BUSINESS AND ITS ENVIRONMENT

Unit I

 Meaning- Factors influencing business, internal and external factors; Social Responsibilities of business towards Share holders- Employees- Consumers-Dealers and public; Business Ethics and Social Value MeaningPrinciples of business ethics-Managerial and Professional ethics. Case studies on Social Responsibilities of Business, Business Ethics and Environment.

BUSINESS
Business is the organised efforts of enterprises to supply consumer with goods and services for a profit Business refer to any commercial activity which is aimed at making profit

BUSINESS ENVIRONMENT
Business environment refers to all external forces which have a bearing on the functioning of business. Business environment consists of all those factors that have a bearing on the business
INTERNAL ENVIRONMENT

MICRO
BUSINESS
EXTERNAL ENVRONMENT

MACRO
BUSINESS ENVIRONMENT

BUSINESS ENVIRONMENT

INTERNAL ENVIRONMENT
These are controllable factors. Lies inside the organisation Under the control of the organisation. Internal environment factors can divided as follows1. Value System The value system of the founders, Board of directors, managers, workers of the organisation has important bearing on the strategies of the organisation.

2. Mission and Objectives

Firms philosophies, priorities, development, polies are guided by the mission and objectives of the organisation Mission and objectives are the first steps in the development of the organisation. Ranbaxys mission to become a research based international pharmaceutical company Arvind mills vision we will enable people to experience a better quality of life by providing enriching & inspiring lifestyle solutions

3. Organisational Structure

4. Human Resources

Organisational hierarchy where authority flows from top to bottom. Some management structures and styles delay decision making and while others facilitate quick decision making
The characteristics of the human resources like skill, quality, morale, commitment, attitude, knowledge etc could contribute to the strength and weakness of an organisation. Some organisations find difficult to carryout restructuring or modernisation because of resistance by employees.

5.Company Reputation

The goodwill of the company matters while raising finance, formatting joint ventures or other alliances, selecting marketing intermediaries, launching new products etc.

6. Financial Factors

Financial factors like financial policies, financial position and capital structure etc. are affecting corporate strategies and decisions.

EXTERNAL ENVIRONMENT
Classified into two categories viz.
1. 2.

Micro Environment Macro Environment

MICRO ENVIRONMENT
The micro environment is a companys immediate environment and that affect the companys ability to produce goods and services and serve consumers. Known as task environment or operating environment Include suppliers, marketing intermediaries, competitors, customers and the publics.

1.

Suppliers

2. Customers

Suppliers are those who supply the raw material and components to the company. Reliable sources of supply are necessary for smooth functioning of business. It is very risk to depend on a single supplier because a strike, lockout or any other production problem with supplies may seriously affect the company. A business exits only because of its customers. A company may have different categories of customer like individuals, households. Industries and other institutions. Depending on a single customer is risky because it may place company in poor bargaining position.

3. Competitors In general competitors are those who sell the goods and services of the same and similar products in the same market. A firms competitors include not only the other firms which are marketing same products but also those who compete for the discretionary income of the consumer. 4. Marketing Intermediaries Every producer has to appoint a number of intermediaries in assisting him in promoting, selling and distributing the goods and services to ultimate customers. Marketing intermediaries help the firm in overcoming the discrepancies in quality , place, assortment.

5. Publics

A public is any group that has actual or potential interest in or impact on companys ability to achieve its objectives. It is the duty of the company to satisfy the people at large, which is necessary for future stay and growth. In order to build goodwill and seek favorable response from the public, it is necessary for the firm to satisfy the needs of the public as well.

MACRO ENVIRONMENT

1.
2.

