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There is no single definition of social responsibility but it

can be said as:

3 Jcting with concern and sensitivity, aware of the

impact or the disadvantages of the action to the
others.
Ôt is generally to be understood to include:

3 The obligations of a business to protect the interests of;

Customers
Employees
Suppliers
General public
3 Social responsibility goes beyond the firm¶s
relationships with their:

Customers
Environmental protection
Consumerism
Support for education
Compliance with governmental regulations
Response to community needs
Firm¶s contributions to the community
organizations.
Œ £ifferent entities have different responsibility,

For example;
3 J state has to ensure the citizens civil right.

3 The business organizations should concern with

human rights of their employees.
Ñeyond social responsibility

Social responsibility can be divided into two main parts:

The responsibility to human

The responsibility to the environment.
Responsibility to Human
ΠResponsibility to human means:
3being responsible to people
3for the action of people
3the affect of any action to the people.

ΠThis is concern with the way of the organization in

treating their customers with respect and
attention, which is not for profit but taking care
of the customer¶s wants and needs.
Œ Ôn order to carry out the social responsibility:

3 Jn organization tries to perform as best as they

can.

3 Ôt often try to keep away themselves as much as

possible from any problem they faced.
For example,

3 When the customer feel that the organization have

done something wrong, the company will take the
blame and do some steps needed to fix the problem.

Organization has the moral responsibility that

empowered them to help people and not to harm them.
3 Social responsibility is a doctrine that state:

Whether it is a village, town, state, corporation,

organization, government or individual, each have
the responsibility to the society as a whole.
Responsibility to environment
Ôt means that:
the organization is responsible to the environment and
the world than to individual; because:

the impact on the environment is larger and broad than

the impact to consumer.

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Jn organization which concern with its social
responsibility, will take every consideration into account
when making their decision.

This has been proved to become one of the reasons of

the company to be profitable in the long run.

Nowadays, many companies are more concern in

fulfilling their social responsibility and every choice
they made affect the consumers environmental.
Some companies produce products that are packed in
more than required packaging thus all the cost and
impact was passing directly to the consumer.

Some become more socially responsible mhey design their

packaging to be more environmental friendly such as
using items that can be recycle rather than using and
wasting more resources that can be used for another
important task.
Ñusiness and its Environment

Modern business get affected by environment in which it

exists. The environment is of two types ±
Œ Ônternal environment
ΠExternal environment

Where as external environment is very wide and consists of

micro level and macro level.
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å. Suppliers

The major force in the micro environment of a company is

the suppliers,
i.e. those who supply the inputs like raw materials and
components to the company.

The smooth flow of supply of sources to the company is very

important in order to have a control on inventory and
availability of products just in time.
]. Customers

J business survives only because of its customers.

J company may be targeting towards different segmentation

of consumers like:
Ôndividuals
Households
Ôndustries
Government and other institutions.
. Competitors

This is very rare these days where the monopoly is existing.

Jlmost in all kinds of product there is competitions for
e.g. products like FMCGs to consumer durables, there is
a big competition.
Even the maximum competitions is in service industries.
6. Marketing Ôntermediaries

The marketing intermediaries include middleman such as:

3 Jgents and merchants who act as a link between the

manufacturers and customers.

Ôf these marketing intermediaries do not supply the

products in time, the customers will switch over to other
brands.
Marketing intermediaries are vital links between the
company and final customers.
M. Publics

3 The public acts as an opportunity for the business

companies and get seriously affected.

3 Jnything by word of mouth by public has a greater

influence than other medias.

3 Such campaigns or exposures by the media might even

influence the government decisions which affect the
company.
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å. Economic Environment:

3 The economic policies are through political decision.

3 Ôf economic policies are good, customers will spend more

and responsibility of business towards different economic
factors is different.

3 Economic environment includes ± industries policy, fiscal

policy, export-import policy.
]. Political and Regulatory Environment:
The following have impact on business:

3 The policies of the political parties

3 The nature of the constitution
3 Government system

Ôf there is stable government shareholder will invest more,

so keeping in mind about latest political factors and
Government factor.
. Social / Cultural Environment:

Culture is defined as:

3 J set of learned core values, beliefs, standards, knowledge,
morals, laws and behaviors shared by individuals and
societies that determine how an individual acts, feels and
views oneself and others.

The culture is passed from generation to generation in a

society.

What is liked by people of one culture may not be liked by

those of other culture.

å. Owners of Ñusiness:

3 Management must provide fair, adequate and stable

long-run rate of return and steady capital
appreciation to the shareholders for their
investments.
3 Ôt must also provide to them regular, accurate, and
up-to-date information about the working of the
company.
3 Maximum disclosure about the progress and
achievements of the company is very satisfying to the
shareholders.

ΠEmployees need security of job, higher wages, full

employment, better conditions of work, opportunities
for self-development and promotion.
ΠManagement as a part of its social responsibilities, is
expected to provide for their social security, welfare,
grievances settlement, machinery and sharing of
excess profits.
ΠEmployees may be allowed to participate in the
decision-making process at all levels of management.
ΠJ feeling of fellowship and a sense of belonging to the
company as a whole should be allowed to grow.

