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Ethics
&
Corporate Social Responsibility
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Ethics A live example of Merck
Dr. P. Roy Vagelos, There may be noinherent conflict between ethical behavior
and pursuit of profit. On the contrary ethicalbehavior creates the kind of goodwill andreputation that expand opportunities for
profit.
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ETHICS AND MORALITY
Ethics is the study of Morality. It is a kind of
investigation that includes both the activity of
investigating and the results of investigation.
Morality is the subject matter that ethics investigates
Morality are the standards that an individual or a group
has about what is right and wrong , or good or evil
CASE: B.F Goodrich v/s Kermit VandivierCharacteristics: injury, not establishes by authoritative
bodies, moral standards v/s self-interests, justice,
emotions
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Ethics Trying to Define
Ethics is a mass of moral principles orsets of values about what conduct oughtto be.
Business ethics is a specialized study of
moral standards as they apply tobusiness policies, institutions andbehavior.
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Scope of Business Ethics
At Societal Level:
Concern for poor and downtrodden
No discrimination against any particular sectionor group
Concern for clean environment
Preservation of scarce resources
Contributing to better quality of life
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Scope of Business Ethics
At Stakeholders Level:
A. Employees
Security of job
Better working conditions
Better recommendation
Participative management
Welfare activities
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Scope of Business Ethics
At Stakeholders Level:
B. Customers
Better quality of goods
Goods and services at reasonable price
Not to practice discriminatory pricing
Not to make false claims about products inadvertisements
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Scope of Business Ethics
At Stakeholders Level:
C. Shareholders
Ensure capital appreciation
Ensure steady and regular dividend
Disclose all relevant information
Not to window dress balance sheet
Protect interest in times of mergers,
amalgamations and takeovers
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Scope of Business Ethics
At Stakeholders Level:
D. Banks and other lending institutions
Guarantee safety of borrowed funds
Prompt repayment of loans
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Scope of Business Ethics
At Stakeholders Level:
E. Government
Complying with rules and regulations
Honesty in paying taxes and other dues
Acting as partner in the progress of the country
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Scope of Business Ethics
At Internal Policy Level:
Fair practices related to internal issues
Better communication at all levels
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Scope of Business Ethics
At Personal Policy Level:
Not to misuse others for personal ends
Not to indulge in politics to gain power
Not to spoil promotional chances of others
Not to use office facilities for personal use
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Myths about Business Ethics
Business Ethics is more a matter of religion
than management
Our employees are ethical so we dont needattention to business ethics
An action is either right or wrong
Good employees do not do bad things You are born with your morality
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CSR Trying to Define
A commitment to improve community
well being through discretionarybusiness practices and contributions of
corporate resources.Philip Kotler and
Nancy Lee (2005)
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CSR Trying to Define
CSR is the continuing commitment by
businesses to behave ethically and
contribute to economic developmentwhile improving the quality of life of
the workforce and their families as well
as of the local community and societyat large .World Business Council for
Sustainable Development
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CSR Common Principles
underlining
CSR is a business imperative Whether
pursued as a voluntary corporateinitiative or for legal compliance reasons,
CSR will achieve its intended objectives
only if business truly believe that CSR isbeneficial to them.
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CSR Common Principles
underlining
CSR is a link to sustainable development
Businesses feel that there is a need tointegrate social, economic and
environmental impact in their operation
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CSR Common Principles
underlining
CSR is a way to manage business CSR is
not an additional add on to business, butit is about the way in which businesses
are managed.
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CSR A Historical Perspective
The concept of CSR in India is not new, the
term may be.
Philosophers like Kautilya from India and
pre-Christian era philosophers in the Westpreached and promoted ethical principles
while doing business
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CSR A Historical Perspective
The idea was also supported by several
religions where it has been intertwined with
religious laws.
Zakaat followed by Muslims
Dhramada followed by HindusDaashaant followed by Sikhs
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CSR A Historical Perspective
In the global context, the recent history goes
back to the seventeenth century when in
1790s, England witnessed the first large
scale consumer boycott over the issue of
slave harvested sugar.
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CSR A Historical Perspective
The term CSR came into common use in the
early 1970s.
By late 1990s, the concept was fully
recognized, people and institutions acrossall sections of society started supporting it.
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CSR A Historical Perspective
Facts: 1977 less than half of the Fortune 500
firms mentioned CSR in their Annual
Report.
By the end of 1990, 90% of the Fortune 500
firms included CSR in their Organizational
Goals and actively promoted their CSR
activities in Annual Reports.
