((((((social Responsibility Mr. krishnaraj jadav Revised by – B.Castro

Social Responsibility Social Responsibility of business refers to what the business does, over and above statutory requirement, for the benefit of the society. Corporate Social Responsibility (CSR) refers to the moral responsibility of the business to the society by the virtue of being a part of the society.

CSR CSR is about how companies manage the business processes to produce an overall positive impact on society. 1. Why would a company want to produce a positive impact on society? What would be the kudo’s for the company?

Traditional Vs. Modern view of Social Responsibility Social obligation--- social responsiveness--- social responsibility. 5

Traditional view of Social Responsibility The prime purpose of the business was profit maximization- Milton Friedman “ the business of business is business.” Friedman argues that the profit earned by business belongs exclusively to the shareholders of the business and these profit cannot be diverted to any other social purpose.- social obligation 6

Cont… He argued that when management decide to spend the organization’s resources for ‘social good’, they add to the costs of doing business, which have to be passed on to the consumers through higher prices or absorbed by stockholders through smaller dividend. 7

Modern view of Social Responsibility ‘Moral behavior pays…..at least in the long run.’ According to this view business is a social and economic institution which can not live in isolation. The establishment and development of business depends upon the contribution made by the society. This socioeconomic view says that managers'’ social responsibility go beyond making profit to include protecting g and improving society’s welfare. 8

Cont… Social responsiveness means that a company engages in social actions in response to some popular social need. Social responsibility means a business’s intention, beyond its legal and economic obligation, to for the right things and act in ways that are good for society. 9

Social Orientation Of Business The extent of social orientation of companies vary very widely and change over time. Social responsibility models: Model describes evolution and extent of social orientation of companies. Following are the corporate obligations. Economic Legal Ethical discretionary 10

Factors affecting social orientation: Promoters and top management Board of directors Stakeholders and internal power relationship Societal factors Industry and trade associations Government and laws Political influence Competitors Resources Ethical influence 11

Major arguments for and against social responsibility 12

For social responsibility Public expectations Long-run profits Ethical obligation Public image Better environment Harmonious and healthy relations with the society 13

Cont… Discouragement of further governmental regulation Balance of responsibility and power Stockholders interests Possession of resources Superiority of prevention over cure 14

Against social responsibility Violation of profit maximization Dilution of purpose Costs Too much power Social actions can not be measured Lack of skills Lack of accountability Increase in the prices of the products or services. 15

Stakeholders and its management 16

Responsibility toward customers/consumer It has been widely recognized that customer satisfaction shall be the key to satisfying the organizational goal. To understand needs and wants of the customers. To improve the efficiency of functioning of business so as to ….  Increase productivity  Reduce prices  Improve quality and services  Smoothen the distribution system 17

Cont… To undertake R & D, to improve quality and introduce innovative product. To supply goods at reasonable price. To provide required after sale services. To ensure product has no adverse effects on consumers. To avoid misleading customers by improper advertisement. To provide sufficient information about product 18

Responsibility toward employees The successful organization depends to a very large extent on the morale of the employees. The payment of fair wages The provision of best possible working conditions The establishment of fair work standards and norms The provision of labour welfare facility. Arrangement for proper training and education of the worker. 19

Cont… Reasonable and proper chance for promotion Proper recognition, appreciation and encouragement of skills. The installation of efficient grievance handling system. An opportunity for participation in a management decision. 20

Responsibility toward shareholders A fair and responsible return on the capital invested by them A part in profit or bonus payment scheme Political and economical security for investment through stable govt. law Knowledge about the working of a n enterprise. Fair amount of dividend or retained earnings. Voting rights 21

Responsibility toward inter-Business The social responsibility of business include a healthy cooperative business relationship between different businesses. Prevention of unfair and unethical competition and unfair interference in the rival’s business. Not to spread false rumors about rival’s product. Not to show unethical advertisement. Not to create artificial scarcity. Businessman should adopt better designs, good advertisements, quick and safe delivery with after sale services, reasonable prices.

Responsibility toward the state (Government) It will be a law abiding citizen. It will pay its dues and taxes other state fully and honestly. It will not purchase political support by unfair means; It will sell his goods, commodities and services without adulteration at fair and reasonable prices, and It will maintain fair trade practices and refrain from activities like restraint of trade

Responsibilities Towards the Community Major areas where business can and does contribute towards community welfare Taking appropriate steps to prevent environmental pollution and preserve ecological balance. Rehabilitation of population disabled by the business. Assisting in over all development of locality. Taking steps to conserve scarce resources Improving the efficiency of business operation. Contributing to R&D Development of backward areas

In the field of Industry Industry/business can help rural areas by introducing ‘self- help’ and ‘earn-while-you-learn’ programmers. Carpentry, pottery, spinning, weaving, agro-based industry, farming, dairy farming, poultry and pig rearing, storage, etc., so that increasing employment could be provided in rural areas. Identification of areas needing improvement, facilities, skill requirements and financial assistance may be surveyed by business experts.

In the field of Agriculture To provide full-time employment to the vast unemployed rural labour force. Providing facilities for irrigation, water supply and actual supply of fertilizers, seeds, pesticides, expertise, and finances.

Housing Facilities Business can, play its role in changing house-building, extending loans and financial aid facilities, providing material and manpower support

Transportation Development of cheap public transport and distribution systems through improved journey planning and traffic regulation, increased operational efficiency and utilization of road capacity.

Health and Education Business organizations also hold a responsibility towards improvement of the quality of life the people in the community. Providing water sources for drinking and bathing, improving sewage disposal system, cleaning dirty areas of the solid waste, reducing pollution, improving sanitary facilities. Reduce preventable and water-borne diseases. They can also distribute free medicines, nutritious food to school- going children and pregnant mothers, the aged and the sick. Holding of open camps for operation of minor ailments, eye diseases, family planning

Industrial Aid to Education in Urban Areas 5 forms of educational aid 1.Cash contribution to educational institutions; 2.Scholarship and loans to undergraduate students; 3.Contribution of material and equipments to educational institutions; 4.Teaching aids for students and teachers; 5.Contribution of company manpower;

Social Audit on Factual Assessment ‘Social audit’ means a comprehensive evaluation of the way a company discharges all its responsibilities to shareholders, customers, employees, community and the government.

Towards Input Suppliers Providing technical know-how and assistance Providing fair price Assuring continuous purchase of inputs Helping them in expansion and development Towards Bankers and Financial Institutions Providing correct data and information for project appraisal Prompt payment of interest Clearance of the principal amount on or before due date

Towards Market Intermediaries Providing products quiet in advance Providing freedom to have price margins Taking back poor quality products Training the personnel Providing freedom in promotional programmes

Green management

MRF tyres

Jet airways

Amway

Nokia