Unit 5

Business and Society Changing Concepts

Concept of business implies the intention of doing a business. In other words, it means the
purpose for which a business is being carried on.
Since last few decades, there has been an impressive change in the concept of business. It has
changed remarkably from its mere producer orientation (i.e. only profit earning attitude) to the
customer orientation (i.e. giving customers maximum satisfaction). It further grew towards
societal orientation (i.e. with focus on achieving welfare of the society), and now also includes
the environmental orientation (i.e. now safety of environment is also a priority).
The changing concept of business went through four orientations:
 Producer orientation.
 Customer orientation.
 Societal orientation.
 Environmental orientation.
Now let’s continue our discussion further to understand individually each of the above-
mentioned orientations. We will also find out the main reasons why these orientations are
adapted within the concept of business.
Producer orientation
Producer orientation is the most traditional concept of business.
In this approach, the producer’s interest, i.e. a profit motive is given very high importance.
Business is done only for the sole purpose of earning optimum profit and nothing else. It is
therefore, also called as a profit-oriented concept of business.
Producer oriented concept was in use in most parts of the world before 1950.
Assumptions of producer-oriented concept of business:
 Customers tend to buy only those products which are easily available in the market and
are low priced.
 A business does production and/or distribution activities only for the sole purpose of
earning profit.
The manufactures following such a concept focus greatly on increasing their production
efficiency and distribution coverage of produced goods. They don’t give much importance to all
functions of marketing.
Reasons for following a producer-oriented concept of business:
 Absence of competition in the market.
 Lack of professionalism in the business.
 Lower expectations of the consumers.
Customer orientation
Customer orientation highlights its main focus on customers.
In concept of business, along with earning profit, importance is also given to the satisfaction of
customers who utilize the produced goods.
While buying goods, consumers pay the quoted price. As a result, they do expect and must get
optimum satisfaction in return to their purchases, which are already made.
According to the customer-oriented concept, a business must first identify the wants or
expectations of the customers. It must then try its level best to satisfy or fulfill these wants more
efficiently and effectively than its competitors.
Customer oriented concept of business started around 1950s, and it gained more significance
during 1960s and 1970s. It introduced the viewpoint of a customer’s satisfaction to the previous
only profit-oriented approach. It made the customer a center of all business activities.
Reasons for following a customer-oriented concept of business:
 Growing expectations of the consumers.
 Increase of competition in the market.
 Growth of professionalism in the business.
Societal orientation
Societal orientation brought the aspect of social welfare in the concept of business.
Under a social approach, along with earning profit and giving customer satisfaction, social
welfare or benefit is also given importance.
According to the social-oriented concept, every business functioning in any specific area must
willingly fulfill its social responsibilities in the best interest of the people in that area.
Generally, social responsibilities of business cover following activities:
 Generation of employment,
 Providing good quality of goods and/or services,
 Charging a reasonable price on goods and services,
 Giving prompt responses to various consumer grievances,
 Contributing in the development of basic infrastructure facilities,
 Adhering to legal rules and regulations, and so on.
Social-oriented concept of business started around 1970s, and it gained more prominence during
1980s and 1990s.
Reasons for following a social-oriented concept of business:
 Sustain and create goodwill in a cut-throat competitive market.
 Adopt a higher degree of professionalism in business.
 Fulfill growing expectations of society from the business.
Environmental orientation
Environmental orientation bounded the safety of environment in the concept of business.
Under an environmental approach, the important areas in the business concept were re-
determined. It was later decided that, along with profit earning, giving customer satisfaction,
doing social welfare; even environment’s safety must be given a prime importance and high
priority in the conduct of business.
According to environment-oriented concept, entrepreneurs shall do further research and
development (R&D) to produce finished goods, which are eco-friendly in nature. If an
entrepreneur implements such an environment-friendly approach in his or her’s business
activities, then he/she can enjoy some monetary benefits from government on a case to case
basis.
Environment oriented concept of business started in early 1990s, and it has gained more
significance since then. For example, establishment of ’Intergovernmental Panel on Climate
Change’ (IPCC) took place during this time for environmental monitoring and impact assessment
of human-induced climate change.
Reasons for following an environment-oriented concept of business:
 Minimize the environmental harm arising due to human-related economic activities and
keep a sustainable development.
 Encourage research and development of environment-friendly technologies and goods.
 Inculcate worthiness of environment in minds of entrepreneurs.

