Surrogate Advertising

c. Use of Children in Advertising d. Brand Building

126
Q 79. Which of the below is not an ethical issue related to Information
Technology

a. Invasion of Privacy b. Data Theft

c. Workplace Monitoring d. Use of Computers

Q 80. Carbon monoxide emitted by automobile directly contributes to

(a) Water pollution (b) Noise pollution

(c) Land pollution (d) Air Pollution

Q 81. That an enterprise must behave as a good citizen is an example of its

responsibility towards

(a) Owners (b) Workers

(c) Consumers (d) Community

Q 82. The primary stakeholders of a business are:

a. Customers. b. Suppliers.

c. Shareholders. d. Creditors.

Q83. The goal of corporate governance and business ethics education is to:

a. Teach students their professional accountability and to uphold their personal

Integrity to society.

b. Change the way in which ethics is taught to students.

127
c. Create more ethics standards by which corporate professionals must operate.

d. Increase the workload for accounting students

Q84. The internal audit function is least effective when the department:

a. Is non-independent.

b. Is competent.

c. Is objective.

d. Exhibits integrity

Q85. Under the , both internal and external corporate governance

mechanisms are intended to induce managerial actions that maximize profit and

shareholder value.

a. Shareholder theory.

b. Agency theory.

c. Stakeholder theory.

d. Corporate governance theory

Q86.One of the objectives of the Sarbanes-Oxley Act was to:

a. Increase the cost of compliance with federal regulations.

b. Force foreign companies to delist from U.S. capital market exchanges.

128
c. Improve the quality and transparency of financial reporting.

d. Increase the compliance burden for small companies.

Q87. An organization’s appropriate tone at the top promoting ethical conduct is

an

example of:

a. Ethics sensitivity.

b. Ethics incentives.

c. Ethical behavior.

d. Consequentialist.

Q88. An independent director is one who:

a. Did not attend a school supported by the company.

b. Does not have outside relationships with other directors.

c. Does not have any other relationships with the company other than his or her

directorship.

d. Is closely associated with company in day to day business activities

Q 89. The environmental analysis includes

a. Political conditions

b.Social factors

129
c.Economic conditions

d. All of the above

Q 90. If you believe in making decisions for the good of most people, you can be

described as following which school of thought?

a. utilitarianism

b. teleology

c. deontology

d. egoism

Q 91. Values and ethics shape the-

(a) Corporate unity (b) Corporate discipline

(c) Corporate culture (d) Corporate differences

Q 92. The moral principles, standards of behaviour, or set of values that guide a

person’s actions in the workplace is called

(a) Office place ethics (b) factory place ethics

(c) behavioural ethics (d) work place ethics

Q 93. Which of the following factors encourage good ethics in the workplace?

(a) Transparency (b) fair treatment to the employees of all levels

(c) both (a) and (b) (d) bribe

130
Q 94. Which of the following are ethical issues in financial markets-?

(a) Churning (b) Illegal dividend payment

(c) creative accounting (d) none of these

Q 95. The trading of a public company’s stock or other securities like bonds or

stock options by individual with possession of material, non-public information

about the security is called-

(a) Insider trading (b) online trading

(c) offline trading (d) direct trading

Q96. Which of the following methods are used in creative accounting?

(a) Off balance sheet financing

(b) Abuses of accounting concepts and conventions

(c) Manipulating assets and liabilities

(d) Over and under valuation of inventories

Q 97. The process by which accountants use their knowledge of accounting rules

to manipulate the figures reported in the accounts of a business in known as-

(a) Financial accounting (b) creative accounting

(c) cost accounting (d) fair value accounting

131
Q 98. An organisation's obligation to act to protect and improve society's welfare

as well as its own interests is referred to as

a. organisational social responsibility

b. organisational social responsiveness

c. corporate obligation

d. business ethics

Q 99: Corporate contributions for charitable and social responsibility purposes is

called

a. corporate philanthropy b. corporate charities

c. corporate donations d. corporate discretionaries

Q 100. : Business ethics deals primarily with

a. social responsibility b. the pricing of products and services

c. moral obligation d. being unfair to the competition

Q101. Which of these is a factor that affects ethical and unethical behaviour?

a. Ethical dilemma

b. Diversity

c. Teamwork

132
d. Open communication

Q 102 The term refers to principles, values and beliefs that define

right and wrong behaviour.

a. Customer satisfaction

b. Empowerment

c. Innovation

d. Ethics

Q 103. A sets out the purpose and general direction for the

organisation?