ΠManagement should provide those goods and services

that the society needs at a price that the society can
afford to pay.
ΠManagement is supposed to provide good quality
products to the consumers at reasonable prices.
Œ Ôt should develop a liberal and fair attitude towards
the consumers.
Œ Ôt is the duty of the management to protect consumers
interest at any cost.
ΠConsumer must guard against:
Jdulteration
Poor quality
lack of service to the consumer
Misleading and dishonest advertisement
under-weighing.
ΠTo provide prompt, courteous and friendly service to
customers.
ΠTo improve their standard of living in society by
producing goods and services which they need.

ΠTo ensure safety of investments over a period of time.

ΠTo provide the highest long-term rate of return on
investment.
ΠTo provide steady capital appreciation on investment.

ΠHe will be law-abiding citizen

ΠHe will pay his dues and taxes to the government
honestly.
ΠHe will not corrupt public servants.
ΠHe will not purchase political support by unfair
means.
ΠHe will sell his commodities and services without
adulteration.

ΠThe measurement, evaluation and reporting of

performance of an organization in the area of social
responsibility is called social audit.
Œ Ôt is also defined as ³J commitment to systematic
assessment of and reporting of some meaningful
definable domain of a company¶s activities that have
social impact´.
ΠOrganizations can inform the public regarding their
activities for society.
ΠThe true picture of corporate accountability can be
given to the society.
ΠSocial audit may be measured in the areas of:
Employment
production
Consumer effort
Consumer funds absorbed
Payrolls
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ΠEconomic Responsibility is:

making a profit by producing a product or service
valued by society.
Ôts been a business¶s most basic social
responsibility.
ΠEconomically, firms are required to maximize their
shareholders' earnings.
ΠThis is done by producing goods and services that are
in demand in the market.
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ΠDegal Responsibility is the expectation that companies

will obey a society¶s laws and regulations as they try
to meet their economic responsibilities.
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Œ Ethical Responsibility is society¶s expectation that:

Organizations will not violate accepted principles
of right and wrong when conducting their
business.
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Œ £iscretionary Responsibility relates to the:

Social roles that businesses play in society beyond
their economic, legal and ethical responsibilities.
ΠThey may include charity runs or setting up "day-
care" centres within the office.

ΠSocial responsibility is:

Jn ethical or ideological theory that an entity whether

it is a government, corporation, organization or
individual has a responsibility to society.
ΠCorporate Social Responsibility (CSR, also called
corporate responsibility, corporate citizenship, and
responsible business) is a concept whereby:

3 Organizations consider the interests of society by

taking responsibility for the impact of their activities
on:
Y Customers
Y Suppliers
Y Employees
Y Shareholders
Y Communities and other stakeholders
Social responsibility means:

Eliminating corrupt
Ôrresponsible or unethical behavior that might bring
harm to the community, its people, or the
environment before the behavior happens.
ΠThe shareholders, suppliers of resources, the
consumers, the local community and society at large
are affected by the way an enterprise functions.

ΠThus a business enterprise should be able to strike a

balance between these divergent groups.
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ΠTo use their ethical decision making to

increase productivity.

This can be done through programs that employees feel

directly enhance their benefits given by the
corporation, like:
better health care
better pension program.
Companies must keep in mind that:

Employees are stakeholders in the business.

They have a vested interest in what the company
does and how it is run.

The productivity increases:

When the company is perceived to feel that their

employees are a valuable asset
The employees feel they are being treated
Œ Ñy making decisions that affect its health as seen to those
stakeholders that are outside of the business environment.

Customers and Suppliers are two examples of such

stakeholders.
Example:
Johnson & Johnson and the Tylenol scare of å ].
When people realized that some bottles of Tylenol contained
cyanide they quit buying Tylenol, stocks dropped and
Johnson & Johnson lost a lot of money.
Ñut they chose to lose even more money and invest in new
tamper resistant seals and announce a major recall of
their product.
Ôn the long run they gained the trust of their customers.
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Ôf it can be then what criteria does it need to ensure? The
measurements are:

ΠEconomic function
ΠQuality of life
ΠSocial investment
ΠProblem solving
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Ôn economic function,
3 The goal that is trying to be achieved should be
measured to see:
Ôf it meets with the cost guidelines that the business
is willing to contribute.

For instance;
Ôf the business were to try to better the plant by reducing
its carbon footprint; how would it go about doing this?
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Quality of life measures:

Whether the organization is improving or degrading

the general quality of life in society.
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Social investment looks at what the business is doing for

the community:

£oes the business work with the community to fix

outstanding issues and social problems?

How much of an investment does it make? What

issues are they addressing?
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Problem solving looks at:

3 To what extent the business will work to fix the
problem.

3 Will the business simply contribute money to an

organization working on the issue?

3 Will they allow company employees to volunteer

on company time to fix the problem?
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* "The Golden Rule:

Jct in a way you would want others to act toward you.

* The utilitarian principle:

Jct in a way that results in the greatest good for the
greatest number.

