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Business Ethics

IMP Questions Concepts Ethics ,Normative Ethics, Applied Ethics, Morality, Legality, Business Ethics, Rights, Duties, Corporate Code of Conduct, Egoism, Altruism, Artha ,Dharma, Kama, Moksha, Ethical Dilemma ,Environmental Ethics, Corporate Governance, Corporate Social Responsibilities, Triple Bottom Line, Environmental ethics. Questions 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23) 24) 25) 26) 27) 28) 29) 30) 31) 32) 33) 34) 35) 36) 37) 38) Explain Concept of Ethics? Explain its types. What is Business Ethics ? Explain Scope of Business Ethics. What is Business Ethics ? Explain importance of Business Ethics. Explain concept of Morality & legality Explain concept of Rights & Duties what is Ethical Dilemma? Why it arises? How to solve ethical dilemma? Write note on Egoism V/s Altruism What is Corporate Code of Conduct? Explain its importance. Explain Different theories of ethics. What is Corporate Code of Conduct? Explain its importance. Write note on Egoism V/s Altruism Explain Role & Responsibilities of manager and Entrepreneur Towards Stakeholders Write note on : profit making An objective with Ethical Dimension. Write Note on : Indian Perspective of Ethics Explain Ethics in Global Marketing & Advertising Write note on Ethics in Employment Write Note on ILO Write note on Ethics in IT : E- Commerce & Privacy Codes Explain Ethical Dilemma ? Why it arises ? How to solve Ethical Dilemma? What is Environmental Ethics? Explain Environmental Issues in India. Define Corporate Governance . Explain it features Explain Objective/Scope of Corporate Governance Explain Importance of corporate of corporate Governance. Write note on Corporate Governance Reporting Explain Role of CEO, Chairman & BOD in Corporate Governance. Explain Rights of Investors & Shareholders Write Note on Cadbury Committee report on Corporate Governance. Write Note on Birla committee report on Corporate Governance. Write Note on Narayan Murthy Committee report on Corporate Governance. Explain meaning & Scope Of CSR What is CSR? Explain its significance in Business. Explain Corporate Social Responsibilities Towards Different Stakeholder/ Society. Explain CSR Relating to Labour Relations Explain CSR in relation to work Atmosphere Explain CSR in relation to Exploitation ,atrocities & Harassment at work place. Explain Role of NGO & International Agencies in Integrating CSR into Business Explain CSR & Sustainable Development Explain CSR & Triple Bottom Line


Q.1.Explain concept of Ethics, Normative ethics, Descriptive ethics , Applied ethics Ethics
The word "ethics" has been derived from the Greek word "ethos" which means conduct, customs or character or accepted behaviour. Ethics according to the Greeks would mean a code of conduct, the manner of customs and the characterization of a persons morals. It refers to code of conduct that guides an individual while dealing with others. It would also mean in a positive way the accepting of responsibilities. Ethics is a normative science. Ethics deals with what is proper course of action for man. It means, laying down norms or standards of what is good and what is bad. It specifies what we ought to do and what we ought not to do, in a certain situation. Ethics means someone's principle which leads to good or bad future in the process of any operation, personal or professional. Types of Ethics Ethics can be broadly divided into three categories, they are as follows:

(a)Normative Ethics Normative Ethics which is also known as Prescriptive Ethics is concerned with the principles by which we ought to live. In simple words, a normative theory is specifically meant to provide men with ethical guidance when they carry on their day to day business. Normative Ethics is the study of principles, rules or theories that guide our actions and judgment, determines what actually is morally right or wrong. The highest values by which moral judgments are made are often referred to as norms, principles, ideals and standards. Ex.: It is never alright to lie. This is the statement that doesnt say what people are actually doing. It says what people ought to be doing. The Golden rule is an example of a normative principle. e.g. - we should treat others the same way that we want others to treat us. Since I dont want my colleague to cheat me, it is unethical on my part to cheat my colleague. -If I would like to receive help from others in times of trouble, then I should help others when they are in trouble (b)Descriptive Ethics. Descriptive Ethics simply involves describing how people actually live and what moral standard they claim to follow. Descriptive Ethics are not value judgments about what is right and wrong. They are just observation about how people tend to behave and what ethics they tend to follow. Descriptive Ethics is a process of understanding what people do or have believed about moral norms. Ex.: Some people believe that it is alright to lie in certain circumstances. Here descriptive Ethics dont judge whether or not it is alright to lie. They just say that some people believe it is alright. (c)Applied Ethics It refers to implementing moral values or ethics in the different field of human lives. Applied Ethics identifies morally correct course of an action in various fields of human lives. Applied Ethics means making of moral judgment about actions and conditions. Ethics can be applied in various fields like on animals, Business Ethics, Environmental Ethics, Social Ethics, Bio Ethics, etc. Applied Ethics is certain branch of Ethics which consists of specific, controversial, moral issues such as animal rights, environmental concerns, abortion and infanticide, homosexuality, capital punishment and nuclear war.

Q.2.What is BUSINESS ETHICS? Explain Scope of Business Ethics.

- Business ethics means the attitude, culture and manner of doing business by the business community. - Business ethics refers to a code which businessmen are expected to follow while dealing with others. - Business ethics are those principles, policies or philosophies that are concerned with moral judgment & good conduct as they are applicable to business situation. - Business Ethics is a branch of ethics which prescribes standards of how the business is to be carried out. It lays down guidelines for the companys response and accountability to its various stakeholders. It has to maintain a fine balance and take care of the interest of the shareholders at one hand and other like the employees, suppliers, customers, and community at large. Business Ethics will tell us what RIGHT is and what is JUST in a globalized world. Business ethics means the scale where you measure the do's or don't for the purpose of the future of business. Business ethics is a form of the art of applied ethics that examines ethical rules and principles within a commercial context, the various moral or ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in commerce. Scope for business ethics The framework has to be outlined before the business activity starts. Criminal behavior and legal framework every business needs to have a code of ethics pertaining to criminal behavior and legal issues. The employees in a business need to be trained sufficiently regarding legalities of the business and the consequences their actions would have upon them and the business. Human values and personal behavior every business needs to have an ethical framework or policy for human values and behavior. Employees should be given training on how to interact with different people, be it customer, suppliers or competitors. They need to be aware of how they are expected to behave with people at different levels and that inappropriate behavior will have consequences. Corporate and business ethics though we are discussing business ethics, this strictly pertains to the corporate ethics, ethical policies for business and actions that are going to be under check and need to be in compliance with legal framework and standards.

Q.3 Explain Need and Importance of Business Ethics.

