Business Environment -unit 4

Culture and Business

Dr. Richa Dixit Bajpai

 CONTENTS

Introduction

Role and Effect of culture on Business

Social Responsibilities of Business

Organizations
 CULTURE

“Culture is the characteristics and knowledge of a particular

group of people, defined by everything from language,
religion, cuisine, social habits, music and arts.”

“Culture is the beliefs, customs and attitudes of a distinct

group of people often defined by dress, food, language, art,
history, geography and religion”.
Culture can refer to a group, culture or entire city.
 SOCIETY-MEANING

“People in general thought of as living together in organized

communities with shared laws, traditions, and values”

A society is a group of individuals involved in persistent 

social interaction, or a large social group sharing the same social
territory, typically subject to the same political authority and
dominant cultural expectations
 SOCIAL STRUCTURE

Ginsberg-
“Social structure is concerned with the principal forms of
social organizations i.e types of groups, associations and
institutions and complex of these which constitute societies”.

“social structure, in sociology, the distinctive, stable

arrangement of institutions whereby human beings in a
society interact and live together.
Social structure is often treated together with the concept
of social change, which deals with the forces that change the
social structure and the organization of society”
 SOCIAL SYSTEM

In sociology, social system is the patterned network of

relationships constituting a coherent whole that exist between
individuals, groups, and institutions. It is the
formal structure of role and status that can form in a small,
stable group.An individual may belong to multiple social
systems at once; examples of social systems include nuclear
family units, communities, cities, nations, college
campuses, corporations, and industries. The organization and
definition of groups within a social system depend on various
shared properties such as location, socioeconomic status,
race, religion, societal function, or other distinguishable
features.[
 FEATURES OF SOCIAL SYSTEM

1. Pluralistic society
2. Predominantly Rural society
3. Poverty
4. Illiteracy and Ignorance
5. Linguistic Diversity
6. Racial Diversity
7. Caste and Casteism
8. Communalism
9. Regionalism
10.Tradition and Modernity
11.Problem of social communication
 ELEMENTS OF CULTURE

1. Knowledge and beliefs- people’s prevailing

notions of reality.
2. IDEALS- norms of society which defines what is
expected.
3. Preferences- Those things in life which are
attractive as objects of desire, which may differ
from culture.
 BUSINESS AND CULTURE- DIFFERENCES/STRATEGIES

1.Culture creates people

2.Culture and Globalizations
3.Attitude to business
4.Attitude to work
5.Culture determines goods and services
6.Ambitions
7.Education
8.Family
9.Ethics in Business- code of conduct
10.Time dimensions- refers to people orientations-past, present, future.
11.Religion and Business
12.Marriage
13.Cultural Resources
 SOCIAL RESPONSIBILITY OF BUSINESS-MEAN

Social responsibilities means obligation of decision makers to

take actions which protect and improve the welfare of society
as whole along with their own interests.
Now a days business is no more only profit maximization.

Social responsibility means that individuals and companies

have a duty to act in the best interests of their environment
and society as a whole.
 RESPONSIBILITIES OF BUSINESS TOWARDS DIFFERENT SECTION OF SOCIETIES

1. Employees
2. Owners
3. Consumers
4. Share holders
5. Community
6. Environment
7. Government
8. Society
CONT---
 SOCIAL RESPONSIBILITIES OF BUSINESS -BENEFITS

1.Public Requirements and supports-

2.Favorable for business- Society and Personal interest both
3.Moral Justifications
4.Socio cultural norms
5.Business can shoulder Responsibility- in case if people
gets frustrated
6.Public image
7.Government regulations
8.Indebted to society
9.Responsibility must correspond with power
 ARGUMENTS AGAINST SOCIAL RESPONSIBILITY-DRAWBACKS

1. Deviation from main objectives

2. Increase in prices
3. Excessive concentration of power
4. Lack of social skill
5. Lack of accountability
6. Influence on social set up
7. Opposition from society
8. Complex social problems
 LIMITATIONS OF SOCIAL RESPONSIBILITIES- FACTORS

1. Cost
2. Efficiency
3. Relevance
4. Scope
 BARRIERS TO SOCIAL RESPONSIBILITIES

1.The manager
2.The organization
3.The Industry
4.The division
 EXAMPLES OF SOCIAL RESPONSIBILITIES TAKEN BY CO.

