Business Ethics Dimensions of Business Environement
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Transcript of Business Ethics Dimensions of Business Environement
By T. Samuel Pongen
Christ University
BBA
Dimensions of Business
Environment
Business Environment The combination of internal and external
factors that influence a company's operating situation.
Macro environment
Micro Environment
Internal Environment
TYPES OF ENVIRONMENT
BUSINESS DECISION
INTERNAL FACTORS
EXTERNAL FACTORS
Internal Environment
Company Image and Brand
Human Resources
Internal Power Relationship
Management Structure and Dimensions
Mission and Objectives
Value System
EXTERNAL ENVIRONMENT
Micro Environment
Macro Environment
MICROENVIRONMENT
Suppliers
Market Intermediaries
Competitors Customers
Publics
MACROENVIRONMENT
Economic Environment
The totality of economic factors, such
as employment, income, inflation, interest
rates, productivity, and wealth,
that influence the buying
behaviour of consumers and institutions.
Economic environment can be divided into three
parts. We shall now study their effect on
business. They are as under:
(i) Economic system
(ii)Economic policies
(iii) Economic conditions
(i) Economic System:
It is necessary to know about the economic
system prevailing in a country in order to
understand the economic environment. Economic
system influences the freedom or openness of
business. Economic system is mainly of three
kinds:
(a) Socialistic Economic System
(b) Capitalistic Economic System
(c) Mixed Economic System.
(ii) Economic Policies:
Economic policies deeply influence the business
of a country. The economic policies are laid down
to direct the economic activities.
Economic activities include import-export,
employment, tax structure, industry, public
expenditure, public debt, foreign investment, etc.
In order to direct all these economic activities, the
following economic policies are laid down:
For example, under the import-export policy,
restrictions on imports will benefit the indigenous
industry.
(iii) Economic Conditions:
Economic conditions are those conditions which
are related with the possibilities of economic
development of a country. On the basis of the
economic conditions the government starts
various programmes for the welfare of the people.
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Some of the examples of economic conditions
are as under:
(a) Flow of Foreign Capital
(b) Supply of Natural Resources
(c) Level of Economic Development
(d) Rate of Interest
(e) National Income
(f) Industrial Development
(g) Foreign Trade
(h) General Price Level.
Political Environment
Political environment is the outcome of a
combination of various ideologies advocated by
different political parties.
Factors connected with the activities of the
government are included in it, e.g., the type of
government (single-party government or multi-
party government), the attitude of the government
towards different industries, progress in passing
different laws.
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The following are some of the examples of the impact of the political environment on business:
(i) In 1977, the Janata Government adopted a stringent attitude towards the multinational companies. As a result of this attitude, the multinational companies like the IBM and the Coca-Cola had to ignore India.
(ii) The new government encouraged the multinational companies for investment in India. This led to the opening of the doors of the Indian market for the multinational companies. Consequently, the Coca-Cola entered the Indian market once again.
TECHNOLOGICAL
ENVIRONMENT
Technological environment in 1990s The success or failure of any business is highly dependent
on the type of technology in use, the level of technological developments, the speed with which new technologies are adopted and diffused, the type of technology that are appropriate etc.
For many years in the past, India did not have a favorable attitude towards latest technology to meet foreign standards. The reservation of products for the small scale sector sometimes comes in the way of adoption of modern technology if it involves capital investment higher than the specified limit.
Technological environment in 1990s It is only after the introduction of liberalization and
globalization of Indian economy drastic changes have come in the technological standards in India. Also very high duty structure made the import of latest technology not only expensive but also almost impossible.
Today, the scenario has changed. Free availability of foreign exchange, welcoming foreign collaborations, FDI, JVs, and setting up of MNCs have led to development of various R & D centers in many firms. Even the development taken place in the infrastructure has also facilitated the technological development
Ethics in the use of business
technology
Scientific advances allow businesses to use
technology to reach goals more easily and more
completely than ever before. In some areas, however,
such applications of technology start infringing on the
rights of individuals and may be unethical.