It is our means of deciding a course of action. Without it our actions would be random and aimless. Business Ethics is about standard of behavior in workplace, with partners, colleagues, customers etc. Many companies have standard code of ethics which everyone in the organization has to follow. Customer will be satisfied only if the business follows all the business ethics Business ethics is needed in order to make businessmen conscious as regards their duties and responsibilities towards consumer and other social group. Business ethics is needed to make business activities fair to consumers. It checks business malpractices and offers protection to consumers. Business ethics is needed in order to improve the confidence of consumers as regards quality, price, reliability etc. of goods and services supplied. Business ethics is needed for the protection of rights of consumers at the business level such as right to health & safety, right to be informed, right to choose, right to be heard etc. Business ethics is needed in order to protect the interest of all those concerned with business-the employees, shareholders, dealers, and suppliers. It avoids their exploitation through unfair trade practices. Business ethics is needed in order to create good image of businessmen in the society and also for avoiding public criticism. Ethical business gets public support while unethical business is criticized by all. Public will be ready to invest or lend money only if they are convinced that the organization is following fair business practices. Business ethics is needed in order to develop cordial and friendly relations between business and society. Organizations doing business ethically will continue to survive & prosper for the long time. Ethics in business are important most of all because we pass them on to others. We have the ability to show others the correct way to act and behave by remaining ethical in the way we live.

Q.4. Explain concept of Morality & legality

Morality: Morality is derived from the Latin word moralities which means manner, character and proper behavior. Morality refers to personal or cultural values, codes of conduct that distinguish between right and wrong in the human society. It refers to what is considered right or wrong by people. It is concerned with generally accepted conducts, courtesies and conventions of the society. As human behavior is influenced by emotions and sentiments, many organizations have no predetermined ethics but evaluate good or bad conduct of business on the basis of social customs, traditional beliefs and expectations of the society. Legality: Legality is an act, agreement or contract which strictly adheres to the statutes of a particular jurisdiction. It means lawfulness by virtue of conformity to a legal statute. Law codifies a nations ideals, norms, customs and moral values. Even if a nations laws are both sensible and morally sound, they may be insufficient to establish moral standards to guide the people. The scope of law is narrow and hence it cannot cover the wide variety of individual and group behavior.

Q.5. Explain concept of Rights & Duties

Duties: From ones perspective, duties are what he/she owes to others. Ones right establishes ones duties and ones duties correspond to the right of others. Thus, rights and duties are correlative. Deontological tradition focuses on duties, which can be thought as establishing the ethical limits of ones behavior. Rights: A right is an individuals entitlement to something. They are powerful devices whose main purpose is to enable the individual to choose freely whether to pursue certain interests or activities and to protect those choices. There are legal rights, employee right and human rights. A right identifies activities or interests that people must be left free to pursue or not to pursue as they choose and whose pursuit must not be subordinated to the interest of others except for exceptional reasons.

Q.6.What is Ethical Dilemma? Why it arises? How to solve ethical dilemma?

AN ETHICAL DILEMMA:An ethical dilemma is a situation when moral perception and obligations conflict in such a way that any possible resolution to the conflict is morally intolerable. eg- consider a young man living with his mother. he is the sole source of happiness to her. he lived in France during the second world war. the young man is caught in a ethical dilemma as he believes that as a young man he should join the army and fight the war however as he is the only child he also has to take care of his old mother. this is a ethical dilemma- to join the war or not? ETHICAL DILEMMA ARISES DUE TO FOLLOWING:(1)MORAL UNCERTAINITY:An ethical dilemma is a situation when moral perception and obligations conflict in such a way that any possible resolution to the conflict is morally intolerable.

(2) SELF IMPOSED DILEMMA:- this is also called as DHARMA SANKAT or when both the actions seems right and fair, however one can take either on action and hence is refrained from taking other action. In this case joining the army during war is a self imposed dilemma. (3)WORLD IMPOSED DILEMMA:-This is created to outside situation which is beyond once the second example is that of three relatives made captive by some outsider. (4)PROHIBITION DILEMMA:- This is created when to make a choice or not itself is prohibited by law. There are certain actions prohibited by law of the country and hence when one is supposed to do such an action or refrain from doing such an action then it is a prohibition dilemma. HOW TO SOLVE ETHICAL DILEMMA:(1)CONSIDER YOUR MOTIVE AND DETACH THEM FROM YOUR DECISIONS:First try to consider your motive say you are the young man-would you fight the war or be with your mother-once you are sure of your motives then take the decision. At times one cannot detach ones motives from the decision making and hence one is not able to take the right decision. (2)CONSIDER YOUR OWN CODE OF CONDUCT/ETHICS:One needs to be sure of ones moral code and code of ethics- what one values in life is it material success, is it accomplishment at whatever cost? Is it the internal peace of mind and job satisfaction etc. Depending on this one should take the decision and choose a course of action. (3)CONSIDER THE CONSEQUENCES:One has to weigh the consequences of all the actions one is likely to take and also how it would affect ones future plans and ambitions. Depending on the alternative which would give the maximum happiness to oneself and community and which would harm the least- such an option should be chosen. (4)LISTEN TO YOUR GUT FEELINGS:When all the rational thinking is done, just listen to your inner voice, your gut feelings and follow your heart as 9 out of 10 times that is the most ethical choices one will make.

Q.7.Explain the concept of Egoism & Altruism

Egoism Egoism is an ethical theory that treats self interest as the foundation of morality Egoism is belief that one ought to do what is in ones own self interest. What is ones self interest may be incidentally be detrimental to others, beneficial to others or neutral in its effect. Egoism revolves around a question I ought to act in the interest of myself. In egoism the issues of the morality revolves around the idea that people must do what is best for themselves in order to live a morally correct life. Egoist make use of their self interest as the measuring rod of their actions Decision based on egoism mainly are indented to provide positive consequences to a given partys interest without considering the consequences of other parties. All human beings act solely out of their own self interest. Altruism Altruism are primarily concerned with other people. It means sacrificing ones one interest for the good of others i.e. providing greatest good for the largest number of people. Altruism is an aspect of moral philosophy in which it is argued that moral decisions should be based upon the interest or well being of others rather than on self esteem. Altruism revolves around the question of morality I ought to act in the interest of others. In Altruism the issue of morality revolves around the idea that in order to live a morally correct life one must act in the interest of others. But acting in the interest of others does not imply a reward. Altruism would not calculate and measure cost & benefit

A person donates money to a charity it is the right thing to do, is the honest act of altruism.

Altruism rather than egoism has a better outline for how one should live life. Combination of two is probably more realistic.

Q.8. Explain Corporate Code of Conduct? What is its importance in business?