Objectives of Business Organisation

A. Economic Objectives:
Economic objectives of business refer to the objective of earning profit and also other objectives
that are necessary to be pursued to achieve the profit objective, which include, creation of
customers, regular innovations and best possible use of available resources.
(i) Profit Earning:
Profit is the lifeblood of business, without which no business can survive in a competitive
market. In fact profit making is the primary objective for which a business unit is brought into
existence. Profits must be earned to ensure the survival of business, its growth and expansion
over time.
Profits help businessmen not only to earn their living but also to expand their business activities
by reinvesting a part of the profits. In order to achieve this primary objective, certain other
objectives are also necessary to be pursued by business, which are as follows:
(a) Creation of customers:
A business unit cannot survive unless there are customers to buy the products and services.
Again a businessman can earn profits only when he/she provides quality goods and services at a
reasonable price. For this it needs to attract more customers for its existing as well as new
products. This is achieved with the help of various marketing activities.
(b) Regular innovations:
Innovation means changes, which bring about improvement in products, process of production
and distribution of goods. Business units, through innovation, are able to reduce cost by adopting
better methods of production and also increase their sales by attracting more customers because
of improved products.
Reduction in cost and increase in sales gives more profit to the businessmen. Use of power
looms in place of handlooms, use of tractors in place of hand implements in farms etc. are all the
results of innovation.
(c) Best possible use of resources:
As we all know, to run any business we must have sufficient capital or funds. The amount of
capital may be used to buy machinery, raw materials, employ men and have cash to meet day-to-
day expenses. Thus, business activities require various resources like men, materials, money and
machines.
The availability of these resources is usually limited. Thus, every business should try to make the
best possible use of these resources. Employing efficient workers. Making full use of machines
and minimizing wastage of raw materials, can achieve this objective.
B. Social Objectives:
Social objective are those objectives of business, which are desired to be achieved for the benefit
of the society. Since business operates in a society by utilizing its scarce resources, the society
expects something in return for its welfare. No activity of the business should be aimed at giving
any kind of trouble to the society.
If business activities lead to socially harmful effects, there is bound to be public reaction against
the business sooner or later. Social objectives of business include production and supply of
quality goods and services, adoption of fair trade practices and contribution to the general
welfare of society and provision of welfare amenities.
(i) Production and Supply of Quality Goods and Services:
Since the business utilizes the various resources of the society, the society expects to get quality
goods and services from the business he objective of business should be to produce better quality
goods and supply them at the right time and at a right price It is not desirable on the part of the
businessman to supply adulterated or inferior goods which cause injuries to the customers.
They should charge the price according to the quality of e goods and services provided to the
society. Again, the customers also expect timely supply of all their requirements. So it is
important for every business to supply those goods and services on a regular basis.
(ii) Adoption of Fair Trade Practices:
In every society, activities such as hoarding, black- marketing and over-charging are considered
undesirable. Besides, misleading advertisements often give a false impression about the quality
of products. Such advertisements deceive the customers and the businessmen use them for the
sake of making large profits.
This is an unfair trade practice. The business unit must not create artificial scarcity of essential
goods or raise prices for the sake of earning more profits. All these activities earn a bad name
and sometimes make the businessmen liable for penalty and even imprisonment under the law.
Therefore, the objective of business should be to adopt fair trade practices for the welfare of the
consumers as well as the society.
(iii) Contribution to the General Welfare of the Society:
Business units should work for the general welfare and upliftment of the society. This is possible
through running of schools and colleges better education opening of vocational training centres
to train the people to earn their livelihood, establishing hospitals for medical facilities and
providing recreational facilities for the general public like parks, sports complexes etc.
С. Human Objectives:
Human objectives refer to the objectives aimed at the well-being as well as fulfillment of
expectations of employees as also of people who are disabled, handicapped and deprived of
proper education and training. The human objectives of business may thus include economic
well-being of the employees, social and psychological satisfaction of employees and
development of human resources.
(i) Economic Well-being of the Employees:
In business employees must be provided with tan remuneration and incentive for performance
benefits of provident fund, pension and other amenities like medical facilities, housing facilities
etc. By this they feel more satisfied at work and contribute more for the business.
(ii) Social and Psychological Satisfaction of Employees:
It is the duty of business units to provide social and psychological satisfaction to their
employees. This is possible by making the job interesting and challenging, putting the right
person in the right job and reducing the monotony of work Opportunities for promotion and
advancement in career should also be provided to the employees.
Further, grievances of employees should be given prompt attention and their suggestions should
be considered seriously when decisions are made. If employees are happy and satisfied they can
put then best efforts in work.
(iii) Development of Human Resources:
Employees as human beings always want to grow. Their growth requires proper training as well
as development. Business can prosper if the people employed can improve their skills and
develop their abilities and competencies in course of time. Thus, it is important that business
should arrange training and development programmes for its employees.
(iv) Well-being of Socially and Economically Backward People:
Business units being inseparable parts of society should help backward classes and also people
those are physically and mentally challenged. This can be done in many ways. For instance,
vocational training programme may be arranged to improve the earning capacity of backward
people in the community. While recruiting its staff, business should give preference to physically
and mentally challenged persons. Business units can also help and encourage meritorious
students by awarding scholarships for higher studies.
D. National Objectives:
Being an important part of the country, every business must have the objective of fulfilling
national goals and aspirations. The goal of the country may be to provide employment
opportunity to its citizen, earn revenue for its exchequer, become self-sufficient in production of
goods and services, promote social justice, etc. Business activities should be conducted keeping
these goals of the country in mind, which may be called national objectives of business.
The following are the national objectives of business.
(i) Creation of Employment:
One of the important national objectives of business is to create opportunities for gainful
employment of people. This can be achieved by establishing new business units, expanding
markets, widening distribution channels, etc.
(ii) Promotion of Social Justice:
As a responsible citizen, a businessman is expected to provide equal opportunities to all persons
with whom he/she deals. He/ She is also expected to provide equal opportunities to all the
employees to work and progress. Towards this objectives special attention must be paid to
weaker and backward sections of the society.
(iii) Production According to National Priority:
Business units should produce and supply goods in accordance with the priorities laid down in
the plans and policies of the government. One of the national objectives of business in our
country should be to increase the production and supply of essential goods at reasonable prices.
(iv) Contribute to the Revenue of the Country:
The business owners should pay their taxes and dues honestly and regularly. This will increase
the revenue of the government, which can be used for the development of the nation.
(v) Self-sufficiency and Export Promotion:
To help the country to become self-reliant, business units have the added responsibility of
restricting import of goods. Besides, every business units should aim at increasing exports and
adding to the foreign exchange reserves of the country.
E. Global Objectives:
Previously India had very restricted business relationship with other nations. There was a very
rigid policy for import and export of goods and services. But, now-a-days due to liberal
economic and export-import policy, restrictions on foreign investments have been largely
abolished and duties on imported goods have been substantially reduced.
This change has brought about increase in competition in the market. Today because of
globalisation the entire world has become a big market. Goods produced in one country are
readily available in other countries. So, to face the competition in the global market every
business has certain objectives in mind, which may be called the global objectives. Let us learn
about them.
(i) Raise General Standard of Living:
Growth of business activities across national borders makes quality goods available at reasonable
prices all over the world. The people of one country get to use similar types of goods that people
in other countries are using. This improves the standard of living of people.
(ii) Reduce Disparities among Nations:
Business should help to reduce disparities among the rich and poor nations of the world by
expanding its operation. By way of capital investment in developing as well as underdeveloped
countries it can foster their industrial and economic growth.
(iii) Make Available Globally Competitive Goods and Services:
Business should produce goods and services which are globally competitive and have huge
demand in foreign markets. This will improve the image of the exporting country and also earn
more foreign exchange for the country.