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Social Responsibility...
an organizations obligation to maximize its
positive impact on stakeholders and tominimize its negative impact
includes legal, ethical, economic, and
philanthropic (discretionary) dimensions
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Legal Dimension...
refers to obeying governmental laws andregulations
civil law: rights & duties of individuals andorganizations
criminal law: prohibits specific actions andimposes fines and/or imprisonment aspunishment for breaking the law
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Ethical Dimension...
behaviors and activities that are expected or
prohibited by organizational members, the
community, and society (not codified intolaw)
standards, norms, or expectations that
reflect the concern of major stakeholders
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Economic Responsibilities...
how resources for the production of goods
and services are distributed within the social
system
Do you think consumers favor socially
responsible companies or are they most
enamored with companies that maximizeprofits?
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Philanthropic Dimension...
businesss contributions to society
strategic philanthropy Strategic philanthropy is a unique and powerful
way to combine your company marketing goals
with your desire to increase the well-being of
mankind. Two of the more popular names are cause -
related marketing or community partnering.
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Why Social Responsibility for Business?
Arguments against Social Responsibility
Contrary to basic functions of business
Domination of Business ValuesInefficiency in the system
Arguments for Social Responsibility
Business: A Part of the SocietyAvoidance of Govt Regulations
Long-run self interest of Business
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Principles of corporate citizenship
Good corporate citizens strive to conduct all business dealings in an ethical
manner, make a concerned effort to balance the needs of all stakeholders,
while working to protect the environment.
1) Engages in fair and honest business practices in its relationship with stakeholders.
2) Sets high standards of behavior for all employees.
3) Exercises ethical oversight of the executive and board levels.
4) Strives to manage the company for the benefit of all stakeholders.
5) Initiates and engages in genuine dialogue with stakeholders.
6) Values and implements dialogue.
7) Fosters a reciprocal relationship between the corporation and community.
8) Invests in the communities in which corporation operates.
9) Respects the rights of consumers.
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CASE: Lifebuoy Swasthya Chetna
HLL is a premier fast moving consumer goods company operating in India.
Its various products have been categorized into three broad groups-home &personal care, food & beverages, and industrial and agricultural.
Lifebuoy is the brand name of toilet soap manufactured and marketed by HLL.This soap is positioned as a means for improving health & hygiene.
In order to increase awareness of health & hygiene in rural India, HLL launcheda five-year Lifebuoy Swasthya Chetna (LSC) programme in 2002 in eight statesacross India.
The objective of this programme was to educate around 200 million people inrural areas about the importance of health & hygiene practices.
The programme aimed to debunk the misconception that visibly clean is safeclean.
It spread awareness about germs and their adverse impact on health, and howproper health & hygiene practices, such as bathing and washing hands with soapcould prevent diseases like diarrhea, the 2nd largest cause of death amongchildren in India.
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The LSC programme was implemented in various phases.
In initial phase, HLL executives interacted with school children and other
influencers like medical practitioners and panchayat members.
People were educated about health & hygiene practices through lectures,
demonstrations, use of visual aids, & quizzes. The programme used media vehicles like cinema vans, wall paintings, weekly
markets, fairs, & festivals.
The programme was later extended to parents & other adults.
The messages on health & hygiene were reinforced through regular contact
programmes. Finally, children & parents were recruited as volunteers to start health clubs that
would help sustain the health & hygiene awareness.
At each stage, LSC programme involved local community in the programme so
that the beneficiaries saw this as their own programme & felt a sense of
ownership.
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For making LSC programme successful, HLL had committed Rs. 240 million to
be spent over a period of five years.
By the end of 2006, HLL had covered around 27,000 villages across the country.
According to the company, LSC programme was not a philanthrophic activity,
but a marketing programme with a social benefit. HLL sought to grow Lifebuoy brand in India by attracting consumers who never
used a soap.
In th eprocess, the company sought to bring about a behavioural change by
convincing people to use soaps more frequently, thus, creating more users for its
brands. On April 7, 2006, on the occasion of Wworld Health Day, the Department of
Posts of Govt of India released a special Lifebuoy Swasthya Chetna Postal
Cover, making Lifebuoy the Indias brand to be featured on a postal cover.
The special cover was released in recognition of the work done by HLL to
increase awareness of health & hygiene in rural India.
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Questions:
Comment on the social responsiveness of
HLL that is reflected in Lifebuoy Swasthya
Chetna programme.
In what way, will this programme benefit to
the society?