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BPK3G
BUSINESS POLICY AND
ENVIRONMENT
Unit : I►DIMENSIONS OF BUSINESS ENVIRONMENT
►DIFFERENT TYPES OF ENVIRONMENTAL FACTORS
►INTERNAL AND EXTERNAL ENVIRONMENT
►ENVIRONMENTAL ANALYSIS
►ENVIRONMENTAL THREAT OPPORTUNITY PROFILE (ETOP)
►FORECASTING TECHNIQUES
BPK3G- Business Policy and Environment 2
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BPK3G- Business Policy and Environment 3
DIMENSIONS OF BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT
ECONOMIC
LEGAL
NATURAL
TECHNOLOGY
GOVERNMENT
DEMOGRAPHIC
POLITICAL
CULTURAL
SOCIAL
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BPK3G- Business Policy and Environment 4
FACTORS COULD INCLUDE
Political International Trade, Taxation Policy
Economic Interest Rates, Exchange rates, National
income, Inflation , Unemployment, Stock
Market
Social Ageing population, Attitudes to work,
income distribution
Technological Innovation, New Product Development,
Rate of Technological Obsolescence
Environmental Global Warming, Environmental Issues.
Legal Competition law, Health and Safety,
Employment Law.
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BPK3G- Business Policy and Environment 5
INTERNAL & EXTERNAL ENVIRONMENT
INTERNAL & EXTERNAL ENVIRONMENT
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BPK3G- Business Policy and Environment 6
ENVIRONMENTAL ANALYSIS
Why Environmental Analysis?
•Analysis should provide an understanding of current and potential
changes taking place, besides long term future prospective.
•Environmental analysis provides inputs in form of information which
is useful for strategic decision making.
•Environment analysis should facilitate and foster strategic thinking in
organization by bringing fresh view points and ideas in context of
business operations.
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BPK3G- Business Policy and Environment 7
• INTERNAL
• EXTERNAL•MICRO
•MACRO
ENVIRONMENTAL VARIABLES
• POSITIVE
• NEGATIVE
INFLUENCE
• BETWEEN EXTERNAL AND INTERNAL ENVIRONMENT
MUTUAL RELATIONSHIP
ETOP –Environmental Threat Opportunity Profile
“Surroundings, external objects, influences or
circumstances under which someone or
something exits”
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BPK3G- Business Policy and Environment 8
Preparing an ETOP
•Dividing the environment into different sectors.
•Analyzing the impact of each sector on the organization.
•Subdividing each environmental sector into sub-factor.
•Impact of each sub sector on organization in form of a
statement.
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BPK3G- Business Policy and Environment 9
ETOP – Advantages
Help to determine the key threats and opportunities
Good tool to qualify the factors related to company‟s
strategy
Can consider many factors fro each special case
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BPK3G- Business Policy and Environment 10
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BPK3G- Business Policy and Environment 11
Subjective
ApproachQualitative in Nature and
usually based on the
opinions of people.
Objective
ApproachQuantitative/ Mathematical
formulations – statistical
forecasting
FORECASTING TECHNIQUES
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BPK3G- Business Policy and Environment 12
Method Advantages Disadvantages
Estimation People in position estimate the number of people the firm will require in the next year.
Incorporates knowledge of corporate plans in making estimates
May be subjective
Expert Opinion Panel of experts forecast HR requirements for particular future business scenarios. For this method, there may be a single expert, or estimates of several experts may be pooled together
Delphi Experts go through several rounds of estimates with no face-to-face meeting
Incorporates future plans & knowledge of experts related to market, industry and technical development
Subjective, time consuming & may ignore data
Group Brainstorming Face-to-Face discussion based on multiple assumptions about future business direction
Generates lot of ideas Does not lead to conclusion
Nominal Group Technique Face-to-Face Discussion Group exchanges facilitate plans
Subjective which may ignore data
Simple Averaging Simple averaging of viewpoints
Diverse view points taken Extremes views are masked when averaged.