Business Ethics
Ethics means the set of rules or principles that the organization should follow. While in business
ethics refers to a code of conduct that businesses are expected to follow while doing business.
Through ethics, a standard is set for the organization to regulate their behavior. This helps them
in distinguishing between the wrong and the right part of the businesses.
The ethics that are formed in the organization are not rocket science. They are based on the
creation of a human mind. That is why ethics depend on the influence of the place, time, and the
situation.
Code of conduct is another term that is used extensively in businesses nowadays. It is a set of
rules that are considered as binding by the people working in the organization.
Business ethics compromises of all these values and principles and helps in guiding the behavior
in the organizations. Businesses should have a balance between the needs of the stakeholders and
their desire to make profits.
While maintaining these balances, many times businesses require to do tradeoffs. To combat
such scenarios, rules and principles are formed in the organization.
This ensures that businesses gain money without affecting the individuals or society as a whole.
The ethics involved in the businesses reflect the philosophy of that organization.
One of these policies determines the fundamentals of that organization. As a result, businesses
often have ethical principles. There is a list of ethical principles involved in the businesses.
Ethical Principles in Businesses from an Indian Perspective
Essentially, any businesses that run in India comprises of these ethical principles.
Integrity
Whenever there is great pressure to do right instead of maximizing profits, this principle is
tested. The executives need to demonstrate courage and personal integrity, by doing what-what
think is right.
These are the principles, which are upright, honorable. They need to fight for their beliefs. For
these principles, they will not back down and be hypocritical or experience.
Loyalty
No ethical behavior can be promoted without trust. And for trust, loyalty needs to be
demonstrated. The executives need to be worthy of this trust while remaining loyal to the
institutions and the person. There should be friendship in the time of adversity and support and
devotion for the duty.
They should not use or disclose personal information. This leads to confidence in the
organization. They should safeguard the ability of a professional to make an independent
decision by avoiding any kind of influence or the conflicts of interest.
So, they should remain loyal to their company and their colleagues. When they accept the other
employees, they need to provide a reasonable time to the firm and respect the proprietary
information attach to the previous firm. Thus, they should refuse to take part in any activity that
might take the undue advantage of the firm.
Honesty
The ethical executives are honest while dealing with their regular work. They also need to be
truthful and do not deliberately deceive or mislead the information to others. There should be an
avoidance of the partial truths, overstatements, misrepresentations, etc. Thus, they should not
have selective omission by any means possible.
Respect and Concern
These are two necessarily different forms of behavior in the organization. But they go in tandem
that is why they have been put under one principle. When the executive is ethical he is
compassionate, kind, and caring.
There is one golden rule which states that help those who are in need. Further, seek their
accomplishments in such a manner that the business objectives of the firm are achieved.
The executives also need to show respect towards the employee’s dignity, privacy, autonomy,
and rights. He needs to maintain the interests of all those whose decisions are at stake. They need
to be courteous and treat the person equally and rightly.
Fairness
The executives need not be just fair in all the dealings, but they also should not exercise the
wrong use of their power. They should not try to use over each or other indecent manners to gain
any sort of advantage. Also, they should not take undue advantage of anything or other people’s
mistakes.
Fair people are inclined more towards justice and ensure that the people are equally treated. They
should be tolerant, open-minded, willing to admit their own mistakes. The executives should also
be able to change their beliefs and positions based on the situation.
Leadership
Any executive, if ethical, should be a leader to others. They should be able to handle the
responsibilities. They should be aware of the opportunities due to their position. The executives
need to be a proper role model for others.

