MANAGEMENT FUNDAMENTALS Lesson 2 Page 136 Ethics and Social - - PowerPoint PPT Presentation

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

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Three Domains to Control Human Action

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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

• f a Ceylinco group company had allegedly siphoned funds of the company, it was revealed

in court.

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

Ethical Dilemma

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Criteria for Ethical Decision Making

Utilitarian approach

• Decision maker considers the effect of each decision alternative on

all parties and select the one that optimizes the satisfaction for the greatest number of people – optimizing happiness of the majority

Moral-rights approach

• Human rights are considered whilst making decisions

Justice approach

• Decisions are made to ensure equity, fairness and impartiality

Individualism approach

• Acts are moral when they promote the individual’s best long-term

interests

Virtue Ethics Approach

• Moral behavior stems from personal virtues (e.g. Honesty,

Trustworthiness, Integrity, etc.) Practical approach

• Decisions are taken combining the above

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Corporate Social Responsibility

5/7/201 6 GDM 401 PB: HDM 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

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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

Who are Stakeholders?

“

“Any group or person within or

• utside organization that has

some type of investment or interest in the organization’s performance and is affected by

• rganisation actions”

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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?

Additional Reading

Innovative way, Page 147

Refer Page 147

Business Environment & Culture

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Business Environment

External Environment

[Outside the boundary

• f an organization]

Internal Environment

[Within the

boundary of an

• rganization]
• Business Environment

refers to the combination of both internal and external factors which influence business operations

• The biggest challenge in

the business environment is its dynamism

The Internal Environment

Includes corporate culture, production technology, structure and physical facilities

Organization Culture Organizational culture refers to the set

• f key values, beliefs, understandings,

and norms shared by members of an

• rganization

Refer Page 83

Visible and Invisible aspects in Culture

Culture includes both visible and invisible aspects

Values, Beliefs & Assumptions

Refer Page 84

Types of corporate culture (CLASSIFICATION)

Refer Page 87 Less Dynamic Highly Dynamic Stable environment Unstable environment

Assumption : Business Environment can mold a corporate culture

Types of corporate culture

• Stable environment
• Employees are

encouraged to achieve

• Dynamic environment
• Employees are involved

in running the business

• Stable environment
• More rules and

regulations

• Dynamic environment
• Employees are

empowered

Adaptability culture Consistent culture Achievement culture Involvement culture

Refer Page 88

Unstable Environment Stable Environment

Additional Reading

 Apply your skills – experiential exercise

Refer Page 95

Macro Micro

Internal

Framework of the External Business Environment

Components includes all elements existing outside the boundary of the

• rganization that have the

potential to affect the

• rganization

Refer Page 70

The External Environment

External Environment

Task environment

Customers Competitors Suppliers Labour suppliers

General Environment

Technological Natural Sociocultural Economical Legal / Political International

Individuals and groups directly deal/transact with or influence the organization in carrying out various tasks Various invisible forces

Refer Page 70

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.)

Refer Page 71 Genetic Fortune Teller 3D Metal printing

Anki is a San Francisco-based company that wants to bring artificial intelligence and robotics into our everyday lives.

Artificial Intelligence Influence the Toys Industry

Socio-cultural Environment

 Demographic characteristics,

norms, customs, and values

World Population: growing,

ageing, migrations, urbanizing  Mega trends

Large influx of immigrants Younger working generation

7.7b population in 2019 will be 8.8b by 2030

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

 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

Economic policy Taxation (fiscal policy)

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  Global warming  Reduce pollution  Develop renewable energy  Deforestation (43m hec of deforest)

• Nearly 3.3. million people die due to

air-pollution

• Nearly 3 million children (less than 5

years) die cue to environmental issues

Mandatory Question

Select a business industry and discuss how ‘general (macro) environmental forces’ impact on your selected industry