Social and Ethical Issues in Business
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Question paper 1
SECTION-A
1. Explain the objectives of Business Ethics.
Answer:
Objectives of business Ethics:-
(i) To establish and maintain standard for the business :- An organizations level of ethics is become an important reason for selecting a product or service around the world.
(ii) Social and environmental commitment :- as Global corporate citizen, it is not enough to successfully of a useful product and service.
(iii) Quality of product and service :- the business ethics aims to ensure a safeguard the quality of goods service provided by the organisations to the people.
(iv) Fair competition :- the code of ethics is an impression of shared fundamental values and represent a Framework for decision making.
(v) Quality of information :- one of the objective of Business ethics is to set a basis for providing clear and formation to customer and other.
2. Define Ethical Organisation.
Answer:
Ethical organization is defined as doing the right thing in area such as making financial decision and treatment of employees and customer.
An ethical organization in a number of of key characteristics such as honesty integrity, accountability respect loyalty and concern.
Ethical organization maintain loyalty to their partners even in the challenging times which result in building a relationship between them. Organization must also have concern for the the stakeholders impacted by organization and make decisions considering their effect on these group of people or the environment.
3. What is Corporate Excellence ?
Answer:
corporate excellence is often described as the outstanding practices in managing the organization and achieving results, all bases on the set of fundamental concept and values. Corporate governance is the most important appreciate tool for the achieving corporate excellence
Accident has to deal with a lot of skill such as leadership, organizational communication, motivational interpersonal, etc
4. What are the benefits of Corporate Governance to shareholders and society ?
Answer:
Benefits of corporate governance to shareholders and Society-
1. Benefits to shareholders:-
(i) Good corporate governance we can provide the proper insanity for board and management 2 to pursue objectives that are in the interest of the company and shareholders.
(ii) Better corporate governance can also provide shareholders with great security on their investment.
(iii) It also ensure that shareholder are sufficient information on decision concern fundamental issues.
2. Benefits to society:-
(i) Strong and vibrant system of corporate governance can be a boon to society.
(ii) It is an effective instrument for combating corruption.
(iii) In market where competition is product or goods market is quite Limited, specially where basis exist.
5. Define Social Audit.
Answer:
Social audit is a way of measuring, understanding, representing, an ultimately improving UN organizations social and ethical performance.
A Social audit help to narrow gaps between goods and reality, between efficiently and effectiveness. It values the stakeholder, including poor groups whose voice are hard social auditing is taken up for the purpose of enhancing local governance e, particularly for strengthening accountability and transparency is local bodies.
6. What are the main Ethical Issues in Marketing?
Answer:
Ethical issues in marketing
1. Issued letter to market research
(i) invention of privacy easy obtaining research data without permission.
(ii) stereotyping drawing answer or inappropriate conclusions.
2. Ishtar letter to target customer and market
(i) it targeting the valuable children the elderly
(ii) include potential customer from the market.
3. Issues related to pricing.
4. Issues related to advertising and promoting.
5. Issue related to data collection and privacy.
SECTION-B
7. What are the various principles governing Business Ethics ?
Answer:
Various principles of Business Ethics are
General principles:-
1. Honesty:- ethical ab all should be honest ad worthy of trust. They are required to supply relevant information and correct misapprehension of fact.
2. Integrity:- integrity referred to 2A wholeness of character demonstrated by distance between thoughts, word and actions. They should be principled, honorable and applied and should fight for their briefs.
3. Accountability:- ethical should acknowledged and accept personal accountability for the ethical quality of their decisions to their colleagues, their comparison and their community.
4. Loyalty:- ethical should be loyal to the person and installation there deal with a fully devoted to their duty.
5. Fairness:- ethical executive should be fair and just in all the dealings. They should with power ability 9 take under advantage of authors mistake or difficulties. Ethical executive should be caring common comparison 8 and kind. They should understand the concept of stakeholders and should always consider their business, financial and emotional consequences of their actions on the the stakeholders.