Gandhian Philosophy of Wealth Management

Gandhian Philosophy of Wealth Management: The Gandhian Philosophy of Wealth
Management is based on the principle that a wealthy man does not truly have the right to hoard
wealth solely for the self; the only right he has is that to an honourable livelihood. It is described
as the concept of “lok sangraha”, oriented towards the common good. This is distinct from
capitalistic economics, with its attendant social ecological and psychological woes.
Trusteeship Management
Trusteeship, as applicable to the corporate world, refers to the act of holding and managing
resources on behalf of the stakeholders of the firm. “What’s new about that”, one may query.
Given that the traditional take on wealth has almost always been tilted towards owners of
corporations, this concept brings in an element of equity, by placing other stakeholders such as
employees, customers and society on the same rung as large and small shareholders.
The idea is that all wealth, including human, financial and technological resources, belongs to
society and the rewards accruing from their use must revert to society at large. The principles of
trusteeship can be traced to the concept of collective Endeavour and community living. Briefly,
these are: Resources must be held and utilized for the benefit of society. Managers are the
trustees of the stakeholders and must work towards optimizing stakeholder value, not merely
maximizing shareholder value. The small investor has as much a say in decisions as the large
investor.
Thus, the overall approach is towards the macro and the long-term perspective, rather than the
short-term, micro perspective which is often geared exclusively to suit the shareholder and top
management. At first sight, this seemingly idealistic concept invariably raises a few protests.
“The owner/s must be rewarded for bearing risks and supplying expertise”: Definitely. But the
reward must be in proportion to the skills and expertise supplied. The increasing instances of
ethical transgressions on the part of leaders and CEOs indicates the need for better balance in the
risk-reward relationship. The Enron fiasco and the sale of shares worth over $70m by erstwhile
chief Rebecca Mark, a few months before its bankruptcy, is a case in point. “Corporations exist
for profits”: They exist to fulfil the needs of society and in the process, generate profits.
Moreover, even if profits were to be the only determinant of policies trusteeship would still score
over inequitable sharing of wealth, since De management automatically leads to more lasting and
stable equations with stake in turn, leads to higher profits, goodwill and trust. “Trusteeship might
lead to an efficiency and efforts”: When individual and group efforts are correctly aligned w
needs, the possibility of de motivation or deliberate inefficiency does not arise. Con the utility of
the concept, coupled with the commitment of top leadership, would ensure efficiency as well as
effectiveness.
The Indian Perspective
The wisdom of the Vedas and Upanishads point towards holistic progress, not fragmented
movement in which one section gains at a cost to others. Moreover, the cycle of give-and-take is
explained at great length. The Arthashastra of Kautilya and The Kural of Tiruvalluvar both
describe the role of the king as trustee, with respect to the citizens and the wealth of the land. In
the last century, Swami Vivekananda taught that sustainable progress calls for progress for all
members and components of society. Fragmented progress is temporary and often illusory. It is
only when all elements of the environment are taken care of that an individual or organization
can hope to consistently succeed in its ventures.
Indian Corporate Leaders and Trusteeship: One of the most inspiring examples of corporate
trusteeship, in recent times, comes from Infosys, particularly from its former CEO and current
chief mentor, Narayana Murthy. His rationale for creating this company along with a small group
of people (better sharing of wealth in society), the involvement of employees in the company’s
fortunes (through ESOPs) and his contentment with a mere 7% of company stock (he prefers it
that way) reflect a deep-rooted commitment towards trusteeship. Other notable examples include
the house of the Tatars with their corporatized initiatives for socio-corporate benefits; the
“WIPRO Cares” Foundation, with a targeted corpus of Rs 100 core for primary education; and
the Birla foundation with its focus on socio-economic improvement in the lives of the people
touched by the corporation. The possibility of feel-good exercises induced with an eye on the
bottom-line cannot be ignored. Yet, corporate boardrooms are increasingly discovering a match
between the long-term interests of the company and their willingness to expand focus to all
categories of stakeholders. As the roles of wealthy CEOs and influential policy-makers continue
to gain public scrutiny, the question that management must periodically ask themselves is: Does
our existence lead to any benefits for society?
Gandhiji’s Seven Greatest Social Sins
Mahatma Gandhi said that seven things will destroy us. Notice that all of them have to do social
and political conditions. Note also that the antidote of each of these “deadly sins” is an explicit
external standard or something that is based on natural principles and laws, not on social values.
Wealth Without Work
This refers to the practice of getting something for nothing – manipulating markets and assets so
you don’t have to work or produce added value, just manipulate people and things. Today there
are professions built around making wealth without working, making much money without
paying taxes, benefiting from free government programs without carrying a fair share of the
financial burdens, and enjoying all the perks of citizenship of country and membership of
corporation without assuming any of the risk or responsibility.
How many of the fraudulent schemes that went on in the 1980s, often called the decade of greed,
were basically get-rich-quick schemes or speculations promising practitioners, “You don’t even
have to work for it”? That is why I would be very concerned if one of my children went into
speculative enterprises or if they learned how to make a lot of money fast without having to pay
the price by adding value on a day-to-day basis.
Some network marketing and pyramidal organizations worry me because many people get rich
quick by building a structure under them that feeds them without work. They are rationalized to
the hilt; nevertheless the overwhelming emotional motive is often greed: “You can get rich
without much work. You may have to work initially, but soon you can have wealth without
work.” New social mores and norms are cultivated that cause distortions in their judgment.
Justice and judgment are inevitably inseparable, suggesting that to the degree you move away
from the laws of nature, your judgment will be adversely affected. You get distorted notions.
You start telling rational lies to explain why things work or why they don’t. You move away
from the law of “the farm” into social/political environments.
When we read of organisations in trouble, we often hear the sad confessions of executives who
tell of moving away from natural laws and principles for a period of time and begin
overbuilding, over borrowing, and over speculating, not really reading the stream or getting
objective feedback, just hearing a lot of self-talk internally. Now they have a high debt to pay.
They may have to work hard just to survive – without hope of being healthy for five years or
more. It’s back to the basics, hand to the plow. And many of these executives, in earlier days,
were critical of the conservative founders of the corporations who stayed close to the
fundamentals and preferred to stay small and free of debt.
Pleasure without Conscience
The chief query of the immature, greedy, selfish, and sensuous has always been, “What’s in it for
me? Will this please me? Will it ease me?” Lately many people seem to want these
Knowledge without Character
As dangerous as a little knowledge is, even more dangerous is much knowledge without a strong,
principled character. Purely intellectual development without commensurate internal character
development makes as much sense as putting a high-powered sports car in the hands of a
teenager who is high on drugs. Yet all too often in the academic world, that’s exactly what we do
by not focusing on the character development of young people.
One of the reasons I’m excited about taking the Seven Habits into the schools is that it is
character education. Some people don’t like character education because, they say, “that’s your
