01 Need / Benefits of Ethics :

Ans. In todays competitive business world, every businessman expects that his organization need to be abide by ethics or rule of law, engage themselves in fair practices of competition; all of which will benefit the consumers, the organization and finally to the society Primarily it is the individual, the consumer, the employee or the human, social unit, the society who benefits from ethics. Following are the benefits of ethical practices : i) Satisfying Basic Human needs : Being honest, fair, and ethical is one of the basic human needs. Every employee desires to be such himself of work for an organization that is fair and ethical in its practices. ii)Creating credibility : An organization that is believed to be driven by moral values is respected in the society even by those who may have no information about the working and the businesses or an organisation. Infosys, for example is perceived as an organisation for good corporate governance and social responsibility initiatives. This perception is held far and wide even by those who do not even know what business the organisation is into. iii)Uniting people and Leadership : An organisation driven by values is respected by its employees too. They are the common thread that bring the employees and the decision makers on a common platform. This goes along way in aligning behaviours within the organisation towards achievement of one common goal or mission. iv)Improving Decision Making : A mans destiny is the sum total of all the decisions that he / she takes in course of his life. The same hold true for organisations. Decisions are driven by values. For example, an organisation that does not values competition will fierce in its operations aiming to wipe out its competitors and establish a monopoly in the market. v)Long Term Gains : Organisation guided by ethics and values are profitable in the long run. Though in the short run they may seem to loose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990s, which soon turned out to be otherwise. The same Co.s TATA NANO car was predicted as a failure, and failed to do well but the same is picking up fast now. vi)Securing the Society : Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save the society and the environment. Technology, for example is growing at such fast pace that by the time law comes up with a regulation, we have a newer technology with new threats replacing the order Lawyers and public interest litigations may not help a great deal but ethics can.

02 Concept of Corporate Social Responsibility :

Ans.Corporate Social Responsibility (CSR) is an expression used to describe companys obligation to be sensitive to the needs of all the stakeholders in its business operations. A corporate must commit to behave ethically towards its internal and external environment and contribute to improving the socio- economic fabric of society. What lies at the very core of corporate social responsibility is an ethical approach to business and it encompasses areas of concern about how a corporate serves the interest and r of the people at large. CSR is a companys voluntary actions over and above its legal requirements with the aim of meeting the ethical needs of its employees, customers, society, locality and environment. It is the index of good corporate citizenship. Relevance of CSR in contemporary society :Social responsibility may sound like a moralistic term with little meaning for a pragmatic corporate; yet it is the bird word in corporate circles today. The corporation has been defined as a legal entity with unlimited life, limited liability and divisibility of ownership. Thus, as a corporate citizen, every business must act in a responsive way. With corporates playing and increasingly important role in the affairs of the world, it is today imperative that they should become conscious and responsible for the consequences their activities and decisions have on society. Contemporary society expects that businesses operate within society, are dependent on society for getting their inputs as well as for marketing their goods and services. Therefore, in addition to providing goods and services, business needs to look after welfare of the various stakeholders. 1. Survival and Growth : In recent times the concept of CSR has turn out to be a vital strategy for companies to survive in. A ruthless market environment. In todays environment where markets shift and consumers preferences become even more unpredictable and complex, CSR can become a powerful tool for survival and growth. 2. Enhanced Corporate Image and Reputation : CSR activities of a business are aim towards the welfare of society and this help develop a positive image for the firm. Enhanced Goodwill and Reputation will, on the one hand attract better employees to join such firms, and on the other hand attracts more customers- people do prefer to patronize a firm because of its positive image in society. 3.Avoid government Regulation : If firms discharges their duties voluntarily and responsibly, much government regulations can be avoided. A lot of legislation has been enacted with respect to waste management, air and water pollution. If a firm is proactive and incorporates environment-friendly practices

voluntarily, it can save itself from the forced implementation of strict government regulation, which sometimes may pose the business to close down. 4 Change Consumer expectation : Todays consumer have become more conscious about their rights and are also more demanding. They protest against supplier of harmful/inferior goods and services and other unethical practices of business. 5. Moral Responsibility : Business is an integral part of society, dependent on it for getting its input as well as for marketing its goods and services. Therefore, business managers have a moral responsibility to protect the interests of society, and look after the welfare of their different stakeholders apart from providing goods and services.
6.

Huge Resources : Large organization have human talent and financial resources to solve societal problems, hence they should be socially responsive. They are also more efficient and ensure a business and result oriented approach towards social projects. Attracts better human resources : CSR is seen to be a great way to attract good talent and to retain them. Social initiatives are a good way to satisfy the emotional and social needs of employees by helping them contribute towards the good of society.

7.

03 The CSR debate :

Ans. CSR, being a voluntary activity, has no rules, regulations or procedures to comply with. It is a means to demonstrate to the society at large that the firm believes in discharging its ethical responsibility. Such activities, as we have seen enhance the firms goodwill and brand image and eventually lead to improved financial performance and lower operating costs. However CSR is a subject of a lot of debate with arguments against corporate social responsibility. Most arguments center around the fact that there could be a conflict of interests between direct stakeholders, government and the society. The following are some of the arguments against CSR : 1. Business is for profit : Business is an economic activity performed with the aim of earning profit. Any amounts spent on social activities would be a strain on its limited resources. Therefore business must concentrate on making profits, leaving social activities to government and other Non governmental organizations (NGOs). 2. Lack of requisite social skills : Businesses often lack skills required to perform social, environmental and developmental activities, which are part of any government agenda. Hence it is sufficient for businesses to earn profits, pay

taxes and allow the government to fulfill the social requirements. 3 Increased Costs : Every business needs to look at a return on investment (ROI). Moneys spent on welfare activities is considered an expenditure rather than an investment and there is to immediate return on such money spent. This may affect the financial strength of a business.
4.

Economic Argument : Investors put money into a business to undertake economic activity and provide them with a good return. Expecting the business to become involved in social welfare activities may reduced its economic efficiency and shift its focused from its primary activity. It can increased cost leading to increase in prices of goods and services offered, resulting in customers bearing the burden of increased prices. It can also lower a firms competitive advantages both locally and internationally.

04 Role of NGOs and International agencies in CSR :

Ans. Non- Governmental organization (NGOs) are private voluntary organizations, not for profits that function as Moral Entrepreneurs selling ethical ideals and standards. They have played major role in solving social and environmental issues from driving inter government negotiations, to regulation of hazards waste and elimination of slavery. NGOs today have begun to shift their focus on powerful Transnational Corporation (TNC) due to perceived lack of social and environmental accountability of TNCs under existing laws. International NGOs have a stories dating back to at least 1839, and play an important role in the anti- slavery movement and the movement for womens suffrage. However, the phrase Non-Governmental Organization came into use with the establishment of the United Nations organization in 1945 with provisions in articles in 71 of chapter 10 of the UN charter for a consultative role for organization which are neither governments nor member states. Globalization during the 20th century gave rise to the importance of NGOs. Many problems could not be solved within a nation. International treaties and International organization such as WTO where centered mainly on the interest of capitalist enterprise. In an attempt counter balance to this trends, NGOs have developed to emphasize humanitarian issues, developmental aid and sustainable development. NGOs can be of two types- Operational and Advocacy NGOs. However, Apart from NGOs other players have increasingly become involve in the development of CSR. A member of Inter Governmental Organization (IGOs) also address this issues of CSR-among these the UN industrial Development Organization (UNIDO), the UN Development Program (UNDP), the UN Commission of Human Rights (UNCHR), and the World bank, some of which are participating in the UN Global Compact.

Another important international initiative was taken by the International Standardization Organization (ISO) to develop standards for social responsibility under the name of ISO 26200. The UN global compact and the ISO initiative confirm the increasing importance of CSR internationally and have also given a status of legitimacy to CSR. CSR and Sustainable Development : In the past, the role of a corporate has been understood in terms of a commercial business paradigm of thinking that focuses purely on economic parameters of success. However, Over the past few decades, thanks to globalization and pressing ecological issues, the perception of the role of a corporate has undergone a sea change. Stakeholders today are redefining the role of corporate, taking into account the corporate responsibility beyond economic performance-its role towards social and environment. A corporate social responsibility is really about building sustainable businesses. CSR :within the organization Work Atmosphere: Health and Productivity : Every employer must treat employees with respect and provide them with a work atmosphere that is safe, secure and healthy, if the firm wants to experience improved productivity. Employees provide the know-how, innovation and customer- service necessary for all business. Therefore a companys success depends on the productivity and commitment of its employees. Some of the issues to be considered under health & productivity at the work place are : The company must comply with all rules and regulations applicable regarding working conditions. The company must ensure a safe and healthy work place environment and appoint a senior management person to implement health and safety requirements. The company must identify hazards associated with its business activities and find ways to mitigate them. Systems must be in place to detect, avoid or respond to even potential threats to the health and safety of employees. The company must provide training to employees on a regular basis regarding effective health and safety instructions ( Particularly jobspecific instructions) The company must provide at its expense personal protective gear to all employees. In case of any work related accident, the company must provide adequate fist aid and any further medical treatment that might be necessary. The company must ensure access to safe drinking water and sanitation facilities.

Exploitation Atrocities and Harassment : 1. Exploitation : Most people need their jobs to earn living to buy food, clothing, shelter, support a family and live a satisfied life. Unfortunately, it is this basic need for survival that opens of the doors to exploitation. When a people afraid of loosing their job because they will not to be able to survive without it, they become more act to tolerate working in an environment they do not like. The risk of quitting the job or being fired by the employer if they confront their employer with the problems they are facing makes them allow themselves to be treated badly. Some employer see this fear as an opportunity and take advantage of their workers. There are many ways a company can exploit an employees. Not being paid for the true worth of your work. Being overworked- either very long shifts with little or no breaks, or continuous day of work with no days off. In both cases the results physical stress, at times even leading to depression. Not getting due to credit for your work- whether verbal praise/ acknowledgement or monetary bonuses/ raises. Unfair treatment, discrimination. This would include preferential treatment of certain employees over others racism, sexism, and any other bias that makes an employee feel that they are not being treated fairly at the work place. 2 Workplace Harassment : Workplace harassment is any type of unwelcome action towards an employee that leads to difficulty in performing assigned tasks or causes the employees to feel he / she is working in hostile environment. The harassment may be based on factors such as race, gender, culture, age, sexual orientation or religious or political preferences. In many countries there are laws that protect employees from enduring this type of on-the-job abuse, if the reality of the harassment can be proven. Harassment covers wide range of offensive behavior. It is commonly understood as behavior that is intended to disturbed or upset, and is harassment and sexual harassment, The Civil Rights act of 1964 addresses the most severe form of discrimination at the workplace. It is unlawful for any employer to discriminate on the basis of sex, caste, race, gender, etc.

3.

Prevention of Harassment : Following the principle of Prevention is better than Cure, employers must avoid cases of harassment by putting in place an equal opportunities policy that defines explicitly Harassment Employees must be educated and aware of these policies and the consequences of harassment.

05 AGENCY THEORY.
Ans.A firm or company can be defined in different ways from the point of view of economics, law and sociology. The legal definition states that a company is a nexus of contracts. A company is actually a group of connected stakeholders, with each having its own interest and views the company differently.As there is separation of ownership and control, the shareholders appoint Board of Directors to manage the business on their behalf giving rise to the Principal- Agent relationship between shareholders and Board of Directors. Meaning of Agency Theory : Michael Jenson and William Meckling (1976) said there exist an agency relationship between owner and management as they believed that a Firm/Company is a nexus of contracts. A company is a network of relationship between different interest groups who have stake in the company. The different stakeholders could be shareholders, managers, creditors, etc. and the often have conflict of interests with others. In a company there is a contractual relationship between the owners .i.e. the Principals and the managers, the agents, the Principals (owners) appoint the agents (managers) to perform certain services on their behalf and delegate adequate decision-making authority to the agents. However, often, if the interest of both these groups are not aligned, it creates conflict of interest. The agency theory states that there will be some sort of mistrust between owners and managers. Thus as per this theory, a company (firm) in basically a unit of conflicts rather than a unitary profit seeking machine. It focuses on the relationships and goal incongruous between owners and managers. If there is theory suggest that agent (managers) have tendency to appropriate from the company, because the benefits are higher than the costs as, such costs are shared by various stakeholders. Agency Theory and Corporate Governance : The essence of corporate governance in the context of Agency theory is to ensure proper disclosure norms, proper monitory mechanism and others system to ensure there is proper alignment of objectives principals and agents as far as possible, thereby reducing agency costs.

Thus under the agency theory, corporate governance would entail: 1. Fair and accurate financial and disclosure : Disclosure of financial as well as non financial ensures transparency and reduces incidents of mismanagement or frauds. Beside this, the quality and frequency of disclosures also enhances corporate governance. The statutory auditors should also be independent and professional in this approach while auditing a company. 2. Independent and Efficient board of directors : To ensure good corporate governance, the board should be made up of who are independent and experts/experts in their line of specialization. The board has fiduciary relationship with shareholders and are accountable to them. Moreover a capable board plays the role of monitoring agency (over managers) thereby reducing conflicts. Assumption of Agency theory : According to the agency theory, in an efficient market condition or in a competitive market, corporate governance is already achieves as agency problems will be mitigated. This is because managers will bear costs of its mismanagement and misconduct. Hence it will provide incentives to the agents for self control. 1.Existence of conflict of interest between owners and managers and between various stakeholders. 2. Information asymmetry .i.e. managers have or possess all information related business which is normally not easily available to owners and this advantages of information asymmetry is exploited by managers to further their gains. 3. Agents are opportunists who often engage in activities which serve their self interest. This is possible as owners can not monitor every action of managers due to separation of ownership and management. 4. Sometimes the agents appointed may not be efficient and capable or at times principal may appoint an agent purely based on his resume without verifying his claims. Criteria : 1. The theory only focus on the relationship between shareholders and managers and ignores other stakeholders. 2. The theory in individualistic in approach that is each individual (group) consider themselves as the only once important in the structure of a company and acts as if it has no meaningful attachments with other groups.
3.

