Management and Society

Chapter Objectives
After studying this chapter, you should be able to:

 Describe the nature of the pluralistic society and

selected environments
 Explain the social responsibility of managers and the
arguments for and against the social involvement of
business.
 Understand the nature and importance of ethics in
managing and ways to institutionalize ethics and raise
ethical standards
 Recognize that some ethical standards vary in different
societies
 Realize that trust is the basis for human interaction

2
 Key words
Pluralistic Society
Stakeholders
External Environment
Social Responsibility and Responsiveness
Ethical Theories
Whistle Blowing
Trust
 The Organization and Its External Environment

4
 Organization and External Environment
All managers must, in varying degree take into
account the elements and forces of their external
environment.

They must identify, evaluate and react to the forces

outside the enterprise that may affect their
operations.

5
Business and Stakeholders Relationship

6 Figure 1-2
 OPERATING IN A PLURALISTIC SOCIETY

 Managers operate in a pluralistic society, in

which many organized groups represent
various interests (environmentalists, NGOs,
professional associations etc – (Kodangulam)

 There are many stakeholders with divergent

claims on the organization and it is the task
of the manager to integrate the same.

 Each group has an impact on other groups,

but no one group exerts an inordinate
amount of power. Many groups exert some
7 power over business.
 A Pluralistic Society

Strengths Weaknesses

 Prevents concentration of  Pursuit of self-interest

power  Proliferates organizations and
 Maximizes freedom of groups with overlapping
expression and action goals
 Disperses individual  Forces conflicts to center

allegiances stage
 Promotes inefficiency
 Creates diversified set of
loyalties
 Provides checks and balances
8
 SOCIAL RESPONSIBILITY AND
RESPONSIVENESS
 Corporate social responsibility is
“seriously considering the impact of the
company's actions on society”
 Social responsiveness is "the ability of a
corporation to relate its operations and
policies to the social environment in
ways that are mutually beneficial to the
company and to the society”

9
Social responsibility of managers

Owing to interdependencies of many groups in our

society social involvement of business has increased.
This social responsibility embraces all organizations
including universities, charitable organizations,
governments etc.
Social responsibility means businesses should consider
the social implications of their decisions.

1
0
Social Responsibility

Social responsibility is the obligation of

organization’s management to make decisions
and take actions that will enhance the welfare and
interests of society as well as the organization.

Social responsibility is therefore quite important

to the society, organization and all stakeholders

It can be said that social responsibility is not

fixed and has to be related to pressures at a
particular point of time
13
14
15
16
17
18
19
 espo n s ib i lit y
Ar ea s of R
 ib i li ti e s t o
Respons
e ra l P u b li c
the Gen
• Public Health Issues. What to do about inherently dangerous products
such as alcohol, tobacco, vaccines, and steroids.
• Protecting the Environment. Using resources efficiently, minimizing
pollution.
• Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing quality of the
overall workforce through education and diversity initiatives.
• Corporate Philanthropy. Cash contributions, donations of equipment
and products, and supporting the volunteer efforts of company
employees.
 ibi li ti e s t o
Respons
Cu s to m e r s

• The Right to Be Safe. Safe operation of products, avoiding

product liability.
• The Right to Be Informed. Avoiding false or misleading
advertising and providing effective customer service.
• The Right to Choose. Ability of consumers to choose the
products and services they want.
• The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties.
 i bi li ti e s t o
Respons
E mp lo y e e s
• Workplace Safety. Monitored by
Occupational Safety and Health Administration.
• Quality-of-Life Issues. Balancing work and family through flexible
work schedules, subsidized child care, and regulation such as
the Family and Medical Leave Act of 1993.
• Ensuring Equal Opportunity on the Job. Providing equal opportunities
to all employees without discrimination; many aspects regulated by law.
• Age Discrimination. Age Discrimination in Employment Act of 1968
protects workers age 40 or older.
• Sexual Harassment . Avoiding unwelcome actions of a sexual nature;
equal pay for equal work without regard to gender.
 ibi li ti e s t o
Respons
Investors

• Obligation to make profits for shareholders.

• Expectation of ethical and moral behavior.

• Investors protected by regulation by the

Securities and Exchange Commission
and state regulations.
Reaction or pro-action?
Since no enterprise can be expected to react very quickly to
unforeseen developments, an enterprise must practice ways of
anticipating developments through forecasts and take prior action.
Proaction is an essential part of the planning process.