custom.” But you can get a common set of values that everyone agrees on. It is not that difficult
to decide, for example, that kindness, fairness, dignity, contribution, and integrity are worth
keeping. No one will fight you on those. So let’s start with values that are unarguable and infuse
them in our education system and in our corporate training and development programs. Let’s
achieve a better balance between the development of character and intellect.
The people who are transforming education today are doing it by building consensus around a
common set of principles, values, and priorities and debunking the high degree of specialization,
departmentalization, and partisan politics.
Commerce (Business) Without Morality (Ethics)
In his book Moral Sentiment, which preceded Wealth of Nations, Adam Smith explained how
foundational to the success of our systems is the moral foundation: how we treat each other, the
spirit of benevolence, of service, of contribution. If we ignore the moral foundation and allow
economic systems to operate without moral foundation and without continued education, we will
soon create an amoral, if not immoral, society and business. Economic and political systems are
ultimately based on a moral foundation.
To Adam Smith, every business transaction is a moral challenge to see that both parties come out
fairly. Fairness and benevolence in business are the underpinnings of the free enterprise system
called capitalism. Our economic system comes out of a constitutional democracy where minority
rights are to be attended to as well. The spirit of the Golden Rule or of win-win is a spirit of
morality, of mutual benefit, of fairness for all concerned. Paraphrasing one of the mottos of the
Rotary Club, “Is it fair and does it serve the interests of all the stakeholders?” That’s just a moral
sense of stewardship toward all of the stakeholders.
I like that Smith says every economic transaction. People get in trouble when they say that most
of their economic transactions are moral. That means there is something going on that is covert,
hidden, secret. People keep a hidden agenda, a secret life, and they justify and rationalize their
activities. They tell themselves rational lies so they don’t have to adhere to natural laws. If you
can get enough rationalization in a society, you can have social mores or political wills that are
totally divorced from natural laws and principles.
I once met a man who for five years served as the “ethics director” for a major aerospace
company. He finally resigned the post in protest and considered leaving the company, even
though he would lose a big salary and benefit package. He said that the executive team had their
own separate set of business ethics and that they were deep into rationalization and justification.
Wealth and power were big on their agendas, and they made no excuse for it anymore. They
were divorced from reality even inside their own organization. They talked about serving the
customer while absolutely mugging their own employees.
Science Without Humanity
If science becomes all technique and technology, it quickly degenerates into man against
humanity. Technologies come from the paradigms of science. And if there’s very little
understanding of the higher human purposes that the technology is striving to serve, we becomes
victims of our own technocracy. We see otherwise highly educated people climbing the scientific
ladder of success, even though it’s often missing the rung called humanity and leaning against
the wrong wall.
The majority of the scientists who ever lived or living today, and they have brought about a
scientific and technological explosion in the world. But if all they do is superimpose technology
on the same old problems, nothing basic changes. We may see an evolution, an occasional
“revolution” in science, but without humanity we see precious little real human advancement:
All the old inequities and injustices are still with us.
About the only thing that hasn’t evolved are these natural laws and principles – the true north on
the compass. Science and technology have changed the face of most everything else. But the
fundamental things still apply, as time goes by.
Religion Without Sacrifice
Without sacrifice we may become active in a church but remain inactive in its gospel in other
words, we go for the social facade of religion and the piety of religious practices. There is no real
walking with people or going the second mile or trying to deal with our social problems that may
eventually undo our economic system. It takes sacrifice to serve the needs of other people – the
sacrifice of our own pride and prejudice, among other things.
If a church or religion is seen as just another hierarchical system, its members won’t have a sense
of service or inner workship. Instead they will be into outward observances and all the visible
accoutrements of religion. But they are neither God-centered nor principle-centered.
The principles of three of the Seven Habits pertain to how we deal with other people, how we
serve them, how we sacrifice for them, how we contribute. Habits 4, 5 and 6 – win-win
interdependency, empathy, and synergy – require tremendous sacrifice. I’ve come to believe that
they require a broken heart and a contrite spirit – and that, for some, is the ultimate sacrifice. For
example, I once observed a marriage where there were frequent arguments. One thought came to
me: “These two people must have a broken heart and a contrite spirit toward each other or this
union will never last.” You can’t have a oneness, a unity, without humility. Pride and selfishness
will destroy the union between man and god, between man and woman, between man and man,
between self and self.
The great servant leaders have that humility, the hallmark of inner religion. I know a few CEOs
who are humble servant leaders – who sacrifice their pride and share their power – and I can say
that their influence both inside and outside their companies is multiplied because of it. Sadly,
many people want “religion,” or at least the appearance of it, without any sacrifice. They want
more spirituality but would never miss a meal in meaningful fasting or do one act of anonymous
service to achieve it.
Political Without Principle
If there is no principle, there is no true north, nothing you can depend upon. The focus on the
personality ethic is the instant creation of an image that sells well in the social and economic
marketplace.
You see politicians spending millions of dollars to create an image, even though it’s superficial,
lacking substance, in order to get votes and gain office. And when it works, it leads to a political
system operating independently of the natural laws that should govern — that are built into the
Declaration of Independence: “We hold these Truths to be self-evident, that all Men are created
equal, that they are endowed by their Creator with certain unalienable Rights, that among these
are Life, Liberty, and the Pursuit of Happiness….”
In other words, they are describing self-evident, external, observable, natural, unarguable, self-
evident laws: “We hold these Truths to be self-evident.” The key to a healthy society is to get the
social will, the value system, aligned with correct principles. You then have the compass needle
pointing to true north – true north representing the external or the natural law – and the indicator
says that is what we are building our value system on: they are aligned.
But if you get a sick social will behind the political will that is independent of principle, you
could have a very sick organization or society with distorted values. For instance, the professed
mission and shared values of criminals who rape, rob and plunder might sound very much like
many corporate mission statements, using such words as “teamwork,” “cooperation,” “loyalty,”
“profitability,” “innovation,” and “creativity.” The problem is that their value system is not based
on a natural law.
Figuratively, inside many corporations with lofty mission statements, many people are being
mugged in broad daylight in front of witnesses. Or they are being robbed of self-esteem, money,
or position without due process. And if there is no social will behind the principles of due
process, and if you can’t get due process, you have to go to the jury of your peers and engage in
counterculture sabotage.
In the movie The Ten Commandments, Moses says to the pharaoh, “We are to be governed by
God’s law, not by you.” In effect he’s saying, “We will not be governed by a person unless the
person embodies the law.” In the best societies and organizations, natural laws and principle
govern – that’s the Constitution – and even the top people must bow to the principle. No one
above it.