In case of large publicly trade companies, managers are very small fraction of shareholding and hence even if company incurs huge debts, it will not impact them much. Hence it does not deter them from taking

risky decision or activities

06 Role of Professional Management for creating goodwill business :

Ans. Good ethics is good Business This suggest the importance of ethics in business. It provides protection, justice and fair treatment to ethical business is equally profitable. Business should therefore support the concept of business ethics. Business ethics is important to business community, consumers and the society at large. The most common belief that Good ethics is good business is true. Businessman have economic power which they can use for making the life of people happy or miserable Businessman should conduct business in fair and ethical manner and make people happy. This is good business and good ethics. Businessman may earn quick profits through unethical practices along with this they may also invite customer displeasure, Government control and non cooperation from the employees. These factors harm the future prospects of business. Business will not get support from the society when justice is not done to different social groups. It is rightly said that Honesty is the best policy & also beneficial in long run. Businessman should not be short-sighted. They should have vision and foresight. They should be fair to all social groups and offer them benefits and happiness. Ethical values should not be discarded in any human activity and business should not run after profit maximisation at any cost. They should support ethical values while managing business activities. It is always desirable to strike a balance between economic performance and social performance of business unit. Business ethics facilitates such balance. Businessman should decide what is social good and what is socially undesirable and act accordingly. This will make their business ethical and also beneficial to them and to the society at large. Business also gets public support when it is conducted in a fair manner. Measures to Improve Ethical Conduct of Business Introduction : The ethical behaviour or conduct can be improved or can be accelerated by introducing a three tier system. It is necessary to include the importance of ethical conduct at different levels which will ultimately benefit to everyone. The three-tier system of ethical conduct At the Institutional Level At the Government Level At the Society Level (I)At the Institutional / Organisational Level

1.Independent Rules of Behaviour : Every institution should prepare its own Rules of behaviour / conduct for its human resource. Such rules will help them to decide what is accepted and what kind of behaviour is rejected. 2.Proper Mixture of Motivational Factors : The organization should introduce mix of proper motivational factors. Under this the employees who follow code of conduct, can be rewarded in positive manner. Whereas whose behaviour is against the code of conduct can be punished or negative reinforcement can be used. 3.Guest Lectures by Eminent Personalities : To imbibe the importance of ethical behaviour among the employees; organizations can arrange guest lectures of eminent personalities. Experience shared by such individuals will boost the feeing of ethical conduct. 4.Workshops / Seminars : Different workshop can be arranged to develop the ethical approach among employees. In this, varied management games, case studies, Role-plays can be included to make it interesting. 5.Review and Feedback : Every organisation should develop a proper system of review and feedback. It will help to monitor the success of Code of Conduct Programme of the organisation. (II) At the Society Level : Measures can be taken at society level in following ways : 1 Investors Participatory Programmes : Through various participatory programmes investors can pressurize the business or organizations for adoption of ethical conduct. Such practice will prevent the unethical activities like Insider trading. 2. Consumer Forum : Different Consumer forum, Grahak Manch, Grahak Parishad can take lead to insist upon code of ethics in organisation. 3.Role of Media : Proper use of media can be supplemented for improving the ethical practices in the organizations. Television, radio, newspapers, magazines can create awareness among the citizens against cheating, exploitation and other unethical practices. 4. Role of NGO : NGOs can contribute in better way to spread the ethical awareness in the society. NGOs can work for curtailing the immoral activities of the business. 5.Use of Legal Weapons : Citizens should take initiative for utilizing the various weapons gives by the law. Right to Information Act, Lokpal bill are the new ways to find out the level of transparency and true and fair view in administration.

(III) At Government Level : 1 Proper Implementation of Laws : The various Acts or laws which are established with the objective of protection of different stakeholders must be implemented in proper manner. They should not be misused. 2.Abolition of Outdated Requirement : The outdated legal requirements, provisions having various loopholes must be abolished. Such provisions give a chance to individuals to involve themselves in unethical practices. 3. Rapid Action Against Criminals : Quick and prompt action must be taken against those who are involved in different crimes. It will increase the confidence of general public in judiciary system. 4.Facilitation of Social Reformists : Government can felicitate those citizens who are actively involved in social reforming activities or who are social workers. E.g. Famous social Reformist Mr. Anna Hazare who worked hard for introduction and implementation of Right to Information Act, 2005.

07 RIGHTS OF INVESTORS.
Ans.Technically speaking, with respect to joint stock company, the term investor include those person who invest finance in a company by means of purchasing its debentures or bonds or participating in its public deposits scheme. Typically invested are interested earning high returns on their investment and not frightened to take risks. This is because, often they are interested in making short term gains, out of their investment. To safeguard their interest, the companies act as well as their articles of a company has recognized the following rights : 1. To appoint nominee directors 2.To get payment to their investment along with regular returns on their investment as per the stated terms and conditions. 3.To file suit case against the company like register of debenture holders, register of charges, etc. 4.To approach High Court for an order to wind up the company.

08 RIGHTS OF SHAREHOLDERS.
Ans. In a common, the term shareholder means a person who has bought

share/s- equity or preference, of a company. A shareholder is treated as a real owner of the company as he has contributed towards the capital of a company. Being the owner of the company, he enjoys ownership rights. All shareholders of a company collectively appoint their representatives called as Board of Directors to manage the affairs of the company on their behalf. As the owner of the company the shareholders enjoys various rights. These rights may be classified as, 1. Rights of shareholders : a) Statutory Rights b) Documentary Rights c) Other Legal Rights Statutory Rights are Rights given to shareholders by the Companies Act, 1956. These rights cannot be amended or taken away from shareholders in any manner. For eg. To receive dividend, get copy of Memorandum and Articles of association, statutory and annual reports, notices of general meetings, transfer shares, demand poll, etc. are some of the statutory rights of shareholders. On the other hand, documentary rights are rights conferred upon by Articles of Association of a company viz to vote at meeting of shareholders, receive dividend, get copies of certain documents after paying nominal fees etc. are documentary rights. The rights shareholders enjoys as per the general law of the company is include under other legal rights. Eg. Amend Memorandum or Articles of a company, get equal treatment by board, inspect certain records of company, take legal action and prevent unauthorized acts of company etc. The rights of shareholders may also be categorized as 2 Rights of shareholders : a) Individual Rights b) Corporate/ Collective Rights Individual Rights refer to rights enjoyed by a shareholder as an individual (owner) of the company. He can enforce this right singly. For eg. Right to receive share certificate, inspect Register of members, attend general meetings etc. Corporate / collective rights are rights enjoyed by shareholders jointly or collectively and not individually. These are rights enforced by the majority usually in the general meetings. They include right to alter memorandum or Articles of Association, elect directors, etc. In a nutshell, following are the rights of shareholders of a Company:

1 To receive copies of Memorandum and Articles of Association, certain resolutions, records etc. free of cost or on payment of prescribed fees, as the case may be. 2. To receive share certificate within 3 months of allotment or within 2 months from date of transfer of shares. 3. To receive notice and agenda of general meeting along with relevant reports like annual reports, auditors reports, statutory report or explanatory notes, as the case may be. 4. To transfer shares subject to provisions of Articles. 5 To be offered preferential right to purchase shares on a pro-rata basis in case of further issue of shares. He also can announce all or part of shares on such issues. 6. To inspect Register of Member, annual return, register or charges, books of accounts etc. and also can get a copy of these on payment of prescribed fees. 7. To appoint proxy. 8. To demand poll. 9. To participate in the process of appointing (and reappointing) directors and auditors and also can remove director before expiry of his term. 10. To declare and receive dividend 11. To participate in surplus assets of the company, if any, on its winding up. 12. To apply to company law board. a) For rectification of Register of member b) For seeking redressal when company has refuses his application for transfer of his shares. c) For asking its approval to call for AGM, if company fails to hold such meeting within the prescribed time limit. d) For convincing extra ordinary general meeting, under certain circumstances. e) For seeking in case of oppression and mismanagement. f) For asking it to investigate the affairs of the company 13.To petition the high court for winding up of the company, under certain circumstances.

09 MODELS OF CORPORATE GOVERNANCE.

Ans. Corporate governance systems vary around the world. This because in some cases, corporate governance focuses on link between a shareholder and company, some on formal board structures and board practices and yet others on social responsibilities of corporations. However, basically, corporate governance is seen as the process by which organizations are run. There is no one model of corporate governance which is universally acceptable as each model has its own advantages and disadvantages. The following are some of the models of corporate governance : Anglo-American model : This model is also called an Anglo-Saxon model and is used as basis of corporate governance in U.S.A, U.K, Canada, Australia, and some common wealth countries. The shareholders appoint directors who in turn appoint the managers to manage the business. Thus there is separation of ownership and control. The board usually consist of executive directors and few independent directors. The board often has limited ownership stakes in the company. Moreover, a single individual holds both the position of CEO and chairman of the board. This system (model) relies on effective communication between shareholders, board and management with all important decisions taken after getting approval of shareholders (by voting). German model : This is also called as 2 tier board model as there are 2 boards viz. The supervisory board and the management board. It is used in countries like Germany, Holland, France, etc. Usually a large majority of shareholders are banks and financial institutions. The shareholder can appoint only 50% of members to constitute the supervisory board. The rest is appointed by employees and labour unions. Japanese model : This model is also called as the business network model, usually shareholders are banks/financial institutions, large family shareholders, corporate with cross-shareholding. There is supervisory board which is made up of board of directors and a president, who are jointly appointed by shareholder and banks/financial institutions. This is rejection of the Japanese keiretsu- a form of cultural relationship among family controlled corporate and groups of complex interlocking business relationship, where cross shareholding is common most of the directors are heads of different divisions of the company. Outside director or independent directors are rarely found of the board. Indian model : The model of corporate governances found in India is a mix of

the Anglo-American and German models. This is because in India, there are three types of Corporation viz. private companies, public companies and public sectors undertakings (which includes statutory companies, government companies, banks and other kinds of financial institutions). Each of these corporation have a distinct pattern of shareholding. For e.g. In case of companies, the promoter and his family have almost complete control over the company. They depend less on outside equity capital. Hence in private companies the German model of corporate governance is followed.

10 TRANSACTION COST THEORY.

Ans. This theory attempts to define firms in relation to market and give an economic explanation for the existence of the company. Ronald Coase in 1937 propounded this theory which was further expanded by Williamson in 1996. According to R.Coase, a firm is system of relationship which comes into existence when direction of resources depends on entrepreneur and therefore firms get larger or smaller in size based on whether the entrepreneur organizes more or favor transaction. Transaction cost, according to him, is cost incurred in making and economic exchange or cost of participating in market. He further adds that price mechanism does not work costlessly and that firms exist to economise on this costs. The extend of a firm is therefore determine by balancing the cost of coordinating production in the market through price mechanism as against the cost of the market of organizing production within the firm. The extent of firm will shrink when the cost of using prices to transact in market falls relative to cost of internal organization. R.Coase use the term transaction Coase to predict when certain economic tasks will be perform by a firm and when they will be perform by market. Hence when external transaction cost are higher, that internal transaction cost, company will grow and if external transaction costs are lower, that internal transaction cost company will or outsource. Alike the belief of traditional economic that all economic agents are rational, the transaction cost economic attempts corporate human behavior in a more realistic manner. It states that managers and other economy agents practice bounded rationality and opportunism. Here bounded rationalism refers to behavior that is intentionally rational but only limitedly so and opportunism means self interest seeking behavior of managers.

11

STEWARDSHIP THEORY.

Ans Unlike most theories of corporate governance which begins with the revise that individuals work for self interest the stewardship theory rejects the notion of self interest. It presumes that managers are good steward of corporation and work diligently to achieve higher levels of profits and better shareholder returns. It holds that managers are motivated by achievement and responsibility needs and are self directed, besides attaching significances to their personal reputation. Thus, managers are stewards whose motives are aligned with the objectives of the principal. The theory holds that managers inherently seek to do job, maximise company profits and enhance the return to shareholders. This, they do, not for their own good but out of a strong feelings of duty to the firm. Here the managers do not holds themselves as isolated individuals but consider themselves as a part of the company. They merge their ego and sense of work with the reputation image of the firm. For this to occur, the managers needs to given need clear cut details of their roles and expectations. The organizational structure should provide adequate authority and power to the management. The expectations should be such that it evokes in managers in sense of ability and worth. This will make them company man .i.e. people who will put the company ahead of their own interests. Thus in stewardship theory managers seek other than financial ends like sense of worth, feeling of job well done where as in agency theory, managers are seen as individuals who pursue their own interest an reputation at the cost of their shareholders. To conclude, stewardship theory focuses not only motivation of CEO alone but rather in providing structure that facilitates and empowers them. For this there should be fusion of CEO and chair of board to maximize the return to shareholders. However, the underlying belief of the theory that managers are selfless may be culturally contingent. The stewardship theory is similar to the trusteeship principle propounded by Mahatma Gandhi which also states that businessman should be aware of their roles and responsibility vis-a-vis their employees, shareholders, creditors, society, etc.

12 SHAREHOLDERS THEORY.
Ans. The word stakeholder was first coined in 1963 and tried to differentiate it with the word shareholder. Accordingly, shareholder meant one who has invested money in a company while stakeholder meant who who has stake in the company and its performance. Initially, the concept of stakeholder theory defined stakeholders as including those groups without whose support the company would cease to exist. In the olden days, the company was considered as input-output model where the company was responsible to convert the inputs of investors, employees and suppliers into outputs like goods and services, which are bought by customers, thereby earning some capital profits for the company. Here only four type of customers viz, investors, employees, suppliers and customers needs are considered. Whereas, in the stakeholder theory other party such as government, trade union, trade associations, community, society, prospective consumers, prospective employees, etc. too are included in the concept of stakeholders. Thus, as per this theory stakeholders are large and diverse group. The constituents of stakeholders can be viewed as in different ways for e.g. one can use the term stakeholder as primary stakeholder (investors, employees, suppliers, customers etc.) or secondary shareholders (government, society, competitors etc.) or long term stakeholders (equity investors, employees, customers, .i.e. current and prospective, suppliers, government, society etc.) or in a broad sence the term stakeholder may include any group or individual who affected by the companys activities e.g. customers, employees, suppliers, stockholders, communities, society, government etc. and in a narrow sense it includes only employees, investors, customers, suppliers etc. However, this theory has been criticised on the following grounds : 1. It can only identify the various stakeholders who have vested interest in the company but fails to identify who actually runs the company. 2. There is no common voice amongst the stakeholder and hence often the strongest group prevails. 3. It fails to reflect the link between stakeholders and the companys performance. 4. It may lead to corruption and mismanagement as the agents (managements) gets an opportunity to direct the wealth from shareholders to other parties, thereby going against the fiduciary obligation towards the shareholders.

13 RESOURCE DEPENDENCY THEORY.

Ans.This theory studies how an organizations behavior affected external resources. It also studies how organizations reduce environments interdependence and uncertainty. It explains how the external environment impacts optimal divisional structure of an organization, recruitment of board member and employees, production strategies and external organizations links. The theory assumes that organizations are dependent on resources for their survival and these resources which are scare are available from the environment. The environment also contains other organization and who also need this resources. Thus often the resources needed by one organization is in the hands of other organization. Resources then became basis of power as organizations to have control over the resource so that their dependency on others reduce or others become more dependent on them. An organization success is on maximizing its power. In other words the resource dependency theory states how organizations seek to manage their environment and shows importance of exchange and power relations in and around the organization. Originally The resource dependency theory provided an alternative perspective explanation to economic theory of merge and board interlocks and understand inter-organizational relations. Thus this theory implies corporate governance is all about constitution of boards, the inter and intra relationships of an organization and strategies adopted by an organization to succeed in its business.

14 POLITICAL THEORY.
Ans.This theory says how some shareholders can influence allocation of resources or decision making at micro levels which is in turn, subject to macro level influences. In other words this theory recognizes how allocation of corporate powers, privileges and profits between owners, managers, and other stakeholders is determine by attitude of govt. towards various stakeholders. In fact, corporations too influence in molding political or legal systems.

15 SOCIOLOGICAL THEORY.
Ans.This theory focuses on board composition and financial reporting. It is assume that if there is concentration of directorship in the hands of privileged class or individuals with vested interests, there will not be equality in the treatment of stakeholders of a company. Hence as per this theory, corporate government focuses on board composition, financial reporting, norms for disclosure and auditing.