Qualitative Methods of Demand Forecasting
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BPK3G- Business Policy and Environment 13
Method Advantages Disadvantages
Trend Analysis &
Projection
Based on past relationship between a business factor related to
employment level itself
Simple long-run trend
analysis
Extrapolates past
relationship between
volume of business
activity & employment
levels into the future
Recognizes linkage
between employment
& business activity
Assumes that volume
of business activity of
firm for forecast
period will continue at
same rate as previous
years ignores
multiplicity of facers
influencing
employment levels
Regression Analysis Regresses
employment needs
onto key variables
Data driven uses
multiple business
factors
Difficult to use & Apply
Quantitative Methods of Demand Forecasting
Unit : II
►ORGANISATIONAL ANALYSIS
►MEANING, DEFINITION, NEED & APPROACHES
►SYSTEMS APPLICATIONS AND PRODUCTS (SAP)
►SWOT ANALYSIS
14
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BPK3G- Business Policy and Environment 15
ORGANISATIONAL ANALYSIS
Organizational Analysis or more commonly
Industrial Analysis is the process of reviewing the
development, work environment, personnel, and
operation of a business of another type of
association.
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BPK3G- Business Policy and Environment 16
ORGANISATIONAL ANALYSIS
Meaning, Need and Importance
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BPK3G- Business Policy and Environment 17
QUANTITATIVE APPROACH TO MANAGEMENT
DEFINITION & METHODS
QUANTITATIVE APPROACH TO
MANAGEMENT
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BPK3G- Business Policy and Environment 18
SAPSYSTEMS, APPLICATIONS AND PRODUCTS
SAP Business One is arranged in several
modules. Whilst each module handles specific
business processes, others may be affected due
to the integrated nature of the solution.
1
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BPK3G- Business Policy and Environment 19
SWOT ANALYSIS
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BPK3G- Business Policy and Environment 20
SWOT ANALYSIS
SWOT ANALYSIS
MEANING & IMPORTANCE
Unit : III►GLOBAL ENVIRONMENT
►SIGNIFICANCE, CAUSES AND STRATEGIES OF GLOBALISATION
►MNCs
►MEANING, MERITS AND DEMERITS OF MNCs
►FDI
►MEANING & BENEFITS
BPK3G- Business Policy and Environment 21
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BPK3G- Business Policy and Environment 22
GLOBAL ENVIRONMENT
The Global Business Environment is that the business carried on
globally. It is influenced by the World Trade Organization,
principles and agreements.
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BPK3G- Business Policy and Environment 23
GLOBALISATION AND ITS IMPACT
ON
INDIAN BUSINESS
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BPK3G- Business Policy and Environment 24
GLOBALISATION
SOCIAL AND CULTURAL DIMENSIONS
TECHNOLOGY & COMMUNICATION
CORPORATE
WORLD
INTERNATIONAL TRADE, RELATIONS, &
ECONOMY
SIGNIFICANCE OF GLOBALISATION
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BPK3G- Business Policy and Environment 25
CAUSES OF GLOBALISATION
TRADE LIBERALISATION: In the last 50 years there has
been a reduction in barriers. There are more FTA‟s and
Customs Unions and more multilateral agreements such as
the WTO/ World Economic Forum.
GROWTH OF MNC’S: Firms have been under pressure t o
innovate and up-grade. Rising costs/ greater competition /
desire for more profit has increased the need to look for
new markets.
INCREASE IN CAPITAL MOBILITY: Eg. Removal of
Exchange controls.
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BPK3G- Business Policy and Environment 26
STRATEGIES FOR GLOBALISATION
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BPK3G- Business Policy and Environment 27
GLOBAL STRATEGIES
Market Globalization•Similar Customer Needs
•Global Customers
•Transferring Marketing
Globalization of
Competition
Interdependence
Competitors global
High exports / imports
Globalization of
Government Policies
•Trade Policies
•Technical Standards
•Host Government
Policies
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BPK3G- Business Policy and Environment 28
MULTINATIONAL COMPANIES
(MNCs)
IN INDIA
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BPK3G- Business Policy and Environment 29
MEANING OF MNC
An enterprise operating in several countries but
managed from one (home) country.
Generally, any company or group that derives a
quarter of its revenue from operations outside of
its home country is considered a multinational
corporation.
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BPK3G- Business Policy and Environment 30
DEFINITION : MULTINATIONAL
CORPORATION
The essential nature of the multinational enterprises lies
in the fact that its managerial headquarters are located
in one country while the enterprise carries out
operations in a number of other countries as well.
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BPK3G- Business Policy and Environment 31
Difference International Multinational
Meaning A global firm pursues a unified strategy to coordinate various international operations.
A TNC corporations essentially shed their home nation identity and act as stateless organizations, in other words they do not identify it self with one national home like an MNC
Configuration of assetsand capabilities
Centralized and globally scaled Dispersed. Interdependent and specialized.