A. Vision statement B. Purpose statement

C. Mission statement D. Profit statement

Q 104 . Which of the following would most effectively act as the primary
objective

of a business organization?

A. To communicate with shareholders.

B. To make a profit.

C. To mediate between the organization and the environment.

D. All of the above.

Q 105. What is the purpose of a balanced scorecard?

133
A. To relate business performance to financial measures.

B. To measure contribution of people to business growth.

C. To relate business performance to customer satisfaction.

D. To combine a range of qualitative and quantitative indicators of performance.

Q106. To which of the following does Corporate Social Responsibility relate to?

A. Environmental practice.

B. Ethical conduct.

C. Human rights and employee relations.

D. All of the above.

Q 107. Who are organisational stakeholders?

A. Employees

B. Government

C. Customers

D. All of the above.

Q 108. What is Ethics to do with?

A. The wider community.

B. Right and wrong.

134
C. Business!

D. None of the above.

Q 109. Which is the element of business ethics?

A. discipline.

B. It is an art & science both.

C. Good intention.

D. All of the above.

Q 110. Which of the following statements about CSR is untrue?

A. It has a strong impact on corporate reporting practices,investment strategies,

SCM & public relations.

B. It is about striking balance between economic performance , meeting

stakeholders expectations & responsibility towards society.

C. It is about recognizing that no organisation is an island & must operate in

partnership with the outside world.

D. Its main concern is about maintaining a competitive edge in global market

Q 111. Which is the principle of corporate responsibility?

A. Trusteeship principle

135
B. Principle of stewardship

C. Principle of charity

D. All of the above

Q 112. Which is the element of social responsibility?

A. Universal concept.

B. Supremancy of public interest.

C. It is related to business organization.

D. All of the above

Q 113. Which one of the following is not principle of business ethics?

A. Principle of universality.

B. Principle of humanity.

C. Principle of autonomy.

D. Principle of dissatisfaction.

Q 114. Business ethics is a dynamic philosophy of ---- economic adjustment

whose

field is widening day-by-day

A. Socio

B. Political

C. Historical

136
D. Traditional

Q 115. The social responsibility of business towards the owners of business

includes

A. Maximum ROI.

B. Report about progress.

C. Report of Profit.

D. All of the above.

Q 116. CSR that extends beyond legal mandates can help meet social expectations

in the absence of:

A. Statutory devices.

B. Social tool

C. Cost tool & technique

D. Science tool

Q 117. The relationship between standards of CSR & potential legal requirements

governing corporate operation lies at the heart of the

A. The business community.

B. Unattaniable

137
C. Formulation

D. The social activity.

Q 118. The argument for CSR involves

A. Recognition of moral obligations by business.

B. Need to balance power with responsibility.

C. Voluntary actions would prevent government regulations.

D. All of the above

Q 119. The spending on CSR activity is mandatory in India for following

organisations:

A. 3% spending for above 5 cr profit organisations.

B. 2% spending for above 5 cr profit organisations.

C. 1% spending for above 5 cr profit organizations.

D. Some spending on above 5cr profit organizations

Q 120. Which of the following are the strengths of teleological ethical theories?

A. They fit with much of our ordinary moral reasoning.

B. They focus on the nature of actions and the rules from which they follow

C. They ignore the consequences of actions.

138
D. None of these.

Q 121. Which of the following are the strengths of deontological ethical theories?

A. They fit with very little of our ordinary moral reasoning.

B. They focus on the nature of actions and the rules from which they follow

C. They pay close attention to the consequences of actions.

D. None of these.

Q 121. Utilitarianism is an example of which of the following ethical theories?

A. Egoism

B. Intuitionism

C. Deontological

D. Teleological

Q 122. Rights that are recognized and enforced as part of a legal system are,
strictly

speaking,:

A. Moral rights.

B. Legal rights.

C. Both moral and legal rights.

D. Neither moral nor legal rights.

139
Q 123. Morality means

A) What is considered as correct within a society

B) Making the right decisions when there is a chance to do wrong

C) Defining what is right and wrong for an individual or a community

D) Where individuals have a conscious choice to make a right and ethical decision

Q 124. What is business ethics?

