SUBJECT: Business and Society (Commerce - I)

 
CLASS: F.Y B.Com Accounting and Finance

UNIT 1- INTRODUCTION TO BUSINESS AND

SOCIETY
 
ASST. PROF. SUNITA SAINI
 BUSINESS
MEANING:
The term “Business" also refers to the organized efforts and activities of individuals to
produce and sell goods and services for profit. Business is one useful economic as well as
social activity. It is closely related to our personal and social Life. It provides goods and
services regularly for the satisfaction of human wants and also for raising social welfare.
It refers to commercial activities aimed at making a profit through production and
marketing. Business is consumer and service oriented. In short it is the material welfare
of the society.
It can be defined as “Business is an organized activity to identify, anticipate, and to
produce and supply customer requirements efficiently and profitably in the interest of all
those who are connected with it.”
 BUSINESS

DEFINITIONS:
Derek French and Heather Saward, “ the activities of buying and selling goods, manufacturing
goods or providing services in order to make profit.”

According to B.O. Wheeler ,“Business is an institution organized and operated to provide goods
and services to the society under the incentive of private gain.”

According to Keith Davis, “business may be defined as any form of commercial activity to
satisfy the economic wants of people at a profit
FEATURES/ NATURE/ CHARACTERISTICS OF BUSINESS
► 1. Organized activity
► 2. Profit Motive
► 3. Degree of scale
► 4. Regularity in Dealings
► 5. Risks and uncertainties
► 6. Societal interest
► 7. Social Responsibility
► 8. Business functions
► 9. Customer Satisfaction
► 10. Creative and dynamic
► 11. Government control
► 12. Buying and Selling
► 13. Dealings in goods and Services
Functions of Business

1. Production
8. Purchase &
2. Finance
Store keeping

7. Research &
Development Functions of 3. Marketing
Business
(R & D)

6. Public 5.
4. Sales
Relations Personnel
/Human
Resource
Management
FUNCTIONS OF BUSINESS
1. PRODUCTION FUNCTION: Production means conversion of raw material into finished product.
Production function relates form utility. Within the production department, then are various sub-
functions, which include:
1. Production planning and control.
2. Maintenance of plant and machinery.
3. Quality control.
4. Implementing production targets, etc.
2. PURCHASE & STORE KEEPING:
► 1. Material planning
► 2. Purchasing
► 3. Store keeping
► 4. Issuing of materials
► 5. Monitoring inventory of materials, semi-finished and finished products.
FUNCTIONS OF BUSINESS

3. MARKETING FUNCTION: Marketing involves several sub-functions such as:

1. Marketing Research.
2. Marketing Information System.
3. Product pricing.
4. Product promotion.
5. Product packaging
6. Product positioning, etc.
4. SALES FUNCTION: In large firms, there can be a separate department to look after sales. The sales
department works in close co ordination with the marketing department. . The sales department is
concerned with the selling activities of the firm. It receives or books orders from dealers or customers,
and distributes the goods through the distribution channels.
FUNCTIONS OF BUSINESS

5. Finance Function:
a. Determining the right sources of funds.
b. Application of funds.
c. Proper management of working capital.
d. Proper management of fixed capital, etc.
6. Personnel Function:
a. Manpower planning.
b. Recruitment and selection.
c. Training of manpower.
d. Performance appraisal.
e. Compensation plans
f. Promotions and transfers.
FUNCTIONS OF BUSINESS

7. RESEARCH AND DEVELOPMENT: R & D department plays an important role in product development. It
helps to bring out product modifications, and product innovations. In today‘s business, firms need to allocate
a good amount of money for R & D firms need to allocate a good amount of money for R & D activities.