Roles of overseas operations
Implementing parent company strategies
Differentiated contributiions by national units to integrated worldwide operations.
Development and diffusion of knowledge
Knowledge developed and retained at the center.
Knowledge developed jointly and shared worldwide.
DIFFERENCES BETWEEN INTERNATIONAL AND
MULTINATIONAL COMPANIES
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BPK3G- Business Policy and Environment 32
HEADQUARTERS OF
MNCs
Operation in
Country 4
Operation in
Country 3
Operation in
country 2
Operation in
Country 1
OPERATION OF MNCs
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BPK3G- Business Policy and Environment 33
FEATURES OF MNC
•Big size
•Huge Intellectual Capital
•Operates in many countries
•Large Number of Customer
•Large Number of Competitors
•Structural way of Decision Making
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BPK3G- Business Policy and Environment 34
IMPACT OF MNCs ON INDIA
Large amount of tax collections through MNC‟s
Increased revenue
Improved Economic Health
Increased Employment
Increased Foreign Relation
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BPK3G- Business Policy and Environment 35
MERITS DEMERITS
Increase in Investment level May acquire Monopoly Power
Transferring the Technology Underestimate local culture
It increase host company exportthan import
Think abut profit rather than the host country interest
Integrating National Economy Inflexibility in terms and conditions
Implementing new Innovations Heavy use of non-renewable natural resources
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BPK3G- Business Policy and Environment 36
IMPACT OF MNCs IN INDIA
PRE AND POST EFFECT OF MNC‟s in INDIA
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BPK3G- Business Policy and Environment 37
FOREIGN DIRECT INVESTMENT IN DIA (FDI)
Foreign Direct Investment (FDI)
is a type of investment that
involves the injection of foreign
funds into an enterprise that
operates in a different economy
of origin from the investor.
It usually involves participation in
management, joint venture,
transfer of technology and
expertise.
Economic Growth
Trade
Employment and skill levels
Technology diffusion and knowledge
transfer
Linkages and spillover to
domestic firms
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BPK3G- Business Policy and Environment 38
BENEFITS OF FDI
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BPK3G- Business Policy and Environment 39
BENEFITS OF FDI
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BPK3G- Business Policy and Environment 33/15
Unit : IV►EONOMIC AND SOCIAL ENVIRONMENT
►ELEMENTS AND IMPACT OF ECONOMIC ENVIRONMENT
►INTERNATIONAL TRADE AGREEMENTS
►GATT
►WTO
►TRIMS
►TRIPS
►IPR
BPK3G- Business Policy and Environment 40
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BPK3G- Business Policy and Environment 41
ECONOMIC AND BUSINESS ENVIRONMENT
Meaning of Economic Environment
Those Economic factors which have their affect on the working of the
business is known as economic environment.
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BPK3G- Business Policy and Environment 42
Elements of Economic Environment
Economic System
Economic Conditions
Economic Policies
Economic Policies
International Economic
Environment
Economic Legislations
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BPK3G- Business Policy and Environment 43
IMPACT OF ECONOMIC ENVIRONMENT
ON BUSINESS
Importance of Stability
Impact on Business of changes
in the economic environment
Levels of Inflation
Availability and Cost of Credit
Labor
Changes in Government Policy
Globalization
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BPK3G- Business Policy and Environment 44
INTERNATIONAL TRADE AGREEMENTS
Improve Economic Relations of Countries
Cover variety of commercial issues
Tax agreements prevent double taxation.
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BPK3G- Business Policy and Environment 45
GATT
GENERAL AGREEMENT ON TARIFF AND TRADE
GATT is to promote economic well-being by “enabling its members to
enter into reciprocal and mutually advantageous arrangements”
It aims for the substantial reduction of tariffs and other barriers to trade
and to the elimination of discriminatory treatment of international trade.
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BPK3G- Business Policy and Environment 46
WORLD TRADE ORGANISATION
What are the Aims of WTO?
•The WTO aims to create economic peace and stability in the world
through a multilateral system based on consenting member states that
have ratified the rules of the WTO In their individual countries as well.
WTO – AIMS AND ROLES
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BPK3G- Business Policy and Environment 47
TRADE RELATED INVESTMENT MEASURES
•Agreement on Trade Related Investment
Measures (Uruguay Round)
•TRIMs are rules that apply to the domestic
regulations a country applies to foreign
investors.