16 INSTITUTIONAL THEORY.
Ans.This theory suggests that managers conform with industry norms, companys traditions, legislations, social and political belief while formulating policies. Decision are taken or actions are performed in a certain way so as to conform with the norms accepted by the society so that it gets legitimacy or acceptance by others. Thus institutional environment strongly influences the development of formal structures in an organization more profoundly than market pressures.

17 Seven Characteristics of Corporate Governance :

1. Discipline : Corporate discipline is a commitment by a companys senior management to adhere to behaviour that is universally recognized and accepted to be correct and proper. This encompasses a companys awareness of, and commitment to, the underlying principles of good governance, particularly at senior management level. For Example a corporate may have following agenda. All involved parties will have a commitment to adhere to procedures, processes, and authority structures established by the organization. 2.Transparency : Transparency is the ease with which an outsider is able to make meaningful analysis of a companys actions, its economic fundamentals and the non-financial aspects pertinent to that business. This is a measure of how good management is at making necessary information available in a candid, accurate and timely manner not only the audit data but also general reports and press releases. It reflects whether or not investors obtain a true picture of what is happening inside the company. All actions implemented and their decision support will be available for inspection by authorized organization and provider parties. 3. Independence : Independence is the extent to which mechanisms have been put in place to minimize or avoid potential conflicts of interest that may exist, such as dominance by a strong chief executive or large share owner. These mechanisms range from the composition of the board, to appointments to committees of the board, and external parties such as the auditors. The decisions made, and internal processes established, should be objective and not allow for undue influences. All processes, decision-making and mechanisms used will be established so as to minimize or avoid potential conflicts of interest. 4. Accountability : Individuals or groups in a company, who make decisions and take actions on specific issues, need to be accountable for their decisions and actions. Mechanisms must exist and be effective to allow for accountability.

These provide investors with the means to query and assess the actions of the board and its committees. Identifiable groups within the organization-e.g., gover-nance boards who take actions or make decisions are authorized and accountable for their actions. 5. Responsibility : With regard to management, responsibility pertains to behaviour that allows for corrective action and for penalizing mismanagement. Responsible management would, when necessary, put in place what it would take to set the company on the right path. While the board is accountable to the company, it must act responsively to and with responsibility towards all stakeholders of the company. Each contracted party is required to act responsibly to the organization and its stakeholders. 6.Fairness : The system that exist within the company must be balanced in taking into account all those that have an interest in the company and its future. The rights of various groups have to be acknowledged and respected. For example, minority share owner interests must receive equal consideration to those of the dominant share owner(s). All decisions taken, processes used, and their implementation will not be allowed to create unfair advantage to any one particular party. 7.Social responsibility : A well-managed company will be aware of, and respond to, social issues, placing a high priority on ethical standards. A good corporate citizen is increasingly seen as one that is non-discriminatory, nonexploitative, and responsible with regard to environmental and human rights issues. A company is likely to experience indirect economic benefit such as improved productivity and corporate reputation by taking those factors into consideration.

18 Role of Manager :
1.Planner and Forecaster : Manager acts as an in-charge for planning and forecasting. he chalks out in advance what is to be done. How to do if, when to do it and who will do it. 2.Organiser : Manager performs an important role in organizer. He arranges different activities, resources, functions in systematic order. This brings effectives in the work. 3.Leader : He is in-charge for different activities of his subordinates. As a leader, manager should understand the subordinates and should support them. He should set a good pattern of behaviour as a leader.

4.Connecting Link : Manager performs a great role of linking the two ends. He bridges the gap between internal public and external world. this can be achieved by attending meeting, workshops, conferences. 5. Communication : A successful manager is an expert communicator who passes the necessary information related to the business. he use different communication models to inform, the persuade the internal as well as external public. 6.Innovator : This role of a manager demands creativity and novelty in ideas, business activities or trade practices. Manager must be able to integrate existing and new thoughts to brings best results

19. Benefits of Duties :

1.Duties provide a direction to achieve the objective. 2.Duties create sincerity and dedication towards the work. 3.It helps to understand the role of every individual in the given situation. 4.Duties bring discipline in the life. 5.Feeling of duties, bring involvement and efficiency in the task. 6.Various duties, in individuals life, help to make the life, balanced one.

20 Rights of Entrepreneur :
1. Right to price the product or service. 2.Right to raise the prices of product or service by following ethical standard. 3.Right to say no under different circumstances. 4.Right to set boundaries that are in line with your integrity. 5.Right to terminate the relationships if the situation demands. 6.Right to charge clients / customers late fees for not paying the dues promptly.

21 Benefits of Rights :
1.Rights boost confidence in the individual. 2.They increase efficiency and performance. 3.Feeling of rights generate motivation. 4.Rights provide the participation and empowerments. 5. It develops the relationship between the superior and subordinate.

6. Rights improve the idea of belongingness and dedication.

22 Features of Ethical Organisation :

There has been a lot of attention paid to ethics in business recently, with most of that focus on the lack of ethics. What has, however, been proven time and again, is that good, ethical behaviour reflects smart business practices. The following are some features that should constitute the ethical bedrock of any organisation : 1.Respect : As an entrepreneur or a manager building a business, you need to respect yourself and others, and surround yourself with people you can respect. Respect your colleagues, employees, customers, vendors and members of society. 2.Integrity : Live up to your values and beliefs in whatever you do & surround yourself with people of high integrity. With integrity comes trust and trust helps an organization grow. Ensure that no one is selling the companys values short to make a quick buck. 3.Transparency : Be open and transparent with all stakeholders have no hidden agendas. 4.Fairness and Objectivity : Be fair in your dealings and objective in your judgments of employees and others. 5. Factor Ethics into the Result-oriented approach : Do not aim for results at any cost rather, work on achieving your results within the framework of company values. Results should be attained in the context of developing products and services that customers want and producing and delivering them at a price that I fair to all parties involved. Good managers support their employees to help them achieve their full potential while achieving results too. In an ethical organization, results are more than just numbers they are benchmarks and lessons for the future as well as goals for the present. 6.Passion : Create a passion in every employee so each one works for the thrill and challenge rather than a mere pay check. Without passion as the fire within and the driving force, employees will put minimal effort, and not take responsibility for their actions. 7.Communicate : Create an atmosphere of open communication in the organization. Ensure that you are able to effectively communicate the companys vision, mission, and objectives to all stakeholders. 8.Share your Wealth : Share your knowledge and money with others. Empower others who helped you become who you are today.; those who you

are benefiting from in business and society. Show your sense of Corporate Social Responsibility.

23 Ethics & Legality :

ETHICS 1. 2. Ethics represents a system of internal controls. It is generally unwritten and voluntary. It is guided by moral principles. Ethics fills the gap in law. Ethics is always current and operative. LEGALITY 1. Legality represents a mechanism for external control. 2. It is purpose fully written and enforced by the state (Government). 3. It law is guided by reality principles. 4. Law and ethics supplement and complement each other. 5. Law needs to be updated periodically to keep it relevant.

3. 4. 5.

24 CSR and Sustainable Development:Corporate Sustainability is a business approach that creates long term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. Corporate sustainability lenders achieve long-term shareholder value creation by gearing their strategies and managements to harness the markets potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks. The quality of a company strategy and managements and its performance in dealing with opportunities and risks deriving from economic, environmental and social developments can be quantified and used to identify and select leading companies for investment purposes. Leading sustainability companies lead their industries and set industry-wide best practices in the following area: strategy, innovation, governance, shareholders, employees and other stakeholders. CSR and Triple Bottom Line in Business: an International endeavour. The triple (Economic, Ethical and Environmental) bottom line evaluates a corporations performance according to a summary of the economic, social and environmental value the term is a framework for measuring and reporting

corporate performance against economic, social and environmental indicators. Recently a broader meaning as been attributed to the term in that in that the concept is used to capture a whole set of values, issues and processes that corporations must address in order to minimize any harm resulting from their value adding or destroying activities. This including clarifying the corporations purpose and taking into consideration all stakeholders. Examples of corporate social Responsibility. Aptech Limited Aptech Limited, a leading education player with a global presence, has played an extensive and sustained role in encouraging and fostering education throughout the country since inception. As a global player with complete solutions-providing capability, Aptech has a long history of participating in community activities. It has, in association with leading NGOs, provided computers at schools, education to the underprivileged and conducted training and awareness-camps. Aptech students donated part of the proceeds from the sale of their art work to NGOs. To propagate education among all sections of the society hrdughout the country, especially the underprivileged, Aptech fosters tie-ups with leading,NGOi throughout the country, including the Barrackpur-based NGO, Udayan, a residential school for children of leprosy patients in Barrackpur, established in 1970.The company strongly believes that education is an integral part of the countrys social fabric and works towards supporting basic education and basic computer literacy amongst the underprivileged children in India. Avon Cycle Limited The poor and ignorant of Indias rural population turn to nearest towns and cities for healthcare. They face indifference and exploitation. Hope gives way to despair. This gave inspiration to AVON for locating MATAKAUSHALYA DEVI, PAHWA CHARITABLE HOSPITAL Mr. Sohan Lal Pahwa, AVONs Chairman and Principal Trustee of the hospital spent a good part of his working life devoted to philanthropy. The hospital, in its 5th year of inception, has risen to serve a model healthcare facility boasting of some bold experiments in its very early years of existence. Its support since inception has been of the order of Rs. 3 crore to date and it continues uninterrupted. Reaching out to the needy farther afield, the hospital holds regular camps in surrounding villages to propagate scientific approach to healthcare. Recently the hospital took the social responsibility concept a step further and formulated a scheme titled Celebrated Female Child to enable and inspire positive and enduring environment for societys allconsuming passion forsons only to end.

Infosys Technologies Limited Infosys is actively involved in various community development programs. Infosys; promoted, in 1996, the Infosys Foundation as a not-for-profit trust to which ;t contributes up to 1%PAT every year. Additionally, the Education and Research Department (E&R) at Infosys also works with employee volunteers on community development projects. Infosys leadership has set examples in the area of corporate citizenship and has involved itself actively in key national bodies. They have taken initiatives to work in the areas of Research and Education, Community Service, Rural Reach Programme, Employment, Welfare activities undertaken by the Infosys Foundation, Healthcare for the poor, Education and Arts & Culture. Tata Consultancy Services The Adult Literacy Program (ALP) was conceived and set up by Dr. F. C Kohli along with Prof. P N Murthy and Prof. Kesav Nori of Tata Consultancy Services in May 2000 to address the problem of illiteracy. ALP believes illiteracy is a major social concern affecting a third of the Indian population comprising old and young adults. To accelerate the rate of learning, it uses a TCS-designed ComputerBased Functional Literacy. shod (CBFL), an innovative teaching strategy that uses multimedia software to teach adults, to read within about 40 learning hours. Larsen & Toubro (L & T) Limited Considering that construction industry is,40second largest employer in India after agriculture, employing about 32 million-strong workforce, L&T set out to regulate and promote Construction Vocational Training (CVT) in India by establishing a Construction Skills Training Institute (CSTI) on a 5.5 acre land, close to its construction Division Headquarters at Manapakkam, Chennai. CSTI imparts, totally free of cost, basic training in formwork, carpentry, masonry, bar-bending, plumbing and sanitary, scaffolder and electrical wireman trades to a wide spectrum of the rural poor. As a result of the good response it received in Chennai, CSTI set up a branch at Panvel, Mumbai, initially offering training in formwork, carpentry and masonry trades. The Manapakkam and Panvel facilities together provide training to about 300 candidates annually who are inducted after a process of selection, the minimum qualification being tenth standard. Since inception, these two units have produced about 2,000 skilled workmen in various trades, with about sixty percent of them being deployed to L&Ts jobsites spread across the country. The success of this training-initiative demonstrates that adoption of systematic training techniques are bound to yield efficient and skilled personnel in the shortest possible time, and in the power to convert the potential of the Rural Youth in Construction and upgrading Rural Economy in a small way.

25 BUILDING CORPORATE VALUE THROUGH CORPORATE SOCIAL RESPONSIBILITY

As the practice of corporate social responsibility (CSR) is being embraced by more companies, there is a greet appreciation of its role in building corporate value. While well-known management thinkers, such as Michael Porter, have written about CSR as part of a firms competitive advantage, it can also be a key mechanism for building corporate value. A reflection of this understanding by some of Canadas corporate leaders was evident in a recent article in the Globe & Mail (October 12, 2009). Gordon Pitts interviewed two corporate titans who commented on corporate social responsibility: Paul Desmarais Jr, Chairman and co-CEO of Power Corp of Canada and Charles Sirois, Chairman, CIBC. Desmarais commented that CSR has captured a lot of attention over the past decade for two reasons. First, societys eagerness to scrutinize and criticize behaviour is stronger than ever and is continuing to escalate. This trend has grown with the evolution of the stakeholder approach to corporate activities; companies have obligation to various groups that are impacted by their actions. Milton Friedmans famous custodian of wealth approach, articulated in 1970, that corporations exist only to make a profit is long out of fashion. In fact, many companies routinely integrate community commitments into the mission and vision statements. Secondly, Desmarais noted that reputation risk has become a much bigger factor in corporate valuations. Youve got to be a lot more attentive than ever before. Just ask Nike. Not long ago Nike was being tarred with accusations of exploited sweat shop labourers producing high-priced shoes. The company could not sit idly by. Phil Knight needed to launch a serious and expensive counter-offensive to safeguard the value of his brand. The second corporate leader interviewed was Charles Sirois. He noted that while the main goal of a corporation is to be profitable, it has to be looked at on a longer-term basis. He explained that a company should take the approach of an owner who is involved for the long term rather than that of an investor who is treating the shares of the company as a commodity. Sirois explained that the owners perspective is you need to maximized return over a longer-term basis and for this you need to be socially involved. Of course, the challenge in Sirois position is for management to maintain this long-term perspective despite the demands of shareholders and even other managers who seek shorter-term gain. Sirois further explains that, Creating value not just for yourself but for the society around you is a key element of building value for your corporation.