Organizational Culture
Organizational culture can be defined as the group norms, values, beliefs and assumptions
practiced in an organization. It brings stability and control within the firm. The organization is
more stable and its objective can be understood more clearly.
Organizational culture helps the group members to resolve their differences, overcome the
barriers and also helps them in tackling risks.
Elements of Organizational Culture
The two key elements seen in organizational culture are:

 Visible elements: These elements are seen by the outer world. Example, dress code,
activities, setup, etc.
 Invisible elements: These inner elements of the group cannot be seen by people outside
the group or firm. Example, values, norms, assumptions, etc. Now let us discuss some
other elements of organizational culture. They are:
 Stories: Stories regarding the history of the firm, or founder.
 Rituals: Precise practices an organization follows as a habit.
 Symbol: The logo or signature or the style statement of a company.
 Language: A common language that can be followed by all, like English.
 Practice: Discipline, daily routine or say the tight schedule everyone follows without any
failure.
 Values and Norms: The idea over which a company is based or the thought of the firm is
considered as its value and the condition to adopt them are called norms.
 Assumptions: It means we consider something to be true without any facts. Assumptions
can be used as the standard of working, means the employees prepare themselves to
remain above standard.
Different Types of Organizational Culture
The culture a firm follows can be further classified into different types. They are:
 Mechanistic and Organic culture
 Authoritarian and Participative culture
 Subculture and Dominant culture
 Strong and Weak culture
 Entrepreneurial and Market culture
Mechanistic and Organic Culture
Mechanistic culture is formed by formal rule and standard operating procedures. Everything
needs to be defined clearly to the employees like their task, responsibility and concerned
authorities. Communication process is carried according to the direction given by the
organization. Accountability is one of the key factors of mechanistic culture.
Organic culture is defined as the essence of social values in an organization. Thus there exists a
high degree of sociability with very few formal rules and regulations in the company. It has a
systematic hierarchy of authority that leads towards free flow of communication. Some key
elements of organic culture include authority, responsibility, accountability and direct flow
towards the employee.
Authoritarian and Participative Culture
Authoritarian culture means power of one. In this culture, power remains with the top level
management. All the decisions are made by the top management with no employee involvement
in the decision making as well as goal shaping process. The authority demands obedience from
the employee and warns them for punishment in case of mistake or irregularity. This type of
culture is followed by military organization.
In participative culture, employees actively participate in the decision making and goal shaping
process. As the name suggests, it believes in collaborative decision making. In this type of
culture, employees are perfectionist, active and professional. Along with group decision making,
group problem solving process is also seen here.
Subculture and Dominant Culture
In subculture, some members of the organization make and follow a culture but not all members.
It is a part of organizational culture, thus we can see many subcultures in an organization. Every
department in a company have their own culture that gets converted to a subculture. So, the
strength and adaptability of an organizational culture is dependent on the success of subculture.
In dominant culture, majority of subculture combine to become a dominant culture. The success
of dominant culture is dependent on the homogeneity of the subculture, that is, the mixture of
different cultures. At the same point of time, some cold war between a dominant culture and a
minor culture can also be seen.
Strong and Weak Culture
In a strong culture, the employees are loyal and have a feeling of belongingness towards the
organization. They are proud of their company as well as of the work they do and they slave
towards their goal with proper coordination and control. Perception and commitment are two
aspects that are seen within the employees. In this culture, there is less employee turnover and
high productivity.
In a weak culture, the employees hardly praise their organization. There is no loyalty towards the
company. Thus, employee dissatisfaction and high labor turnover are two aspects of this culture.
Entrepreneurial and Market Culture
Entrepreneurial culture is a flexible and risk-taking culture. Here the employees show their
innovativeness in thinking and are experimental in practice. Individual initiations make the goal
easy to achieve. Employees are given freedom in their activity. The organization rewards the
employees for better performance.
Market culture is based on achievement of goal. It is a highly target-oriented and completely
profit-oriented culture. Here the relationship between the employees and the organization is to
achieve the goal. The social relation among the workers is not motivating.
How to Create an Organizational Culture
An organizational culture is created with the combination of certain criteria that are mentioned
below:
  The founder of the organization may partly set a culture.
 The environment within which the organization standards may influence its activities to
set a culture.
 Sometimes interchange of culture in between different organizations create different new
cultures.
 The members of the organization may set a culture that is flexible to adapt.
 New cultures are also created in an organization due to demand of time and situation.
The culture of an organizational can change due to composition of workforce, merger and
acquisition, planned organizational change, and influence of other organizational culture.

Technological Development and Social Change

Technology is the application of scientific knowledge to the making of tools to solve specific
problems. Technological advances such as automobiles, airplanes, radio, television, cellular
phones, computers, modems, and fax machines have brought major advances and changes to the
world. Indeed, 20th century technology has completely and irreversibly changed the way people
meet, interact, learn, work, play, travel, worship, and do business.
Technological information increases exponentially: The entire database of scientific knowledge
doubles every several years. This “technological explosion” is due in part to an “Information
explosion,” as well as to advances in storage, retrieval, and communication of data. In other
words, a cycle occurs: Improvements in technology lead to increases in knowledge and
information and, thus, to uncovering the means to create better technology. Consequently,
sociologists are concerned with how technological societies will be forced to adapt to the social
changes that improvements in technology will continue to bring.
Computer Technology
In the 1990s, people witnessed an explosion of computer technology both in America and around
the globe, which has in turn led to a change in how and where people work. Telecommuters are
employees of agencies or business firms who work full‐time or part‐time at home instead of in
the office. They connect to their offices via electronic networking: phone, computer, e‐mail, and
fax. Telecommuting allows employees to work under supervisors in another state or country.
This form of employment especially helps disabled individuals who are unable to leave home or
travel to an office, as well as working parents of young children.
The Internet: The world’s largest computer network has revolutionized electronic networking.
The number of people using the Internet continues to double annually, with at least 50 percent of
all Americans “online” in 2000.
The Internet originally developed from a system built by the U.S. Defense Department to permit
governmental work in the aftermath of a nuclear attack. Although originally only those with
governmental or university positions could access the Internet, now virtually any home can
purchase World Wide Web service. Net‐surfers can telecommute, read articles, check stock
prices, conduct research, comparison price, shop from home, meet others in chat rooms or on
bulletin boards, take college courses, and even earn an accredited degree.
The Internet has certainly provided exciting new possibilities for electronic communication, yet
critics argue that a dark side exists to this informational tool. One area of special concern,
especially for families with young children, is the ability to access and download pornographic
materials. Internet users can download pornographic photos, trade sexual messages on a bulletin
board, have overtly sexual conversations with a distant “playmate,” play erotic games, or
purchase tickets for a singles cruise. In recent years, sexual predators have also used the Internet
to identify potential victims. Other areas of concern include potential social isolation, random
and reckless dissemination of nonverifiable or inaccurate information, plagiarism, and family
estrangement.
Biotechnology
Recent decades have produced dramatic though controversial scientific advances in
biotechnology (the application of technology to the practice of medicine). Advances in such
areas as reproductive technologies, surrogate parenthood, sex preselection, and genetic
engineering have raised difficult political, ethical, and moral questions.
Reproductive technologies and sex preselection
Not every couple wanting to conceive can do so. If they fail to conceive after one year or more of
trying, the couple is considered infertile. At any one time, up to 20 percent of couples in the
United States may be infertile.
In many cases, doctors can successfully treat infertility:
Fertility drugs (ovulation‐stimulating hormones) can help when the woman’s inability to ovulate
causes the infertility.
Artificial insemination, which involves collecting and introducing sperm into the vagina using a
syringe, proves particularly useful when the man possesses a below‐normal sperm count.
In vitro fertilization, or the “test‐tube baby” method, involves fertilizing an egg outside the
woman’s body and implanting it into the uterus. This procedure is useful when the woman has
blocked fallopian tubes.
Gamete intrafallopian transfer (“GIFT”) involves taking eggs from the woman’s ovaries, mixing
them with the man’s sperm, and then inserting them into the fallopian tube. In this procedure,
fertilization takes place inside the woman’s body rather than outside. To date, couples in the
United States have produced over 20,000 babies using alternatives such as these.
Some couples or individuals decide that adopting a child represents the best way of dealing with
infertility. Others elect to utilize the services of a surrogate mother—a woman who contracts
with a couple to carry their fetus to full term, deliver it, and adopt it to the couple. A physician
may artificially inseminate the surrogate with the man’s sperm or implant an in vitro fertilized
egg into her uterus. Either way, the procedure remains controversial, given the many potential
ethical, legal, and moral issues it raises. For example, questions of legal, moral, and biological
parenthood can give rise to long and complicated custody proceedings.
Similar to surrogate motherhood, and also controversial, is carrier implantation. The procedure
involves implanting a fertilized egg into a relative’s uterus. Because a relative carries the fetus to
term, the woman or couple avoids the expense and hassle of hiring a surrogate mother.
Physicians have now successfully implanted embryos into women in their 50s, following
hormone therapy to reverse the effects of menopause.
Sex preselection techniques designed to help a couple choose the gender of their unborn child
have also proven controversial. Because sperm bearing the Y chromosome produce males,
couples wanting a male baby attempt to increase the chances of a Y‐bearing sperm fusing with
the X‐ovum. A number of sperm‐separating techniques supposedly accomplish this. For
example, doctors can impregnate the mother‐to‐be via artificial insemination of primarily Y‐
bearing sperm, which they have separated in a test tube. Success rates of sperm‐separating
techniques are questionable, with reported figures approaching 85 percent. Critics note that
society cannot know the effects of gender imbalances created through sex preselection. Will
people prefer more girls than boys? What happens to the future of marriage and family?
Genetic engineering
Perhaps even more presumptuous (or alarming, according to some critics) than reproductive
technologies and sex preselection is altering human behavior through genetic engineering.
Cloning, or the creation of exact replicas from a single genetic ancestor, represents the most
extreme form of genetic engineering. Geneticists have cloned animals for years, but may soon
focus their efforts on human beings.
One of the latest advances in genetic engineering is gene therapy, in which genetic engineers, in
limited cases, can disable genes carrying undesirable traits and replace them with genes carrying
desirable traits. While these sorts of developments pose many possibilities for altering various
organisms and eradicating certain diseases and disabilities, gene therapy remains experimental.