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BPK3G- Business Policy and Environment 48
Restrictions
1. Include local content requirements
2. Manufacturing requirements
3. Trade balancing requirements
4. Domestic Sales requirements
5. Export performance requirements
6. Local equity restrictions
7. Foreign exchange restrictions
8. Remittance restrictions
9. Licensing requirements
10.Employment restrictions
THE TRIMS AGREEMENT
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BPK3G- Business Policy and Environment 49
LEGAL FRAMEWORK
•The TRIMs agreement does not provide any new language
•It focuses on tow Articles that were identified in a previous
case under the GATT
– Article III (National Treatment)
• National treatment of imported product, unless specified in
other agreements
• Subjects the purchase or use by an enterprise of imported
products to less favorable conditions than the purchase or
use of domestic products.
– Article XI (Quantitative Restrictions)
• Prohibition of quantitative restrictions on imports and exports
• Part of the general trend in textiles and agriculture to phase out the
use of quantitative restrictions.
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BPK3G- Business Policy and Environment 50
India’s Notified TRIMs
•TRIMs Agreement India had notified three trade related
investment measures as inconsistent with the provisions of
the Agreement:
1. Local Content (mixing) requirements in the production of
News Print,
2. Local Content requirements in the production of
Rifampicin and Penicillin – G, and
3. Dividend balancing requirement in the case of
investment in 22 categories consumer goods.
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BPK3G- Business Policy and Environment 51
What is Intellectual Property and IPR?
•Intellectual Property (IP) is a term referring to a number of
distinct types of creations of the mind for which a set of
exclusive rights are recognized and the corresponding fields
of law.
•Under IPR, owners are granted certain exclusive rights to a
variety of intangible assets, such as musical, literary, and
artistic works;
•Monitored by World Intellectual Property Organization
(WIPO). Switzerland.
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BPK3G- Business Policy and Environment 52
TREATIES
•There are 21 International Treaties in the field of intellectual property,
which are administered by WIPO.
•The treaties fall into three groups names
Treaties, which establish international protection
Treaties, which facilitate international protection and
Treaties, which establish classification systems.
•1994 Uruguay round. Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIOs) and Agreement on Trade Related Investment
Measures (TRIMs) by WTO (then GATT).
•1996 – An Agreement between WIPO and the WTO provides for
cooperation concerning the implementation of the TRIPs Agreement, such
as notification of laws and regulations, and legislative assistance to
member countries.
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BPK3G- Business Policy and Environment 53
TYPES OF IPR
Intellectual Property is divided into two categories
Industrial Property which includes
•Patents for inventions,
•Trademarks
•Industrial Designs and
•Geographical Indications
Copyright and related rights which cover
•Literary and artistic expressions (e.g. books, films, music, architecture, art),
•Rights of performing artists in their performances, producers of phonograms
in their radio and television broadcasts which are also referred to as
neighboring rights.
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BPK3G- Business Policy and Environment 54
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BPK3G- Business Policy and Environment 55
Copy Rights: A legal concept giving the creator of an original work exclusive
rights to it, usually for a limited time.
Trademarks: A distinctive sign or indictor used by an individual, business
organization, or other legal entity to identify those products or services to
consumers.
Patents : A set of exclusive rights granted by a sovereign state to an inventor
for a limited period of time in exchange for the public disclosure of an invention.
Industrial Design Rights: Protects the visual design of objects that are not
purely utilitarian.
Geographical Indication: Place names (in some countries also words
associated with a place) used to identify the origin and quality, reputation or
other characteristics of products.
Trade Secrets
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BPK3G- Business Policy and Environment 56
WHY DO WE NEED IPR?
•Incentive to produce
•Protects the Creator
Protects innovators from theft.
Individuals have all elements of control
Easy to sort out disputes between individuals
•Document Creations
Creators Document their innovations
Provide creators the freedom to converse about their
innovation
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BPK3G- Business Policy and Environment 57
THE TRIPS AGREEMENT
•Negotiated in the 1986-94 Uruguay Round
•Trade Related Aspects of Intellectual Property Rights (TRIPS) is a
World Trade Organization (WTO) agreement designed by developed
countries to enforce a global minimum standard of Intellectual
Property Rights.
•Only one actually enforceable under GATT Arts. XXI & XXII & the
WTO dispute settlement understanding.