Role of government:There are many instances in which social

changes can be implemented only by the enactment of legislation.

Social audit: defined as a commitment to systematic assessment of

and reporting on some meaningful, definable domain of the
company’s activities that have social impact – legal and voluntary.

2
5
 THE TECHNOLOGICAL ENVIRONMENT

One of the most pervasive factors in the

external environment is technology.

The term technology refers to the sum total of

the knowledge we have of ways to do things.

Its main influence is on the ways of doing

things, how we design, produce, distribute, and
sell goods and services.

2
6
 THE ECOLOGICAL ENVIRONMENT
Ecology means the relationship of people and other
living things and their environment such as soil,
water, and air.
•Land may be polluted by industrial waste such as
packaging and chemicals.
•Water pollution may be caused, for example, by
hazardous waste and sewer systems
•Air pollution can be caused by acid rain, auto
exhaust fumes, carcinogens from manufacturing
processes, and other causes

2
7
 ETHICS IN MANAGING

 Ethics is the discipline dealing with

what is good and bad and with moral
duty and obligation

 Business ethics is concerned with

truth and justice

Scandals and Corporate Governance

Corporate scandals such as those of
Enron, Union Carbide have shaken the
2 confidence of investors.
8
 Ethics in managing:
Ethics is defined as the discipline dealing with what is good and
bad and with moral duty and obligation.
Personal ethics has been referred to as the rules by which an
individual lives his or her personal life.
Accounting ethics pertains to the code that guides the
professional conduct of accountants.
Business ethics is concerned with truth and justice and has a
variety of aspects such as the expectations of society, fair
competition, advertizing, public relations, social responsibilities,
consumer autonomy, and corporate behavior in home country as
well as abroad.
2
9
 w are n e ss
Ethical A

Code of Conduct Formal

statement that defines
how the organization
expects and requires
employees to resolve
ethical questions.
 WHISTLE-BLOWING

Black’s Law Dictionary defines a

whistle blower as ‘an employee who
refuses to engage in and/or report
illegal or wrongful activities of his
employer or fellow employees’.

3
1
 ob E t h ic al
On-the-J
Dilemmas

Telling the truth and

adhering to deeply felt
Situation in which a ethical principles in
business decisions.
business decision may be
influenced for personal
gain.

Businesspeople expect
employees to be loyal
Employee’s and truthful, but ethical
conflicts may arise.
disclosure of illegal,
immoral, or unethical
practices in the
organization.
 ETHICAL THEORIES
 The utilitarian theory suggests that plans and actions should be
evaluated by their consequences – greatest good for greatest
number of people.

 The theory based on rights holds that all people have basic
rights – freedom of speech, freedom of conscience, privacy etc.
I should only act in a way in which I would be happy if everyone in that situation
would act the same

 The theory of justice demands that decision makers

be guided by fairness and equity, as well as
impartiality
Are the processes by which decisions are made and the outcomes of those
decisions equitable, fair, and impartial?

3
3
 INSTITUTIONALIZING ETHICS
Managers have a responsibility to create an
organizational environment that fosters ethical
decision making by institutionalizing ethics.

That is applying and integrating ethical

concepts with daily actions.

(eg) having code of ethics, formally appointed

ethical committee, teaching in MDP.

A code is a statement of policies, principles, or

rules that guide behavior.

Implementation of policies.
3
4
FACTORS THAT MAY RAISE ETHICAL
STANDARDS
 Public disclosure and publicity

 The increased concern of a well ‑informed

public
 Following government regulations

 Education to raise the professionalism of

business managers.
 Strict enforcement of the code of ethics.

3
5
 Differing Ethical Standards
Ethical as well as legal standards differ, particularly
among nations and societies . (eg)
Contributions to political parties, campaigning for candidates.
Payments made to government officials for business favors.
Paid news.
“Guanxi” in China / East Asia – exchanging favors, informal
relationships.

3
6
 TRUST AS THE BASIS FOR CHANGE
MANAGEMENT
 Traditionally, the concept of trust is equated with
integrity, loyalty, caring, and keeping promises in
the relationships between and among individuals
 Belardo points out that trust should go beyond
individual relationships and extend to the
organization by creating a culture of trust that
transcends individual leadership.

 Trust must be at the centre for communication,

collaboration, and the willingness to change.

3
7
 Case Studies
Bhopal Gas Tragedy and its implications
Tata Steel City
Indian Tobacco Company
ACC Afforestation program

38