Business Environment

Unit 7

Social Environment

Social Responsibility of Business

Laissez Faire Capitalism Maximization of Profits Business of Business is Business Business began merely as an instrument for the purpose of making money The public be damned Unconcerned with social welfare

New Management Philosophy

Realization by business leaders about public being integral part of business Placing sufficient purchasing power in the hands of consumers Higher wages and Lower prices Rise of new relationship between public and business. Accountability for public finance.

Origin of Social Responsibility

Oliver Sheldon, a British Business Leader, put forth concept of Social Responsibility
Awakening of public interest in inner working of business Workers demand for more leisure time and increased opportunity for self-development Association of workers into large groups, a trigger for social change A new spirit of equity emerging from application of scientific approach to problem solving

Definition of Social Responsibility

K R Andrews: Intelligent and objective concern for welfare
of society that restrains individual and corporate behavior from ultimately destructive activities

H R Bowen: A businessman has an obligation to pursue

those policies, to make those decisions or to follow those lines of action which are desirable in terms of objectives and values of our society

Keith Davis: Social responsibility begins where law ends. A

firm is not being socially responsible if it merely complies with minimum requirements of law. It is a firms acceptance of social obligation beyond requirements of law

Need for Social Responsibilities

Iron law of responsibility Satisfaction of long term interest Establish a better public image Avoid excessive government regulation/control Avoid misuse of national resources/economic power Avoid class conflict Convert obstacles into opportunities Environmental protection

Ethics, Values and Business

Business has two major objectives
Economic making profit Social Ensure goods/services at fair, reasonable and relatively stable prices, eliminating seasonal fluctuations Shun unethical practices such as hoarding, blackmarketing and profiteering Encourage adoption of code of ethics

Sachar Committee (1978) Suggestions

Openness in corporate affairs adequate disclosure of information for the benefit of all stakeholders Majority of India lives in rural areas. Disperse business to such undeveloped regions Employment, specially for socially handicapped and weaker sections Welfare of its employees, spread of adult literacy Annual report on fulfillment of social obligations Explicit declaration of non-inclusion of family Companies Act to require submission of social report

Consumer Movement
Rights of Consumers
Right to safety Right to be informed, consumer education Right to choose Right to be heard, to seek redressal,

Features of Consumer Movement

Protest movement Mass movement Non-official movement Recognized and backed by government

Hindrances to Growth
Lack of leadership and management Illiteracy Large country, inadequate means of effective communication Lack of sufficient financial resources Peoples attitude

Consumer Protection Act 1986

Applicable to all goods and services Covers all sectors-public, private, cooperative Confers rights on consumers Setting up of consumer protection councils Provisions in addition to existing Acts Covers a wide definition of who is a consumer

Consumer Disputes & Redressal

District forum State commission National commission

Environmental Movement
Earths Garden of Eden with flora and fauna, rivers and oceans, grasslands and wetlands fighting for survival Threat comes from commercial exploitation, rising population demands, industrial pollution While improving standard of living linked to industrial development, Industry responsible for water, air, noise pollution; radiation waste

Environment Protection Act 1986

In addition to two allied Acts
Water (Prevention and Control of Pollution) Act 1974 Air (Prevention and Control of Pollution) Act 1981

Central Government has general powers

To take measures for protecting and improving quality of environment To constitute necessary authorities To appoint officers To make rules To call for information

Threats to Environment
Air Pollution Water Pollution Noise Pollution Dumping habits

Major Tasks
o o o o o o o o To protect the natural environment To regenerate and restore degraded ecosystems To decentralize control over natural resources To develop and share understanding of nature To formulate national policy for environment To ensure coordinated and integrated govt action To make individuals and institutions accouintable To monitor the state of environment

Assignment
Corporate Social Responsibility in an Indian Public Sector Organization : A Case Study of Bharat Petroleum Corporation Ltd
After reading the above case study, answer the following questions:
1. 2. 3. Define CSR What were the objectives of BPCLs CSR Programme? What are the actual/perceived/potential benefits to BPCL from this programme?