A) The study of business situations, activities, and decisions where issues of right

and wrong are addressed

B) Defined as decisions that organizations make on issues that could be

considered right or wrong

C) Ethics that can be applied to an organisation’s practises

D) Ethical processes businesses use in order to achieve a good ethical standard

Q 125. Various Customs, traditions and habits developed over a period of time
are

called

a. Values

b. ethics

c. Ethos

d. Pathos

140
Q 126. Good Advertising refers to advertising

a. Honest

b. Convenient

c. Surrogate

d. Influencers

Q 127. Philanthrophy comes from the Greek word.

a. Philanthropos

b. Philosophy

c. Philanthry

d. Philosophy

Q 128. Which of the following is not part of ISO 14000 Series

a. ISO 14001
b. ISO 14004
c. ISO 14064
d. ISO 10001

Q 129. Social Accountability International developed which standard

a. ISO 14001
b. SA 8000
c. ISI
d. AGMARk

141
 Q130. AA 1000 was introduced by

a. AccountAbility Organisation

b. Social Accountability International

c. United Nation

d. India Standard organisation.

Q 131. UN Global Compact does not cover which of the below areas

a. Human Rights

b. Anti Corruption

c. International Trade

d. Human Rights

Q.132. Applying social criteria to an investment decision refers to

________________.
a) socio-economic view
b) social responsiveness
c) social responsibility
d) social screening

142
Q133--------is a document that outlines principles for doing business globally in

the areas of human rights, labor, the environment, and anticorruption.

a) A code of ethics

b) The Global Compact

c) The Foreign Corrupt Practices Act

d) Global Ethics

Q 134. Social responsiveness refers to the capacity of a firm to adapt to changing

a) societal conditions b) organizational conditions

c) societal leaders d) organizational managers

Q.135. Under the concept of social obligation, the organization

.

a) does what it can to meet the law, and a little bit more for stakeholders

b) fulfills its obligation to the stakeholders, which makes it fulfill the law,

143
c) does the minimum required by law

d) fulfills its obligation to the law and its stakeholders

Q.136. The approach to formal corporate ethics initiatives focuses on

meeting required behavior norms or obeying the letter of the law

a) Rules
b) Compliance
c) Principles
d) Values

Q.137. The _ approach to formal corporate ethics initiatives is

proactive and inspirational.

a) Rules
b) Compliance
c) Principles
d) Values

Q.138. Periodic ethics audits

a) Are required by the Indian stock exchange
b) A method of fostering ethics

c) A method of quantitative assessment

d) Always use external consultants

Q 139. PEST analysis does not cover

A) Political

B) Social

C) Technological

D) Medical
144
Q 140. Which of the below is not a Human Resource ethics issue

a. Employment of Children

b. Improper Working condition

c. Fexi Working Hours

d. Exploitation of women in work places

Q 141. Corporate governance structure

a) varies a great deal across countries.

b) has become homogenized following the integration of capital markets.

c) has become homogenized due to cross-listing of shares of many public

corporations.

d) none of the above

145
Q 142. The term 'asymmetry of information' means information in a corporation
is:

a) Transferable to all stakeholders

b) Not transferable to all stakeholders

c) Not equally transparent to all stakeholders

d) Equally transparent to all stakeholders

Q.143 . An organization that is owned by shareholders but managed by agents on

their behalf is conventionally known as the modern:

a) Conglomerate b) Corporation

c) Company d) Firm

Q.144. The modern corporation has four characteristics. These are limited
liability,

legal personality, centralized management and:

a) Fiduciary duty b) Stakeholders

c) Shareholders d) Transferability

Q.145 Fraudulent trading may be

a) a civil offence committed by any employee

146
b) a criminal offence committed only by directors of a limited company

c) a civil and a criminal offence committed only by directors of a limited company

d) a civil and a criminal offence committed by any employee

Q.146. A company may become insolvent if it

a) has negative working capital

b) cannot meet its budgeted level of profit

c) makes a loss

d) cannot pay creditors in full after realisation of its assets

Q 147. Which BEST defines the principle value?

A. Foundation upon which other values and measures integrity are based

B. Foundation relative to the values and attitudes of a society

C. Foundation encompassing the values and ethics concerns of humanism

D. Foundation of integrity, accountability and humanism

Q 148. If a person’s personal conduct is evaluated and judged in comparison to

the

norms of society, there is a judgement of:

A.Professional behaviour

B. Moral behaviour

147
C. Ethical behaviour

D. None of the above

Q 149. All of the following describes professional attitudes and behaviours

except:

A. Altruism

B. Humanism

C. Responsibility

D. Religious

Q 150. Which stage of development of a professional is described below:

Experienced inemploying and expanding and renew the cognitive process with new
attainment.

A. Preprofessional

B. Appliers

C. Analysts

D. Integrator

148
QUESTION BANK

1. Define ethics.
Ethics is the branch of study dealing with what is the proper course of action for
man. It answers the question, “What do I do?” It is the study of right and wrong
in human endeavors. At a more fundamental level, it is the method by which we
categorize our values and pursue them. Do we pursue our own happiness, or do
we sacrifice ourselves to a greater cause?