A corporate code incorporates a companys values. It means. A set of rules to guide behaviour and decisions. A way of behaving, a set of unwritten rules according to which people in a particular group, class or situation are supposed to behave. A statement and description of required behaviours, responsibilities , and actions expected of employees of an organization or of members of a professional body. Code of conduct can be evolved only through constant brainstorming in workshops, seminars, conferences, formal and informal discussions. They must be evolved through mutual consent and consensus.,Involvement of the senior management, Involvement of the employee, Picking the well tested model. The development of a corporate code involves -The identification of the key behavior that maximizes long-term value -Reviewing the codes -communicating the codes to employees - finally updating the codes according to the law and regulations. Once the code is developed ,it has to be implemented in the organization. Thus it is necessary for every organization to develop a corporate code. Importance of corporate code of conduct To define the framework of acceptable behaviour. To follow high standard of practice. To create benchmarks for self-evaluation. To enhance sense of community. To create transparency in business activities To foster higher standards of business ethics. To comply with government laws and norms. HIGHLIGHTS OF CODE OF CONDUCT Do not cheat/ exploit consumers through business malpractices such as artificial and adulteration. Do not restore to hoarding , black-marketing, profiteering and sale of harmful goods. Do not destroy healthy competition, which offers certain benefits to consumers. Ensure accuracy in weighing , packing and quality while supplying gods to consumers. Pay taxes and other charges to concerned authorities honestly and regularly . Avoiding bribing officials and lobbying for favours. Maintain accurate accounts and make them available to all authorized persons and authorities. Pay fair wages , provide facilities and incentives and also give human treatment to employees. Supply reliable information to shareholders regarding financial position and other policy decisions of the company. Charge fair and reasonable price. Ensure accuracy in weights and measures. Ensure that intermediaries do not manipulate Provide product warranty in clear terms. Not to trade in smuggled products.

Avoid formation of private monopolies and concentration of economic power. the prices.

Q.9.Explain theories of ethics

BUSINESS ETHICS Conducting business in a right way. Moral values must be used in conducting business. Following are the theories of Ethics: 1)Teleological Theory Bentham a widely recognized leader of the English Utilitarian and a proponent of the basis of utility or usefulness, or ability to produce happiness. According to him ethics aims at The greatest good of the greatest number of people. This theory rests on consequence hence called Consequential or Teleological school ethics Act which Produce Benefit, advantage, pleasure, good, happiness,to largest no. of people is ethical. Eg. It is wrong to steal money from people at gunpoint. As it results in happiness to one individual but unhappiness to large number of people. 2)Deontological Theory The profounder of this theory is Immanuel Kant.For an action to be good it must not simply conform to a moral law, but from a sense of duty, should be internally consistent and universally valid.No matter how much good may come from lying. The action will never be right. 3)Nature Law Theory Aristotle believed that what we ought to do, and what we ought not to do was determined by considering some aspects of nature. things that hinder our pursuit of truth are bad. He believed that it was our rational element (a) to know (b) to choose an action wisely For eg. if it is a baby doing any unethical act it is not considered unethical as he dont have any knowledge. The 4) Heodonistic Theory According to this theory Outcome of the decision must do maximum good to maximum number of people. Happiness is the highest good.Act must provide highest happiness and lowest pain. 5) Machiavelli Theory Nicrolo Machiavelli gave this theory.This theory says to relentlessly work towards the end and to do anything and everything under the sun to retain power. Morals are only to be read and not practiced. To be in power any act is considered right. Today many business firms conducting business in unethical way u follow this theory. 6)Praxis Theory There is nothing immoral and unethical unless there is deception and manipulation involved. Motive and intentions have to be clear and straight forward. Act must not have adverse effects.

Q.10. Explain Roles & Responsibilities of a Manager & Stakeholder

Primary purpose of any organization is to maximize shareholder value. Organization is responsible not only to shareholders but also Stakeholder shareholders, employees, customers, suppliers, lenders &society at large. In other words, all those who are affected by the organization. It should consider the interest of the all stakeholders when taking managerial decisions. Based on the relationship with the organization, stakeholders can be categorized as : Internal stakeholders

Management Shareholders Employees

External stakeholders Consumers Suppliers Competitors Community Responsibilities of manager towards stakeholders 1. Management To balance multiple claims of different stakeholders. To safeguard the welfare of the corporation. Management has to look after all the stakeholders of the corporations, achieve financial returns for the corporations, spend enough on research for better quality for the customers, etc. 2.Shareholders Most corporations owe their primary responsibility to their shareholders. Shareholders are Considered as members who help the company achieve the goals by investing in business. Shareholders are Entitled share in the profit. They are also entitled to up-to-date information about the company performance. 3.Employees Contribute their efforts and time towards the development of the org. which in turn improves society. Org. has to try to ensure the growth and well being of the employees. Organization should Conduct training programmes for employees, to improve their efficiency Org. has to ensure Health & safety of employees 4. Consumers Providing prompt and adequate service to consumers. Offering quality goods at reasonable prices. Ensuring the health and safety of consumers. 5. Suppliers When dealing with suppliers, organisations must Share information with suppliers and integrate them in the planning process. Pay suppliers on time and in accordance with the agreed terms of trade. 6. Competitors Foster open markets for trade and investment. Respect both tangible and intellectual property rights. Refuse to acquire commercial information by dishonest or unethical means.

Q.12. Write note on Indian Perspective of Ethics.

Purushartha Purusha means either God or a human being. Artha means an object or objective. Purusharthas means objectives of a human being. Purusha does not mean male in the physical sense, but any soul in its differentiated aspect. So the Purusharthas are applicable to both men and women equally.

Four chief aims of Purushartha are : 1. Dharma (Righteousness) 2. Artha (Wealth) 3. Kama (Desire) and 4. Moksha (Salvation or Liberation). Human life without purpose would be meaningless. One needs to have an end or purpose in his life towards which our actions can be directed. Dharma, Artha, Kama & Moksha are the aims or goals of human life which man ought to strive for attaining it throughout his life and in all births. 1. DHARMA Dharma means duty, faith, religion, righteousness, justice, morality Dharma means attainment of certain ends. According to one school of Hinduism, Dharma is an obligatory duty as prescribed by the Vedas to be performed by an individual in accordance with the rules prescribed for the caste to which he or she belongs. In a wider sense, Dharma is the secret glue, the binding force, which upholds and regulates this entire creation just as the gravitational force controls and holds the entire material universe as one piece. It is the divine constitution that defines our role and responsibilities, our social and moral order, our purpose and goals and the reward and punishments that are appropriate for our actions. The most fundamental aspect of Dharma is the performance of ones duty, appropriate to the situation, as an individual, as a member of society and of an organization, as a citizen of a nation, and as a member of the international community. Dharma in business It s increasingly felt that in the absence of Dharma business management is becoming dull and less effective just like a body without soul. Dharma must constitute the foundation of all activities planning, organizing, producing and marketing. Without the presence of Dharma, managerial activities will be practically like a body without soul, a near corpse. Every organization and institution must, therefore, built a culture that represents the embodiment of Dharma in every aspect of its functioning and its relationships production, pricing, marketing, workers consumers, shareholders, the community in general and the government. Eg. An IAS officer has got lots of riches ,money, &pleasure in his life, but this are to be acquired by performing his duty with sincerity & honesty, and not with bribery, corruption or other malpractices, then only it will add meaning to his life. 2)ARTHA Arthameans attainment of riches, worldly prosperity, advantage, profit & wealth. Hinduism recognizes the importance of material wealth for the overall happiness and well being of an individual. Today everyone need money to meet their needs of life like basic necessities, education, for luxuries of life, for name & fame etc., It is one of the Dharmas (duties) of a person in the second stage of life, the householder stage, and during this a person must accumulate as much wealth as possible, without being greedy, to help and support his family. A householder requires wealth, because he has to perform many duties to uphold Dharma and take care of the needs of his family and society. A person should not seek wealth for the sake of wealth but to uphold Dharma and help the members of his family and society achieve their goals. 3) KAMA Kama is desire for pleasure .it can be sensuous pleasure, emotional pleasure or mental pleasure getting through satisfaction of wrok, urge for sexual pleasure etc. Kama means enjoyment of appropriate objects by five senses of hearing, feeling, seeing, tasting and smelling assisted by the mine together with the soul. All that man does is inspired by kama(to get happiness). As we can see the right way to fulfill ones desire is by performing ones obligatory duties in the right manner but not by neglecting them so that the way of the Dharma also becomes the way of fulfillment of desires. It means Artha (Wealth) is means to attain Kama(Pleasure of life) 4)MOKSHA

