WELCOME

GROUP NO 5
MEMBERS

1.RAHUL.K
2.ATHIRARAJ.V
3.SRUTHI.MP
4.MOHAMMED ASLAM.K.P
5.SOORAJ
6.swathy
SOCIAL RESPONSIBILITY
OF BUSINESS
INTRODUCTION
 The socio-economic obligation of business refers to
its responsibility in preventing to prevent economic
consequences of business from adversely affecting
public welfare.
 Social-human obligation denotes to the obligation of
business to nurture and develop its human resources
so that employees get every opportunity to grow,
develop and advance through life and their careers
and to promote human values within the organization.
DEFINITION
 Keth Devis has defined social responsibility in the
following words:
"Social responsibility refers to the businessman's
decision and actions taken for reasons at least partially
beyond the firm's direct economic or technical
interest."
 Keith Davis Model of Corporate Social Responsibility

 Davis' model gave a list of five propositions that describe why

and how a business should adhere to the obligation to take
actions that protect and improve the welfare of society as well
as of the organization:

Proposition 1: Social Responsibility Arises from Social

Power.
Proposition 1: Business Institutions as Citizens have the
Responsibility to become Involved in certain Social
Problems that are Outside their Normal Areas of
Operations.
Proposition 3: The Social Costs and Benefits of an
Activity, Product or Service shall be thoroughly
Calculated and Considered in Deciding whether to
Proceed with it.

Proposition 4: The Social Costs and Benefits of an

Activity, Product or Service shall be Passed on to the
Consumer.

Proposition 2: Business shall Operate as a Two-way

Open System.
 Accountability of Business to
Society
 Milton Friedman claims that the ethical mandate of business is
to increase the shareholders' profit.

 It is a general belief that business is accountable to its

shareholders because it is running on their resources.

 But this is a misconception. If business is accountable to

shareholders because it uses their resources, then a business
should primarily be responsible to society because in real
terms, it uses society's resources.
 Corporate social responsibility is about seriously considering
the impact of the company's decisions and actions upon the
environment and the society.

 The dependence of any business on its social and ecological

environment is so comprehensive that the very existence,
survival and growth of any enterprise depend upon its
acceptance by the society and the environment.
Forces Inducing Social Responsibility
 The following forces ensure that businesses recognizes
and honors its new social responsibilities:
 The pressure of organized labour.
 Growing public awareness about quality of life and the
need to remove all types of pollution.
 Public opinion stressing on business morality and
integrity to be observed by all organizations in any
field of human endeavor.
 The threat of nationalization or of severe regulations in
business, to prevent public exploitation and
evils of monopoly.
 The development of consumerism in many countries,
insisting on consumer protection in the market place.

 The managerial revolution enabling managers to act as

trustees and to adopt an objective attitude in the
distribution of surplus among all the interested parties.
 There are four important groups that influence and are
influenced by business. Business is expected to accept its
responsibilities towards these groups:

1. The owner of the business, i.e., shareholders

2. The employees
3. The customers
4. The society at large
 Share
holders

Social
Society at responsibility
large employee

customer
 Responsibilities Towards Shareholders

 Milton Friedman claims that the ethical mandate of

business is to increase shareholders' profit.
 To give good returns on investment.
 To give dividends at the proper time.
 To protect the interests of even small shareholders.
 To regularly invite shareholders to participate in
decision making.
 Responsibility Towards Employees

 Fair treatment
 No discrimination on the basis of sex, caste or creed
 Fair wages
 Fair appraisal system
 Healthy and safe working environment
 Establishment of fair work standards and norms
 The provision of labour welfare facilities
 Fair opportunity for accomplishment and promotion
 Proper recognition, appreciation and encouragement

of special skills and capabilities of the workers

 Installation of an efficient grievances handling

system
 An opportunity for participating in managerial

decisions to the extent desirable

 Proper training and development programmes
 Family Welfare
 Responsibility Towards Consumer

 Providing products of proven quality.