2. Why is ethics important?

Ethics is a requirement for human life. It is our means of deciding a course of
action. Without it, our actions would be random and aimless. There would be no
way to work towards a goal because there would be no way to pick between a
limitless numbers of goals. Even with an ethical standard, we may be unable to
pursue our goals with the possibility of success. To the degree which a rational
ethical standard is taken, we are able to correctly organize our goals and actions
to accomplish our most important values. Any flaw in our ethics will reduce our
ability to be successful in our endeavours.

3. What are the key elements of a proper Ethics?

A proper foundation of ethics requires a standard of value to which all goals and
actions can be compared to. This standard is our own lives, and the happiness
which makes them liveable. This is our ultimate standard of value, the goal in
which an ethical man must always aim. It is arrived at by an examination of
man’s nature, and recognizing his peculiar needs. A system of ethics must
further consist of not only emergency situations, but the day to day choices we
make constantly. It must include our relations to others, and recognize their
importance not only to our physical survival, but to our well-being and

149
happiness. It must recognize that our lives are an end in themselves, and that
sacrifice is not only not necessary, but destructive.

4. Define Business ethics.

According to Andrew Crane, ”Business ethics is the study of business

situations, activities, and decisions where issues of right and wrong are
addressed.”
According to Raymond C. Baumhart,”The ethics of business is the ethics of
responsibility. The business man must promise that he will not harm
knowingly.”

5. What business ethics can contribute in business?

Practicing business ethics can contribute to the growth of your company in
many ways including public relations, employee productivity, investment and
even employee retention.

6. State the features of business ethics.

Code of conduct, Based on moral and social values, Gives protection to social
groups, Provides basic framework, Voluntary, Requires education and guidance,
Relative term

7. Define Unethical behaviour.

Unethical behaviour in the workplace can be defined as any action that does not
conform to the standards of conduct established by the organization. Unethical
behavior can occur in the relationships between employees, in the way an
employee goes about his business or how he uses company resources. Unethical
behavior can even break the law in some situations.

150
8. Define work ethics.
It includes not only how one feels about their job, career or vocation, but also
how one does his/her job or responsibilities. This involves attitude, behaviour,
respect, communication, and interaction; how one gets along with others. Work
ethics demonstrate many things about whom and how a person is. It involves
characteristics such as honesty and accountability. Essentially, work ethics
break down to what one does or would do in a particular situation.

9. State the advantages of work ethics.

The advantage of work ethics are, Competitive edge-people prefer to work with
those they can trust, Credibility-people believe you, Efficiency-trust makes
decision making faster and more economical, Morale-people feel better about
their work and themselves, Loyalty- internal and external and Personal
satisfaction- Self-respect, affection of others

10. Define code of conduct.

Code of conduct is a set of rules outlining the responsibilities of, or proper
practices for, an individual, party or organization. A common code of conduct is
written for employees of a company, which protects the business and informs
the employees of the company’s expectations. It is ideal for even the smallest of
companies to form a document containing important information on
expectations for employees.

11. State the contents of code of conduct.

The code of conduct includes detail on compliance with laws and regulations
(such as harassment and discrimination on the workplace), conflicts of interest,

151
confidentiality and security matters, fairness and equity, contact with the public
and media, values of the business and guidelines on general behaviour.

12. State the benefits of code of conduct.

Creating an agreed way of behaving and operating for the entire company;
Improved company performance when linked to the company’s business and
strategic objectives; Good company culture – employees know what is expected
of them in terms of behaviour; Good communication with employees having a
framework to look up when faced with difficult decisions; Having a set of
values – having a sense of what the company values are and what the company
stands for. It also can enable your company to stand out from similar companies
and show what your company values and believes in.

13. Define Utility.

It is the ability of an action to bring about benefit, advantage, pleasure, good or
happiness and to prevent mischief, pain, evil, or unhappiness.

14. What is Hedonism?

Philosophy emphasizing that the good life is one devoted to pleasure, Only
pleasure has intrinsic value that can lead to happiness and differ over definition
of pleasure: is it of the body or pleasure of the mind

15. Define Organisational culture.

Organisational culture is the set of shared values, beliefs, goals, norms etc that
prevails within an organisation.

16. Explain Socialism.

152
The concept of socialism in business states that gains of a business must be
shared by all and just by the owner of business. Profit is a sign of business skill
and talent. Profit is also a result of group efforts. Employees, shareholders,
consumers, Suppliers and others contribute to the success of the business.
Therefore, success should be shared by all concerned.