Moksha means getting rid off or release or liberation or salvation. It is highest end of life attainable only by individual himself with the help of guidance of dharma. Dharma is common regulator whereas moksha is coomon aim of human life. Moksha actually means absence of Moha. Human being has attachment with the desire for sense objects .A person achieves liberation when he overcomes his desire for sense objects by detachment, self control, Surrender to God offering of ones action to God. There are many paths to salvation ad all of them lead to God. The main paths are path of knowledge, of action, of devotion and of renunciation.

Q.13 Explain Ethics in Global Marketing & Advertising.

1. Introduction ETHICS: A GLOBAL PERSPECTIVE Ethics is especially important for companies operating overseas. Although certain ethical values and traditions are the same in various countries, they are practiced differently. These differences in practicing certain ethical values create difficulties amongst managers of multi national corporations when dealing with other countries. As more corporations move into the global arena, dilemmas relating to ethical values and traditions are becoming increasingly common. Sometimes multinationals are accused of exploiting workers in underdeveloped countries, supporting repressive governments that help them, marketing dangerous drugs, unsafe equipments and disrupting the culture and traditions of other countries. There are a number of moral norms that apply to multinationals which are operating in less developed countries. The first norm is to do no intentional direct harm, and is applied to all. The second norm states that the activities have to be morally justified. This means that harmful goods must not be traded in the host country. The third norm states that the human rights of the workers and the consumers in the host country should always be respected. United nations has formed a code of conduct on transnational corporations. Many of its standards are ethical standards such as respect for human rights and fundamental freedom, abstaining from corrupt practices, consumer protection, environmental protection, etc.The government also plays a very vital role in further development of ethical standards for international business. 2. Ethics in Marketing Marketing is the process of bringing together business with customers and involves numerous components. There is a product development deciding what is needed. There is public relations, trying to get along smoothly with others so they will help send business. Then there is advertising which will tell everybody what you have and why they need it, and need it from you! There is a lot of cross over from these areas, but combined they are marketing. MAJOR GLOBAL MARKETING ETHICAL PROBLEMS ARE AS FOLLOWS: With the internet the ethics or principles that once governed marketing and business have not global. Unfortunately ethics seem to have been lost in the global business world today TRADITIONAL SMALL SCALE BRIBERY: it involves the payment of small sum of money, typically to a foreign official in exchange for him/her violating some official duty or responsibility or to speed routine government actions. LARGE SCALE BRIBERY: a relatively large payment intended to allow a violation of law or designed to influence policy directly or indirectly. GIFTS/ FAVOUR / ENTERTAINMENT: it includes range of items such as lavish physical gifts, opportunities for personal travel at the companys expense, gifts received after the completion of the transaction and other extravagant expensive entertainment. PRICING: it includes unfair differential pricing, questionable invoicing where the buyer requests a written invoice showing a price other than the actual price paid, pricing to force out local competition, dumping

products at prices well below that in the home country, pricing practices that are illegal in the home country but legal in host country. PRODUCTS/ TECHNOLOGY: it included product and technology that are banned for use in the home country but permitted in the host country and/ or appear unsuitable or inappropriate for use by the people of the host country. TAX EVASION PRACTICES: used specifically to evade tax such as transfer pricing including the use of tax havens, where any profit made is in low tax jurisdiction, adjusted interest payments on intra- firm loans, questionable management and service fees charged between affiliates and/ or the parent company. ILLEGAL/ IMMORAL ACTIVITIES IN THE HOST COUNTRY: practices such as polluting the environment, maintaining unsafe working conditions, product/ technology copying where protection of patents, trademarks or copyrights has not been enforced and short weighting overseas shipments so as to charge a country a phantom weight. QUESTIONABLLE COMMISSION TO CHANNEL MEMBERS: unreasonably large commissions of fees paid to channel members such as sales agents, middlemen, consultants, dealers and importers. CULTURAL DIFFERENCES: some practices involve potential miss- understandings related to the traditional requirements of the exchange process due to cultural differences. These practices include gifts, monetary payments, favors, entertainment and political contributions. INVOLVEMENT IN POLITICAL AFFAIRS: it is related to the combination of marketing activities and politics including the following: The exertion of political influence by multinationals, Engaging in marketing activities when either home or cost countries are at war and illegal technology transfers. GUIDELINESS TO SOLVE GLOBAL BUSINESS ETHICS PROBLEMS To solve the Global business ethics problems following are the five guidelines: 1. Do not direct intentional harm 2. Produce more good than harm for the host country 3. Respect the rights of employees and of all others affected by ones action or policies 4. To the extent consistent with ethical norms, respect the local culture and work with and not against it. 5. Multinationals should pay their fair share of taxes and cooperate with the local government in developing equitable laws and other background institutions. To solve global marketing ethics problems international institutions should manage, regulate and police the global marketplace, and to promote the establishment of multinational treaties to govern the global business system. 3. ETHICS IN ADVERTISEMENT: DEFINATION: An advertisement is defined as a paid- for communication, addressed to the public or a section of it, the purpose of which is to influence the opinions or behavior of those to whom it is addressed. MEANING: Advertising is the attempt to send information to people to convince them to spend their money with a certain company. This concept is the foundation of much of the modern financial world. ASCI (THE ADVERTISING STANDARD COUNCIL OF INDIA) ASCI is a voluntary self- regulation council, registered as a not-for-profit company under sec 25 of the Indian cos. Act.The sponsors of the ASCI, who are its principle members, are firms of considerable repute with industry in India, and comprise Advertisers, media, add Agencies and other professional/ ancillary services connected with advertising practice.

