Page 136 MANAGEMENT FUNDAMENTALS Lesson 2
Page 136 Ethics and Social Responsibility
Page 136 What are Ethics? (Definition) Ethics are ‘ codes of moral principles and values ’ that govern the behaviour of a person or group (organization) with respect to what is right or wrong
Page 136 Three Domains to Control Human Action
Benefits of ethical behaviour Public Image Build customer loyalty Ability to retain good employees Positive work environment Avoid legal problems According to the financial statement 2007 the Golden Key Credit Card company posted a profit of Rs. 20 million but the actual loss was amounting to Rs . 7 billion. The auditor’s signature had also been forged and the CEO of the company and one of the Vice Chairmen of a Ceylinco group company had allegedly siphoned funds of the company, it was revealed in court.
Page 139 Ethical Dilemma Sometimes managers find it difficult to arrive at ‘ethical decisions’ This refers to the doubts arise whilst making decisions to confirm whether certain decisions are ethical or not
Page 140 Criteria for Ethical Decision Making • Decision maker considers the effect of each decision alternative on Utilitarian approach all parties and select the one that optimizes the satisfaction for the greatest number of people – optimizing happiness of the majority Moral-rights • Human rights are considered whilst making decisions approach Justice approach • Decisions are made to ensure equity, fairness and impartiality Individualism • Acts are moral when they promote the individual’s best long -term approach interests Virtue Ethics • Moral behavior stems from personal virtues (e.g. Honesty, Approach Trustworthiness, Integrity, etc.) Practical approach • Decisions are taken combining the above
Page 146 Corporate Social Responsibility 5/7/201 GDM 401 PB: HDM 6
Page 136 Definition : CSR The obligation of an organisation’s management to make choices and take actions that will contribute to the welfare and interests of society Two main considerations Nature and Society
Triple Bottom Line - 3P’s
Microsoft and CSR “Everywhere we operate, we focus on contributing to local communities in positive ways — helping to spark growth, competitiveness and economic opportunity for all” CEO of Microsoft, Satya Nadella, 2017 Since 2016 Microsoft has donated more than $1 billion in cloud services to more than 90,000 nonprofits and university researchers The company has announced a new plan to more than triple the number of nonprofits they will reach to 300,000 over the next 03 years
C O R P O R AT E C U LT U R E A N D T H E E N V I R O N M E N T
Page 146 Who are Stakeholders? “ “Any group or person within or outside organization that has some type of investment or interest in the organization’s performance and is affected by organisation actions”
Classification of Stakeholders
Exercise 1 – Min-case: Toyota How Toyota has taken various steps to satisfy its stakeholders Type of Stakeholders How they were satisfied by Toyota?
Refer Page 147 Additional Reading Innovative way, Page 147
Page 69 Business Environment & Culture
Business Environment • Business Environment External Environment refers to the [ Outside the boundary combination of both of an organization] internal and external factors which influence business operations Internal Environment • The biggest challenge in [ Within the boundary of an the business environment organization ] is its dynamism
Refer Page 83 The Internal Environment Includes corporate culture, production technology, structure and physical facilities Organization Culture Organizational culture refers to the set of key values, beliefs, understandings, and norms shared by members of an organization
Refer Page 84 Visible and Invisible aspects in Culture Culture includes both visible and invisible aspects Values, Beliefs & Assumptions
Refer Page 87 Types of corporate culture (CLASSIFICATION) Assumption : Business Environment can mold a corporate culture Highly Dynamic Less Dynamic Stable environment Unstable environment
Refer Page 88 Types of corporate culture • Dynamic environment • Stable environment • Employees are • More rules and empowered regulations Adaptability Consistent culture culture Involvement Achievement culture culture • Dynamic environment • Stable environment • Employees are involved • Employees are in running the business encouraged to achieve Unstable Environment Stable Environment
Refer Page 95 Additional Reading Apply your skills – experiential exercise
Refer Page 70 Framework of the External Business Environment Macro Components includes all elements existing outside the boundary of the Micro organization that have the potential to affect the organization Internal
Refer Page 70 The External Environment Customers Individuals and groups directly Competitors deal/transact Task environment with or influence Suppliers the organization in carrying out Labour suppliers various tasks External Technological Environment Natural Various invisible forces Sociocultural General Environment Economical Legal / Political International
Refer Page 71 International Environment Globalization influences all other aspects of the external environment New competitors New suppliers The global environment is complex and ever-changing Organisations must think globally and learn how to compete globally
Refer Page 71 Technological Environment Scientific and technological advancements which can impact on business (e.g. 5G networks, autonomous devices, AI, VR/AR, Big Data concepts, etc.) 3D Metal printing Genetic Fortune Teller
Artificial Intelligence Influence the Toys Industry Anki is a San Francisco-based company that wants to bring artificial intelligence and robotics into our everyday lives.
Socio-cultural Environment Demographic characteristics, norms, customs, and values World Population: growing, ageing, migrations, urbanizing Mega trends 7.7b population in 2019 will be 8.8b Large influx of immigrants by 2030 Younger working generation
Economic Environment Economic health of the country/region Extended globally with uncertainty Economic shift impacted small business although there is still vitality in small business sector of economy Consumer purchasing power Unemployment rate Income, Inflation, GDP , Employment rates, Inflation, etc.
Legal-Political Environment Government regulation Economic policy Taxation (fiscal policy) Political activities Government agencies and regulation (e.g. minimum wages, labour rules, etc.) Managers must recognize the power of pressure groups Work to influence companies to behave in a socially responsible way
Natural Environment Growing importance and pressure Organisations must be sensitive to the environment Natural dimension does not have own voice Environmental groups advocate action/policy Climate change • Nearly 3.3. million people die due to Global warming air-pollution • Nearly 3 million children (less than 5 Reduce pollution years) die cue to environmental issues Develop renewable energy Deforestation (43m hec of deforest)
Mandatory Question Select a business industry and discuss how ‘general (macro) environmental forces’ impact on your selected industry
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