17. State the two key branches of ethics.

The two branches of ethics are Descriptive ethics involves describing,
characterizing and studying morality-“What is” and Normative ethics involves
supplying and justifying moral systems-“What should be”

18. What are deontological theories?

Deontological theory is a normative theory, which asserts that one must follow
“his or her obligations to another individual or society because upholding one’s
duty is what is considered ethically correct”.

19. What is an ethical theory?

A theory is a kind of explanation, and an ethical theory is an attempt to explain
moral values, to provide a single and unifying statement about moral value, one
that is true throughout all the differences and conflict in moral values.

20. Give examples of unethical behaviour in the workplace.

Some examples of unethical behaviours are Using office equipment for personal
use; doing personal business on work time; Calling in as “sick” to take the day
off; Divulging confidential information; Claiming credit for someone else’s
work; Concealing own errors; Faking financial statements / accounting records,

153
engaging in illegal activities / business and Bribery; Badmouthing about
competition, fooling customers, escaping the law.

21. Why do people behave unethically in an organization?

No one will find out, Behaviour is not really illegal, it is in the best interest of
the organization. The organization will protect them.

Part – B

1. Explain the need and importance of business ethics?

2. Comment on business ethics and profit.
3. Explain the nature and characteristics of ethics in business.
4. What are the factors affecting business ethics?
5. Explain the six prima facie principles that are part of ethics.
6. Explain the causes of unethical behavior in organizations.
7. What are the characteristics of an ethically effective management?
8. What are the factors that contribute to work ethics?
9. Explain the ethical theories in detail.
10. Explain how to formulate code of conduct for an organization.

Unit – 1 – ETHICS THEORY AND BEYOND

Part – A
1. Define dilemma.
According to the Merriam Webster Dictionary, dilemmas are situations or
problems where a person has to make a difficult choice.

2. Define ethical dilemma.

154
According to the Merriam Webster Dictionary, an ethical dilemma is a problem
where a person has to choose between a moral and an immoral act.

3. What is the difference between business ethics and ethical business?

Business ethics relates to how an organization conducts its business in order to
make profit or achieve other goals. However, whether an organization is judged
to be an ethical business, may involve a subjective assessment of any of the
following: the products and services it offers, its founding priorities, goals and
values, its reputation among its stakeholders, the way it treats customers and
staff and so forth.

4. What are the limitations of code of ethics?

The limitation of code of ethics are Smaller Profits, Wasted Time, Performance
and Unattainable Goals.

5. Give a brief account of the unethical practices in internet.

The unethical practices in internet includes means trying to utilize the personal
information of an individual by mules. It includes, Advance pay, Official prize
winner notification, Missing Heir/Beneficiary, Identity Theft/Account
Information Fraud, Misrepresentation, Internet Income Opportunities Frauds.

6. Differentiate moral and ethics.

Morals define personal character, while ethics stress a social system in which
those morals are applied. In other words, ethics point to standards or codes of
behaviour expected by the group to which the individual belongs. This could be
national ethics, social ethics, company ethics, professional ethics, or even

155
family ethics. So while a person’s moral code is usually unchanging, the ethics
he or she practices can be other-dependent.

7. When does a gift become bribe?

Any gift given with “an expectation of compensation” has crossed the line into
bribery. Another view holds that a gift becomes a bribe only when the expected
compensation is “specific.”

8. How is code of ethics useful for professionals?

A code of conduct is intended to be a central guide and reference for users in
support of day- to-day decision making. It is meant to clarify an organization’s
mission, values and principles, linking them with standards of professional
conduct. As a reference, it can be used to locate relevant documents, services
and other resources related to ethics within the organization.

9. What is ethical management?

Ethical management refers to corporate management that not only fulfills
economic goals and legal responsibilities, but also meets the ethical
expectations imposed by social norms in conducting business.

10. How do personal ethics differ from business ethics?

Personal ethics are the decision ones make that guides their behaviour. Business
ethics are the set of guidelines that govern the conduct of a business, company,
etc. The guidelines define the way the employees should act to perform
professionally.

11. Do ethics have no place in today’s business?

156
This is an extreme argument-consider its opposite: there can be no business
without ethics. There has to be a minimum level of trust to make business work
-otherwise you need contracts for everything. Ethics simply means being
honest, decent, not cutting corners, playing by the rules.

12. Who is a virtuous person?

A virtuous person is someone whose moral choices are guided by good

character rather than by simply weighing the consequences. Ancient Greeks:
virtue meant excellence.