Sirois approach reflects the importance of CSR as part of the value-building process for a corporation. The comments of these two corporate leaders, Desmarais and Sirois, are reflective of a clearer understanding that CSR is vital to the value building process. Not only are these companies doing well, but they are helping their own objectives. As Michael Porter has written, CSR has great potential to be a competitive advantage; but it wont be for companies that dont embrace the opportunity. Corporate social responsibility with the local community Working with your local community brings a wide range of benefits. For many businesses, local customers are an important source of sales. By improving your reputation, you may find it easier to recruit employees. A good relationship with local authorities can also make your life easier. For example, some local authorities prefer to award contracts to businesses with a record of community involvement. There are many ways to get involved. Some businesses choose to support a local charity, or sponsor a local event. It makes commercial sense to get involved in. an activity related to your product. This lets you use your expertise as well as showing the human face of your business. For example, some restaurants provide food to local homeless groups, while builders may give free labour and materials to community projects. You can find out more about getting involved with your community on the Small Business Journey website Opens in a new window. Look for opportunities that will directly benefit you for example, by generating publicity, or improving the neighborhood around your premises. Many businesses involve their employees in working with the local community. For example, you might support charities chosen by employees. Some businesses encourage employees to volunteer for community activities and also give them paid time off for this. As well as improving your community relations, this can help motivate employees and can help develop their interpersonal and team participation skills. You could also give your employees the option of making regular charitable donations which are deducedat source from their pay. Business in the Community (BITC) has developed the Community Mark standard to help businesses get the most of out community involvement. For more information,

Community Justice Projects The governments community justice initiative helps businesses work with local agencies to improve the quality of life in their local area. This can benefit your business in a number of ways. For example, if your business is suffering because of damage to your property or the surrounding area, the community justice team can work with you to address this. Your business could take a pro-active approach to dealing with local crime by supporting recent offenders. You could help them learn new skills by offering them work experience or training, as part of a sentence or on a voluntary basis. Or you could provide financial or practical resources to the local community justice team. And getting involved with local regeneration projects is another way of helping attract new business to your area. Find your nearest Community Justice project by checking our list of current schemes Opens in a new window. You could also support staff who volunteer in the criminal justice system, e.g. as mentors, special constables, youth offender panel members, or in victim and witness support. See our guide on allowing time off work. You could offer financial or practical resources to the local community justice team. Corporate social responsibility and your business Corporate social responsibility (CSR) can cut across almost everything you do and everyone you deal with. The suppliers you choose and the way you deal with them. For example, trading with suppliers who pollute the environment could be as irresponsible as doing so yourself. See the page in this guide on how to deal responsibly with customers and suppliers. How you treat your employees. For the responsible business, this means doing more than simply complying with legal requirements. See the page in this guide on how to benefit from corporate social responsibility. How your business affects your local community and whether you should be actively involved. See the page in this guide on how to work with the local community. How what you do affects the environment and what you can do to use resources more efficiently and reduce pollution and waste. See the page in this guide on how to understand the environmental impact of your business. This doesnt mean that you cant run a profitable business. In fact, CSR can help you improve your business performance. By looking ahead, youre ready to cope with new laws and restrictions. You avoid costs such as wasted energy or paying unnecessary waste fees. Perhaps most importantly, you can keep winning business from increasingly demanding customers.

26 Responsibility towards Different Interest Groups

The business generally interacts with owners, investors, employees, suppliers customers, competitors, government and society. They are called as interest groups because by each, and Livery activity of business, the interest of these groups is affected directly or indirectly. Responsibility of Business towards Different Interest Groups Responsibility towards owners Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to: 1. Run the business efficiently. 2. Proper utilization of capital and other resources. 3. Growth and appreciation of capital. 4. Regular and fair return on capital invested. Responsibility towards investors Investors are those who provide finance by way of investment debentures, bonds, deposits, etc. Banks, financial institutions, and investing public are all included in this category. The responsibilities of business towards its investors are : 1. Ensuring safety of their investment, 2. Regular payment of interest, 3. Timely repayment of principal amount. Responsibility towards employees Business needs employees or workers to work for it. These employees put their best effort for the benefit of the busing it is the prime responsibility of every business to take care of the interest of their employees. If the employees are satisfied and efficient, then only the business can be successful. The responsibilities of business towards its employees include: 1. Timely and regular payment of wages and salaries. 2. Proper working conditions and welfare amenities. 3. Opportunity for better career prospects. 4. Job security as well as social security like facilities of provident fund group insurance, pension, retirement benefits, etc. 5. Better living conditions like housing, transport, canteen, cr6ches, etc. 6. Timely training and development.

Responsibility towards suppliers Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. Certain suppliers, called distributors, supply finished products to the consumers. The responsibilities of business towards these suppliers are: 1. Giving regular orders for purchase of goods. 2. Dealing on fair terms and conditions. 3. Availing reasonable credit period. 4. Timely payment of dues. Responsibility towards customers No business can survive without the support of customers. As a part of the responsibility of business towards them the business should provide the following facilities: 1. Products and services must be able to take care of the needs of the customers. 2. Product and services are must be qualitative 3. There must be regularity in supply of goods and services. 4. Price of the goods and services should be reasonable and affordable. 5. All the advantages and disadvantages of products as well as procedure to use the products must be informed do the customers, 6. There must be proper after-sales service. 7. Grievances of the consumers, if any, must be settled quickly. 8. Unfair means like under weighing the product, adulteration, etc. must be avoided. Responsibility towards competitors Competitors are the other businessmen, or organizations involved in a similar type of business. Existence of competition helps the business in becoming more dynamic and innovative so as to make itself better than its competitors. It also sometimes encourages the business to indulge in negative activities like resorting to unfair trade practices. The responsibilities of business towards its competitors are 1. Not to offer exceptionally high sales commission to distributors, agents, etc. 2. Not to offer to customers heavy discounts and, /or free products in every sale. 3. Not to defame competitors through false or ambiguous advertisements.

Responsibility towards government Business activities are governed by the rules and regulations framed by the government. The various responsibilities of business towards-government are: 1. Setting up units as per guidelines of government 2. Payment of fees, duties and taxes regularly as well as honestly. 3. Not to indulge in monopolistic and restrictive trade practices. 4. Conforming to pollution control norms set up by government. 5. Not to indulge in corruption through bribing and other unlawful activities. Responsibility towards society A society consists of individuals, groups, organizations, families, etc. They all are the members of the society. They interact with each other and are also dependent on each other in almost all activities. There exists a relationship among them, which may be direct or indirect. Business, being a part of the society, also maintains its relationship with all other members of the society. Thus, it has certain responsibilities towards society, which may be as follows: 1. to help the weaker and backward sections of the society 2. to preserve and promote social and cultural values 3. to generate employment 4. to protect the environment 5. to conserve natural resources and wildlife 6. to promote sports and culture 7. To provide assistance in the field of developmental research on education, medical science, technology, etc.

27 Interventions of Business to Fulfill Social Responsibilities

We all know that people engage in business to earn profit. However, profit making is not the sole function of business. It performs a number of social functions, as it is a part of the society. It takes care of those who are instrumental in securing its existence and survival like-the owners, investors, employees, consumers and government in particular and the society and community in general. So, every business must contribute in some way or the other for their benefit. For example, every business must ensure a satisfactory rate to return to investors, provide good salary, security and proper or king condition to its employees, make available quality products at reasonable price to its consumers, maintain the environment properly, etc. However, while doing so two things need to be noted to view it as social responsibility of business. First, any such activity is not charity. It means that if any business donates some amount of money to any hospital or temple or

school and college, etc., it is not to be considered as discharge of social responsibility because charity does not imply fulfilling responsibility. Secondly, any such activity should not be such that it is good for somebody and bad for others. Suppose a businessman makes a lot of money by smuggling or by cheating customers, and then runs a hospital to treat poor patients at low prices his actions cannot be socially justified. Social responsibility implies that a businessman should not do anything harmful to the society in course of his business activities. The obligation of any business to protect and serve public interest is known as social responsibility of business. Thus, the concept of social responsibility discourages businessmen from adopting unfair means like black marketing, hoarding, adulteration, tax evasion and cheating customers, etc. to earn profit. Instead, it encourages them to earn profit through judicious management of the business, by providing better working and living conditions to its employees, providing better products, after sales-service, etc. to its customers and simultaneously to control pollution and conserve natural resources.

28 Role and Responsibility of Local Community in Business

Issues related to economic development are often the primary area of interest for an enterprises surrounding community. This includes questions about jobs, contributions to the tax base, and the secondary impact of an enterprise (through local business linkages and the multiplier effect of the local payroll). Equally among a communitys primary interests are issues related to the management of local health, safety, and security risks and information on community complaints about corporate activities and how these are dealt with. In some contexts, the local community may also have concerns about the impact of an enterprises operations on local culture. Such impacts can result from the introduction of new products or services, or from the generation of internal migration. Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors. Key areas of concern are environmental protection and the wellbeing of employees, the community in particular and the civil society in general. Till recently, social and political theorists tended to believe that we lived in a twosector world, comprising of market or economic sector business) and the state sector (government). A third sector consisting of, NGOs, local community groups, religious organizations came into prominence as pressure groups during the last decade to improve ethical management of business and to follow the CSR.

If corporations have to function ethically and serve not only the stockholders, but also cater lo the needs of all stakeholders. there has to be both an internal system and an external framework kept in place- to ensure these ideals. Most business concerns have realized that working closely with local communities is a win-win proposition for both the businesses as well as the local communities. Businesses may find that cultivating a partnership with a local community organization may take a little more time, research and thought, but the benefits are multiplied. And those benefits flow back into the community where the employees and their families live. A partnership with the local community ensures more chance of success because both parties want the local community to benefit, and they can actually see these benefits. The business will see a boost in patronage because local residents will see the good work the partnership is doing, and will want to support the business. The standing and profile of the business will improve among the members of the local community and set it apart from local competitors. The business will ultimately benefit from the greater support from staff that will have a sense of ownership both of the partnership and the community it is benefiting. A good relationship with local authorities can boost business. For example, some local authorities prefer to award contracts to businesses with a record of community involvement. There are many ways for a business to get involved. Some businesses choose to support a local charity, or sponsor, a local event. It makes commercial sense to get involved in an activity related to the business. In this way not only the expertise of the business but also the human face of the business comes into the forefront. For example, some restaurants provide food to local homeless groups, while builders may give free labour and materials to community projects. Many businesses involve their employees in working with the local community. For example, by supporting charities chosen by employees. Some businesses encourage employees to volunteer for community activities and also give them paid time off for this.

29 RACIAL HARASSMENT
It is any action that expresses or promotes racial hatred and stereotypes. It can be obvious or subtle. It can include: spoken or written putdowns, gestures, jokes, other unwanted comments or acts. The law prohibits any kind of exploitation or harassment. In India, it is one of the fundamental rights of all Indians. The right against exploitation, given in Articles 23 and 24, provides for two provisions, namely the abolition of trafficking in human beings and Begar (forced labour), and abolition of employment of children below the age of 14 years in dangerous jobs like factories and mines. Child-labour is considered a

gross violation of the spirit and provisions of the constitution. Begar, practiced in the past by landlords, has been declared a crime and is punishable by laws. Trafficking in humans for the purpose of slave trade or prostitution is also prohibited by law. An exception is made in employment without payment for public services for compulsory public purposes. Compulsory military conscription is covered by this provision. Safety Standards Protecting employees health and safety is certainly one of the businesss major ethical responsibilities. Thus, to ensure this some of the issues that need to be taken care are: 1. Protect the health and safety of all individuals affected by its activities including the employees and the public at large. 2. Provide a safe and healthy working environment 3. Review of compliance with local and national requirements with respect to health and safety. 4. To ensure that sufficient and clearly marked exits allowing for the orderly evacuation of workers in case of fire or other emergencies are in place and emergency exit routes are posted and clearly marked in all sections of the factory. 5. Aisles, exits and stairwells are kept clear at all times, boxes and all other objects that could obstruct the orderly evacuation of workers in case of fire or other emergencies are removed. The company should indicate with a yellow box or other markings that the area in front of exits, fire fighting equipments, control panels, and potential fire sources are to be kept clear. 6. Doors and other exits are kept accessible and unlocked during all the working hours for orderly evacuation in case of fire or other emergencies. All main exit doors should open to the outside. 7. Fire extinguishers should be appropriate, regularly maintained, and charged, and should display the date of their last inspection. It should be mounted on walls and columns throughout the company so that they are visible and accessible to, all employees in all areas 8. Fire alarms should be in each floor and emergency light should be placed above exits and on staircases. 9. Evacuation drills should be conducted at least annually 10.Machinery should be inspected with operational safety devices and should be inspected and serviced on a regular basis. 11.The company should have at least one well-stocked first aid kit on every floor and train specific staff in basic first aid, The company should have procedures for dealing with serious injuries that require medical treatment outside the company.

12.The company should store hazardous and combustible materials in secure areas and should be disposed in a safe and legal manner. 13.The company shall establish systems to detect, avoid, or respond to potential threats to the health and safety of personnel. The company shall maintain written records of all accidents that occur in the workplace and in company-controlled residences and property. 14.The company shall provide at its expense appropriate personal protective equipment to personnel. In the event of a work related injury the company shall provide first aid and assist the worker in obtaining follow-up medical treatment. 15.The company shall undertake to assess all the risks to new, and expectant mothers arising out of their work activity and to ensure that all reasonable steps are taken to remove or reduce any risks to their health and safety. 16.The Company shall appoint a senior management representative to be responsible for ensuring a safe and healthy workplace environment for all personnel, and for implementing the Health and Safety standards. 17.The company shall provide to personnel on a regular basis effective health and safety instructions, including on-site instruction and where needed job specific instructions. Such instructions shall be repeated for new and reassigned personnel and in cases where accidents have occurred.

30 Labour Relation:Labour relations are a broad field encompassing all the myriad interchanges between To protect the rights mentioned above, the Wagner Act also, created a new federal agency, the National Labour employers and employees. While labor relations are most often used to discuss this exchange as it pertains to unionized employees, it may also refer to non-union employees as well. Labour relations are dictated in a large part by the government of a nation and the various regulations it provides to industry regarding the treatment of employees. In the United States, labour relations gained a huge boost with the passage of the National Labour Relations Act in 1935. This act covered a wide range of labour rights, including the right to strike, the right to bargain as a union, and a general right to protest and take action to achieve their desires. The National Labour Relations Act, also known as the Wagner Act, gave most employees these rights. It was upheld by the Supreme Court in 1937.Relations Board. The sphere of, the National Labour Relations Board, and the Wagner Act itself is limited only to employees operating in the private sector. Government employees,

among with the employees of some mass transit (rail and air), are covered under a separate labour relations act, All, ail a Labour Act. In 1947, the National Labour Relations Act was changed substantially through the passage of the Taft-Hartley Act. Its passage, came only after Congress overrode a presidential veto by President Truman, who d s Gibed it as a bill of slave labour. The Taft-Hartley Act substantially undermined the the National Labour Relations Act and the power it had granted unions. While the National labour Relations Act is the largest and most well-known piece of legislation pertaining to labour relations, a large amount of legislation can be accurately described as labour relations. Minimum wage laws, fairpractice rules, and legislation dictating danger pay are all examples of labour relations. As a theoretical field, labour relations can be thought of as examining the interface between employees and the world at large. This may include labour relations with employers, but it also includes how the employee sector is affected by everything from globalization to a falling economy. Labour relations in this sense attempts to minimize negative impact on the work force by identifying potential disasters and coming up with methods of damage control. For example, if advancing technology in a sector threatens to result in massive layoffs for the employees as their Work is automated, labour relations could come up with ways of reducing the damage done to these employees. This might take the form of re-education programs, preparing the employees for transfer to another field, or looking at ways their existing experience could complement, rather than compete with, the new technologies. Most of the labour relations in the companies are based on the Declaration of Fundamental Principles and Rights at work. Adopted in L998, the ILO Declaration on Fundamental Principles and Rights at Work is an expression of commitment by governments, employers and workers organizations to uphold basic human values values that are vital to our social and economic lives. These principles and rights are: freedom of association and the effective recognition of the right to collective bargaining) the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; The elimination of discrimination in respect of employment and occupation. A further recognition of the importance of these principle and rights has been their incorporation into the Global Compact, an initiative of the United Nations Secretary General. Like the ILO Declaration the Global Compact is a platform designed to promote learning and good practices of businesses, based on universal principle:. The Fundamental Principles and Rights at Work are derived from the ILO Constitution.