Refer to those factors which are not concerned to the firms immediate environment. These factors are external to the firm and are quite uncontrollable The macro environment generally consists of two factors viz.. Economic environment Non-economic environment

1. ECONOMIC ENVIRONMENT

This comprises all those factors relating to the economic conditions, systems, economic policies of a country and includes structure of economy, agriculture, industrial sectors, transportation etc The economic policy of the govt. has a greater impact on business. Some business are favorably affected by govt. policy and some are adversely affected by the govt. policy . Favorable monetary policies like credit sanction, interest rate influence the business unit. The fiscal policy of the govt. like tax policy has its influence ion the pattern of business

2. NON-ECONOMIC ENVIRONMENT
Non-economic factors consists of following factors
a)

Political Environment

The nature of policies and the type of the govt. in economy have considerable influence over the business environment. The business activities flourish when there is a stable govt. in the economy on the other hand if the Govt. is unstable and doubtful, it will demoralise the business and may adversely effect on its performance. Certain changes in the Govt. policies like industrial policy, fiscal policy may have profound impact on business

b) Education and Cultural Environment The attitude towards education and training helps business and industry to avail services of efficient, trained and labour. The cultural factors like buying and consumption habit of the people, customs and traditions, tastes and preferences, languages etc. are the factors that affect the strategy of the business. c) Legal Environment The vital aspect like of business like who should own? What should be the size of business? And what should be happen to the earnings? Can be decided by legal rules and regulations. Threre are number of legislations formed by the Govt. to regulate the business. It is said that the stable Govt will protect the business by formulating effective legislation .

d) Natural Environment

The natural factors like weather climate, availability of land, forest resources etc. have influence on the business activities. It is stated that difference in geographical conditions may call for changes in production, marketing activities in the economy. The ecological factors like depletion of natural resources, environmental pollution have cost grater concern to the business field, so that preservation of physical environment is becoming important factor of management of modern business.

e) Demography

Study of the population in terms of age, sex, size of the population, family size, and occupation is known as demography. Rapidly increasing population indicates a growing demand for many products. Increasing population also indicates that availability of surplus labour which affects the wage rates.

f) Technological Environment. Technology is a systematic application of scientific knowledge to practical task. The business prospects largely depend upon the technological aspects in connection with production and marketing of products. The changes in technology also create problem for business enterprises as they are subject to obsolescence quickly

G) International Environment It refers to those global factors which have impact on business and economy. It is important for industries which are directly depending on imports and exports. Export market enables a firm to develop more profitable product mix

Social responsibility of Business

Business depends on the society on the society for the needed inputs like money, men, and skills. Business depends on society for existence, sustenance, and encouragement. Being so much dependent, business has definite responsibility towards society.

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What is Social Responsibility?

Obligation of business to take actions which protect and improve the welfare of society as a whole along with its own interests
What business does, over and above the statutory requirement, for the benefit of the society

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Social Responsibility in Business

Early 20th Century Middle 20th Century Early 21st Century

Maximize Profits

Provide Jobs and Pay Taxes

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Balance Profits and Social Issues

Dimensions of Social Responsibilities

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1. Social Responsibility Towards Stockholders

Protect the capital. Providing fair and reasonable return. Share in the profit bonus. Capital appreciation. Corporate image. Stability of dividend Transparency in the business operation.periodical report.

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2. Social Responsibility Towards Employees

Providing fair compensation.- principles of adequacy, equity and human dignity Providing good working conditions. Opportunity for workers participation in management.leadership qualities Establishment of fair work standards and norms Provision of labour welfare facilities medical , canteen, accommodation, etc Adoption of progressive labour policy based on recognition of genuine trade union rights Offering job security and promotion opportunities Arrangements of proper training and education of the workers Proper recognition, appreciation, encouragement of special skills of the employees and workers and Provision of religious, social and political freedom to workers
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3.Social Responsibility Towards Consumers

The goods supplied must meet the need of the consumers at different classes, tastes and purchasing power Strive to improve product quality. Providing goods and services at fair and competitive price. Making arrangements for supply of goods and services. Customers services should be made in the way of advice, guidance and maintenance There should be fair and widespread distribution of the goods and services among all the sections of the consumers Satisfactory after sale services. The product supplied should not have adverse effect on the consumers Taking appropriate steps to prevent profiteering, hoarding, black marketing, etc Avoiding misleading, false and exaggerated advertisement Providing the opportunity for being heard and redressing the genuine grievances of the consumers
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4. Social Responsibility Towards Competitors