13. Define competitiveness.

Competitiveness pertains to the ability and performance of a firm, sub-sector or
country to sell and supply goods and services in a given market, in relation to
the ability and performance of other firms, sub-sectors or countries in the same
market.

14. Define Profitability.

Profitability is the ability of a business to earn a profit. A profit is what is left of
the revenue a business generates after it pays all expenses directly related to the
generation of the revenue, such as producing a product, and other expenses
related to the conduct of the business’ activities.

15. What is cost of ethics to business?

The “cost of ethics” is the price of following ethical practice in business and
also it includes the cost of breaching the business code of ethics.

157
16. Define Ecology.
Ecology is the scientific study of interactions of organisms with one another and
with the physical and chemical environment. Although it includes the study of
environmental problems such as pollution, the science of ecology mainly
involves research on the natural world from many viewpoints, using many
techniques.

17. Define Environment.

The sum total of all surroundings of a living organism, including natural forces
and other living things, which provide conditions for development and growth
as well as and damage.

18. Is ethical behaviour good or bad for business?

The advantages of ethical behaviour include:Higher revenues – demand from
positive consumer support; Improved brand and business awareness and
recognition; Better employee motivation and recruitment; New sources of
finance – e.g. from ethical investors.
The disadvantages claimed for ethical business include:Higher costs – e.g.
sourcing from Fair trade suppliers rather than lowest price; higher overheads –
e.g. training & communication of ethical policy; a danger of building up false
expectations.

19. Define Environmental Ethics.

Environmental ethics is concerned with the issue of responsible personal
conduct with respect to natural landscapes, resources, species and non-human
organisms. Conduct by persons is the direct concern of moral philosophy.

158
20. How do you facilitate implementation of ethical behaviour in an
organization?

There are at least four elements which exist in organizations that make ethical
behaviour conducive within an organization. Written code of ethics and
standards, Ethics Training, Availability for advice on ethical situations, Systems
for confidential reporting.

21. Mention the components of ethical behaviour.

Justness what is right, Fairness impartiality, Righteousness rational judgment of
what is supposed to be truthfulness conformity with facts or reality?

22. State the Golden Rule of Ethics.

Earlier, the business community and society at large neglected ethics. But over
the years people have realized its importance for the welfare of an organization.
The golden rules, which find its mention in the Bible, are: Everything you want
others to do to you, you shall do to others; do not do to others that which you do
not wish them to do to you; do not do anything that if done to you, would cause
harm to you. In a nutshell, treat others, as you would like to be treated. So if you
do not want to be spoken to rudely then you must not speak rudely. So if don’t
want to use flawed goods you must also refrain from adulteration.

Part – B
1. Explain the factors affecting ethical decision making in business.
2. Explain the role of ethical managers.
3. What causes an ethical dilemma in business?
4. Explain the Hosmer’s model of business ethics.
5. Explain the code of ethics for advertising in India.
6. Explain ethics in advertising in India.

159
7. What is the relationship between business ethics and profits?
8. State and explain the major environmental issues in India.
9. How to evaluate the social and ethical impact of business on society? 10.
Explain the environmental issues that affect business.
11. Explain environmental business ethics in detail.

Unit – 1– Legal Aspect of Ethics

1. What is Restrictive Trade Practices?
The term restrictive trade practices, refers to any strategy used by market
operators to restrict competition within a given market. In addition, it may also
prohibit specific practices which do not necessarily (or not always) fall into
these basic categories, such as: third line forcing, exclusive purchasing or
selling, tying arrangements, resale restrictions or resale price maintenance,
boycotts, etc.
2. What are the objectives of MRTP Act?
The objectives of MRTP Act are:prevention of concentration of economic
power to the common detriment;control of monopolies;prohibition of
Monopolistic Trade Practices (MTP);prohibition of Restrictive Trade Practices
(RTP);prohibition of Unfair Trade Practices (UTP).

3. What do you mean monopolistic trade practices?

Any trade practice which seeks to prevent competition and which results in high
price. Such as, unreasonablyhigh prices, Limiting technical development,
limiting capital investment, Lower quality of goods and services and Preventing
or lessening competition.

4. What is meant by monopoly?

A market structure characterized by a single seller, selling a unique product in
the market. In a monopoly market, the seller faces no competition, as he is the

160
sole seller of goods with no close substitute.

5. What is meant by unfair trade Practices?

Unfair trade practice means a trade practice which, for the purpose of promoting
the sale, use or supply of any goods or for the provision of any service, adopts
any unfair or deceptive practice. Such as, misrepresentation, false advertising,
tied selling and other acts that are declared unlawful by statute. It can also be
referred to as deceptive trade practices.