The ASCI is not a government body, nor does it formulate rules for the public or relevant industries. The U.K. self regulatory body, the advertising standards authority suggests that the advertisement should be legal, decent, honest and truthful in that they Should not cause serious or widespread offence Should not cause undue harm or diseases Should contain nothing that might provoke anti-social or violent behavior. Should contain nothing that is likely to result in the physical, mental or moral harm to children. 4. Conclusion Marketing plays an important role in bringing products of great value to humankind. While product safety and advertising, admittedly two central parts of marketing, have received a good deal of attention, areas such as pricing market research, sales, target marketing, and social marketing have been neglected. Ethics in marketing would include making safer products, not using deceptive or miss leading advertisements, not indulging in hard sell, not using coercion on channel partners to push products and not engaging in price fixing- in short, fair and honest dealings that have the customers and other stakeholders interest in mind. Tobacco and alcohol advertisements are extremely popular targets for regulation. Many critics have argued that these advertisements encourage consumption of these products and they are harmful. The four Ps: product, price, promotion and place also arises important ethical questions which are listed below: What responsibilities do producers have for the quality and the safety of their products? Who is responsible for harm caused by a product? Is the consumers willingness to pay, the only ethical constraint on fair pricing? Should the ability to pay be a factor in setting price? Are misleading and deceptive advertisements ethical? What privacy protections should be offered for marketing data? Is it ethical to target vulnerable populations such as children or the elderly? What responsibilities does a producer have when marketing in foreign countries? ADOPTION OF ETHICS DUE TO MARKET COMPULSIONS: Marketers are moving away from guns and cigarettes due to public demands and government restriction. Many of them are becoming increasingly aware of marketing ethics and moving towards healthier and safer products.

Q.15. Write Note on ILO

The International Labour Organization (ILO) is a specialized agency of the United Nations that deals with labour issues. It founded in 1919 with 15-20 country member, At present there are 175 country member. The main aim was to establish a system of International standards, which define & guarantee labour rights & improve conditions for working people. ILO built a system of International labour standards expressed in the form of Conventions, Recommendations & codes of Practice. The ILO has since adopted more than 180 Conventions and 190 Recommendations covering all aspects relating to workplace. In addition, dozens of codes of practice have been devloped. ILO standards play important role in drawing national legislation.ILO provide advice in drafting national labour law. All ILO members has adopted in 1998 The declaration of Fundamental Principles & Rights at work place.This covers 4 areas Freedom of Association and the right to collective bargaining Equality of opportunity & treatment Forced Labour Child labour ILO is working in form of Three organ International labour organization Government body

International labour office

Q.17.What is Environmental Ethics ? Explain Environmental issues in India.

1. INTRODUCTION Does the earth exist for the benefits of humanity? Do humans have any ethical obligations with respect to the natural world? Have we the right to take all the Earths resources for our own use? Do other species have an intrinsic right to exist? Do trees have legal standing? What do various religious have to say about humanitys relationship to the rest of the living world? These and similar questions are addressed in the study of environmental ethics. We are cutting down forests for making our homes. We are continuing with an excessive consumption of natural resources resulting in their depletion. Human activities lead to Environmental pollution. Human being disturbing the natural balance. This is coming back to us in form of polluted environment risking the life of future generation. Is this ethical? This is the issue that environmental ethics takes up. 2.ENVIRONMENT ETHICS: Environmental Ethics explain Human behavior and responsibilities towards environment. Environmental Ethics is the branch of philosophy that studies the ethical relationship between human being & the Environment. Environmental ethics stresses the fact that all life forms on earth have right to live. By destroying nature we are depriving these life forms of their right to live. Environmental ethics is about including the rights of non-human in our ethical & moral values. Even if the human race is considered the primary concern of society, animals and plants are in no way less important. They have equal to get their fair share of existence. COMPONENTS OF ENVIRONMENTAL ETHICS Awareness Knowledge Participation 3.ENVIRONMENT CHALLENGES: 1. Pollution. 2. Consumption of non renewable resources like oil. 3. Use of renewable resources such as water above the rate of natural replenishment. 4. Change in the universal balance in the eco system through the artificial stellar activities. 5. Inviting climatic change through the rapid felling of trees and fast removal of forests. 6. The outlook of winning a war against the nature through the scientific activities. 7. Toxic waste. 8. Contamination of ground water. 9. Oil spills destroying the seashores. 10. Fossil fuels producing carbon dioxide resulting in green house effect. 11. Usage of fluro carbons that deplete the ozone layer. 4.ENVIRONMENTAL ISSUES IN INDIA: Rapid industrialization and urbanization have brought about economic development in India but they also caused damage to the country s environment through deforestation, soil erosion, water pollution etc. ENVIRONMENT ISSUES : a) Air pollution : According to WHO Environmental report, New Delhi is one of the top 10 most polluted cities in the world. It is found that respiratory diseases caused due to air pollution in New Delhi are about 12 times the national average. Premature deaths occurring each year due to air pollution is the highest in our country. Government has stipulated that all public vehicles that are 15 years or more should banned and public transport vehicles in New Delhi should switch to Compressed Natural Gas(CNG) engines. But these regulatory reforms have failed due to lack of enforcement.

b) Energy consumption: India is the second largest commercial energy consumer in East Asia. Higher energy consumption in industrial sector is due to increase in population urbanization. The industrial sector accounts for 41 % of total consumption. c) Carbon Emission : In India carbon emission has grown 9 times over the past four decades. Its contribution to world carbon emission is expected to increase by 3.2% by 2020.The country reliance on low quality coal with high carbon content is the primary reason for higher carbon emission. d) Energy & carbon intensity: Carbon intensity level in India is high as compare to other Asian countries. The reason for this are the increase in industrial activity that has taken place .Indian economic policies such as high import tariffs on high quality coal and subsidies on low quality coal have also contributed to carbon pollution intensity. 5.Effort taken by the government of India : 1. The government of India (GOI) has adopted a comprehensive policy to protect public health, forest, and wildlife. But the policy has an important limitation that no court can enforce it. 2. The environment protection act 1986 focused on reducing industrial pollution. The report stated that the estimated annual cost of environment, degradation is 4.5% of GDP (average). 6.Effort taken by the Business of India : GREEN INITIATIVES : Green initiative in business range from environmentally friendly technological innovations, green tourism, green community, environmental campaigning and environmental counseling. Green community service projects are another example of what is being done in the private sector to demonstrate the concern for environment. In 1992, many initiatives were taken up to encourage green business. These initiative had encouraged investment in landscape improvement, fund collection for implementing green practices, voluntary campaigns, rehabilitation programmes that encourage various country sites etc. These programmes were developed for the benefit of local communities. Environmental counseling is a green programme aimed at encouraging employees to express their concern about environmental issues. In many companies, employees are given an opportunity to discuss environmental issues. Companies also publish articles on green topics and organize competitions to encourage ecologically sensitive innovations in the working process. REASONS FOR ADOPTING GREEN INITIATIVES : Organizations adopt green initiative due to the following reason; a) Economic benefits from increased efficiency: Firms by reducing the wastage can decrease handling expenses, fines and costly inputs. b) Competitive advantage through innovation: Efficient product ensures the usage of cleaner technologies, process innovation and waste reduction. c) Public image : Consumers, investors and employees respond positively to companies with a reputation of good environmental performance.