1.Freedom of Association and Effective Recognition of the Right to Collective Bargaining: All workers and all employers have the rights to freely form and join groups for the support and advancement of their occupation interests. This basic human right goes together with freedom of expression and is the basic of democratic representation and governance. People need to be able to exercise their right to influence work-related matters that directly concern them. In other words their voice needs to be heard and taken into account. Freedom of association means that workers and employers can set up, join and run their own organizations without interference from the State. Along with this right is the responsibility of people to respect the law of the land. However, the law of the land, in turn, must respect the principle of freedom of association. These principles cannot be ignored or prohibited for any sector of activity or group of workers The right to freely run their own, activities means that workers and employers organizations can independently determine how they best wish to promote and defend their occupational interests. This covers both long-term strategies as well as action in specific circumstances, including recourse to strike and lock out. They can independently affiliate with international organizations and cooperate with them in pursuit of their mutual interests. Voluntary collective bargaining is a process through which employers or their organizations and trade unions or, in their absence, representatives freely designated by the workers discuss and negotiate their relations, in particular terms and conditions of work. Such bargaining in good faith aims at reaching mutually acceptable collective agreements. The collective bargaining process also covers the phase before actual negotiations information sharing, consultation, joint assessments -as well as the implementation of collective agreements. Where agreement is not reached, dispute settlement procedures ranging from conciliation through mediation to arbitration may be used. To realize the principle of freedom of association and the right, to collective bargaining in practice requires, among other things a legal basis which guarantees that these rights are enforced; an enabling institutional framework, which can be tripartite, between the employers and workers organizations, or combinations of both the absence of discrimination against individuals who wish to exercise their rights to have their voice heard, and; Acceptance by employers and workers organizations as partners for solving joint problems and dealing with, mutual challenges. 2.Elimination of All Forms of Forced or compulsory Labour? Forced labour occurs where work or service is extracted the State or individuals. who have the will and power to threaten workers with severe deprivations such as withholding food or land or wages, physical violence or

sexual abuse, restricting peoples, movements or locking them up . For example, a domestic worker is, in a forced labour situation where the head of a household tales away identity papers, forbids the worker to go outside and threatens him or her with, for instance, with physical harm or non payment of salary in case of disobedience. The domestic may also work for an unbearably low wage, which amounts to exploitation. If he or she were free to leave, this would not amount to forced labour but to exploitation. Another example of forced,. our arises where villagers, whether they want to or not, have to provide substantial help in the construction of roads, the digging of irrigation channels etc. Bonding workers throu6hdebts is, in fact, a widespread form of forced labour in a number of developing countries. Sometimes it originate with a poor and illiterate farmer pledging labour services to an intermediary or a landowner to work off ,a debt over a period of time. 3.Effective Abolition of Child Labour: Children enjoy the same human rights accorded to all people. But, lacking the knowledge experience or physical development of adults and the power to defend their own interests in an adult world, children also have distinct rights to protection by virtue of their age one of these is protection from economic exploitation and from work that is dangerous to the health-and growth of children or hampers the childs development. Effective abolition of child labour means ensuring that every girl and boy has the Opportunity to develop physically and mentally to her or his full potential. Its aim is to stop all by children that jeopardizes their education and development. This does not mean stopping all work performed by children. International labour standards allow the distinction to be made between what constitutes acceptable and unacceptable forms of work for children at different ages and stages of development. 4. Elimination of Discrimination in Respect of Employment and occupation Discrimination at work can occur in different settings, from high-rise office buildings to rural villages, and in a variety of forms. It can affect men or women on the basis of their sex, or because of their race or skin colour, nationality, social origin, religion, or political opinions. Often countries decide to ban distinctions or exclusions and forbid discrimination on other grounds as well, such as disability, HIV, status or age. Discrimination at work denies opportunities to individuals and deprives society of their Contribution. Eliminating discrimination starts with dismantling barners and ensuring equality in access to training, education as well as the ability to own and 16resources such as land and credit. It continues with fixing conditions

for setting up and running enterprises of all types and sizes, and the policies and practices related to hiring, assignment of tasks, working conditions, pay, benefits, promotions, lay-offs and termination of employment. Merit and the ability to do a job, not irrelevant characteristics, form the prerequisites job. Equality at work means that all individuals should be accorded equal opportunities to develop fully the knowledge, skills and competencies that are relevant to the economic activities they wish to pursue. The diversity in culture, language, family circumstances, and the levels of literacy have to be kept n mind while framing measures to ensure equality. For peasants and owners of small or family enterprises, especially the women and ethnic groups, equal access to land (inb0ding by inheritance), training, technology and capital are key factors. CSR within the, organization warrants fixation of working hours, remuneration or wages keeping in view the legal framework specified in this regard. Thus, these are the rules which the companies need to keep in mind while formulating their regulation regarding labour relations. Moreover, in its CSR report, the company needs to furnish information relating to composition of work force, employment type, net employment creation, percentage of employees represented by independent trade union organizations or other bona fide employee representatives, etc. 5.Work Atmosphere: Healthy and Productive The related discipline, Occupational Health Psychology (OHP) is a relatively new field that combines elements of occupational health and safety, industrial / organizational psychology and health psychology. The field is concerned with identifying work-related psychosocial factors that adversely affect the health of people who work. OHP is also concerned with developing the health of people who work. For more detail on OHP, see the section on occupational health psychology.

31 Corporate governance from Cadbury Committee to Narayan Murthy committee.

Sir George Adrian Hayhurst Cadbury (born 1929) is a former British Olympic rower and Chairman of Cadbury and Cadbury Schwepps for 24 years. He has been a pioneer in raising the awareness and stimulating the debate on corporate governance and produced the Cadbury Code, a code of best practice which served as a basis for reform of corporate governance around the world.

The committee was set up in May 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession. The report embodied recommendations based on practical experiences and with an eye on the US experience, further elaborated after a process of consultation and widely accepted. The final report was released in December 1992 and then applied to listed companies reporting their accounts after 30th June 1993. Reasons for setting up the Committee. 1. The committee was set up in May 1991 by the Financial Reporting Council, the London Stock Exchange and the accountancy profession to, address the financial aspects of corporate governance. The Committees membership and terms of reference are set out in Append. Its sponsors were concerned at the perceived low level of confidence both in financial reporting and in the ability of auditors provide the safeguards, which the users of company reports sought and expected 1. These concerns about the working of The corporate system were heightened by some unexpected failures of major companies and by criticism of the lack of effective board accountability for such matters directors pay. Further evidence of the breadth of feeling that action had to be taken to clarity responsibilities and to raise standards came from a number of reports, on different aspects of corporate governance which had either been published or were in preparation at that time. 2. The committee wherever possible drew on these documents, and a wide range of submissions from interested parties, in producing its draft report which was issued for public comment on 27 May, 1992. 3. Since then, the committee has received over 200 written response to its proposals, the great majority of which broadly support the committees approach, and has carefully considered the balance of opinions expressed on particular issue. The committee is most grateful to all those who have taken the time and trouble to give us their comments. They have helped to shape our final report and, in addition, they are a valuable reference source for our successors. 4. Corporate governance is the system by which companies are directed and controlled. Board of directors is responsible for the governance of their companies. The shareholders role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance in place. 5. Within that overall framework, the specifically financial aspect of corporate governance ( the Committees remit ) are the way in which boards set financial policy and oversee its implementation, including the use of financial controls, and the process whereby they report on the activities and progress of the company to the shareholders.

6. The role of the auditors is to provide the shareholders with an external and objective check on the directors financial statements, which form the basis of that reporting system. Although the reports of the directors are addressed to the shareholders, they are important to a wider audience, not least to employees whose interests boards have a statutory duty to take into account. 7. The committees objective is to help to raise the standard corporate governance and the level of confidence in financial reporting and auditing by setting out clearly what it sees as the respective responsibilities of those involved and what it believes is expected of them

32 Financial Regulations and Their Scope in Corporate Governance

Financial regulations are a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrityof the financial system. This may be handled by either a government or non- government organization. A stable and efficient financial system has a potentially powerful influence on a countrys economic development not the least because it may have an impact on the level of capital formation, efficiency in the allocation of capital between competing claims, and also tire confidence that end-users (consumers) have in the integrity of the financial system. The stability and efficiency of the system has both supply-side and demand-side effects on the economy. In turn, a wellstructured regulatory regime contributes to the efficiency and stability of the financial system. The overriding purpose of regulation should be to facilitate legitimate business activity while providing safeguards for the interests of stakeholders and ensuring fair competition in the market. Safeguards for stakeholders include: Deterring and restraining companies from pursuing illegal or excessively risky practice that have the potential to have wider social or economic consequences and Intervening and responding appropriately and effectively where breaches are considered likely to occur or have already occurred

The specific aims of financial regulators are usually 1. To enforce applicable laws 2. To prosecute cases of market misconduct such as insider trading 3. To license providers of financial services 4. To protect clients, and investigate complaints 5. To maintain confidence in the financial system 6. To maintain prudential regulation for the safety and soundness of financial institutions 7. To maintain stability and, integrity of the payments system 8. To perform prudential supervision of financial institutions 9. To propagate conduct of business regulation (i.e., rules about how firms conduct business with their customers) 10.To make safety net arrangements such as deposit insurance and the lender-of-last-resort role performed by the central bank 11.To do liquidity assistance for systemic stability, i.e., liquidity assistance for solvent institutions 12.To handle the insolvent institution.

33 The Agency Theory: Principal-Agent Relationship

Corporations today are based on, Agency Theory (a branch of organizational behavior) wherein the behavior) wherein the owners of funds (alias principals invest their money in a company that it managed by altogether different group of people called directors and managers (alias agents) This agency relationship between shareholders and directors is based on the premise of trust; shareholders lend their money to directors under trust that the latter shall deploy the money in a manner that would maximize shareholders interests. This theory assumes agent management will not always take decisions that will value. maximize long-term ownership value. Managers often take decisions, which further their own interest but are detrimental to the interest of the organization. This theory states that agents/managers/employees can not be trusted to act in the best interests of the shareholders and should be monitored and controlled to ensure that they follow the set policies, procedures and plans of the corporation Agency Theory is defined by Chartered Institute of Management Accountants as Hypothesis that attempt to explain elements of organizational behaviour through an understanding of the relationship between principals (shareholders) and agents (directors and managers). A-conflict may exist between the actions undertaken by agents in furtherance of their own self-interest and those required to promote the interest principals.

34 Corporate Reporting
Corporate Reporting is basically of 5 types. A brief on these components is given first and a detailed discussion on corporate governance reporting is given in following paragraphs: Financial performance. Corporate governance. Executive renumeration Corporate responsibility. Narrative areas.

Financial performance: At the core of the corporate reporting model is the financial reporting model, consisting GAAP- complaint financial statements and accompanying notes. Corporate governance: It relates to the communication of processes by which companies are directed and controlled. Levels of disclosure differ woeld wide but might include information on board composition and development, accountibility and audit and relations with the shareholders. Executive renumeration: The communication of how executives are given renumeration, both short and long-term, in order to deliver on their companys strategic objectives. Corporate responsibility: Corporate responsibility includes the communication about how companies understands and managing their impact on people, clients, suppliers, society, and the environment in order to deliver increased value to all our stateholders. Narrative Reporting: Narrative reporting is shorthand for the crital contextual and non-financial information that is reported alongside financial information so also provide a broader more meaningful understanding of a companys business, its market position, strategy, and performance and future prospectsincluding quantified metrics.

35 Ethics and Information Technology

Information technology is changing many, aspects of human endeavor and existence. This is beyond doubt. What are contested ace the social and ethical implications of these changes. The source of these contestations is the multiple ways in which one can conceptualize and interpret the information technology/society interrelationship. Each of these ways of conceptualization and interpretation enables one to see the information technology/society

relationship differently and therefore construe its social and ethical implications in a different manner. This entry is concerned with the phenomenological approach to interpreting information and its social and ethical implications. However, in order to understand the distinctiveness of the phenomenological approach some other possible ways of interpreting this relationship will also be outlined briefly. Information technology has become ubiquitous, invading all aspects of human existence. Most everyday technologies such as elevators, automobiles, microwaves, watches, and so forth depend on microprocessors for their ongoing operation. Most organizations and institutions have become reliant on their information technology infrastructure to a large degree. Indeed information technology is seen by many as a cost-efficient way to solve a multitude of problems facing our complex contemporary society. One can almost say that information technology has become construed as the default technology for solving a whole raft of technical and social problems such as health provision, security, governance, etc. One could also argue that it has, become synonymous with societys view of modernization and progress. For most it seems obvious that information technology has made it possible for humans to continue to construct increasingly complex systems of coordination and social ordering; systems without which contemporary society would not be able to exist in its present form. The economic and organizational benefit of information technology is not widely disputed. The dispute is more often about the way information technology is changing or transforming the social domain, and in particular, the ethical domain. This dispute is largely centered around different ways of conceptualizing and interpreting the nature of the information technology and society interrelationship

36 Ethics In Advertising :Advertising tries to convince the audience to do something. Therefore it is not objective. This fact disturbs those who think that advertising ought to be objective neutral, and informative. Besides, the easily make certain claims in an advertising message are perception of matters. Such messages can be implied by the situations pictured in the advertisements. Subtle messages are limited experience. Advertising should permit progressive society to see and select among different products. If advertising product is look as violating ethical standards, customers are able to exert pressure refusing to buy the product. They are able to complain to the company and other regulator bodies. The following are example of advertising ethics:

1. Advertising restrains from making misleading, false or inaccurate claims or statements about his products and services or a competitor. 2. Advertising must reveal the fact the neglect would mislead the public. 3. Advertising claims are exonerated by evidence in possession of the advertising agency and the advertiser making such claims. 4. Advertising of guarantees should be explicit, with sufficient, information to evaluate customers of their explicit terms and limitations the advertisements must clearly reveal where the full text of the guarantee is able to examine before buying.

37

Ethics in Global Marketing

Marketing is the process of bringing together businesses with customers and involves numerous components. There is product development, deciding what is needed. There is public relations, trying to get along smoothly with others so they will help send you business. Then there is advertising, which is telling everybody what you have and why they need it, and need it from you! There is a lot of cross over between these areas, but combined they are marketing. Marketing was generally local and done customer by customer. While there was competition, it was usually some one you knew. With the Internet, that has changed and marketing has gone Global! Now it seems a fee for all with Mexico competes with China and both struggling to out produce India. But what about the ethics or principles that once governed marketing and business, have they gone global as well? Unfortunately ethics seems to have been lost in the Global Business World of today! What happened to ethics? The problem with ethics is that they are variable from culture to culture and place to place. Because they are not uniform around the world, many places seem to feel they no longer apply. It is further compounded by religious issues as well. What one religion feels is great, others consider sacrilege. Business is the same. In most places, people trade with those, they know and develop relationships over time. One man may build your house while, landscapes the yard and the uncle runs the supermarket. Each one knows that if something goes too wrong, they will look bad to the rest of the family and lose respect., You also will usually not cheat some one that goes to the same religious service. On the global market, there are more options, but they are often hard to reference and each one oft n does as they please because the consequences are not as bad, they can always go to another country or region. A Christian may not cheat another Christian, but shipping low standard to a Hindu in India is shifting inventory, ethics go out the window.