* Kant's categorical imperative:

Jct in such a way that the action taken under the
circumstances could be a universal law, or rule, of
behavior.
* The professional ethic:
Take actions that would be viewed as proper by a
disinterested panel of professional peers.

* The TV test:
Jlways ask, "Would Ô feel comfortable explaining to
a national TV audience why Ô took this action?³

* The legal test:

Jsk whether the proposed action or decision is legal.
Established laws are generally considered minimum
standards for ethics.
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* Society has to pay the Cost:

3 Costs of social responsibility will be passed on to the
society
3 Ôt is the society which has to bear them.

* Dack of social skills:

3 Ñusiness managers are goods at solving matters relating
to business
3 They not very effective at solving social problems.
* Social Overhead Costs:
3 Cost of social responsibility will not immediately benefit
the business.
3 Why spend money on an object, benefits of which will be
realized only in future.

* Friedman¶s Views:
3 Friedman asserted that if managers spend corporate
funds on projects not intended to maximize profits, then;
Y The efficiency of the market mechanism will be
undermined and resources will be misallocated within
the economy.

* Many companies involve themselves in social activities

because of the:
3 Tax exemptions on the income spent on social purposes.
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3 Some People believe that the concept of social

responsibilities is against the profit motive. This is a
misconception.
3 Social responsible actions may reduce immediate profits.
3 For instance, installation of an expensive anti-
pollution device involves cost which cannot be passed
on to consumers.
3 Ñut in the long-run, actions taken in the interest of
society help to improve the image of the firm and add to
its profitability.

3 To make the best use of national resources so as to raise

the level of national income and standard of living of the
people.
3 To make more and more employment opportunities for
engineers, technicians and other skilled persons from
educational institutions.
3 To protect the national environment and ecological
balance from all types of pollution.
3 To contribute to the economic development of backward
regions and weaker sections of society.
3 To recognize and respect social values, business ethics and
cultural heritage.
3 To cooperate with the government in solving problems like
communalism, illiteracy, over-population, concentration of
income and wealth, monopoly etc.
3 To make the country economically self-reliant through
export promotion and import substitution.
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The concept of decision making is defined as:
The selection from among alternatives of a course of
action; it is at the core of planning.

£ecisions are of three types:

å. Strategic £ecision
]. Tactical £ecision
. Operational £ecision
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3 £ecisions have to be taken to achieve a particular

objective / goal of the organization.
3The manager has to understand first the specific
objective of taking the decisions before
diagnosing a problem.
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3 Ôn order to take a decision:

The problem has to be diagnosed first.
3 Just like doctor diagnosing a disease before
prescribing a medicine, similarly
a manager has to diagnose the real problem
before solving a problem.
For example, if there is high rate of absenteeism in the
organization, the management has to analyze the rate
of absenteeism from different perspectives.
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Jfter diagnosing;
The management has to search for alternative solutions.
For example, for reducing absenteeism:
3 The management has to announce some incentives,
3 Take serious action;
3 Convince employees to attend work regularly, etc.

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The management has to evaluate the impact and

implementation of all the alternatives.
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From the available alternatives, the best alternative

has to be selected for implementation.
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Jfter choosing the best alternative:

3 Ôt is to be implemented by the managers.
3 Ôt requires organizational support and cooperation
at all levels.

When the best alternative is implemented,

3 Ôts impact has to be examined.
3 Managers have to take follow-up action in the light
of the feedback received from the results.
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The main aim of utilitarian is to provide, greatest good
for the greatest number.
£ecisions are made solely on the basis of their out
comes
3 For e.g. as hike in prices, laying off large number of
employees, shut down plants are the cases in
utilitarian terms.
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The individuals take decision on the basis of their rights
mentioned in the constitution.

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This needs an individual to impose and enforce rules
fairly and impartially so there is equitable distribution
of benefits and costs.
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Œ J man¶s personal code of ethics

Œ The company¶s policies and procedures.
ΠGovernment regulations
Jpart from these managerial values, the values which
emerged as most preferred are given below:-

ΠHonesty
ΠFair minded
ΠCompetent
Œ Ñroad minded
ΠSupportive
ΠOptimistic
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J Management Ônformation Systems (MÔS) refers to the

system by which the required information is:
Collected
Processed
Presented
to the management to take better decisions.
The output helps the manager in the decision-making
process.
Managers take decisions to have better results in the
organization.

Ôn MÔS, data is the input which is processed to provide

output in the form of information reports,
summaries etc.
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Timeliness:
The required information is to be provided at the right
time.
Jccuracy:
The accuracy of the information is very information in
taking decisions.
Relevance:
The information has to be relevant to take the right
decisions.
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3 The cost of production may be reduced

3The quality of the product may be increased
3The customer satisfaction may be improved
3Employee relations may be improved in several decisions.
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Jdvantages:-
å. Groups can accumulate more knowledge and facts.
]. Groups have a broader perspective and consider more
alternative solutions.
. Ôndividuals who participate in decisions are more
satisfied with the decision and are more likely to support
it.
£isadvantages:-
å. Groups often work slowly than individuals.
]. Groups decision making involves considerable
compromise which may lead to less than optimal
decisions.
. Groups are often dominated by one individual or a small
clique.