Q.18 . Define corporate Governance. Explain its features.

Corporate Governance Corporate Governance is the application of best management practices, for sustainable development of all stakeholders. Corporate governance can be defined as a set of systems and processes which ensures that a company is managed in the best interest of all its stakeholders. Corporate Governance is the adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility

Corporate governance is about "the whole set of legal, cultural, and institutional arrangements that determine what public corporations can do, who controls them, how that control is exercised, and how the risks and return from the activities they undertake are allocated." Corporate governance is about how companies are directed and controlled. Good governance is an essential ingredient in corporate success and sustainable economic growth. DEFINITION OF CORPORATE GOVERNANCE: 1) According to James. D. wolfensohn: Corporate governance is about promoting corporate fairness, transparency and accountability. 2) According to Sir Adrian Cadbury, Corporate governance is holding the balance between economic and social goals between individual and committee goals. Objective Enhancement of shareholder value keeping in view the interests of other stakeholder. Key Constituents Shareholder. Board of Director. Management. Features of Corporate Governance It is a concept rather than an individual instrument. Corporate Governance is a process or a set of system and processes to ensure that a company is managed to suit the best interest of all. Corporate Governance relates to law, procedures, practices and implicit rules that determine companys ability to take improved managerial decision from social point of view. Corporate Governance is in essence determination of how companies are governed, how executive actions are supervised and how a company is accountable to regulation imposed on it by law or other commitments shareholders. The importance of corporate governance has been suggested by international agencies such as OECD and World Bank. In many countries, legal recognition is given to the concept. All companies are accepted to honour this concept on voluntary basis. It is not merely the rules of play for the distribution of power between owner and management, it includes the interface between the company and other shareholders. It aims at maximum welfare of the maximum number. It hinges on complete transparency, integrity and accountability of management that includes executive and non-executive. Corporate Governance is basically a system of making directors accountable to shareholder for effective management of the company along with concern for ethics and values. Corporate Governance is concerned with establishing a system whereby directors are entrusted with responsibilities and duties in relation to the direction of a companys affairs. An effective corporate governance system should provide mechanisms for regulating directors duties in order to restrain them from abusing their powers and to ensure that they act in the best interest of the company in its broad sense. Corporate Governance is also concerned with the ethics, values and morals of a company and its directors. The systems include structural and organizational matters. The stakeholders may be internal stakeholders (promoters, members, workmen and executive) and external stakeholders (customers, lenders, vendors, bankers, community).

Q.19 Explain Objectives/Scope of Corporate Governance.

SCOPE/OBJECTIVES OF CORPORATE GOVERNANCE: 1) Long term value: To enhance the long term value and economic efficiency of the company. It encompasses all shareholders and integrates all the participants involved in the process. 2) Evaluate the reputation: To evaluate the reputation of the corporation and the esteem of its management. 3) Attract the reputation: To attract the reputation of corporation and the esteem of its management. 4) Improve the morale: To create and adopt, code of conduct with wholehearted commitment and improve the morale and ethical standards of performance to the utmost level. 5) To lead organization: To have a right balance, knowledge and competence to set strategies and lead the organization. 6) Benefit of shareholders: To use the resources entrusted to the management, in the most economic, efficient, productive and effective ways, for the benefit of shareholders as well as for the society at large. 7) Reliable information: To generate accurate and reliable information. 8) Decision-making process: To make decision-making process transparent. 9) Set high standards of business: To set high standard of business ethics base upon humanity, honesty and hard work. 10) Standard of living: To improve the standard of living and life of society industry, commerce, services, professionals.


1) New business opportunities: corporate governance prepares a small enterprise for growth and helps to secure new business opportunities when they arise. 2) Manage crises: It increases the companys ability to identify and mitigate risks, manage crises, respond to changing market trends. 3) Market confidence: It increases market confidence as a whole. 4) Protect interest: It protect welfare and interests of a wide range of constituencies and communities nearby. 5) Credibility: The credibility of corporate governance attracts long capital-foreign as well as domestic. 6) Quality of product: It ensures the purity and quality of product after the product leaves the factory. 7) Economic and social objectives: A balance between economic and social objectives and the reconciliation of the interests of the individuals, the company and society is achieved. 8) Frame objectives: Corporate governance provides a structure through which the objectives of the company are set. 9) Outcomes and obligations: Good corporate governance helps an organization to achieve its outcomes and obligations through sound planning and risk management. 10) Decision making: It provides a means to assist in decision-making and to improve accountability.

11) Stability and long-term sustenance: Adoption of good corporate practices promotes stability and long-term sustenance of stakeholders relationship.

12) Minimizes wastages: Good corporate governance also minimizes wastages, corruption, risks and mismanagement. 13) Maintain investors confidence: Strong corporate governance maintains investors confidence, as a result of which, company can raise capital efficiently and effectively.

Q.21. Write note on Corporate Governance Reporting. It mean governing a company in value based manner. Corporate Governance is the relationship between Shareholders, Directors, Independent Directors, the Board & Management of the Company. Objective Enhancement of shareholder value keeping in view the interests of other stakeholder. Key Constituents Shareholder. Board of Director. Management.