One can also now hire some very high powered PR firms to help promote your business or do damage control, hide the unethical things that may have happened. These firms can hire professional writers that will write anything, and make it a glowing report even for a rotten product. These persons were once difficult to get and limited in what they could do, but not with the Internet!

38 Profit Making : An Objective with an Ethical Dimension :

In the mid 1950 and 60s different views about business ethics were put forward by philosophers. Unitarian view argues that morality and ethics are related to business. The separatist view expressed that, business should concentrate on profits, and ethics and morality do not form a part of business. The integration view defined a new area called business ethics, where ethical behaviour and business are integrated. The external forces like government, market system, law and services will ethical behavior of the business. People at the time feared that any ethical conduct or embracing of any moral philosophies would lead to sacrifice of productivity; and the competitiveness of the market place would fade away. Lately, this misconception about the business ethics has changed, as business believe that being ethical and moral would provide them loyal customers. Today, more and more business accepting business ethics as a part of business conduct. The criticism about business ethics is business being economic entity they have nothing to do with ethics or morals. Some experts were of the opinion that the purpose of business is to produce goods and services and maximize profits for the shareholders. Fighting such trends with laws and compliance structures is not enough. If positive results are needed, people need to be given a positive basis for trust and respect and an ethical vision to live by, not merely severe punishment for misdeeds. This will curb the tendency for acquiring profits at any cost. Business has to adapt practices which reconcile profitability with social good. It should be ensured that all reasonably honest ways of making profit are able to serve the public good with no additional ethical imperatives required.

39 Manager:Definition: A Manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary. For many people, this is their first step into a management career.

Managers may direct workers directly or they may direct several supervisors who direct the workers. The manager must be familiar with the work of all the groups he/she supervises, but does not need to be the best in any or all of the areas. It is more important for the manager to know how to manage the workers than to know how to do their work well. A manager may have the power to hire or fire employees or to promote them. In larger companies, a manager may only recommend such action to the next level of management. The manager has the authority to change the work assignments of team members. A managers title reflects what he/she is responsible for. An Accounting Manager supervises the Accounting function. An Operations Manager is responsible for the operations of the company. The Manager of Design Engineering supervises engineers and support staff engaged in design of a product or service. A Night Manager is responsible for the activities that take place at night. There are many management functions in business and, therefore, many manager titles. Regardless of title, the manager is responsible for planning, directing, monitoring and controlling the people and their work. Roles and responsibilities of Managers 1.Integrity- Integrity is the cornerstone of all values. A business manager should be morally upright. It is this characteristic. That distinguishes professional manager from a mercenary. 2. Impartiality- A manager should look at and treat all aspects of an issue in a fair and unprejudiced manner. 3.Responsiveness to the Public Interest - Though a manager is paid to serve the interest of the stockholders of the company, public interest is no less important. 4. In fact, managers should consider it as of paramount importance, if they have to be successful in their tasks. 5. Accountability- Accountability is one of the basic characteristics of a good business manager. Business manage are responsible for all their actions and are accountable to an the stakeholder- stockholder, creditors, employees, consumer, government and the society at large. 6. Honesty- A cardinal ethical value that a manager should possess is this quality. Managers should be fair just and sincere both in character and behaviour. They should not indulge in cheating or stealing and should be free of deceit and untruthfulness. 7. Transparency- Good business managers should be transparent and set standards for others to follow: They should be frank and open. Their action should be easily discussed and understood by others.

1. Supervise and manage the overall performance of staff in his department. 2. Analyzing, reporting, giving recommendations and developing strategies on how to improve quality and quantity. 3. Achieve business and organization goals vision and objectives. 4. Involved in employee selection, career development, succession planning and periodic training. 5. Working out compensations and rewards. 6. Responsible for the growth and increase in the organizations finances and earnings. 7. Identifying problems, creating choices and providing alternatives courses of actions.

40 Entrepreneur Definition:
Someone who assumes the financial risk of the initiation, operation and management of a business In the most general sense of the word, an entrepreneur is someone who organizes a business venture and assumes the risk for it. Rut true entrepreneurship goes way beyond that simple definition. An entrepreneur is a person who has possession of a new enterprise, venture, or idea and assumes significant accountability for the inherent risks and the outcome. The term is originally a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. Jean-Baptiste Say, a French economist is believed to have coined the word entrepreneur first in about 1800. He said an entrepreneur is one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour Entrepreneur Role and responsibilities 1. Part of the responsibilities an entrepreneur has when trying to successfully operate their business is developing the traits and qualities of a good leader, qualities that inspire confidence and trust from not only employees, but customers as well, and the confidence they have that you know what your doing and trust that you will do what you say you will do, in addition to other attributes any good leader must develop and use before anyone willingly follows them. 2. To be a successful leader the entrepreneur must develop a clear and concise vision needed to inspire people by giving them purpose and direction, and you will get the best out of your team, since it is only natural for people to want to be part of a success story, and it is the

entrepreneurs task as a leader to show them how you can lead them there. 3. Developing a well thought out plan is critical to accomplish you vision, and the plan doesnt have to be expansive and elaborate, but you need to clearly define the path which you are going to lead the team on from point A to point B, in simple, clear concise steps and be finally, the sure to assigned timelines with deadlines to each, step of the process, and entrepreneur needs to make sure that everyone son board with the plan and clearly understands not only their individual roles, but the, ole of the team as well, to insure the teams and your success. 4. If you do not have the instinct, then you must develop the leadership attribute of decisiveness, since no one wants-to follow someone who cant make up their own mind, especially when it comes to what is, perceived as small decisions, and this doesnt mean make acknowledgeable decisions, but first get as much wise input and counsel as you can, and then make an educated decision you can live with and always be ready to make new decisions based on additional information, and remember that informed decisive decisions is a quality of a leader that others are willing to follow. 5. A successful entrepreneur is able to adapt and make adjustments in the ever changing world of the marketplace, adaptation to new trends, technology, products, and marketing strategies, always working with the plan in mind, and brainstorm with the team ways you can best adapt to changes, implement the necessary changes with the thought always in mind that the plan is a virtual living tool, not static doctrines that would actually be worthless if one could not adapt them to the ever changing marketplace. 6. Your role as an entrepreneur and leader is only as good as your word, and when it comes to your word, keep it, as in if you tell someone working for you that you are going to do something, then do it, and it is important to remember that it takes time to build the integrity of ones word, and only a moment to undo all the work, as nothing destroys trust and confidence like breaking your word, for which there is really no excuse. 7. Genuine praise should be given whenever it is warranted, as it is important to keep high morale for continued high performance, and avoid even the slightest temptation to give false praise unless you want to lessen and diminish the work thats already been done. 8. Employees will always notice entrepreneurial leaders that are honest and fair-minded, but they are even quicker to notice dishonest and biased behaviour, even the most subtle displays, and great leaders avoid playing favourites and destroying the high morale of the team, always working to build and maintain the successful team.

41 What is Ethics?
According to Thomas Donaldson, There is a growing realisation all over the world that business ethics is important for any business and the progress of any society. Ethics alone, not government nor laws can protect the society. An ethically responsible company is one which has developed the culture which flows throughout the organisation from the top managers and leaders The Concept of Ethics What is ethics? Ethics is the set of universally accepted moral principle and values that govern the behaviour of the person or group in terms of what is right and wrong. Ethics is concerned with how people think about the rightness or the wrongness of business practices. Business Ethics is guided by principle of commercial relationship and right and moral standard applied within an enterprise that indicate what is good and right for business. Ethics is the basis for developing a system of morality and moral laws that evolve from ethics. Morality is the activity that governs appropriate human conduct in a given culture. Peoples behaviour is guided by moral rules and obligation in their lives. For example. It is a moral obligation to care for parents and children and even to support ones country. What is Business Ethics? Business ethics, a subject that for years has been low profile in business publications and business school curriculum has suddenly gained status. The word ethics was once considered irrelevant by corporate loyalists, but now it is increasingly seen as not only important but also critical of , Companys success. The intensity of consumer movements and the rising levels of awareness among corporate stakeholders are making it difficult for corporate to get away with unethical business practices Indian corporate have lately realized that integrity, transparency and open communications are the new norms of the corporate worlds. Ethics is a subject that deals with human beings. Human by their nature are capable of judging between right and wrong, good and bad behaviour. Ethics is a normative science. The word normative implies a guide or control of actions; so normative ethics tells us what ought to do. Ethics deals with human conduct that is voluntary and not forced by any persons or circumstances. Business can be defined as a primary economic institution through which people in modern societies carry on the tasks of producing and distributing goods and services. Business ethics refers to the application of ethical judgements to business activities. Business ethics concern

itself with what is right or wrong in the workplace. Business ethics explain that business can generate profits even when being ethical. Due to expansion of business, the application of ethical practices and its implications has created a need for practicing business ethics. Today much importance is being to the application of ethical practices in business dealing and the implication of business decisions. At times, business finds it difficult to explain its action on ethical ground. Any business, if it wants to survives and grow in the long run must strike a balance between its social obligation and economic objectives. These obligation may be complex and costly to discharge. But if the organisation wants to be ethical it has to discharge its social obligations towards the society.

42 Why should business be socially responsible?

Social responsibility is a voluntary effort on the part of business to take various steps to satisfy the expectation of the different interest groups. As you have already learnt, the interest groups may be owners, investors, employees, consumers, government, and society or community. But the question arises, why the business should come forward and be responsible towards these interest groups. Let us consider the following points: i.Public Image - The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a company that engages itself in various social welfare programmes. Again, good public image also attracts honest and competent employees to work with such employers. ii.Government Regulation To avoid government regulations businessmen should discharge their duties voluntarily. For example, if any burn:-firm pollutes the environment it will naturally come under strict government regulation which may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a pollution free environment. iii. Survival and Growth - Every business is a part of the society. So for its survival and growth, support from the society is very much essential. Business utilizes the available resources like power, water, land, roads, etc of the society- So it should be the responsibility of every business to spend a part of its profit for the welfare of the society. iv.Employee satisfaction Besides getting good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education and training. The employers should

try to fulfil all the expectations of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organization. For example, if business spends money on training of the employees, it will have more efficient people to work and thus, earn more profit. t. v.Consumer Awareness Now-a-days consumers have become very conscious about their rights. They protest against the supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price. Responsibility towards Different Interest Groups The business generally interacts with owners, investors, employees, suppliers customers, competitors, government and society. They are called as interest groups because by each, and Livery activity of business, the interest of these groups is affected directly or indirectly. Responsibility of Business towards Different Interest Groups Responsibility towards owners Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to: 1. Run the business efficiently. 2. Proper utilization of capital and other resources. 3. Growth and appreciation of capital. 4. Regular and fair return on capital invested. Responsibility towards investors Investors are those who provide finance by way of investment debentures, bonds, deposits, etc. Banks, financial institutions, and investing public are all included in this category. The responsibilities of business towards its investors are : 1. Ensuring safety of their investment, 2. Regular payment of interest, 3. Timely repayment of principal amount. Responsibility towards employees Business needs employees or workers to work for it. These employees put their best effort for the benefit of the busing it is the prime responsibility of every business to take care of the interest of their employees. If the employees are satisfied and efficient, then only the business can be successful. The responsibilities of business towards its employees include:

1. Timely and regular payment of wages and salaries. 2. Proper working conditions and welfare amenities. 3. Opportunity for better career prospects. 4. Job security as well as social security like facilities of provident fund group insurance, pension, retirement benefits, etc. 5. Better living conditions like housing, transport, canteen, cr6ches, etc. 6. Timely training and development. Responsibility towards suppliers Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. Certain suppliers, called distributors, supply finished products to the consumers. The responsibilities of business towards these suppliers are: 1. Giving regular orders for purchase of goods. 2. Dealing on fair terms and conditions. 3. Availing reasonable credit period. 4. Timely payment of dues. Responsibility towards customers No business can survive without the support of customers. As a part of the responsibility of business towards them the business should provide the following facilities: 1. Products and services must be able to take care of the needs of the customers. 2. Product and services are must be qualitative 3. There must be regularity in supply of goods and services. 4. Price of the goods and services should be reasonable and affordable. 5. All the advantages and disadvantages of products as well as procedure to use the products must be informed do the customers, 6. There must be proper after-sales service. 7. Grievances of the consumers, if any, must be settled quickly. 8. Unfair means like under weighing the product, adulteration, etc. must be avoided. Responsibility towards competitors Competitors are the other businessmen, or organizations involved in a similar type of business. Existence of competition helps the business in becoming more dynamic and innovative so as to make itself better than its competitors. It also sometimes encourages the business to indulge in negative activities like resorting to unfair trade practices. The responsibilities of business towards its competitors are

1. Not to offer exceptionally high sales commission to distributors, agents, etc. 2. Not to offer to customers heavy discounts and, /or free products in every sale. 3. Not to defame competitors through false or ambiguous advertisements. Responsibility towards government Business activities are governed by the rules and regulations framed by the government. The various responsibilities of business towards-government are: 1. Setting up units as per guidelines of government 2. Payment of fees, duties and taxes regularly as well as honestly. 3. Not to indulge in monopolistic and restrictive trade practices. 4. Conforming to pollution control norms set up by government. 5. Not to indulge in corruption through bribing and other unlawful activities. Responsibility towards society A society consists of individuals, groups, organizations, families, etc. They all are the members of the society. They interact with each other and are also dependent on each other in almost all activities. There exists a relationship among them, which may be direct or indirect. Business, being a part of the society, also maintains its relationship with all other members of the society. Thus, it has certain responsibilities towards society, which may be as follows: 1. to help the weaker and backward sections of the society 2. to preserve and promote social and cultural values 3. to generate employment 4. to protect the environment 5. to conserve natural resources and wildlife 6. to promote sports and culture 7. To provide assistance in the field of developmental research on education, medical science, technology, etc.

43 CSR
Meaning:Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Thus, the meaning of CSR is twofold. On one hand, it exhibits the ethical behaviour that an organization exhibits towards its internal and external stakeholders (customers as well as employees). On the other hand, it denotes the responsibility of an organization towards the environment and society in which it operates.

Corporate social responsibility Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a builtin, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical, standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into decision-making, and the honoring of a triple bottom line: People, Planet, and Profit. The practice of CSR, is subject to much debate and criticism. Proponents argue that there is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to preempt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the years. However, it essentially is titled to aid to an organizations mission as well as a guide to what the company stands for and will uphold to its consumers. Development Business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles). Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major

corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded their core values in the light business ethical considerations (e.g. BPs beyond petroleum environmental tilt). The term CSR came in to common use in the early 1970s, after many multinational corporations formed, although it was seldom abbreviated. The term stakeholder, meaning those on whom an organizations activities have an impact was used to describe corporate owners beyond shareholders as a result of an influential book by R Freeman in 1984. ISO 26000 is the recognized international, standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the Triple Bottom Line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.