Fair game in market. Engaging in healthy competition. Should not indulging in brand assassination

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5. Social Responsibility Towards Government

Conducting business according rules and regulations enacted by govt. Regular payment of various taxes. Providing required information from time to time. It should not desist from corrupting public servants or the democratic process for selfish ends It should not make any attempt to buy political support by money or patronage It should follow honest trade practices and avoid activates leading to restraint of trade
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6. Social Responsibility Towards Local Community

Preventing of environmental pollution. Providing employment opportunities to the socially handicapped and weaker sections of the community Development of backward areas.- set new industries Conserving scarce resources.- protect the natural environment forest , lakes, rivers, wild life, etc Promotion of small scale industries. Providing employment and education opportunities. Prevention if slum development, elimination of crimes in industrial areas and meeting heavy costs of pollution and waste disposal Providing relief to victims of natural calamities Assisting in overall development of the locality.
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Why Social Responsibility?

Social involvement of business would foster a harmonious and healthy relationship between the society and business to the mutual benefit of both. Social responsibility like recycling of waste may have favourable financial effects. Social involvement may create a better public image for the company which may help it in attracting customers. Social involvement may discourage additional govt. regulation and intervention.
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Why Social Responsibility?

Business which survives using the resources of the society has a responsibility to the society. Business which is an integral part of the society has to care for the varied needs of the society.

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Business ethics and social values

Meaning
Behavior of the business men while conducting the business by observing morality in his business activities Right or wrong ?? Moral codes

Definition
Acc to wheeler, business ethics is art and science for maintaining harmonious relationship with society, its various groups and institutions as well as recognizing moral responsibility for the rightness or wrongness of business conduct Moral rules and principles to protect the interest

Need for the business ethics

Survival of the business Growth of the business units Earning goodwill Improving the confidence Maintaining the inter relationship Solving social problems Decision making Failure of law Tool of corporate governance

Principles
Service and not profit no discrimination Satisfaction Clean environment Human feelings No wastage Dynamic and efficient Quality products with reasonable price Improve standard of living Healthy competition No fear on the job security sincere in payment of the fair wages Better working conditions

Employees should be motivates and recognized Participation In the management Monetary and non monetary incentives Pay tax Disclose relevant info to the needy people Development of the nation Proper communication system Fulfill promise Mutual corporation and help Employees freedom to speak Maintain books of accounts not indulge In politics

Advantages of the business ethics

Customer Get quality goods Pay reasonable price Get goods easily No price discrimination Non price fluctuation

Employees Receive fair wages Get better working condition and working environment Recognizing human feelings Reward for efficiency Job security Participation in management Appropriate personnel policy

 Industry Scope for healthy competition Better co-ordination and co-operation Steady growth Business Adequate profit Fast growth Quick diversification of business Less labor turnover

 Society Better utilization of resources Improved standard of living No problem of pollution Government Prompt collection of taxes Development of the country Easy implementation of legislation

Social values
Service to customers Company loyalty Organization efficiency Ability Achievement High productivity Organizational growth Organizational stability Profit maximization Service to public

Professional and managerial ethics

Who have formally acquired the specialized knowledge and skill for management Who have authority and freedom to take the right decision Who have no ideologies bias in the discharge of the functional Whose decisions and actions are guided by certain ethics consideration

Professional codes
Company creeds or philosophy which usually cover those basic philosophies and behavior that govern business A code is found in the company operational policies which set up guides to action that have ethical contest. Such policy guidelines may be applied to recruitment and selection, selling, handling consumer complaints Since people belong to various profession they also governed by code of conduct framed by their associations. Such codes have been devised by various professional bodies like ALL INDIA MANAGEMENT ASSOCIATION , INSTITUTE OF COMPANY SECRETARIES OF INDIA, etc

ETHICS AT WORK PLACE

Ethics is knowing the difference between what you have the right to

do and what is right to do.

- Potter Stewart

WHAT IS ETHICS
Ethics is not definable, is not implementable, because it is not conscious: Ethics is the activity of man directed to secure the inner perfection of his own personality. A man without ethics is a wild beast loosed upon this world.