6. How to file a complaint under MRTP Act?

The procedure for filing a complaint is as follows: (a) Complaint is filed either
by the individual consumer or through a registered consumer organization. (b)
The Director General of the MRTP commission would carry on the
investigation for finding facts of the case. (c) If the prima facie case is not
made, the complaint is dismissed. (d) If the compliant is true, an order is passed
to its effect. (e) The commission restricts and restrains the concerned party from
carrying on such practices by granting temporary injunction. (f) Then the final
order is passed. (g) The complainant may be compensated for his loss.

7. What are the regulation of Monopolistic trade practices?

Central government may: Regulate production and fix terms of sale, prohibits
any action that restricts competition, Fix standards for goods and services.

8. What are the regulations of RTP and UTP?

The MRTP Commission if on enquiry concludes that the practice under
consideration is of restrictive or unfair in nature, it may: Order discontinuation
of the practice and restrict its repetition (cease and desist order) Ø the
agreement shall be void and shall stand modified as may specified in the order.

161
9. What is Indian Constitution?
The Constitution of India is the supreme law of India. It lays down the
framework defining fundamental political principles, establishes the structure,
procedures, powers and duties of government institutions and sets out
fundamental rights, directive principles and the duties of citizens.

10. Define Political environment.

The political environment is the state, government and its institutions and
legislations and the public and private stakeholders who operate and interact
with or influence that system.

11. What is legal environment of a business?

The legal environment of a business refers to the relevant laws and regulations
under which the business operates.

12. State the UTP which is introduced in MRTP Act by 1984.

Unfair Trade Practices (UTP) falling under the following categories were
introduced in 1984 in the MRTP Act: -Misleading advertisement and false
representation; Bargain sale, bait and switch selling; Offering of gifts or prizes
with the intention of not providing them and conducting promotional contests;
Product safety standards. And Hoarding or destruction of goods.

13. What is meant by ‘Temporary Injunction’?

During any inquiry, the commission is satisfied that any undertaking or any
person is carrying on, or is about to carry on, any monopolistic, restrictive or
unfair trade practice, which is a pre-judicial to the public interest or the interest
of any trader or class of traders generally, or of any consumer or class of

162
consumers, or consumers generally, the commission may grant a temporary
injunction restraining such undertaking or person form carrying on such practice
until the conclusion of inquiry or until further orders.

14. What is meant by ‘Compensation’?

When any monopolistic, restrictive or unfair trade practice has caused damage
to any Government, or trader or consumer, an application may be made to the
Commission asking for compensation, and the Commission may award
appropriate compensation. Where any such loss or damage is caused to a
number of persons having the same interest, compensation can be claimed with
the permission of the commission, by any of them on behalf of all of them.
15. What is FERA?
An act to regulate certain payments dealing in foreign exchange, securities, the
import & export of currency and acquisition of immovable property by
foreigners. Under Section 31 (1) of the Foreign Exchange Regulation Act
(FERA) of 1973, it is mandatory for foreign corporations, which are not
incorporated in India to obtain permission from the Reserve Bank Of India
(RBI) to acquire, hold, transfer or dispose-off in any manner (expect by way of
lease for a period not exceeding five years) any immovable property in India.

16. What is the main objectives of FERA?

The main objectives of FERA is to regulate certain payments, to regulate
dealings in foreign exchange and securities, to regulate transactions, indirectly
affecting foreign exchange, to regulate the import and export of currency, to
conserve precious foreign exchange and the proper utilization of foreign
exchange so as to promote the economic development of the country.

163
17. What is FEMA?
The Foreign Exchange Management Act (FEMA) was an act passed in the
winter session of Parliament in 1999 which replaced Foreign Exchange
Regulation Act. This act seeks to make offenses related to foreign exchange
civil offenses.

18. Why was FEMA introduced?

FEMA replaced Foreign Exchange Regulation Act (FERA). It had become the
need of the hour since FERA had become incompatible with the pro-
liberalisation policies of the Government of India. FEMA has brought a new
management regime of Foreign Exchange consistent with the emerging
framework of the World Trade Organisation (WTO). It is another matter that
the enactment of FEMA also brought with it the Prevention of Money
Laundering Act 2002, which came into effect from 1 July 2005.