44

Corporate Governance

Meaning Corporate Governance can be defined as a set of systems and processes which ensures that a company is managed in the best interest of all its stakeholders. When one talks of Stakeholders, it does not essentially mean a shareholder. A company typically has five stakeholders, namely, the employees, the shareholders, the customers, the creditors and the community. The Other actors who also play an important role in Corporate Governance are the CEO and the Board of Directors. Business author Gabrielle ODonovan defines Corporate Governance as an internal system encompassing policies, processes, and people, which serve the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity, accountability and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a health board culture which safeguards policies and processes. Report of SEBI committee (India) on Corporate Governance defines corporate Governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal &

corporate funds in the management of company. The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as business ethics and a moral duty. There has been renewed interest in the corporate governance practices of modem corporations since 2001, particularly due to the high profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002 the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance. After that, it is being largely adopted by companies across the globe as a differentiating strategy and to show its commitment to its social responsibilities. According OECD definition Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specified the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance is done. Scope of Corporate Governance The scope of corporate governance extends: 1. To enhance the long term value and economic efficiency of the company. It encompasses all shareholders and integrates all the participants involved in the process. 2. To elevate the reputation of the corporation and the esteem of its management. 3. To attract the reputation of the corporation and the esteem of its management. 4. To attract, employ and retain talent and motivate employees to give their best. 5. A more open and participative style of management ensures free exchange of ideas and frank appreciation at all levels. 6. To create and adopt code of conduct with wholehearted commitment and improve the moral and ethical standards of performance to the utmost level. 7. To have a right balance, knowledge and compete to set strategies and lead the organization. 8. To use the resources entrusted to the management, in the most economic, efficient, productive and effective ways, for the benefit of shareholders as well as for the society at large.

9. To set the high standards of business ethics based upon humanity, honesty and handwork. 10.To improve the standards of living and life of the society, industry, commerce and professional services. 11.To increase the market confidence of the firm.

45 Environmental Ethics:Environmental Ethics: Indian and western perspectives. What is Environmental Ethics? Does the earth exist for the benefit of humanity? Do humans have any ethical obligations with respect to the natural world? Have we the right to-take all the Earths resources for our own use? Do other species have an intrinsic right to exist? Do trees have legal standing? What do various religions have to say about humanitys relationship-to the rest of the living world? These and similar questions are addressed in the study of environmental ethics. We are cutting down forests for making our homes. We are continuing with an excessive consumption of natural resources. Their excessive use is resulting in their depletion, risking the life of our future generations. Is this ethical? This is the issue that environmental ethics takes up. Scientists like Rachel Carson and the environmentalists who led philosophers to consider the philosophical aspect of environmental problems, pioneered in the development of environmental ethics as a branch of environmental philosophy. The Earth Day celebration of 1970 was also one of the factors, which led to the development of environmental ethics as a separate field of study. This field received impetus when it was first discussed in the academic journals in North America and Canada. Around the same time, this field also emerged in Australia an Norway. Today, environmental ethics is one of the major concerns of mankind When industrial Processes lead to destruction of resources, is it not the industrys responsibility to responsibility to restore the depleted resources? Moreover, can a restored environment make up for the originally natural one ? Mining processes hamper the ecology of certain areas they may result in the disruption of plant and animal life in those areas. Most of the human activities lead to environmental pollution. The overly increasing human population is increasing the human demand for resources like food and shelter. As the population is exceeding the carrying capacity of our planet, natural environments are being used for human inhabitation. Thus human beings are disturbing the natural balance. The harm we, as human beings, are causing to the nature, is coming back to us by resulting in a polluted environment.

The depletion of natural resources is endangering our future generations. The imbalance in nature that we have caused is going to disrupt our life as well. Environmental ethics stresses the fact that all the life forms on Earth have a right to live. By destroying nature we are depriving these life forms of their right to live. We are going against the true ethical and moral values by disturbing the balance in nature. We are being unethical in treating the plant and animal life forms, which coexist in society. Human beings have certain duties towards their fellow beings. On similar lines, we have a set of duties towards our environment. Environmental ethics says that we. Should base our behavior on a set of ethical values that guide our approach towards the other living beings in nature. Environmental ethics is about including the rights of non-human animals in our ethical and moral values. Even if the human race is considered the primary concern of society, animals and plants are in no way less important. They have a right to get their fair share of existence. We, the human beings, along with the other forms of life make up he society. We all are a part of the food chain and thus closely associated with each other. We, together form our environment. The conservation of natural resources is not only the need of the day but also our prime duty. Environmental ethics is the part of environmental philosophy which considers extending the traditional boundaries of ethics from solely, including humans to including the non-human world. It exerts influence on a large range of disciplines including law, sociology theology, economics, ecology and geography

46 The Impact of Information Technology and the Application of Ethical Theory

Much of the ethical debate about computers and information technology more generally has been informed by the impact view of information technology. Within this tradition a number of issues have emerged as important. For example, whether compute generate new types of ethical problems that require new or different ethical theories or, whether it is just more of the same (Gorniak 1996). These debates are often expressed in the language of the impact of information technology on particular values and rights (Johnson 1985, 1994). Thus, we have discussions on the impact of CCTV or web cookies on, the right to privacy, the impact of the digital divide on the right to access information, the impact of the piracy of software on property rights, and so forth. In these debates Jim Moor (1985) has argued that computers show up policy vacuums that require new thinking and the establishment of new policies. Others have

argued that the resources provided by classical ethical theory such as utilitarianism, consequentialism and deontological ethics is more than enough to deal with all the ethical issues emerging from our design and use of information technology (Gert 1999). Irrespective of whether information technology creates new types of ethical problems that require new ethical theory or whether established ethical theory is sufficient, one tends to find the debate centered on questions of policy that is intended to regulate or justify conduct. These policies are seen, and presented as ways to regulate or balance competing rights or competing values. For example, what sort of policies do we need to protect our children when they go on the internet? How would these policies affect the right to free speech? Or, what sort of policies do we need to secure the rights of producers of digital products? How would these policies affect the right of society to a reasonable access to these products? Furthermore, these debates are most often directed at an institutional level of discourse i.e., with the intention to justify the policies or conduct for governments, organizations and individuals. In these debates, on the impact of technology, ethics and ethicists are primarily conceived as presenting arguments for justifying a particular balance, of values or rights, over and against other possibilities. Electronic commerce, commonly known as e-commerce or e-commerce, or ebusiness consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transactions lifecycle, although it can encompass a wider range of technologies such as e-mail as well. A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all-, big retailers have electronic commerce presence on the World Wide Web. Electronic commerce that is conducted between-businesses is referred to as business to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or

B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the sellers computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real- time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is electronic commerce such as eBay.com. Electronic commerce is generally considered to be the sales aspect of ebusiness. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions. Code of Ethics Pretty simple, actually: We dont post things we dont believe. All content is editorial, never pay-to-play. We have never been paid to promote a product or service in our writings, and we dont publish press releases, advertorials, or sponsored posts. (Weve been offered, but we always refuse.) That means no quid pro quo, no link exchange posting, and no paid reviews. If we like something, we praise it and link to it for free. If we dont like something thats free too. The site receives remuneration from advertising on the site. Advertisements do not affect editorial content. Ads may be served by Google, Yahoo!, Linkshare, Commission Junction, Blogads, or others. Ad content is generated by these companies, often automatically on the basis of a search of blog post content. Some images are affiliate marketing ads, generated randomly. Links to third party sites may be affiliate links. However, this site will never recommend or praise a company because of an advertising or affiliate relationship. A regularlyupdated list of companies with whom we have affiliate relationships, and whose ads may appear on the site, can be found on the Book and Buy page. Privacy Policy Mostly simple, too: Upgrade: Travel Better does not store any personallyidentifying information about visitors who browse to the site. The only information we ay keep is the e-mail we receive and the content of comments left by site visitors. Tips, opinions, or other messages e-mail to the site owner may be published. If you do not to have your messages publicized, you are welcome to indicate that you with your comments to be kept private. We respect all such requests. We adopt a journalistic policy regarding sources : if confidentiality is requested, it is respected as far as legally permissible. Leaving a comment on the site requires an e-mail address. (The WordPress publishing system requires e-mail addresses for commenter, in part to reduce spam.) These e-mails are kept in the blog database, but will never be used for

any marketing purpose. Commenters and posters IP addresses are recorded in our database. Please note that we are not responsible for the content of other users comments written as responses to posts. Standards organization A standards organization, standards body, standards developing organization or SDO is any entity whose primary activities are developing, coordinating, promulgating, revising, amending, reissuing, interpreting, or otherwise maintaining standards that address the interests of a wide base of users outside the standards developing organization. Most voluntary standards are offered for use by people, regulators, or industry. When a published standard achieves widespread acceptance and dominance it can become a broader de facto standard for an industry. This has happened with the modem protocol developed by Hayes, Apples TrueType font standard and the PCL protocol used by Hewlett-Packard in the computer printers they produced. Normally, the term standards organization does not include the parties participating in the standards developing organization in the capacity of founders, benefactors, stakeholders, members or contributors, who themselves may function as the standards organizations.

47 Purusharthas: Dharma, Ailha, Kama, Moksha

The four purusharthas are really the objectives of God, of the Supreme Self, the qualities of God. And since an individual person is a reflection of God, is a part of God, it is the rightful pursuit of a person to fulfill these four purusharthas. An individual can realize him or her self by balancing and fulfilling these four objectives. These four objectives are not independent of each other and should not be viewed in a standalone manner. They define and refine the other objectives and allow the other objectives to define and refine it. The activity of fulfilling one objective should also support the fulfillment of the other objectives. By maintaining a balance between the definition and fulfillment of the four purushartha, a symbiotic evolution of the individual self takes place Exclusive pursuit of one purushartha creates an imbalance in a persons life, and prevents the person from reaching the ultimate destination of their life. As a person progresses through the evolution of their soul, they find that some of the objectives eventually lose their place and importance to more predominantly make way for the others. For example the desire to earn wealth may diminish and disappear, or a person may come to the realization there is no more material desires that they need to pursue, and hence more room is created for the pursuit of the ultimate objective, Moksha.

Ekatvam is founded on the four pillars of Dharma, Artha, Kama, and Moksha. The mission of Ekatvam is to help people realize their True Selves, to become one with the Supreme Self in this lifetime, to achieve moksha. Often, people make the mistake of renouncing everything in the pursuit of, Moksha, but that can frequently turn out to be the wrong path, and is not suited for everyone Ekatvam is in place to help people identify their true purpose and their unique purusharthas. Ekatvam shows the way to each individual by helping people see the underlying unity, Ekatvam (oneness), of them with the Universe. The path for each individual to reach the ultimate destination is different, and it is only the individual self that can identify and see the path with the help of the Divine guidance. Dharma: A person is born on this earth to perform certain duties. The soul houses itself into the physical vehicle that is the body which most suits for performing these duties. The physical work that a person needs to do, the duties of the person on this earth plane are termed as the Dharma of the person. Dharma is a difficult term to translate into English, but can roughly be translated as the rightful duty of a person. This is the true calling of a person, what they are born to do. Examples of a persons dharma are to be a doctor, teacher, writer, warrior, priest, parent etc. Sometimes a persons dharma is decided by their birth, but it need not necessarily so. A persons dharma can be a combination of things, and as a person progresses through life, different stages of life may call for different dharma and purposes. Tuning into the inner guide of the heart allows a person to identify their dharma, their true calling. Artha: Artha is the pursuit of material wealth, which brings material comforts to a person. People sometimes believe that the paths of spiritual growth and pursuit of material wealth are mutually exclusive, or even that a spiritual seeker needs to be in poverty. But that is not true. If we look at the Universe, it is a reflection of abundance. Nature is abundant in everything, poverty is nothing but a state of consciousness. If abundance is the quality of the Divine, how is pursuit of abundance in contrast with the pursuit of the Divine? If one is in poverty in a state of constantly worrying about how to support and feed, if that is where the focus is on, how can one pursue spirituality? Only when there are no worries is one able to focus their attention to the goal of union with the Divine. The important thing to remember not to be attached to the possession or attainment of wealth. It can be sought with detachment and with awareness, and when done in this state of mind, the pursuit of wealth is not-.different from the pursuit of the Divine, because one sees abundance or wealth as a form of the Divine. And in this state of detachment, one recognizes when one has attained their

financial objectives, and hence the desire to pursue more automatically dies away, paying the way for Moksha. Kama: Kama is fulfilling ones desires. Desires are in various forms to he wealthy, powerful, sexual needs, recognition, service. The Kama purushartha advocates that ones desires in this lifetime need to be fulfilled, albeit in a state of awareness and without harming anyone in the process. For a person to evolve spiritually and to reach the ultimate destination, the barrier of desires needs to be crossed. This can be done either by fulfilling the desires, or by sublimating them. Suppressing of desires is certainly not recommended because it is like a fully coiled spring that is held down by force, it can erupt unpredictably causing undesirable consequences. As one becomes aware of their desires and one goes about fulfilling them in awareness and without judgment, one soon reaches the stage of being able to sublimate them. The Divine, the Universe, lends a big hand in the process. Moksha Moksha means liberation, realizing of the Self, and is the ultimate destination for this human birth. It is the stage of inner realization that the individual self is the same as the Supreme Self. It is the experience of the cosmos within ones self. It is the experience of the flow and fusion of the Shiva and Shakti energies in ones self. It is the experience of union, oneness, Ekatvam, with the Universe. As all the rivers must eventually lead to the sea, there are many spiritual paths leading to the same destination. Some paths are shorter than others; some are more arduous than others. The path can be difficult to navigate, and the path may not always be visible. A guide, in the form of a Guru is needed to traverse this path, someone who holds the person and shows the way. It is Ekatvams mission; it is the Dharma of Amma and Swamiji to help people find their way to Moksha.

48 Egoism Vs Altruism
Psychological egoism is another important perspective that is relevant to the study of business ethics. Egoism is an ethical theory that treats self-interest as the foundation of morality. Egoism contends that the is morally right if and only if it best promotes an agents (persons, groups or organizations) long term interest. Egoists make use of their Self-interest as the measuring rod of their actions. Decisions based on egoism mainly are indented to provide positive consequences to a given partys interest without considering the consequences of other parties. All human beings act solely out of their own self- interest. This is called as psychological egoism. Egoism is often raised as a skeptical

challenge to the legitimacy of business ethics. Constraining or preventing selfish behavior of human beings in the name of ethics is a challenging task. Many ethical theories take egoism as a major obstacle to overcome since ethics sometimes requires us to limit our own self-interests. Ethics requires us to act out of a concern for others. This is called altruism. Altruists are primarily concerned with other people. Altruists relinquish their own personal interests for the good of others. The altruists moral authority and motivation is to produce the greatest good for the largest number of people. Altruists would not diligently calculate and measure cost and benefits. Altruists are akin to philanthropists. Moral duty does arise where goods for others, which may or may not overlap goods for the self, are concerned. Moral duty consists of respect for the autonomy of others, which means allowing the free exercise of the innocent, competent will of others in regard to their own interests. 1. Allowing the free exercise means the use of neither fraud (deception) nor force (coercive threat of violence or actual violence) against the will of other persons in the disposing of their interests. 2. Innocent means that the other is not actually committing or effecting a wrong, whether or not they intend wrong (although they actually are morally innocent if they do not intent wrong and are not negligent). The intentional or negligent commission of a wrong entails loss of some rights of autonomy and self-interest both in order to prevent the active commission of the wrong and in order to extract retribution (through the loss of goods, proportional to the wrong) as just punishment for wrongs committed. 3. Competent means mentally able to rationally evaluate and pursue ones own self-interest. Incompetent persons do not lose rights of self-interest and only lose rights of autonomy in so far as their self-interest can be better evaluated and pursued, in their behalf, by others. 4. Their own interests are self-defined in the areas or matters where, according to the types of interests considered below, we have rights of possession,use, and exchange. It has become common to say that people have rights wherever they they have interests, but this principle does not allow for compensability, the possibility that the rights can all be exercised at the same time, since many interests overlap and conflict. Such rights must necessarily be abridged, a dangerous characteristic, since any rights can then be abridged for any expedient reason. If not all interests are protected by rights, however, then rights can be moral and legal claims that cannot be abridged.