6. Concern for other:- ethical executive should be caring, compassionate, and kind. They should understand the concept of stakeholders and should always consider the business, financial and emotional consequences for the actions of the stakeholders.
7. Respect for others:- article executive should to the golden rule, striving to treat other the way they would like to be treated.
8. Law abiding:- ethical executive should be abide by the laws rule and regulations relating to their business activities. law abiding by the aggregator with motivate the employees to abide by the code of ethics of business organizations.
9. Leadership:- ethical executive should the conscious of the responsibilities and opportunities of their position of leadership.
10. Commitment to excellence:- ethical executive fresher excellence in performing their duties.
11. Reputation:- ethical executive should understand the importance of their own and their companies reputation as well as importance of the the pride and goal moral of the employees
Specific principles
1. no Enpoitation & customers :- the business executive should not cheat and expire customer with measure such as artificial price risk and adulteration.
2. avoid profiting:- inscription business activities activities and hoarding, black marketing, selling band or harmful good to each profit must be avoided.
3. Encourage healthy Competition:- healthy competitive atmosphere that offer certain benefit to customer and must be encouraged.
4. Ensure accuracy:- accuracy in packaging and quality of supplying goods to the customer has to be followed by the business executive.
5. Payment of terms regularly:- duties to the government must be honestly and regularly paid.
6. proper auditing of accounts:- proper business records and accounts must be managed
7. Fair treatment to employees:- fair wages aur salaries, facilities and incentive must be provided to the Employees.
8. Keep the Investors informed:- the shareholders and investors must know about the financial and other important decisions of the company.
9. Avoid injustice and discrimination:- the Businessman should avoid all type of injustice and partiality to the Employees
10. No bribe and corruption:- the Businessman should not give impressive gift conversion and pay off to the people having influence.
11. Discourage secret agreement:- market secret argument with other business people to influence production, distribution, pricing extract are unethical in term of business
12. Service before profit:- the Businessman should accept the principles of service first and profit next.
13. Practice fair business:- business should be prayer, human, and dynamic of of asserting benefit to the customers.
8 Ans. Ethical organization:- companies ethics are its set of morals standard that determine have it conduct business. ethics is similar to doing the right thing in areas such as making financial decisions and the treatment of employees and customers. Unethical Organization in habit a number of key characteristics such as honesty integrity, accountability, respect for loyalty and concern first of these characteristics must by the organizational leader and spread down to the organizations lowest paid worker.
Characteristics of an ethical organization:-
1. Mission and mission driven:- ethical businesses are commonly divine buy something more concrete then profit in the form of mission statement or charter of values. This creates a better image of organization and help to build a good relationship with the public.
2. Management focus:- ethical organizations are characterized by top management personnel placing a high level of focus on ethical behavior. ethics are are prominently mentioned in the company S mission statement.
3. Honesty:- unethical workplace exhilarates the characteristics of honesty. Honesty can occur in the relationship between employees, such as when one admits lucky mistake instead of trying to blame it on another.
4. Integrity:- article workplace feature employees who have a high level of integrity full stop integrity involve treating other fairly and with dignity and respect.
5. Accountability:- ethical employees hold them self accountable for their result and action. Complete their work assignment properly and on time.
6. Respect:- ethics and respect go hand in hand. Unethical business demonstrate respect for its employees by valuing opinion and treating each employees as an equal. The business show respect for it customers while listening to feedback and ensuring their needs.
7. loyalty:- an ethical business stay loyal to its partnership even in the challenging time resulting in a strong relationship between them. Loyal relationship are mutually beneficial and both is gain benefit
8. Concern:-. an ethical business has concern for anyone and anything impacted by business. This include customer employees vendors and the public.
9. Leadership Effectiveness:- building an ethical business in drawn by Bhai A top down approach. Ethical role model or leader must be in position to create ethics as a cornerstone of company s culture.
10.Long term Perspective:- companies with a long-term view are often seen as more ethical. This long term review should not only related to profit but also companies place in the community and the world.
11. Honour:- good people are are a fundamental part of good ethics. The ethical organization gives special attention to strong customers recognized top achiever and produce and show its gratitude to the people who have made sacrifice for the company.