Corporate Governance report involves promoting Transparency - Everything that happen in the company, if it is not shy to share in publicly, it is transparent. Accountability - The Management is accountable for its decision. Equanimity - Right of all shareholder are equal, regardless of minor or major shareholding.It involve letting Investors, know how the company in which they have invested is utilizing their money. Corporate governance report consist of: Information related to Board of Directors. Duties and Responsbilties of director. Promoters of promoters. Institutional Investors. Shareholding pattern. Structure. According to the Corporate Governance committees of various countries ,there shall be a separate section on Corporate Governance in the annual reports of company with detail compliance report on Corporate Governance. According to SEBI ,the lists to be mentioned in Corporate Governance Report are as follow 1. A brief statement on Companys Philosophy on Code of Governance. 2. Managements perspective on Corporate Governance. 3. Board of Directors : Composition & Categories of the Board of Directors. Number of board meetings held, dates on which held. Attendance of each director at BOD meetings and the last AGM Number of BODs or Board committee he/she is member or chairperson. 4.Code of Business Ethics & Conduct 5.Risk Management

6.Committees of the Board :a)Audit Committee :-Brief description of terms of reference. -Composition, names of members & chairperson -Meetings & attendance during the year. b)Remuneration Committee:-Brief description of terms of reference. -Composition, names of members & chairperson. -Meetings & attendance during the year. -Remuneration policy. -Details of remuneration to all the directors, as per format in main report. c)Shareholder Committee:-name of the Non-executive director handling the committee. -No. of shareholders complaints received so far. -No.of complaints not solved to the satisfaction of shareholderd -Remuneration policy. -No. of pending share transfer. 7.General Body Meetings -Location & time where last AGM held. -Details of voting pattern -Whether special resolution were put through postal ballot last year. -procedure for postal ballot. 8.General shareholder information -AGM-date, time and venue -date of book closure -dividend payment date -Distributions of shareholding -Dematerialization of shares & liquidity -Plant location -Listing on stock exchanges -market price data :High, low during each month in last financial year. -Address for correspondence. 9.Means of communication -Half yearly report send to each household of shareholders and the quarterly results. -The names of newspaper which publish the details normally. -Any website which display the information 10. Disclosure

Related Party Transactions Statutory compliance, penalties & strictures Whistle Blower Policy General body meetings Compliance with mandatory requirements. Compliance with non mandatory requirements Remuneration Committee Audit qualifications

Postal Ballot

11.Code for Prevention of Insider-Trading Practices. 12.Other Important Areas Private/Section 25 Company. Auditors Certificate on Corporate Governance. Committee Membership (in Audit & Investor Grievance Committee) Communication to Shareholders. Investor Grievance & Shareholder Redressal. Disclosure on material, financial, & commercial transactions with senior management.

Q.23 Explain rights of investor / shareholders.

Definition of shareholder Shareholder is an individual, group or organization that holds one or more shares in a firm and in whose name the share certificate is issued. Shareholder is the one who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership come a right to declared dividends and the right to vote on certain company matters. There are also called as: Shareowner, Stockholder and Investor.

Rights of investor and shareholders

Shareholder interests are paramount. A main purpose of corporate governance is to protect the interest of a company's owners - the shareholders. The OECD principles on corporate governance pay special attention to the rights of shareholders and their equitable treatment. Here is a summary 1.Basic shareholder's rights The right to secure ways of registering ownership The right to get share in the companys profits The right to transfer of their shares The right obtain timely and relevant information on the corporation The right vote in general shareholder meetings The right Elect members of the board 2.Right to get information The shareholders have right to get sufficient information on decisions concerning fundamental corporate changes such as amendments to the statutes, or articles of incorporation or similar governing documents, and extraordinary transactions that in effect result in the sale of the company. Shareholders should be informed of the rules, including voting procedures that govern general shareholders' meetings. Shareholders should be given: o Information on the voting right should be provided before the purchase of the share, o Sufficient and timely information about the date, location and agenda, as well as issues to be decided at the meeting; o Opportunity to ask questions of the board and to place items on the agenda of general meetings, subject to reasonable limitations; o The right to vote in person or in abstentia with equal treatment of such votes. o The rules and procedures concerning the acquisition of corporate control in capital markets, and extraordinary transactions such as mergers, and sales of substantial portions of shares, should be clearly articulated and disclosed so that investors clearly understand their rights and recourse. Transactions should occur at -

transparent prices and under fair conditions that protect the rights of all shareholders according to their class. Anti-take-over devices should not be used to shield management from accountability. 3.Right to get equal treatment: All shareholders should receive equitable treatment, including minority and foreign shareholders and all shareholders should be able to obtain effective redress for violation of their rights. Shares of the same class should have the same vote,

All shareholders have equal right to participate in Management decisions & other matter related to their interest Any changes in voting rights should be subject to shareholder vote,

4.Other rights To receive the share certificates on allotment or transfer as the case may be, in due time. To receive copies of the abridged annual report, the balance sheet the profit & loss account. To participate and vote in general meetings either personally or through proxies To receive corporate benefits like rights, bonus etc. once approved. To inspect the minute books of the general meetings and to receive copies thereof. To proceed against the company by way of civil or criminal proceedings. To apply for the winding-up of the company. To receive the residual proceeds. To receive dividend in due time once approved in general meetings. To apply to company law board to call or direct the annual general meeting. To receive offer to subscribe to right shares in case of further issue of shares. To receive offer under takeover or buyback offer under SEBI regulations. To receive all benefits/material information declared for the investors by the company. Prompt service from the company such as transfers, sub-divisions and consolidation of holdings in the company. As an equity holder they have a right to subscribe to further issue of capital by the company. Investors can expect delivery of shares purchased/value of share sold within 15days from the end of settlement period. Access to the exchange arbitration facilities in case of dispute with broker. Right to transfer ownership means, shareholders are allowed to trade their stock on an exchange.

Q.24 Write note on Cadbury committee report on Corporate Governance.

CADBURY COMMITTEE REPORT (1992) The 'Cadbury Committee' was set up in May 1991 with a view to overcome the huge problems of scams and failures occurring in the corporate sector worldwide in the late 1980s and the early 1990s. It was formed by the Financial Reporting Council, the London Stock of Exchange and the accountancy profession, with the main aim of addressing the financial aspects of Corporate Governance. Other objectives include: (i) uplift the low level of confidence both in financial reporting and in the ability of auditors to provide the safeguards which the users of company's reports sought and expected; (ii) review the structure, rights and roles of board of directors, shareholders and auditors by making them more effective and accountable; (iii) address various aspects of accountancy profession and make appropriate recommendations, wherever necessary; (iv) raise the standard of corporate governance; etc.