19. What is the main objectives of FEMA?

The main objectives of FEMA is to unite and revise all the laws that relate to
foreign exchange. Further foreign Exchange Management ACT (FEMA) aims
to promote foreign payments and trade in the country. Another significant
objective and goal of the Foreign Exchange Management Act (FEMA) is to
encourage the orderly maintenance and development of the foreign exchange
market in India.

20. What are the similarities between FERA and FEMA?

The similarities between FERA and FEMA are: (1) The Reserve Bank of India
and central government would continue to be the regulatory bodies. (2)
Presumption of extra territorial jurisdiction as envisaged in section-1 of FERA

164
has been retained. (3) The Directorate of Enforcement continues to be the
agency for enforcement of the provisions of the law such as conducting search
and seizure.
Part – B

1. State the salient features of Indian Constitution.

2. State the provisions of the Indian Constitution pertaining to business.
3. Explain how political environment affects the functioning of businesses.
4. Explain how legal environment affects the functioning of businesses.
5. Explain the major characteristics of Indian political setup.
6. What are the implications of political setup on businesses in India?
7. Explain the salient features of Indian culture.
8. Explain the various Unfair Trade Practiced in India with example.
9. Distinguish between FEMA and FERA in detail.
10. What are the impact of socio cultural environment in business?

Unit – 4 – Corporate Social Responsibility and Governance

1. Define Corporate Social responsibility.

Corporate Social Responsibility (CSR) is defined as the voluntary activities
undertaken by a company to operate in an economic, social and environmentally
sustainable manner.

2. What is the need for CSR?

The CSR is needed to bridges the company with its consumer and investor,
shifting paradigm of Consumer awareness, to provide legislation support in
protecting environment and Globalization.

165
3. State the benefits of CSR.
The benefits of CSR are Brand Differentiation, Investment in ‘ethical brand
equity’, Brand building, Build brand loyalty, Reputation and brand
attractiveness, Business Development, New markets, products and services,
Better management and conservation of strategic assets and Better internal and
external relationships & many more.

4. List the five golden principles of best corporate governance.

Five Golden Rules of best corporate governance practice are: Ethics: a clearly
ethical basis to the business; Align Business Goals: appropriate goals, arrived at
through the creation of a suitable stakeholder decision making model; Strategic
management: an effective strategy process which incorporates stakeholder
value; Organisation: an organisation suitably structured to effect good corporate
governance; and Reporting: reporting systems structured to provide
transparency and accountability.

5. What is Social Audit?

Social audit is a process of reviewing official records and determining whether
state reported expenditures reflect the actual monies spent on the ground.

6. Differentiate between corporate social responsibility and corporate

citizenship.
Corporate citizenship is about how a Company expresses its values and role vis-
à-vis society. Whereas corporate social responsibility (CSR) is what society
expects of business.

166
7. Mention any two challenges for implementing CSR.
The challenges of implementing CSR are lack of Community Participation in
CSR Activities, need to build local capacities, issues of transparency, non-
availability of Well Organized non-governmental Organizations, visibility
factor, narrow Perception towards CSR Initiatives, non-availability of Clear
CSR Guidelines, lack of Consensus on Implementing CSR Issues.

8. Define corporate governance.

Corporate Governance may be defined as a set of systems, processes and
principles which ensure that a company is governed in the best interest of all
stakeholders. It is the system by which companies are directed and controlled. It
is about promoting corporate fairness, transparency and accountability. In other
words, ‘good corporate governance’ is simply ‘good business’.

9. What is the relationship between CSR and Corporate Governance?

“Corporate Governance is concerned with holding the balance between
economic and social goals and between individual and communal goals. The
corporate governance framework is there to encourage the efficient use of
resources and equally to require accountability for the stewardship of those
resources. The aim is to align as nearly as possible the interests of individuals,
corporations and society.”

10. Why is corporate governance important?

Corporate governance is the way a corporation polices itself. In short, it is a
method of governing the company like a sovereign state, instating its own
customs, policies and laws to its employees from the highest to the lowest
levels. Corporate governance is intended to increase the accountability of your

167
company and to avoid massive disasters before they occur. Failed energy giant
Enron, and its bankrupt employees and shareholders, is a prime argument for
the importance of solid corporate governance.

Part – B
1. Trace the Evolution of CSR?
2. Elaborate the theoretical perspectives of CSR.
3. Explain the challenges in implementing CSR.

4. Discuss in detail the strategies for CSR.

5. Trace the Evolution of Corporate Governance.
6. Explain the structure and development of boards.
7. Explain the future of Governance.
8. Explain the structure of capital Market.
9. Explain the techniques for rating Corporate Governance.
10. How do you measure the effectiveness of CSR?

Essential and Additional Readings:

168