12. Customer focus:- the decision of the company factor its people investor, partner and ultimately it's customer. Serving all of these people is a part of its ethical responsibilities.
13. Result Oriented:- ethical managers clearly identify the desserts they expect from the employees and then sport Their employees and help them to achieve those results.
14. Risk Taking:- organization hire purpose and grow by taking race. Great companies innovate and try new things create companies attract employees who are willing to take risk and encourage sport and reward them for taking calculate risk.
15:- Passion:- ethical organization are comprised of people who have a Passion of what they are doing. These are people who are working for the company who heartily and not just for collecting pay check.
8. How would you recognize an Ethical Organisation ? Explain its characteristics.
Answer:
Ethical organization:- companies ethics are its set of morals standard that determine have it conduct business. ethics is similar to doing the right thing in areas such as making financial decisions and the treatment of employees and customers. Unethical Organization in habit a number of key characteristics such as honesty integrity, accountability, respect for loyalty and concern first of these characteristics must by the organizational leader and spread down to the organizations lowest paid worker.
Characteristics of an ethical organization:-
1. Mission and mission driven:- ethical businesses are commonly divine buy something more concrete then profit in the form of mission statement or charter of values. This creates a better image of organization and help to build a good relationship with the public.
2. Management focus:- ethical organizations are characterized by top management personnel placing a high level of focus on ethical behavior. ethics are are prominently mentioned in the company S mission statement.
3. Honesty:- unethical workplace exhilarates the characteristics of honesty. Honesty can occur in the relationship between employees, such as when one admits lucky mistake instead of trying to blame it on another.
4. Integrity:- article workplace feature employees who have a high level of integrity full stop integrity involve treating other fairly and with dignity and respect.
5. Accountability:- ethical employees hold them self accountable for their result and action. Complete their work assignment properly and on time.
6. Respect:- ethics and respect go hand in hand. Unethical business demonstrate respect for its employees by valuing opinion and treating each employees as an equal. The business show respect for it customers while listening to feedback and ensuring their needs.
7. loyalty:- an ethical business stay loyal to its partnership even in the challenging time resulting in a strong relationship between them. Loyal relationship are mutually beneficial and both is gain benefit
8. Concern:-. an ethical business has concern for anyone and anything impacted by business. This include customer employees vendors and the public.
9. Leadership Effectiveness:- building an ethical business in drawn by Bhai A top down approach. Ethical role model or leader must be in position to create ethics as a cornerstone of company s culture.
10.Long term Perspective:- companies with a long-term view are often seen as more ethical. This long term review should not only related to profit but also companies place in the community and the world.
11. Honour:- good people are are a fundamental part of good ethics. The ethical organization gives special attention to strong customers recognized top achiever and produce and show its gratitude to the people who have made sacrifice for the company.
12. Customer focus:- the decision of the company factor its people investor, partner and ultimately it's customer. Serving all of these people is a part of its ethical responsibilities.
13. Result Oriented:- ethical managers clearly identify the desserts they expect from the employees and then sport Their employees and help them to achieve those results.
14. Risk Taking:- organization hire purpose and grow by taking race. Great companies innovate and try new things create companies attract employees who are willing to take risk and encourage sport and reward them for taking calculate risk.
15:- Passion:- ethical organization are comprised of people who have a Passion of what they are doing. These are people who are working for the company who heartily and not just for collecting pay check.
9. State the various Stakeholders to whom Business Organisations are socially responsive and why ?
Answer:
A stakeholder is any individual or organization that is affected by the activities of a business. Them they may have a direct or indirect interest in the business, and maybe in contact with the business on a daily basis, are made just occasionally.
The main stakeholders are:-
1. Stakeholders:- there will be interest in there divided and capital growth of their shares.
2. Management and employees:- they may also be shareholders. They will be interested in their job security, prospect and pay.