What is the difference between

Personal Ethics are based on thinking processes that determine right from wrong according to a personal standard or morality.

Professional Ethics are a set code that professionals in a variety of fields follow to meet certain industry standards.

PERSONAL ETHICS
Personal ethics is a category of philosophy that determines what an individual believes about morality and right and wrong. Personal ethics differ from person to person and it defines who we are. Personal ethics are learned from families, friends and teachers. Some ethics might also be adapted from individual experiences.

PROFESSIONAL ETHICS
The concept of Professional Ethics is partly comprised of what a professional should or should not do in the work place. It also encompasses a much greater part of the professionals life. If a professional is to have ethics then that person needs to adopt that conduct in all of his dealings

OBJECTIVES OF PROFESSIONAL ETHICS

ACT WITH INTEGRITY ALWAYS BE HONEST BE OPEN AND TRANSPARENT BE ACCOUNTABLE ACT WITH YOUR LIMITATION BE OBJECTIVE AT ALL TIMES

GIVE CREDIT WHERE CREDIT IS DUE

BE POLITE & HARMONIOUS ALWAYS TREAT OTHERS WITH RESPECT STAND FOR RIGHT

BE FELLED VALUED
IN GENERAL SET A GOOD EXAMPLE

ACT WITH INTEGRITY

Never put your own gain above the welfare of your clients or others to whom you have a professional responsibility. Respect their confidentiality at all times and always consider the wider interests of society in your judgments

ALWAYS BE HONEST

Be trustworthy in all that

you do never deliberately mislead, whether by withholding or distorting information

BE OPEN AND TRANSPARENT

Share the full facts with your clients, making things as plain and intelligible as possible

BE ACCOUNTABLE

Take full responsibility for your actions, and dont blame others if things go wrong.

ACT WITHIN YOUR LIMITATION

Be aware of the limits of your competence and dont be tempted to work beyond these. Never commit to more than you can deliver

BE OBJECTIVE AT ALL TIMES

Give clear and appropriate advice. Never let sentiment or your own interests cloud your judgment

GIVE CREDIT WHERE CREDIT IS DUE

without appreciating people for their ideas and works, it is considered stealing and we are cheating them of their hard work.

BE POLITE
It is the expression of goodwill and kindness Kindness is one of the most important skill in dealing with people. Every act of kindness makes a difference in the life of some one every living thing response to kindness.

BE HARMONIOUS
To live together and get along with everyone is a delicacy that we all long for. But, dont change yourself to please others- its not worth becoming a completely different person simply to make other people happy because by doing so, you may be making yourself unhappy.

ALWAYS TREAT OTHERS WITH RESPECT

Never discriminate against others. Pay attention to colleagues when they speak.

Treat others as you wish to be treated

STAND FOR RIGHT

Be prepared to act if you suspect a risk to safety or malpractice of any sort.

SET A GOOD EXAMPLE

The better of a person you are, the better an image you present. Remember both your public and private behavior could affect your own, your company's and other members reputations

BE FEEL VALUED
Make people valued to break the barriers between different age group,gender,position and job function we do.
Treat people as they are. Help your juniors and subordinates,Don't bully them or allow your peers to do so

WARM WELCOME
A good handshake that coveys the message welcome I am opened to engage in conversation with you this small act of courtesy goes a long way in making sure all people work well. The first to extend your hand for a hand shake and look the person in the eye,

IN GENERAL
Refrain from gossip, do not spread or encourage. Respect every ones privacy and individuality Do not encourage or indulge in politics at work place

Language counts, talk like a professional and you will be seen and treated as one.
Handle all office equipments carefully and avoid using them for personal use.

IN GENERAL
Keep your productivity high...
No goofing in the office. Be careful in choosing your associates. Do not discriminate against female colleague allow them equal opportunity

Your technical skill or hard skill will help you in getting the job

Etiquette and manners are your soft skills. What keeps you climbing the ladder of success is your soft skills

Benefits of professional codes

Customer - confidence Employees fulfill expectation + behavior Organization external relation Industry fair trade practice Society social envt