Social Responsibility of business with respect to different stakeholders

Business depends on society for inputs like money, men, and skills and also for market where
products have to be sold to the customers. The business depends on society for existence,
sustenance and encouragement.
Being so much dependent on society, business also has a definite responsibility towards different
segments of society. Though profit making is one of main objectives of business but it has to
satisfy employees, consumer, government, community, shareholders also.
1. Employees:
No Enterprise can succeed without the whole-hearted cooperation of the employees.
Responsibility of business towards employees is in the form of training, promotion, proper
selection, fair wages, safety, health, worker’s education, comfortable working conditions,
participation management etc.
The employees should be taken into confidence while taking decisions affecting their interests.
The workers should be offered incentives for raising their performance. Mental, physical,
economic and cultural satisfaction of employees should be taken care of. If business looks after
the welfare of employees then they will also work whole heartedly for the prosperity of business.
The committee that conducted ‘social audit’ of TISCO (Tata Iron and Steel Company) observes,
“not only should the company carry out its various obligations to the employees as well as the
larger community as a matter of principle, but this has also led to a higher degree of efficiency in
TISCO works and an unparalleled performance in industrial peace and considerable team spirit
and discipline which have all resulted in high productivity and utilisation of capacity.”Thus, by
discharging its responsibility to employees the business advances its own interests.
‘TATAS’ have been the first to enforce certain laws in favour of employees. Similarly Godrej &
Boyce, Shriram Industries and TVS groups are also good employers. Financial position of
company and economic conditions of nation should be taken into consideration while spending
on labour welfare during performance of responsibility towards employees.
2. Owners:
Business is accountable towards owners as well as managing business profitably, ensuring fair
and regular return on capital employed, consolidating financial position of business,
guaranteeing capital appreciation so as to enable the owners to withstand any business
contingencies.
3. Consumers:
Responsibility of business towards consumer extends to:
(i) Product:
Quality goods should be produced and supplied. Distribution system should make goods easily
available to avoid artificial scarcities and after sales service should be prompt. Buying capacity
and consumer preferences should be taken into consideration while deciding the manufacturing
policies. The care must be exercised in supplying the goods of quality which has no adverse
effect on the health of consumers.
(ii) Marketing:
To avoid being misled by wrong claims about products through improper advertisements or
otherwise, the consumer should be provided full information about the products including their
adverse effects, risks and care to be taken while using the products.
Consumers all over the world are, by and large, dissatisfied because the performance of
businessman is far from satisfactory. Consumer is not the king in our country but a vehicle used
by businessmen for driving towards the goal of profit maximisation.
As a result of which the concept of ‘consumerism’ has come up to protect the rights of
consumers. Even the government is interfering in a big way to protect the interests of consumers.
4. Government:
A number of legislatives are formed from time to time by the government for proper regulation
and control of business. Businessmen should comply with all legal requirements, execute
government contracts, pay taxes honestly and in time, make services of executives available for
government, suggest measures and send proposals to enact new laws for the business.
A number of taxes are imposed on business for collecting revenue. Businessmen should pay
various taxes in time and help government in collecting funds. They should not resort to tax
evasions rather declare their incomes honestly and correctly.
But series of raids conducted on business houses clearly show that businessmen have failed to
discharge their responsibility towards government.
5. Shareholders:
Shareholders who are the owners of business should be provided with correct information about
company to enable them to give them true and fair position of the company to enable them to
decide about further investments.
Company should provide a fair return on the investment made by shareholders. If shareholders
do not get proper dividend then they will hesitate to invest additional funds in the concern.
Shareholders should be kept fully informed about the working of the company for healthy
growth of the business. The Companies Act 1956 also requires company to give full disclosure in
the published statements.
Company should strengthen the share prices by its growth, innovation and diversification. At the
same time shareholders shall also offer wholehearted support and co-operation to the company to
protect their own interests.
6. Community:
Responsibility of business towards community and society includes spending a part of profits
towards civic and educational facilities. Every industrial undertaking should take steps to dispose
of Industrial wastes in such a way that ecological balance is maintained and environmental
pollution is prevented.
Rehabilitating the population displaced by business units should also De part of responsibly of
business? Business houses should set up units at those places where sufficient space is available
for housing colonies of workers. The promotion of small scale industries will help not only
nation but will also help in building up a better society.
7. Environment:
Business should protect the environment which has acquired great importance all over the world.
Business can discharge the responsibility of protecting environment in following way:
(i) Preservation of Natural Resources:
Scarce natural resources should be used very carefully as these are depleting at a very fast rate.
The alternative sources can also be found out to save natural resources like to save forests
alternative to wood and pulp can be found, the use of coal can be reduced by alternative source
of energy.
(ii) Pollution Control:
Appropriate steps should be taken to prevent environmental pollution and to preserve ecological
balance. The industrial waste should be disposed off carefully or if possible can be recycled to
minimise pollution. The toxic wastes, excessive noise, chemical pesticides, automobile exhaust
etc. need to be checked from time to time.