3. Customer and suppliers
4. Bank and other financial organization:- leading money to the business.
5. Government:- specially the inland revenue and the customer and exercise who will be collecting taxes from them.
6. Trade unions:- who will represent the interest of the workers.
7. pressure groups who are interested in whether the business is acting appropriately to word their area of interest.
8. Stakeholder vs shareholders
It is important to distinguish between stakeholders and shareholders. Best sound the same but the difference is critical.
Shareholders hold share in the company that is they on part of it.
Stakeholder have an interest in the company but do not own it.
Open the aims and objectives of the stakeholder are not the same as shareholder and they come into conflict
The conflate often arises because while share holder want term profit, The Other stakeholder Divas tend to cost money and reduce profit. The owners after have to balance their own wish against those of the stakeholders or risk losing their ability to generate future profits.
9. Operating with articles supply chain:- stakeholder are are increasingly aware of life cycle issues with the business of supply chain and insisting on ethical Sourcing of materials.
10. Actively protecting the environment:- many of the choice your business make have impact on the environment that can be quiet district from the issue of climate change.
11. Responding to public policy:- stakeholder may also insert on knowing your frame stand on public issues. Sometime these are are the so called hot button issues like aberration or civil rights.
> The main responsibilities of business auto word shareholder are to ensure safety or capital investment. To provide equal opportunity to all the states share holder to participate in the management of the business as required by the law for stop to provide a fair and adequate return on shareholders investment.
10. Discuss the principle of Corporate Governance highlighting their role and importance in the organisation.
Answer:
Principles of corporate governance
1. Sustainable development of all stakeholders:- a good corporate governance must ensure growth of all individuals associated with or affected by the Enterprises for sustainable basis .
2. Effective management:- it must and sure that the Enterprises create maximum wealth ad judicious use the wealth so created for providing maximum benefit to all stakeholders and enhancing it wealth creation capabilities to maintain the sustainability.
3. Discharge of social responsibilities :- through bases activity of Business and trees is inherently commercial yet is must make some social act. It master take care of communities obligation. Commercial objective and community service obligation should be clearly documented after approved by the board.
4. Best management practices :- management practices include setting up of clear objectives and appropriate ethical Framework, establishing due process, providing of transparency and clear of responsibilities and accountability implementing sound business planning encouraging business risk assignment, evaluating performance and sufficiently recolonization individually and graph contribution.
5. Legislation :- a good corporate governance must ensure value instrument for all stakeholder guaranteed by law for maintaining social economic balance fullstop clear and registration and regulation are fundamental to be effective corporate governance.
6. Adherence to financial and operational reporting:- the broad required comprehensive timely e, reasonable, regular, correct and relevant information in a form of a quality that is appropriate to discharge its function of monitoring corporate governance.
Role and importance of corporate governance
1. Corporate performance:- improve governance structure and process help ensure quality decision-making encourage effective planning for senior management and enhance the long-term property of companies independent of type of company and its source of finance.
2. Enhance investor trust:- investor consider corporate governance as important as a financial performance when evaluating companies for investment fullstop investor who are provided with high level of disclose and transparency and like to those companies.
3. Better access to global market:- good corporate governance system attach investment from Global investors, which subsequently leads to Greater effect in the financial sector.
4. Combating corruption:- companies that are transparent, and have sound system that provide follow closure disclose of accounting and auditing procedures comma allowed transparency in all business transaction provide environment where Corporation will face out.
5. Easy finance from institutions:- survival structure change like increased role and financial inter meditate and institutional investor, size of Enterprises, investment choice available to investor, increase corruption and increased risk expose have made monitoring the use of capital more Complex thereby increasing the the need of good corporate governance.
6. Enhancing Enterprises valuation:- improved management accountability and operational transparency fulfill investor interpretation null and confidence or management and cooperation, and increase the value of cooperation.
7. Reduce risk of Corporate crisis and scandal:- Effective corporate governance E insurance risk system in place transparent and accountability system that corporate governance make the broad of a company aware of the risk involved in particular strategy, thereby, placing various counted system to monitor the related units.