 Regular R&D to augment the product and to innovate.
 To ensure that product reaches the customer and to check any
sort of black marketing or profiteering by middlemen and anti
social elements.
 To supply goods at reasonable prices.
 To provide required after-sale services, and to ensure that
spare parts should be available in the market.
 To fulfill its commitments impartially and
courteously, in accordance with sound and
straightforward business principles.
 To provide sufficient information about the product,

including its adverse effects, risks and the care

to be taken while using the product.
 To ensure that the product supplied does not have any

adverse effect on the customer.

 To hear and redress the genuine grievances of

customers
 To avoid any type of cartel formation that a attempts

to reap monopoly profits.

 Responsibility Towards Community

 To prevent environmental pollution and to prevent

ecological imbalance.
 Improve the efficiency of business operations.
 Contributing to research and development.
 Development of backward areas.
 Promotion of small scale industry.
 Development of region in which they are operating.
 Taking steps to conserve scarce resources and

developing alternatives, wherever possible.

 Major Social Responsibilities of Business
 Optimum Utilization of Scarce National Resources
 Responsibility Not to Make Losses
 Improved Quality of Life
 Responsibility of Employment and Income
 Offering Quality Products at Fair Prices
 Environmental Protection
 Local development
 Fair Trade Practices: Fair trade practices includes:

 By creating shortages for the purpose of black marketing

and speculation.
 By exaggerating and making false statements regarding
claims.
 Not buying political favours to sway decisions it its favor.
 Following healthy competition with competitors.
 Not deliberately making the organization sick to avoid

obligations or to escape from responsibilities.

 Not to involve in insider trading or to take undue advantage

of inside information.
 Not bribing public servants and corrupting the democratic

structure of the country.

 Paying taxes, duties and other dues honestly and on time.
 To provide required information to shareholders and all

other stakeholders.
 Making timely payment of borrowings and interest.
 Not adopting a communication strategy that is not

compliant with social norms.

 Business should abide by the laws of the land.
 Argument Against Corporate Social
Responsibility
The major arguments against assumption of broad
social responsibilities include:

 Loss of Profit Maximization

 Cost
 Lack of Skills
 Dilution of Purpose
 Too Much Power
 Lack of broad support.
 Lack of accountability
 Argument for Corporate Social
Responsibility
 The major arguments supporting a role for the social responsibility of
business are as follows:
 Shareholder Interest:
 Long Run viability
 Public Image
 Better Environment
 Avoidance of government regulation
 Balance of Responsibility and Power
 Let Business Try
 Business has the resources
 Problems can become profit
 Prevention is better than cure
 Public Expenditure
 Social Responsibility and Profit
 The biggest arguments against social responsibility is its cost
and bearing on profitability. Organizations cyst for profit and
their philanthropy can reduce profits. Laura P. Hartman has
rightly said:
 "The problem of business and for business ethics is the
equation of business money, specifically bottom line
accounting profits, and the pressure to increase those profits
quarterly and annually. The organization is structured, people
are hired, jobs are described, managers are held accountable,
raw materials are acquired, and technology engaged to
increase that bottom line. Everything and everybody within
the company is directed by that profit maximizing principle
and expected to conform to demands."
 Any sales promotion technique may reap short-term profits
but fulfilling social responsibility results in long term gains.
Managing and performing social responsibility not only yields
profit but also results in competitive advantages:

Decreasing Cost
Brand Loyalty and High Saks
E-Choupal

 E-Choupal, meaning electronic choupal is where farmers can

transact electronically. They can acquire information about the
weather, or become better educated about newer methods of
farming. ITC opened electronically linked mobile/fixed outlets
where farmers can perform all the above functions.

 This reduces the number of middleman between farmers and

consumers, which gives better prices and good margins to
farmers and an economical crop to the consumer.
Project Shakti
 The objective of Project Shakti is to create income-generating
capabilities for the under privileged rural woman by providing
a sustainable micro enterprise opportunity, and to improve
rural living standards through health and hygiene awareness. It
was developed on the model of the Grameen Bank of
Bangladesh, which empowered the women of Bangladesh
through economic freedom.

 Project Shakti offers mass-market products to the SHG

(Special Help Group), which are relevant to the rural
customer. HLL imparts the necessary training to these groups
on the basis of enterprise management, which the women need
to manage their enterprises for the SHG woman need to
manage their enterprises.
THANK YOU