1.TATA-
a.Indian institute of science, Banglore
b.Tata institute of social sciences, Mumbai
c.Tata energy research institute, New Delhi

2. Birla-
a.BITS PILANI and Ranchi
b.Temples- Lakshmi Narayan
 SOCIAL RESPONSIBILITIES IMPLEMENTATIONS
BUSINESS RESPONSIBILITIES IS TOWARDS

1.Employees
2.Consumers
3.Share holders/owners
4.Community
5.Government
6.Crises
7.Business Environments
 SOCIAL AUDIT

To Assess the performance of business, in the field of social

responsibility, The techniques of social audit is used.

A social audit is thus, a systematic study and evolution of an

organisation’s social performance”

A social audit is a way of measuring, understanding, reporting and

ultimately improving an organization's social and ethical
performance.

A social audit is a formal review of a company's endeavors, procedures,

and code of conduct regarding social responsibility and the company's
impact on society. A social audit is an assessment of how well the
company is achieving its goals or benchmarks for social responsibility.
 CHARACTERISTICS OF SOCIAL AUDIT
) Multi-Perspective/Polygonal : 
1) Aims to reflect the views (voices) of all those people (stakeholders) involved with or
affected by the organisation / department / programme.

2) Comprehensive : 
Aims to (eventually) report on all aspects of the organisation's work and performance.

3) Participatory :
Encourages participation of stakeholders and sharing of their values.

4) Multi-Directional :
Stakeholders share and give feedback on multiple aspects.

5) Regular : 
Aims to produce social accounts on a regular basis so that the concept and practice
become embedded in the culture of the organisation covering all the activities.
 CONT--

6) Comparative :
Provides a means, whereby, the organisation can compare its own
performance each year and against appropriate external norms or
benchmarks and provide for comparisons with organisations doing
similar work and reporting in similar fashion.

7) Verification :
Ensures that the social accounts are audited by a suitably experienced
person or agency with no vested interest in the organisation.

8) Disclosure : 
Ensures that the audited accounts are disclosed to stakeholders and the
wider community in the interests of accountability and transparency.
 OBJECTIVES OF SOCIAL AUDIT
1.Assessing the physical and financial gaps between needs and resources
available for local development.
2. Creating awareness among beneficiaries and providers of local social
and productive services.
3. Increasing efficacy and effectiveness of local development
programmes.
Scrutiny of various policy decisions, keeping in view stakeholders
interests and priorities, particularly of rural poor.
4. Estimation of the opportunity cost for stakeholders of not getting
timely access to public services.
 ACTIVITIES COVERED BY SOCIAL AUDIT-KEITH DAVIS AND
BLOMSTROM

1Ecology and Environmental Quality-

a.Clear up of existing pollution
b.To prevent pollution
c.Aesthetic improvements
d.Noise control
e.Control of land use
f.Required recycling
2. Consumerism-
a.Truth in labeling, advertisement & other activities
b.Product warranty and services
c.Control of harmful products
 CONT--

3. Community need-
a.Use of business expertise to solve problems
b.Reduction of role of business community
c.Aid with health care facilities
d.Aid with urban renewal
4. Governmental relations-
a.Restrictions on lobbying
b.Control of business in political actions
c.Extensive new regulations of business
d.Restrictions on international operations
5. Business Giving-
a.Financial support
b.Donations to education
 CONT--

6. Minorities and Disadvantaged persons-

a.Training of hard core employment
b.Equal employment opportunities and quotas for minority employment
c. Operations of programs for alcholic and drug adicts
d. Employment of person with person records
E Building of plants and offices in minority areas
F Purchasing from minority businessmen