Social Audit and Social Responsibility of Business

Social Audit
A social audit is a formal review of a company’s endeavors in social responsibility. A social
audit looks at factors such as a company’s record of charitable giving, volunteer activity, energy
use, transparency, work environment, and worker pay and benefits, to evaluate what kind of
social and environmental impact a company is having in the locations where it operates.
Social audits are optional. Companies can choose whether to perform them and whether to
release the results publicly or only use them internally.
A social audit is an internal examination of how a particular business is affecting a society. It
serves as a way for a business to see if the actions being taken are being positively or negatively
received and relates that information to the company’s overall public image.
A social audit examines issues regarding internal practices or policies and how they affect the
identified society. The activities included tend to pertain to the concepts of social responsibility.
This can include activities affecting the financial stability of a region, any environmental impact
resulting from standard operations and issues of transparency in reporting.
There is no standard regarding what must be considered as the society during the audit. This
allows a business to expand or contract the scope based on its goals. While one company may
wish to understand the impact it has on a small-scale society, such as a particular city, others
may choose to expand the range to include an entire state, country or the world as a whole.
Social Responsibility of Business
Social responsibility of business implies the obligations of the management of a business
enterprise to protect the interests of the society.
According to the concept of social responsibility the objective of managers for taking business
decisions is not merely to maximize profits or shareholders’ value but also to serve and protect
the interests of other members of a society such as workers, consumers and the community as a
whole.
Thus, Sachar Committee on Companies and MRTP Acts appointed by Government of India
states, “In the development of corporate ethics we have reached a stage where the question of
social responsibility of business to the community can no longer be scoffed at or taken lightly. In
the environment of modern corporate economic development, the corporate sector no longer
functions in isolation. If the plea of the companies that they are performing a social purpose is to
be accepted, it can only be judged by the test of social responsiveness shown to the needs of the
society”.
But in today’s world the interest of other stakeholders, community and environment must be
protected and promoted. Social responsibility of business enterprises to the various stakeholders
and society in general is considered to be the result of a social. Responsibility of Business
Enterprises towards Stakeholders and Society in General contract.

Social contract is a set of rules that defines the agreed interrelationship between various elements
of a society. The social contract often involves a quid pro quo (i.e. something given in exchange
for another). In the social contract, one party to the contract gives something and expects a
certain thing or behaviour pattern from the other.
In the present context the social contract is concerned with the relationship of a business
enterprise with various stakeholders such as shareholders, employees, consumers, government
and society in general. The business enterprises happen to have resources because society
consisting of various stakeholders has given them this right and therefore it expects from them to
use them to for serving the interests of all of them.
Though all stakeholders including the society in general are affected by the business activities of
a corporate enterprise, managers may not acknowledge responsibility to them. Social
responsibility of business implies that corporate managers must promote the interests of all
stakeholders not merely of shareholders who happen to be the so called owners of the business
enterprises.
1. Responsibility to Shareholders
In the context of good corporate governance, a corporate enterprise must recognise the rights of
shareholders and protect their interests. It should respect shareholders’ right to information and
respect their right to submit proposals to vote and to ask questions at the annual general body
meeting.
The corporate enterprise should observe the best code of conduct in its dealings with the
shareholders. However, the corporate Board and management try to increase profits or
shareholders’ value but in pursuing this objective, they should protect the interests of employees,
consumers and other stakeholders. Its special responsibility is that in its efforts to increase profits
or shareholders’ value it should not pollute the environment.
2. Responsibility to Employees
The success of a business enterprise depends to a large extent on the morale of its employees.
Employees make valuable contribution to the activities of a business organization. The corporate
enterprise should have good and fair employment practices and industrial relations to enhance its
productivity. It must recognise the rights of workers or employees to freedom of association and
free collective bargaining. Besides, it should not discriminate between various employees.
The most important responsibility of a corporate enterprise towards employees is the payment of
fair wages to them and provides healthy and good working conditions. The business enterprises
should recognise the need for providing essential labour welfare activities to their employees,
especially they should take care of women workers. Besides, the enterprises should make
arrangements for proper training and education of the workers to enhance their skills.
However, it may be noted that very few companies in India follow many of the above good
practices. While the captains of Indian industries generally complain about low productivity of
their employees, little has been done to address their problems. Ajith Nivard Cabraal rightly
writes, “It should perhaps be realised that corporations can only be as effective and efficient as
its employees and therefore steps should be taken to implement such reforms in a pro-active
manner, rather than merely attempting to comply with many labour laws that prevail in the
country. This is probably one area where good governance practices could make a significant
impact on the country’s business environment.”
3. Responsibility to Consumers:
Some economists think that consumer is a king who directs the business enterprises to produce
goods and services to satisfy his wants. However, in the modern times this may not be strictly
true but the companies must acknowledge their responsibilities to protect their interests in
undertaking their productive activities.
Invoking the notion of social contract, the management expert Peter Drucker observes, “The
customer is the foundation of a business and keeps it in existence. He alone gives employment.
To meet the wants and needs of a consumer, the society entrusts wealth-producing resources to
the business enterprise”. In view of above, the business enterprises should recognise the rights of
consumers and understand their needs and wants and produce goods or services accordingly.
The following responsibilities of business enterprises to consumers are worth mentioning:
1. They should supply goods or services to the consumers at reasonable prices and do not
try to exploit them by forming cartels. This is more relevant in case of business
enterprises producing essential goods such as life-saving drugs, vegetable oil and
essential’ services such as electricity supply and telephone services.
2. They should not supply to the consumers’ shoddy and unsafe products which may do
harm to them.
3. They should provide the consumers the required after-sales services.
4. They should not misinform the consumers through inappropriate and misleading
advertisements.
5. They should make arrangements for proper distribution system of their products so as to
ensure that black-marketing and profiteering by traders do not occur.
6. They should acknowledge the rights of consumers to be heard and take necessary
measures to redress their genuine grievances.