Page 136 MANAGEMENT FUNDAMENTALS Session 2
Session 2 Ethics and CSR – Chapter 5 Business Environment – Chapter 3
Page 136 Chapter 05 Ethics and Social Responsibility
Page 136 Definition - Ethics 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 Human behaviour is controlled by three domains Exhibit 5.1
What benefits does an organization gain by acting ethically?
Benefits of ethical behaviour Enhance Public Image The World’s Most Ethical Companies in 2019 Volvo Cars is named by the Ethisphere Institute as the ‘World’s Most Ethical Company, 2019’. This company is receiving this honor for three consecutive years now, which is a great achievement for a commercial organization. This year, 128 companies were shortlisted from all over the world, for awarding this title. But among them, only 4 companies have been finally selected for this recognition in the Automotive category, Volvo Cars being one of them
Became the world’s most ethical company for the 6 th consecutive year in 2019 (BY ETHISPHERE.COM) Ethics are built into the culture of 3M 3M’s Code of Conduct is central to its business playbook and a key reason for the company’s high reputation among consumers and across many industries. “Great and enduring companies are driven by purpose and built on a foundation of trust” – Mike Roman the CEO “Customers want to do business with companies they can trust, and achieving that trust requires the help of all employees. I’m proud to say our people live 3M’s Code of Conduct every day by making ethical decisions and speaking up if they aren’t sure what to do.”
Build customer loyalty ASDA (owned by US company WalMart) is a retail store became notorious for its unpleasant atmosphere It had massively failed to embed corporate responsibility into its operations and supply chains around the globe. This had lead to workers' rights abuses at supplier factories, accusations of discrimination by staff, and a host of other charges
Benefits of ethical behaviour Ability to retain good employees Positive work environment
Page 139 Ethical Dilemma Sometimes managers find it difficult to make ‘ 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 146 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
Question to Discuss How can organizations carryout various CSR activities? Provide examples
Examples of Corporate Social Responsibility in Action Corporate social responsibility comes in many forms. Even the smallest company impacts social change by making a simple donation to a local food bank. Some of the most common examples of CSR include: Reducing carbon footprints • Siemens Pledging to Reduce Carbon Impact The world’s largest industrial manufacturer has pledged to be completely carbon neutral by the year 2030. Investing over €100 million into reducing their environmental impact, Siemens aims to cut its carbon emissions in half
Examples of Corporate Social Responsibility in Action Corporate social responsibility comes in many forms. Even the smallest company impacts social change by making a simple donation to a local food bank. Some of the most common examples of CSR include: Reducing carbon footprints • Improving labor policies • Participating in fair trade •
Fair Trading at BODYSHOP The Body Shop currently works with 120 suppliers, in 26 countries around the world, who employ over 30,000 people. Through our Ethical Trade programme we are working continuously to ensure that all of these workers’ lives are enriched through engaging with The Body Shop, and their workplaces are happy, safe, fair and secure.
Examples of Corporate Social Responsibility in Action Corporate social responsibility comes in many forms. Even the smallest company impacts social change by making a simple donation to a local food bank. Some of the most common examples of CSR include: Reducing carbon footprints • Improving labor policies • Participating in fair trade • Charitable giving •
Dane Anita Roddick: the body shop “The purpose of business should not merely be money, it should be about responsibility. It should be about public good, not private greed”
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” Satya Nadella, CEO of Microsoft, 2017
Examples of Corporate Social Responsibility in Action Corporate social responsibility comes in many forms. Even the smallest company impacts social change by making a simple donation to a local food bank. Some of the most common examples of CSR include: Reducing carbon footprints • Improving labor policies • Participating in fair trade • Charitable giving • Socially and environmentally conscious investments •
Triple Bottom Line - 3P’s
Brandix “Care water – care for woman” Water supplying systems – particularly in rural areas where there are less assess to clean drinking water Started with 500 such projects across the country
Question to Try “CSR initiatives enable to enhance corporate image” Discuss and justify the above statement with suitable example
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 Chapter 03
Business Environment • Business Environment refers to the combination of both External Environment internal and external factors [ Outside the boundary which influence business of an organization] operations • The challenge in the Internal business environment: Environment 1. Consistently influence [ Within the boundary business operations (e.g. of an organization ] Covid-19 pandemic) 2. Environment is getting changed quite often ( dynamism)
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 ” e.g. Shareholders
Classification of Stakeholders Internal Environment External Environment
Question to Discuss - Stakeholder Satisfaction Why it is important to keep the following stakeholders happy? Employees Customers
Business Environment - Levels External Environment [ Outside the boundary of an organization] Internal Environment [ Within the boundary of an organization ]
Refer Page 83 The Internal Environment Includes physical facilities, corporate culture, production technology and structure 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 We can recognize 4 types of corporate cultures
Refer Page 88 Types of corporate culture • Stable environment • Dynamic environment • Having steady rules • Employees are empowered to make and regulations decisions then and there • ‘Learning’ atmosphere Adaptability Consistent culture culture Involvement Achievement culture culture • Dynamic environment • Stable environment • Employees are involved • Employees are in running the business encouraged to achieve (participating) • Expect rapid growths • Decentralized decisions Unstable Environment Stable Environment
Refer Page 95 Additional Reading Apply your skills – experiential exercise (Adaptability culture)
Refer Page 70 External Business Environment
Refer Page 70 Framework of the External Business Environment Macro (General) Components includes all elements existing outside the boundary of the Micro (Task) organization that have the potential to affect the organization Internal
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