Business enviournment- society

8/6/2019 Business enviournment- society

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SOCIETAL ENVIRONMENT


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The variables of business like

- the values and norms it adheres to

- the marketing strategies

- the way the business is organised

are all influenced by the culture and

structure of the society


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Business also tries to influence the society

- on its lifestyle

- social attitudes

- customs, etc.

But it cannot control all the variables

Here it tries to adapt to the environment


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Objectives ofBusiness

- Profit maximisation is no more the mainobjective

- Many large companies do strive tomaintain the market share , salesvolume, fixed assets by sacrificingprofit maximisation

- Some firms limit their profit to discouragecompetition, to avoid public criticism, tomaintain customer goodwill


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Objectives

Economic Social


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Economic Objectives

Survival

- Constant monitoring of environment

- Strategic planning Return on Investment

To satisfy shareholders

For building confidence in associatedfirms and public

For further growth of the industry


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- To obtain loan from financiers

- To compete with firms in same area

Growth

- Growth may be in vertical or in

horizontal direction

- May diversify into unrelated area

Eg: Reliance India Ltd.

- Growth benefits promoters,shareholders and customers


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Innovation

- Try to find new methods and materials

to improve the quality

- Induce new technology by way of

collaboration

Eg: Automobile industry in India


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Market share

- To become market leader

- Brings in prestige and industry

recognition

- To increase market share, industriestake over similar companies


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SOCIAL OBJECTIVES

It is concerned with the needs and welfareof the society

Protects the interests of consumers,workers and society

Eg: Effort to increase the profit may result in

price rise and affect the interest of publicToo much importance for economic

objectives may hamper social objectives


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RECONCILIATION BETWEEN SOCIAL AND

ECONOMIC OBJECTIVES

Profit objective need not affect the

social objectives

A reasonable level of profit is

necessary for the discharge of

social obligations and

responsibility Profit can be increased by improving

the productivity


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Improved productivity benefits the

shareholders, customers andworkers

Reasonable salary to workers and the

welfare measures to cater their needswill improve productivity

Many larger industries in India had

observed that welfare measures takenhad improved their sincerity to the firm

and resulted in higher productivity


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FACTORS AFFECTING

OBJ

ECTIVES PROFESSIONALISATION

- Professionalism imparts a certainresponsibility and dignity to management

- A professional manager is one who will beplanning, organising, directing and

controlling the efforts of others through asystematic use of knowledge, experienceand principles


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- A professional manager should have

autonomy- Should have liberty to arrive at his own

judgment

- Should have acquired specialisedknowledge and skill

- Should not have any ideological bias

- Should be guided by certain ethicalprinciples


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Many family owned business concerns

have either appointed professionals intheir firm or acquired necessary

qualifications for running the firms

efficiently

Eg: Ratan Tata has recently announced

his decision to step down for a

professional


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BUSINESS ETHICS

Ethics refers to certain moral principlesand rules of conduct applied to business

It reflects the responsibility, authority anddignity of the top management

Some of those principles are

- Do not deceive customers by selling sub-

standard or defective products- Do not resort to black marketing or

profiteering


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- Do not destroy or distort competition

- Ensure sincerity in advertising andpackaging

- Make accurate business records available

to public- Refrain from kickbacks to authorities and

politicians

- Ensure fair wages and treatment toemployees


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How to promote business ethics

Education and Persuasion

- Educate the members about the

importance and need of business ethics- Persuade them to give due regard to

ethical principles

- Convince the members that, if they followethics, the image of business community

will be boosted in the eyes of public


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Code of Ethics

- By introducing a code of conduct

- Code of conduct will guide and regulatethe conduct of business by members


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Moral Sanctions

- Those who misconduct can be punished

- They may be debarred from the group

Who can implement it ?