•Since TRIPS is part of the WTO agreements, developing countries
that want access to the global market through the WTO must accept
the TRIPS agreement, and integrate its IPR standards into their
national legislation.
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BPK3G- Business Policy and Environment 58
INDIAN PATENT ACT TRIPS
Only process not product patents in food, medicines and chemicals
Process and product patents in almost all fields of technology
Term of patents; 14 years, 5-7 in chemicals, drugs
Term if patents: 20 Years
Compulsory Licensing Limited compulsory licensing
Several areas excluded from patents Almost all fields of technology patentable
Government allowed using patented invention to prevent scarcity
Very limited scope of governments
Difference between TRIPS and Indian
Patent Act
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BPK3G- Business Policy and Environment 33/15
Unit : V
►SOCIAL ENVIRONMENT
►BUSINESS AND SOCIETY
►CORPORATE SOCIAL RESPONSIBILITY
►CORPORATE GOVERNANCE
►BUSINESS ETHICS
BPK3G- Business Policy and Environment 59
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BPK3G- Business Policy and Environment 60
SOCIAL ENVIRONMENT
The Social Environment, Social Context refers to the
immediate physical and social setting in which people live
or in which something happens or develops. It includes the
culture that the individual was educated or lives in, and the
people and institutions with whom they interact.
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BPK3G- Business Policy and Environment 61
SOCIAL ENVIRONMENT IN BUSINESS - DEFINITION
Social Environment is defined as “ The Social Environment
consists of the sum total of a society‟s beliefs, customs,
practices and behaviors. It is, to a large extent, an artificial
construct that can be contrasted with the natural
environment in which we live. Every society constructs its
own social environment.
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BPK3G- Business Policy and Environment 62
BUSINESS AND SOCIETY
BUSINESS, GOVERNMENT & SOCIETY:
INTERACTIONS AND INFLUENCES
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BPK3G- Business Policy and Environment 63
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility or CSR has
been defined by Lord Home and Richard
Watts in The World Business Council for
Sustainable Development‟s publication
„Making Good Business Sense‟ as “…. The
continuing commitment by business to behave
ethically and contribute to economic
development while improving the quality of
life of the workforce and their families as well
as the local community and society at large”
CSR is one of the newest management
strategies where companies try to create a
positive impact on society while doing
business.
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BPK3G- Business Policy and Environment 64
AIMS OF CSR
Environmental Aims
Social and community activities
Sustainable Development
Ethical Issues
Business RelationshipPeople
Corporate Social Responsibility (CSR)
Planet
Environmental protection and conservation
Profit
Generation of sustainable
business results
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BPK3G- Business Policy and Environment 65
CORPORATE GOVERNANCE
Corporate governance is the set of
processes, customs, policies,
laws, and institutions affecting the
way a corporation(or company) is
directed, administered or
controlled. Corporate governance
also includes the relationships
among the many stakeholders
involved and the goals for which
the corporation is governed. In
simpler terms it means the extent
to which companies are run in an
open & hones manner.
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BPK3G- Business Policy and Environment 66
SCOPE OF CORPORATE GOVERNANCE
ACCOUNTABILITY of Board of Directors & Their constituent
responsibilities to the ultimate owners- the shareholders.
TRANSPARENCY, i.e. right to information, timeliness & integrity of the
information produces.
CLARITY IN RESPONSIBILITIES to enhance accountability
QUALITY & COMPETENCE OF DIRECTORS and their track record
CHECKS & BALANCES in the process of governance
ADHERENCE TO THE RULES, laws & spirit of codes.
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BPK3G- Business Policy and Environment 67
BENEFITS OF CSR
Win new business
Increase customer retention
Develop and enhance relationships with customers, suppliers and
networks
Attract, retain and maintain a happy workforce and be an Employer
of Choice
Save money on energy and operating costs and manage risk.
Differentiate yourself from your competitors
Generate innovation and learning and enhance your influence.
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BPK3G- Business Policy and Environment 68
ETHICAL ISSUES IN BUSINESS
A problems, situations, or opportunities requiring an
individual to choose among actions that may be evaluated
as right or wrong, ethical or unethical.
Ethical issues arise because of;
•Conflict among personal/organizational values
•Conflicts with societal values.
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BPK3G- Business Policy and Environment 69
Importance of Business Ethics
and Social Responsibility
BUSINESS ETHICS AND
SOCIAL RESPONSIBILITY
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BPK3G- Business Policy and Environment 70
THANK YOU