Governments and ethically operated companies are
aware of these limitations. Governments have passed
privacy laws and regulated communication
companies. Some companies self-censor and apply
internal policies to limit unethical behavior.
Businesses that wish to be considered ethical must
look at whether applying certain technologies may
harm some individuals and constrain such
applications to what is absolutely necessary.
Privacy
Individual privacy is one area that has been
identified clearly as a base for unethical business
behavior through the application of technologies.
Companies can track Internet usage, buying
habits and individual movement as well as collect
personal information about millions of customers
or even potential clients.
While governments have passed legislation
restricting the collection of personal data and
allowing individuals some control over what
companies can collect and store, ethical
businesses must decide -- independently of
legislation -- what is appropriate behavior.
Content
With new technologies allowing the easy creation
and distribution of images and videos, both
individual employees and companies need
guidelines as to what is acceptable. Without such
guidelines, some of this content will be offensive
to some of the company staff and to some
members of the public.
Security
Companies monitor employees and visitors and
collect much additional information in the name of
security. Ethical issues arise from the continuous
monitoring of employee activity and the recording
of security camera images.
An unjustified level of employee surveillance is
ethically questionable; the ethical company must
try to establish a level of monitoring it can justify.
The surveillance of non-employees, such as
visitors or suppliers' representatives, must be
constrained to an even lower level to be ethically
acceptable.
2G Spectrum Scam
The 2G spectrum scam involved politicians and
government officials in India illegally
undercharging mobile telephony companies for
frequency allocation licenses, which they would
then use to create 2G subscriptions for cell
phones.
The shortfall between the money collected and
the money which the law mandated to be
collected is estimated to be Rs.1,76,645 crore, as
valued by the Comptroller and Auditor General of
India based on 3G and BWA spectrum auction
prices in 2010.
Legal Environment
Many Acts are passed from time to time in order
to control and regulate business activities.
The sum total of all these Acts creates legal
regulatory environment. Acts are mossy passed
to regulate such business activities as sale-
purchase, industrial disputes, labour, regulating
partnership business, regulating company
business, foreign exchange, etc.
What is Social Environment?
Social environment is the totality of conditions
which concern in the effecting of the activity
feature of a human being. Those conditions
promote or hinder, motivate or restrain, the
characteristic activities of a living being.
Why Study Social
Environment?
Businesses live within society and the
interrelation between businesses and
stakeholders takes place within a social
environment.
They interrelate with society on many
levels: owners, customers, suppliers,
employees, government and the
community as stakeholders
Cultural Environment
The cultural environment mean a environment
which affect the basic values, behaviours, and
preferences of the society-all of which have an
effect on business decisions. Socio-cultural
environment.
All companies often include an examination of the
socio-cultural environment prior to entering their
markets.
Case of McDonalds In India.
A Company, which got benefit due to social
environment of India was McDonalds.
All the ethical decisions to respect the tastes of
the Indians and their religious beliefs were taken
care of.
McDonalds made sure that it altered the menu to
better suit the taste and religious beliefs of
Indians.
Business Environment presents two challenges to the enterprise
The challenge to combat the environmental threatsExploit the business opportunities
Business and Society
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Course focuses on large businesses (visibility,
power, widely recognized brands), but issues apply
to small and medium-sized companies as well.
BusinessThe collection of private,
commercially oriented organizations
SocietyA broad group of people and other
organizations, interest groups,
a community, a nation.
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Society as Macroenvironment
Segment Focus
Social Demographics, lifestyles, social values
Political
Processes for passing of laws and election
of officials. Interactions between firms,
politics, and government
EconomicNature and direction of the economy in
which business operates
TechnologicalChanges in technological advancements
taking place in society
Business Relationships
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Society’s Expectations Versus
Business’s Actual Social Performance
Society’s
Expectations
of Business
Performance
So
cia
l P
erf
orm
an
ce:
Exp
ecte
d a
nd
Actu
al
1960s
2000s
Time
Social
Problem
Business’s Actual
Social
Performance
Social
Problem