Business association orTrade Organisation


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CULTURE OF SOCIETY

Proper understanding of the societal

culture is very important for all business

activities

All the dimensions of culture may not

visible

International business firms do face this

problem seriously


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What is Culture

Culture of a human race includes

knowledge, belief, art, morals, law, custom

and habits acquired by man as a member

of society

It is the total way of life of people

It is a learned behaviour and can be

changed


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.Culture

It is the human product of social

interaction

Provides socially accepted patterns formeeting biological and social needs

It is handed down from generation to

generation in a society

It is a basic determinant of personality


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Elements of culture

Knowledge and Beliefs

- These are peoples notions of reality

- They include myths and scientific realities- People share a belief system

- They take a hostile attitude towards those

who do not accept the conventionaldefinitions of fact


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Ideals

- They are societal norms which define whatis expected, customary, right or wrong in a

given situation

- Norms are enforced by sanctions

by rewarding the right behaviour

by punishing the wrong behaviour


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Preferences

- They refer to societys definitions of those

things in life which are attractive or

unattractive as objects of desire


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Organisation of culture

This refers to social structure and integration of

behaviour patters that make up the cultural

system

Eg: - People belong to certain sects inBihar and UP take tea only in mud

bowls or wooden bowls

- For wishing each other, some people say

namaste and some others shake hands


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Cultural Adaptation- When a person decides to settle in a foreign

country, he has to get adapted to the existingculture of that country

- A business has to adapt to the society in which itexists

- While introducing new ideas, one has to have apre-assessment of the extent to which theinhabitant would adapt to it

Eg: Blue colour of a product is treated as feminineand warm in Holland but the same is treated asmasculene and cold in Sweden


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- Green is a favoured colour in Muslim

country but it is associated with illness inMalasia


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Cultural Shock

- When a person works in a totally differentcultural environment, he gets a culturalshock

- Similarly, when a firm starts business in aforeign country, in an alien culturalenvironment, it gets a cultural shock

- Proper home work is necessary to studythe variants of the alien culture for overcoming such shocks


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Cultural Transmission

- Culture in many cases is transmitted down

from generation to generation

- During this process, it gets transformedand diffused

- Cultural transformation happens with

education

- Transformation is also aided by media


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Cultural Conformity

If culture is enduring, most people will try

to follow it resulting in conformity

Eg: If a person abides by the rules of thecountry, he is conforming to the rules

ofland

In the similar way, organisations also

should have conformity to the existing

culture


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Cultural Traits

Masculine and Feminine culture

- Masculine culture appreciate

aggressiveness and assertiveness- It respects the goal of material acquisition

- Feminine culture appreciates inter-

personal relationship- Gives more important for quality of life

than material acquisition


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- Firms doing direct marketing should bear

in mind these aspects- Business people from feminine culture are

more reserved and less time-driven than

those from masculine cultureMonochronic and PolychronicSocieties

In monochronic society, tasks are done in

a sequential order whereas in polychronic,diverse tasks are accomplished at thesame time


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Neutral and Emotional

In a neutral culture, emotions are held incheck

In emotional culture, emotions are openlyand naturally expressed

Eg: Japan and UK are having high neutralculture whereas people in Mexico andNetherlands are having high emotional

culture.W

hen business persons dobusiness with people of opposite culturemust be careful


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Specific and Diffuse

- In specific culture, people are more open

and extrovert whereas in diffuse culture,

people are less mingling and introvert- US, UK, Switzerland are having specific

culture and China, Spain and Venezuela

are having diffuse culture


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RELIGION

Different people have different religiousconvictions, beliefs, rituals and customs

Organisations should consider theseaspects while planning

Business related to beef products are

discouraged in certain parts of India Business of Pork is not allowed in Muslim

countries


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..RELIGION

Certain months in some countries aretreated as unlucky for starting newventures

Business concerns must consider theseaspects when they plan new businessprogrammes

The influence of religion on politics is onthe increase and this in turn has a bearingon business


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Language

Same words of language in different

countries have different meanings

Eg: A message the project went a bomb inUK means it was a great success whereas

in US , it means a damn failure

These aspects must be considered for

design of advertisement and giving

instructions in package


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..Language

Non verbal communication also is very

important

Same symbols and gestures meandifferent things in different countries

Eg: The symbol of Thumbs up has got a

wide acceptance in UK, USA and Russia

but highly offensive in Iran and regerded

rude in Australia


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CULTURE AND BEHAVIOR OF

ORGANISATIONS

The culture of a country has got a strong

impact on its organisations

These aspects must be considered by theinternational business firms

Centralized and Decentralized

Decision Making

- In some societies, the major decisions

are made by only the top management


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- In some other societies, the major decisions are

taken only after consulting the middle level and

lower-level management

Safety and Risk

- The top management may be having aversion

in risk taking in some society, but in others risktaking may be encouraged

Informal and Formal Procedure

- In some society, many of the business is done

through informal means but in others, everythingis done on the basis of formal procedure and are

followed rigidly


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High and Low Organisational Loyalty