The fallacy of altruism, : or altruistic moralism (or moralistic altruism), is the sense that there is a general duty, or that morality as such requires us always, to act in the interest of others. On the other hand, an altruistic moral aestheticism [or, simply, altruistic aestheticism) is not a moral fallacy; for this only means that a person may act for the good of others if this seems good, which is unobjectionable as long as the action respects the autonomy of others, i.e. is not against their innocent and competent will. The asymmetry between egoistic and altruistic moral aestheticism, that one is a fallacy and the other isnt, is due to the circumstance that morality limits the pursuit of self-interest with respect for others. The removal of moral constraint in aestheticism thus would be motivated for the self, which can then gain through wrong, but would not be motivated for others, who were protected from wrongful loss. Altruistic moralism is often a tempting doctrine because the rule for the specification of non-contractual duties of commission appears to be complex. There will be such a duty on a person only where: The other is unable to help themselves, the other is in danger of serious and irreversible harm, there is no one else present who has a more defined contractual obligation to help the other (e.g. lifeguard, parent, physician, policeman, etc.) and who is able to do so, and a person is able to act competently to prevent that harm without comparably endangering either themselves personally or the interests of those who are contractually dependent upon the agent for support (e.g. children or other family, etc.). A person who does more than is required by these conditions, i.e. who acts even at the cost of endangering themselves or damaging their own interests of comparable magnitude to those originally endangered, acts with supererogation, i.e. beyond the requirements of moral duty. Altruistic moralism denies supererogation. Since non-contractual duties of commission involve judgments of incompetence or physical disability, altruistic moralism implies paternalism, i.e. the judgment that the agent knows better the interests of others, and how to pursue them, than they do themselves. Paternalism and altruistic moralism thus will lead to basic violations of moral duty as the actual innocent and competent autonomous will of others may be abridged by force. That is a general problem with any form of altruism, that the self-defining character of what is good is transferred from the other to the altruistic agent, always raising the danger that, another may be judged incompetent simply because, their judgment about what is good for them may differ from the agents.

49 Concept of Right and Duty: Business Western and Indian Perspective, Definition and scope, Relevance in Social Change
Rights offer protection of certain human interests, prohibiting the sacrifice of these interests merely to provide a net increase in the overall happiness but interests, as opposed to desires, are connected,. To human well being in an objective manner. Human nature, characterized as the capacity for free and autonomous choice, provides the grounds for distinguishing central interest from mere wants. In general, a right is an individuals entitlement to something. A Person has a right when that person, is entitled to act in a certain way or is entitled to have others act in a certain way towards him or her. The term employees rights can be interpreted in three ways: firstly, there are those legal rights granted to employees on the basis of legislation or judicial rulings. Secondly employees rights might refer to those goods that employees are entitled to on the basis of contractual agreements with employers. Finally, the employees rights might refer to those entitlements to which employees have a claim independent of particular legal or contractual factors. Such rights would originate with the respect owed to them as human beings. Thes-3 are called human rights. Legal rights: The entitlement may derive from a legal system that permits or empowers the person to act in a specified way or that requires other to act in certain ways towards that Person: the entitlement is then called a legal right. The Constitution, for example, guarantees all citizens the right to freedom of speech, and commercial statutes specify that each party to a valid contract has a right to whatever performance the contract requires, from the other person. Legal rights ire limited, to the particular jurisdiction within which the legal system is in force. Employee rights: These are the rights the employee derives out of the contract of employment and they can be considered as a subset of legal rights. The entitlement of remuneration reward for the work rendered is one such right. Human rights: Entitlements can also derive from a system of moral standards independently of any particular legal system. The right to work, for example, is not guaranteed by the constitution, but many argue that this is a right that all human be,possess. Such rights, which are called moral rights or human rights, are based on moral norms and principles that specify that all human beings are permitted or empowered to do something or are entitled to have some thing done for them. Moral rights, unlike legal rights are usually thought of as being universal insofar as they are rights that all human beings of every nationality possess to an equal extent simply by virtue of being human beings. Unlike legal

rights, moral rights are not limited to a particular jurisdiction. If humans have a moral right not to be tortured, for example, then this is a right that human beings of every nationality have regardless legal system under which they live. Rights are powerful devices whose main purpose is to enable the individual to choose freely whether to pursue certain interests or activities and to protect those choices. We sometimes use the term right to indicate the mere absence of prohibitions against pursuing some interest or activity. For example, one has a right to do whatever the law or morality does not positively forbid one to do. We sometimes use the word right to indicate that a person is authorized or empowered to something either to secure the interest of others or to secure ones interest. The term right is sometimes used to indicate the existence of prohibitions or requirements on others that enable the individual to pursue certain interests or activities. Moral rights are tightly correlated with duties. Moral rights provide individuals with autonomy and equality in the free pursuit of their interest .That is a right identifies activities or interests that people must be left free to pursue or not pursue as they choose and whose pursuit must not be subordinated to the interest of others except for special and exceptionally weighty reasons. Moral rights provide a basis for justifying ones actions and for invoking a moral justification for doing it. Because moral rights have these features, they provide a basis for making moral judgments that differ substantially from utilitarian standards. Moral standards concerned with rights indicate what is due to the individual from others, promote the individuals welfare, and protect the individuals choices against encroachment by society. It is generally acknowledged that civil rights may legitimately be restricted for the sake of public welfare Individual rights mean entitlements and unquestionable claims. The principle of rights is one of the most powerful concepts that enables and protects individual freedom, dignity, and choice. This principle is the cornerstone of any democracy Moral rights are based on legal rights and the principle of duty. Ones moral rights imply that one has certain duties towards ones rights, Individual freedom, welfare; safety, health, and happiness are essential core values of moral rights. Rights can also override utilitarian principles. Many times, violations of rights are solved by the criterion of whose rights have precedence in a given situation. Lawsuits are won and lost on the principle of individual rights not being upheld or protected Moral rights include: (i)The right to work (ii)Employment at will (iii)Due process in the workplace

(iv) Participation rights (v) Privacy in the workplace Concept of Duty:Philosopher will claim that rights and- duties are correlative. This is to say that ones right establishes ones duties and duties correspond to the right of others. Deontological tradition focuses on duties, which can be thought as establishing the ethical limits of ones behavior. From ones perspective, duties re what he /she owe to others. Other people have certain claims upon our behavior in other words certain rights against us. Fulfilling our ethical obligations can set limits on decisions aimed by producing good consequences. The professional duties associated with the gate keeping roles as accounts, auditors, lawyers, financial analysts, and boards of directors also function as ethical limitations on business activities.

50
Ethics

Ethics, Morality and Legality

Ethics is an investigation into the basic concepts and fundamental principles of human conduct. It includes study of universal values such as the essential equality of all men and women, human or natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment. Business ethics is the examination of the variety of problems that can arise from the business environment, and how employees, management, and the corporation can deal with them ethically. Problems such as fiduciary responsibility, corporate social responsibility, corporate governance, shareholder relations, insider trading, bribery ands discrimination nation are examined in business ethics Law is a code of conduct which the authority in power-prescribed for society. It is concerned with the minimum regulation necessary for public order which is enacted by the government. For many business people, ethics is identified with the law. Business behaves ethically when it obeys the law. Compliance with the law alone will prove insufficient for ethically responsible business. Following things will fall within the circle of ethics but not within that of law. Caring for the aged Being considerate to ones workers Imparting good education to students Obedience to elders Speaking the truth

Morality There is no system of morality which is accepted as universal and the answers to the question Whit is morality? differ sharply from place to place, group to group and from time to time. For some it means conscious and deliberate effort in guiding ones conduct by reason based on fairness and religious beliefs and for other it is conformance to a recognized code doctrine, or system of rules of what is right or wrong. Morality is derived from the Latin word moralities which is virtuous. Morality has three principal meanings. Quest Tutorials Business Ethics & CSR Morality refers to personal or cultural values, codes of conduct that distinguish between right and wrong in the human society. Describing morality in this way is not making a claim about what is objective right or wrong, but only referring to what is considered right or wrong by people. For the most part, right and wrong acts are classified as such because they are thought to cause benefit or harm, but it is possible that many moral beliefs are based on prejudice, ignorance or even hatred. Legality Legality is an act, agreement, or contract which strictly adheres to the statutes of a Particular, jurisdiction. For example, in insurance contracts it is assumed that all risks covered under the policy are legal ventures Legality means lawfulness by virtue of conformity to a legal statute. This also means The state or quality of being legal: lawfulness Adherence to or observance of the law A requirement enjoined by law Generally, law codifies a nations ideals, norms, customs and moral values however changes in law can take place to reflect the conditions of the time in which they are enunciated. Even if a nations laws are both sensible and morally sound, they may be insufficient to establish moral standards to guide the people The law cannot cover the wide variety of possible individual and adequate tool to provide moral guidance. group behaviour and in many situations is an inadequate tool to provide moral guidance.

51 Explain the Approaches to Business Ethics?

According to the philosophies, environment means humanity. Todays ethics approaches note depending on keeping human wants under pressure for the benefits of all human beings. By these words environment includes not only men, but also animals, plants i.e., the nature. Ethics occurs by relations of humans with themselves and their physical and social environment. Therefore, the origin of the problems and solution is human. The philosophies note many approaches in these relations. These approaches can be grouped into three groups: -The human-oriented approach -The living oriented approach - The environment oriented approach. Every approach describes one of parts of the whole environmental ethics. But the common point of these approach is that all human beings and their equal rights take place in the ecosystem. By the r ach in the concept of deep ecology it is accepted that the diversity of the ecosystem has an internal value and no one has any right to decrease this diversity and difference. For centuries, people have established a lot of establishments to achieve these goals. Human beings have seen that producing something by cooperation is more productive and effective than doing it alone, so they have established enterprises. They have seen unlimited needs, increasing wants and scarcity of objects and they have also seen establishing enterprises as a way of producing more. But in this century humans saw a lot of impacts from our living. Air, water and soil pollution, the danger of consuming natural resources, acid rain, and gas, dust, and liquids industries caused, soiling of natural foods, industrial pollution, and dangerous wastes, just to mention a few problems we face. These environmental problems make us reconsider the goals of organizations and their responsibilities to the society and nature. The organizational goals are often not environmentally friendly. In some events the goal of the establishment is opposite to the environment and sometimes organizational activities damage the environment in achieving the goals. In this process, we should emphasize the reasons why they should have responsibility. First, they use environmental resources and resources are limited. Second, they damage the environment by their activities. Third, they use common assets of mankind. Finally, the enterprises have various forces to influence the environment: Economic force, social and cultural force, technological force, politic force, forces on individuals and physical environment.

In spite of these impacts and forces of establishments, there is no social control system on the activities of enterprises. This point emphasizes business ethics terms as an institutional framework, i.e., social ethics. As an institutional term, social ethics means searching ethical norms to protect the social benefits, and determining the possibilities for achieving a kind society. Then, business ethics means, the norms, duties, responsibilities, courses of actions of enterprises to protect the benefits of whole society. In a broader view, because of the impacts on the natural and social environment, business ethics concepts determine the responsibilities towards s ecosystem. It is the common denominator of business ethics and environmental ethics is the interrogation of relations and dilemmas between economy and nature, man and society. According to the common classification of conceptual approaches on business ethics, The approaches. three are there. The first approach reconciles ethical values with economic goals. The second approach gives priority to the ethical values. According to Ulrich, a new multidimensional goal system should replace to the profit maximization. And the third approach is pragmatic approach. In this approach, the attitudes model of business managers is the focus of interests. The last two approaches are very important for us to develop a new concept and term on business ethics. The approach which gives priority to the ethical values is important, because the enterprises are not a purpose, they are only a tool which we use to get benefits. If this tool causes various damages on the ecosystem to get profit, then we should revise our organizational goals, targets and activities. A pragmatic approach is characterized with the importance of individual conscience and discussion of alternative individual courses of actions. Therefore, these two approaches define the new term business ethics as an institutional concept. This concept includes both organizational responsibility and individual duties as business managers, also covered the ecosystem. We can name this concept as environment oriented business ethics or enterprise ethics and As determined above, if people are the focus of the problems and solution, educating people becomes our great responsibility. People should be educated as a member of business organizations. This education process should begin in childhood continue during our life. Normative Ethics:Ethics is a normative science. It means it lay down the norms or standard of what is good and what is bad. It specifies what we ought to do and what we ought not to do, in a certain situation. Normative ethics is the branch of philosophical ethics that investigates the set of Questions that arise when we

think about the question how should one act, morally speaking? Normative ethics is the discipline that produces moral norms or rules as it end product. Normative ethics prescribe moral behaviour. It is a branch of ethics concerned with classifying actions as right and wrong, attempting to develop a set of rules governing human conduct, or a set of norms for action Traditionally, normative ethics (also known as moral theory) was study of what makes actions right and wrong. These theories offered an overarching moral principle to which one could appeal in resolving difficult moral decisions Normative ethical systems can generally be broken down into three categories: deontological, teleological and virtue ethics. The first two are considered deontic or action-based theories of morality because they focus entirely upon the actions which a Person performs. When actions are judged morally right based upon their them consequences we have teleological or consequentiality ethical theory. When actions are judged morally right, based upon how well they conform to some set of duties; we have a deontological ethical theory. Prescriptive Ethics:Business ethics is a branch of ethics which prescribes standards of how the business is to be carried out. It lays down guidelines for the companys response and accountability to its various stakeholders. It has to maintain a fine balance and take care of the interest of the shareholders on one hand and other like the employees, suppliers, customers and community at large on the other hand. All the stakeholders have different objective of what they expect from the company and at times these objectives may be conflicting in nature. Applied Ethics:Applied ethics is a branch of ethics that deals with specific, often controversial moral issues such as abortion, female feticide and infanticide, displacement of tribal people due to huge hydro- electric projects, cloning, testing drugs on animals, etc. Business too faces many controversial moral choices such as misleading advertising, insider trading bribery, corruption etc. Ethical theories lay down certain moral standards that provide a reference point for judging the moral value of a decision. When applied to business, these theories should enable the manager to distinguish between right and wrong and to make morally acceptable decision