8. PUBLIC RELATION: There is a need to maintain good public relations with the various sections of the
public. Therefore, it makes a good sense to maintain separate department to look after public relations,
especially in the case of large firms.
 BUSINESS OBJECTIVES

► MEANING
Business objectives are the goals, aims or purpose of the business. The business tries to achieve these goals.
Profit is the main objective of business. However, the business cannot have only one objective. This is
because it has to satisfy different groups such as shareholders, employees, customers, creditors, etc. So, it
has to fix objectives for each group.
DEFINITION
Koontz and O’ Donnell, “ Objectives are the ends towards which
Activities of any enterprise or department or project within it ,
Are aimed.”
D. E Mc Farland, “Objectives are the goals, aims or purposes that
Organisations wish to achieve over varying period of time.”
Louis Allen "Objectives are goals established to guide the efforts
of the company and each of its components."
NATURE/FEATURES OF BUSINESS OBJECTIVES

•Multiplicity of Objectives
1.

• Hierarchy of Objectives
2

• Periodicity of Objectives
3

• Flexibility of Objectives
4

• Qualitative and Quantitative Objectives

5

• Measurability of Objectives
6

• Network of Objectives
7
IMPORTANCE OF BUSINESS OBJECTIVES

1.
• Helps in defining the organization

2
• Facilitates Planning

3 • Facilitates direction

4
• Provides basis for evaluation

5
• Facilitates decision making in all functional areas

• Ensures Proper Organizing of resources

6

7 • Helps in Coordinating Decisions

8
• Motivates personnel

9
• Reduces wastage

10
• Develop Team Work
STEPS IN FORMULATING OBJECTIVES

Analyze Internal Environment

Analyze external environment

Knows the values and beliefs of the top

management

Awareness of past achievement of the firm

Setting of objectives
 CLASSIFICATION OF BUSINESS OBJECTIVES
D. Human
C. Social Objectives
B. E. National
A. Organic/ Objectives Objectives
Basic/ Three Economic • 1 Fair Wages
fold Objectives
• 1. Towards • 2. Good
Objectives • 1. Profit Customers working • 1.Development
• 2. Towards Conditions of SSI
• 2.Creation of
• 1.Survival wealth Dealers • 3. Welfare • 2. Self-
• 2.Growth • 3. Towards facilities sufficiency
• 3.Creation of
• 3.Prestige customer Shareholders • 4. Job • 3.Employment
• 4.Expansion • 4. Towards satisfaction • 4.Development
of market Financial • 5. Human of backward
Institutions Resource areas
• 5.Innovation
• 5. Towards development • 5.Social welfare
Competitors
SOCIETY CONCEPT
INTERFACE BETWEEN SOCIETY AND BUSINESS
► A society is a group of people involved in persistent social interaction, or a large social grouping
sharing the same geographical or social territory, typically subject to the same political authority and
dominant cultural expectations. Societies are characterized by patterns of relationships (social
relations) between individuals who share a distinctive culture and institutions; a given society may be
described as the sum total of such relationships among its constituent members. In the social
sciences, a larger society often evinces stratification or dominance patterns in subgroups. Insofar as it
is collaborative, a society can enable its members to benefit in ways that would not otherwise be
possible on an individual basis; both individual and social (common) benefits can thus be
distinguished, or in many cases found to overlap. A society can also consist of like-minded people
governed by their own norms and values within a dominant, larger society. This is sometimes referred
to as a subculture, a term used extensively within criminology. More broadly, and especially within
structuralist thought, a society may be illustrated as an economic, social, industrial or cultural
infrastructure, made up of, yet distinct from, a varied collection of individuals. In this regard society
can mean the objective relationships people have with the material world and with other people,
rather than "other people" beyond the individual and their familiar social environment. 
BUSINESS ETHICS
MEANING:
The term ‘Business Ethics’ refers to the system of moral principles and rules of the conduct applied to
business. Business being a social organ shall not be conducted in a way detrimental to the interests of the
society and the business sector itself. Every profession or group frames certain do’s and do not’s for its
members. The members are given a standard in which they are supposed to operate. These standards are
influenced by the prevailing economic and social situations. The codes of conduct are periodically
reviewed to suit the changing circumstances.
“Business ethics in short can be defined as the systematic study of ethical matters pertaining to the
business, industry or related activities, institutions and beliefs. Business ethics is the systematic handling
of values in business and industry.” —John Donaldson
FEATURES/CHARACTERISTICS OF BUSINESS ETHICS

Refers to
code of
conduct
Act as ‘ Based on
Summum moral and
bonum’ of social
human life value

Not Provides
against protection
Profit to social
making groups

Provides
Education
basic
and
framework
Guidance
for
required
Business
Need
willing
acceptance
PRINCIPLES OF BUSINESS ETHICS
Integrity
1.