8. Accountability:- investor investor relations in in essential part of good corporate governance.
SECTION-C
11. Explain the OECD Principles of Corporate Governance.
Answer:
The OECD principles of corporate governance provide specific guidance for policy maker, regulator and market participants in in improving the legal Institute and regulatory Framework that underpins corporate governance, with a focus on publicist publicly traded companies.
The six OECD principles are:-
# ensuring the basis of an effective corporate governance framework:-
The corporate governance Framework show promote transparent and effect market be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities.
# the rights of shareholder and ownership functions:-
The corporate governance Framework should protect and facilitate the the exercise of shareholder s right.
Basic share holder right should include the right to:-
(i) secure method of ownership registration.
(ii) convey or transfer shares.
(iii) obtain a relevant and material information on the the Corporation on a timely and regular basis.
(vi) participate and vote in general shareholders meeting.
(v) elect and remove member of the board.
(vi) share in the profit of the corporation.
# the equitable treatment of shareholders
The corporation governance e Framework should ensure the equitable treatment of all shareholder, including minority and foreign shareholders. All the shareholder should have the opportunity to obtain effective Riders for violation of rights.
The principles also state that:-
(i) all shareholders of the same series of a class should be treated equally.
(ii) insider trading and abusive self dealing should be prohibited.
(iii) members of the broad and key executive should be required to disclose the broad whether they are directly or indirectly or on behalf of third parties have a material interest in any transaction or matter directly offering the Corporation.
# the role of shareholder in corporate governance:-
The corporate governance Framework should recognize the right of shareholder established by law thought virtual are agreement and encourage active cooperation between operational and stakeholder in creating wealth, jobs and the sustainability of financial sound Enterprises.
# disclosures and transparency:-
The corporate governance Framework should ensure that timely and aural disclose is made on all material matter regarding the corporation, including the financial situation performance, ownership, governance of the company.
# the responsibilities of broad:-
The corporate governance Framework should and sure the strategy guidance of the company, the effective monitoring of Management by the broad, and the lead accountability to the the company and shareholder.
12. List the major reforms done in the field of Corporate Governance and how many of them are implemented ?
Answer:
Major reforms done in the field of corporate governance are
1.Company Law:- the companies act, 1956 wall enacted on the Recommendation of the b h a b a committee that was set up in 1950 with the objective to consolidate the the existing Corporate law and to provide a new basis for the corporate operation. The Companies Act 1956 has since then provided the legal framework of Corporate entries in India
2.Securty Law:- over the last few demand in many countries the responsibilities for or protection of investor has shifted to the security law and the security regulator at least in case of large listed company. In India the SEBI was set as statutory authority in 1992 you and it has taken a number of of initiatives in the area of investor protection.
3. Corporate Governance through Listing Agreement:- this issue of corporate governance has adequate a center stage with the introduction of Clause 49 in in the listing agreement. In its 10th investor to improve the standard of corporate governance in India in October 2002 who constituted A committee on corporate governance under the chairmanship of N.R Narayan Murthy full stop in India the responsibilities to audit committee includes security of companies annual audited financial statement, appointment of internal auditors interacting with internal auditor at Issue relating to investor control that are existing in the company.
4. Governance By Financial Institution:- the financial institution have also taking Responsibility in enforcing corporate governance see in the companies where they have substitution state.
They insist company on the following factors:-
(i) making adequate closures.
(ii) moving forward internationally Accepted Accounting Standard.
(iii) maintaining, direction between the CEO and chairman wherever applicable.
(iv) holding regular meeting with proper recording and dissimulation of proceedings.
The Financial Institutions have also implemented new form for appointment of Nominee directors, which have directly cut down to the total number of such directors on the company's broad.
5. Role Played By credit rating Agencies:- two of the leading reading rating agency credit rating Information Service of India Limited and ICRA have a prepared a a investment for creating the good corporate governance practices of the listed companies that investment will unable to market regulator to judge compliance status of the corporate on parameter such as effective management and distribution of investor wealth.