- In some societies people show strongloyalty towards their employer

- In some cases, they show more loyalty

towards their immediate senior or

subordinates

Cooperation and Competition

- Some societies encourage cooperation

between people whereas others

encourage competition


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Stability and Innovation

- Some culture encourages stability and

resistance to change

- Others put high value on innovation andchange

Eg: Countries ruled by religious

fundamentalistsEuropean countries


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Some General Social Trends

In most of developed and developing

countries, there is a significant rise in the

number of women working outside the

household along with men

This is a business opportunity for those

organisations which do business on

household appliances, packaged foodproducts, etc.


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Social Responsibility of

Business

Classical View on Business

- In classical view, there is only one social

responsibility of business- to use the resources

of society to increase its profit so long as it stayswithin the rules of the society

Contemporary View on Business

-B

usiness is an economic entity and cannotignore its profitability meeting the social

needs


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Social Responsibility Models

The conceptual models of social

responsibility are

Economic

Legal

Ethical Discretionary


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Economic Responsibility

- Generation of surplus wealth for

rewarding the investors, further

development and meeting the social

needsLegal Responsibility

- The company is liable to work within the

boundaries of the law of land


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Ethical Responsibility

- These are the norms which the societyexpects the business to observe

though they are not mandatory

- Norms like not to resort to bribing,

unethical practices or unfair competitive

practices, etc. are not mandatory


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Discretionary Responsibility

- Refers to the voluntary contribution of thebusiness to the society like community

development or other social

programmes


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Hierarchical Pyramid

Discretionary

Ethical

Legal

Economic


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Factors Influence Social

Orientation

Promoters and Top Management

The values and vision

They chalk out the major policy

Resource allocation is made by them

Stakeholders

- Shareholders, creditors, employees, etc.- They should have a common interest inpursuing social objective


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Societal factors

- The type of social activity depends on the

nature of the society

- A poor society needs the assistance by way of

education and health facilities

- A developed society may seek for better

infrastructure

Government and Laws

- Agreement to anti trust legislations, unfair

practices, etc.

- Govt. agencies like SEBI are authorized to take


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Political Influences

- Political parties, media, special interests

group try to influence the social orientation

- NGOs like consumer protection group,

environmentalists, etc. would also

influence to adopt various regulatory

measures


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- Improve productivity and reduce price

- Improve quality by R&D- Provide after sales service

- provide more information about the

product, its side effects and risks

- In India, many firms are interested in

exploiting the customers


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Responsibility to Prospects

- Prospects are the expected customers

-Welfare programs will convert prospectivecustomers to actual customers

Responsibility to Community

- Community means the immediate social environment tothe company

- The company should provide positive assistance tocommunity objectives

- It should not be instrumental to environmentdegradation


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How to implement?

- By initiating pollution-free environment-

friendly technology

- Social afforestation- Preventing emission of effluents and flue

gases


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- They should help to solve theunemployment and socio-economic

problems

- Development of backward areas

- Promotion of ancillary industries

- Rehabilitate the displaced people


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Responsibility to Human resources

- By way of fair wages, conducive workingconditions, proper working climate, etc.

- Prescribed working time (Eg: Eight hour shift)

- Free medical aid

- Educational facility for children

-Workers provident fund- Training institute


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SOCIAL AUDIT

- a tool for evaluating how satisfactorily a

company has discharged its social

responsibility

It involves

- Identification of firms activities having

potential social impact

- Assessment and evaluation of social

costs and social benefits


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Assessment of social costs to

community- Increase in environmental pollution

- Increase in cost of living

- Increase in electric power of stateconsumed

Documents

Business enviournment- society