7.Labour Relations-
a.Improvement of health and safety
b.Prohibition of export of jobs through operations in nations with low labor costs.
c.Provision of day care centers for children of working mothers.
d.Expansion of employees rights
e.Control of pensions, specially pension rights
 CONT--
8. Share holder Relations –
a. Opening of boards of directors to members of public
representing various interest groups.
b. Improvement of financial disclosures
disclosure of activities effecting social issues and
environment
9. Economic activities-
a. Control of conglome(Very big co includes small co) rates.
b.Breakup of grant industry
c. Restriction of patent use.
 CONDUCT OF SOCIAL AUDIT

Conducted by 2 persons-
1.Internal auditor
2.External auditor or consultant
3.Both
 DIMENSIONS OF SOCIAL
RESPONSIBILITIES

Responsibility towards Shareholders (Owners)

Responsibility towards EmployeesResponsibility

towards the Community and Public at large

Responsibility towards Customers

Responsibility towards Government

 SOCIAL ACCOUNTING

Social accounting is the systematic assessment and reporting on those aspects

of a company's activities that have a social impact - the impact of corporate
decisions on environmental pollution, conservation of non-renewable
resources, maintenance of publi:, services, public safety, health and hygiene,
education and training and other social concerns. In this context, there is
another term used called 'social responsibility accounting; which refers to
identification, measurement, recording and reporting, for internal and external
use, the relevant information relating to the social activities of an enterprise.
 APPROACHES TO SOCIAL ACCOUN,TING

1.Valuation of social costs and social benefits- which is often adopted by various
government agencies for comparing the socio-economic impact of public projects
in terms of cost-benefit ratios. To estimate the total value of benefits and costs, this
approach requires the use of shadow prices with respect to inputs and outputs for
which market prices do not reflect the real economic or social worth.
2. measuring the worth of social investments- by estimating the 'market worth' of
expected belief its to be derived by the people affected.
3.developing 'social indicators’- measuring on that basis a finn's contribution to the
quality of life in different areas such as socially desirable profit earning, human
asset values of the organization, generating employment for backward and socially
handicapped people, rural upliftment, educational development, environmental
improvement, quality of products and services, etc.
4.'social goal accounting and reporting’- It requires the indicators to be related to
the societal goals set by the company. Thus, the management is to select their
'social market' by reference to their own analysis of the environment, and then
identify those areas of social activity they believe they can contribute effectively
by increasing benefits and reducing costs.
5.'integral welfare approach’- suggests that social reporting be carried out by way
of a social profit and loss account and a social balance sheet.
6.'socio-economic operating statement- focuses on "what a corporation has done
for society on the one hand and what it has failed to do on the other".
 NATURE OF CULTURE

1. Learned
2. Shared
3. Trans generational- culture is passed from
one generation to other.
4. Symbolic- culture uses symbols to
recognize something
5. Adaptive- culture is based on human
capacity to change or adopt
 LEVELS OF CULTURE

1. National Culture- is the dominant culture within the

political boundaries. Formal education is usually
taught.
2. Business culture- guides all everyday business
transactions. Eg. What to wear to a meeting, how to
use business cards etc.
3. Organizational Culture/ Corporate culture-
Refers to philosophies, ideologies, values, assumptions,
beliefs, expectations, attitudes, norms that knit an
organization together and shared by its employees
4. Occupational culture- behavior of people in same
occupation. Eg. Doctor, Engineers
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4.Occupational culture-
The cultures of different occupational group
such as physicians, professors, lawyers,
accountants, and crafts people with different
occupations are called as Occupational culture.
 IMPACT OF CULTURE ON BUSINESS
1. Culture creates people
2. Culture and globalizations
3. Culture determines goods and services
4. Language and culture
5. Attitudes
6. Collectivism and individualism
7. Ambitions or complacent
8. Education
9. Family
10. Authority
11. The view of scientific method- adoption of new technology
12. Ethics in business
13. Religion
14. Marriage
15. Cultural resources
16. Customs and manners
 REFERENCES

Unit-3.pdf (egyankosh.ac.in)
(Social Responsibilities of Business Organizations)

Unit-14.pdf (egyankosh.ac.in)
(Social Responsibilities of Business Organizations)

Unit-4.pdf (egyankosh.ac.in)
(Cultural Environment)
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