13. Explain the need of Corporate Governance for a Business. Discuss the theories of Corporate Governance.
Answer:
Need of corporate governance
1.Corporate Performance:- improve governance structure and process help ensure quality decision making, encourage effective succession planning of Management and in hen the long-term prosperity of comparison, independent of the type of company and its source of finance.
2. Enhanced investor Trust:- investor consider corporate governance as important as financial performance when innovating companies for investment.
3. Better Access to global market:- good corporate governance system attract investment from global investor.
4. Combating corruption:- corporate governance in able a corporation to to complete more and prevent found and with the organization.
5. Easy finance from institution:- the creditworthiness of a company can be touch on the basis of Corporate currency practiced in the company.
6. Enhancing enterprise valuation :- improved management accountability and operational transparency fulfill investor and on management and cooperation.
7. Reduced risk of corporate Crisis and scandals:- effective corporate governance e in sure effect and risk mitigation system in place.
8. Accountability :- investor relation is important part of good corporate governance.
Theories of Corporate Governance:-
1. Agency Theory:- it provide a theoretical basis to corporate governance full stop according to this theory shareholders are the principles owners and its manage act agent of the corp orators. The owners define the central objective of the corporation first of corporate governance is control of Management thought design the structure and process.
Shareholders
Broad
Management
Employees
2.Shareholder/Stockholder Theory:- according to this theory, it is the the corporation which consider as the property of shareholder Oscar stockholders. They dispose of the property, as and when they need. They want to get maximum return from the their property.
3. Stakeholders Theory:- according to this theory the company have responsibility is not only to word shareholder but also to word the stockholders which include creditors employees, customer, suppliers local community and the government. Does a corporation exist for them and not for shareholder alone.
4. Stewardship Theory:- this theory is based on the assumption that managers and employees are not merely agents matter they are stewards. Dost rivers means a person who manage another property or E state. They are not motivated by compensation packages. They are trustworthy, their behavior is pro organizational and they does not repartee from that of Owners.
14. Write a detailed note on Cadbury Committee Report.
Answer:
In India, the real history of corporate governance dates back to the year 1992, following report made is many countries of the world to put in place a system used by the Cadbury committee.
The corporate governance Movement in India begins in 1997 with a voluntary code formed by confidential of industry. Followed by this recommendations of the human mangalam birla committee set up in 1999 by the the securities and in charge Broad of India cultivating in introduction of Clause 49 of the standard listing agreement to be compared with by all the companies inspipulated phrases. The human mangalam birla committee divide it recommendations into monetary and non-monetary.
Mandatory recommendation include such issues as the composition of broad, appointment and structure of audit committee, Recommendation of directors, broad producers, addiction information regarding management, discussing and analyzing as part of the annual report shareholder rights and compelled level of corporate governance in the annual report.
From 1st April 2001 every 140 listed companies accounting for or almost 80% of market capitalization where to follow ab mandatory code which was in line with same of best invest mental practices full stop by April 2003 every listed company followed the S bi I code.
The Cadbury committee was established in 1991 by the financial reporting counseling, the London stock in change and the Accountancy profession
Reason:-
1. Increasing lack of investor confidence in the honesty and accountability of listed companies.
2. Financial collapse of listed Corporation.
3. Auditor what side of a set a counter which turned out be a misrepresentation of the factor, and about lasting its self regulatory role.
4. Lack of broad accountability for Sachs matter as devote pay.
Cadbury Report 1992.
1. The committee on the financial aspects of corporate governance.
2. The code of best practices 1992
Voluntary Code
But for listed companies of compliance statement was required.
Fairness
1. Protect shareholder rights.
2. Treat all share holder including minority is equally.
3. Provide effect redress for violation
Cadbury Report 1992.
1. The more than any other incentive incorporate currency Reform has led to the shift of directors dialogues to word greater accountability and engagement with shareholders.
2. It has generated the main significant change of Corporate responsibilities through word a range of stakeholders encouraging greater corporate social responsibilities in general.
According to Cadbury report on corporate governance should based on:-
1. Good broad practices.
2. Control environment
3. Transparent disclsure
4. Well defined shareholder rights.
5. Broad commitment