Loyalty
2

Honesty
3

Respect and Concern

4

Fairness
5

Leadership
6
Corporate Social Responsibility (CSR)
•CSR is a Company’s commitment to values that
benefits the society as well as to the firm & its
shareholders. It relates to the business being
accountable to the society on voluntary basis. It
is a management concept whereby companies
integrate social and environmental concerns in
their business operations and interactions with
their stakeholders. The term Corporate Social
Responsibility was officially coined in 1953 by
American economist Howard Bowen in his
publication Social Responsibilities of the
Businessman. As such, Bowen is often referred
to as the father of CSR.
Corporate Social Responsibility (CSR)

•Definitions:
•1. “ The basic idea of CSR is that business & society are interwoven rather than
distinct entities.”- Wood
•2. “ CSR is the responsibility of decision makers to take actions which helps the
society & serve own interests.”
SCOPE OF CSR
 ARGUMENTS IN FAVOUR AND AGAINST CSR
Arguments in Favour of CSR
• 1. Protect the interests of stakeholders
• 2. Long-run survival
• 3. Self-enlightenment
• 4. Avoids government regulation
• 5. Resources
• 6. Professionalization
Arguments against CSR
• 1. Business is an economic
activity
• 2. Quantification of social
benefits
• 3. Cost-benefit analysis
• 4. Lack of skill and competence
• 5. Transfer of social costs
• (a) High prices, (b) Low wages,
(c) Low profits
• 6. Sub-optimal utilisation of
resources
SOCIAL AUDIT
Meaning
► A social audit is a way of measuring, understanding, reporting and ultimately
improving an organization's social and ethical performance. A social audit helps to
narrow gaps between vision/goal and reality, between efficiency and effectiveness.
Social auditing creates an impact upon governance. A social audit is an internal
examination of how a particular business is affecting society.
► Definition:
George A. Stenier, “ report of social performance in contrast to the financial report which
is concerned with economic performance.”
FEATURES OF SOCIAL AUDIT

1. Systematic evaluation
2. Measurement of social performance
3. Conducted on regular intervals
4. Supplements social responsibility
5. Different from commercial audit
6. Voluntary in character
7. Wide coverage
8. Difficult to conduct
9. Subjective Element
TYPES OF SOCIAL AUDIT

Personnel Marketing
Audit Audit

Shareholders
Issue Audit
Audit
BENEFITS/ MERITS/ ADVANTAGES OF SOCIAL AUDIT

1. Supply data on social performance

2. Favourable corporate image
3. Reduction of wastages
4. Prevents unfair practices
5. Increases accountability
6. Guidance to Top management
7. Protection to different groups
8. Provides Social benefits
 Social Audit V/S Commercial Audit

Point of Difference / Basis Social Audit Commercial Audit

of Difference
1. Meaning
2. Information Supplied
3. Who Conducts?
4. Purpose
5. Scope
6. Legal Position
7. Procedure
8. Submission
9. When Conducted?
10.Standard Format
REFERENCES

► http://www.dr.nishikantjha.com
► https://kalyan-city.blogspot.com/2011/08/business-objectives-meaning-types.html#:~:text=Business%2
0objectives%20are%20the%20goals,tries%20to%20achieve%20these%20goals.&text=However%2C%20the%2
0business%20cannot%20have,%2C%20customers%2C%20creditors%2C%20etc.
► https://www.businessmanagementideas.com/notes/management-notes/corporate-social-responsibility/arg
uments-in-favour-and-against-corporate-social-responsibility-csr-management/5315
► https://egyanagar.osou.ac.in/download-slm.php?file=DIM_COURSE_1_BLOCK_2-1520926406.pdf
► https://www.toppr.com/guides/business-communication-and-ethics/business-ethics/meaning-and-ethi
cal-principles-in-business/