Keeping this in view, the Committee published its final report on 1st December 1992. The report was mainly divided into three parts:1) Reviewing the structure and responsibilities of Boards of Directors and recommending a Code of Best Practice The boards of all listed companies should comply with the Code of Best Practice. All listed companies should make a statement about their compliance with the Code in their report and accounts as well as give reasons for any areas of non-compliance. The Code of Best Practice is segregated into four sections and their respective recommendations are:A )Board of Directors The board should meet regularly retain full and effective control over the company and monitor the executive management. There should be a clearly accepted division of responsibilities at the head of a company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision. all directors should have access to the advice and services of the company secretary, who is responsible to the Board for ensuring that board procedures are followed and thatapplicable rules and regulations are complied with. B)Non-Executive Directors -The non-executive directors should bring an independent judgment to bear on issues of strategy, performance, resources, including key appointments, and standards of conduct. -The majority of non-executive directors should be independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment, apart from their fees and shareholding. C)Executive Directors Directors service contracts should not exceed three years without shareholders approval. In Annual report there should be full and clear disclosure of total emoluments of the chairman, directors and highest-paid directors, including pension contributions and stock options. In annual report separate figures should be given for salary and performance-related elements and the basis on which performance is measure should be explained. D)Financial Reporting and Controls It is the duty of the board to providing true and fair picture of financial reporting. Board should present a balanced and understandable assessment of their companys position, in reporting of financial statements. The board should ensure that an objective and professional relationship is maintained with the auditors. The board should establish a audit committee of at least three non executive directors with written terms of reference which deal clearly with its authority and duties. Director should report on effectiveness of companys system of internal control. Director should report that co. is a going concern, with supporting assumptions or qualifications as necessary. 2)Considering the role of Auditors and addressing a number of recommendations to the Accountancy Profession The Cadbury Committee recommended that a professional and objective relationship between the board of directors and auditors should be maintained, so as to provide to all a true and fair view of company's financial statements. Auditors' role is to design audit in such a manner so that it provide a reasonable assurance that the financial statements are free of material misstatements. There is a need to develop more effective accounting standards, which provide important reference points against which auditors exercise their professional judgement. Every listed company should form an audit committee which gives the auditors direct access to the nonexecutive members of the board. The Committee further recommended for a regular rotation of audit partners to prevent unhealthy relationship between auditors and the management.

The Accountancy Profession, in conjunction with representatives of preparers of accounts, should take the lead in:- (i) developing a set of criteria for assessing effectiveness; (ii) developing guidance for companies on the form in which directors should report; and (iii) developing guidance for auditors on relevant audit procedures and the form in which auditors should report. However, it should continue to improve its standards and procedures.

3)Dealing with the Rights and Responsibilities of Shareholders The shareholders, as owners of the company, elect the directors to run the business on their behalf and hold them accountable for its progress. They appoint the auditors to provide an external check on the directors financial statements. The Committee's report places particular emphasis on the need for fair and accurate reporting of a company's progress to its shareholders, which is the responsibility of the board. It is encouraged that the institutional investors/shareholders to make greater use of their voting rights and take positive interest in the board functioning. Both shareholders and boards of directors should consider how the effectiveness of general meetings could be increased as well as how to strengthen the accountability of boards of directors to shareholders.

Q.25 Write note on Birla committee report on Corporate Governance.

KUMAR MANGALAM BIRLACOMMITTEE, 1999 COMMITTEE A committee was appointed by SEBI on 7th May1999.under chairmanship of Mr. Kumar Mangalam Birla to promote & raise the standard of corporate governance. The Committee made 25 recommendations, 19 of them were `mandatory WHY WAS THE COMMITTEE FORMED? Primary objective was to view corporate Governance from perspective of investors & shareholders. To promote and raise the standards of Corporate governance. To improve corporate governance Standards in listed companies in areas Such as - Disclosure of material information (financial & non- Financial),Manner & frequency of such disclosure, Responsibilities of independent & non-Independent directors To draft a code of corporate best practice RECOMMENDATIONS OF KUMARMANGALAM BIRLA COMMITTEE Applies to listed companies of paid up capital of Rs. 3 crores . Composition of Board of Directors There should be optimum Combination of Executive & Non- Executive Directors. At least 50 % of directors should be non-executive . Where chairman is executive director, at least 1/3 of directors should be independent directors. Where chairman is Non- executive director, at least 1/2 of directors should be independent directors. Audit Committee-There should be qualified ,independent audit committee, all non-executive, having 3 independent directors, With 1 having financial and accounting knowledge. Remuneration committee There should be remuneration committee to frame policy for remuneration packages of executive directors. It should have at least 3directors, all no executive and be chaired by an independent director. There should be proper Disclosure in annual Report relating to all elements of remuneration package of directors like salary, bonus, pension, benefits.

Shareholders committee- There should be Shareholder committee to look into the issues related to shareholders. Disclosure- Management discussion & analysis report covering industry structure, opportunities, threats, Internal control system. Information sharing with shareholders Board procedures-At least 4 meetings in a year, to Review operational plans, capital budgets & quarterly Results

NON MANDATORY RECOMMENDATIONS Role Of Chairman - effective participation of all members Remuneration Committee of Board credibility & Transparency Ballot system -Shareholders' Right for Receiving Half Yearly Financial Performance. They should be informed about Postal Ballot. Postal Ballot can be done Covering Critical Matters like Alteration in Memorandum Sale-Of Whole or Substantial Part of the Undertaking Corporate restructuring Further Issue Of Capital Venturing Into New Businesses etc CONCLUDING REMARKS By and large, Indian listed companies have been legally mandated to follow fairly strict standards of Corporate governance and disclosure Indian corporate sector regulators and Companies have been quick to incorporate some of the best international corporate governance and disclosure practices The need of the day is more training of Directors, audit committee members and senior Executives of companies The challenge is to design and sustain a system that imbibes the spirit of corporate governance And not merely the letter of the law.

Q.26 Write note on Narayan Murthy Committee report on Corporate Governance.

The Securities and Exchange Board of India (SEBI) had constituted a Committee on Corporate Governance in 2002 , in order to evaluate the adequacy of existing corporate governance practices and further improve these practices. It was set up to review and suggest measures to improve corporate governance standards. The SEBI Committee was constituted under the Chairmanship of Shri N. R. Narayana Murthy, Chairman and Chief Mentor of Infosys Technologies Limited. The Committee comprised members from various walks of public and professional life. This included captains of industry, academicians, public accountants and people from financial press and industry forums. Objectives TO review the performance of corporate governance; and

To determine the role of companies in responding to rumour and other price sensitive information circulating in the market, in order to enhance the transparency and integrity of the market.

The issues discussed by the committee primarily related to audit committees, audit reports, independent directors, related parties, risk management, directorships and director compensation, codes of conduct and financial disclosures. The committee's recommendations in the final report were selected based on parameters including their relative importance, fairness, accountability, transparency, ease of implementation, verifiability and enforceability. The key mandatory recommendations focused on:

strengthening the responsibilities of audit committees: All Audit committee members should be financially literate i.e. ability to read & understand basic financial statements like P&L, Balance Sheet etc. and at least one member should have accounting or financial management expertise. The Audit committees of public listed companies should be required to review the following financial information mandatorily -Financial statement including quarterly/half yearly financial information and draft audit report. -Management discussion and analysis of financial condition & results of operations. -Report relating to compliance with laws & risk management. responsibilities on boards to adopt formal codes of conduct There should be obligatory on BOD to lay down the code of conduct for all board members and senior management of co. This code of conduct shall be posted on website of co. All board members & senior management personnel shall affirm compliance with the code on annual basis.The Annual report of the co. shall contain a declaration to this effect signed by CEO. disclosures relating to compensation All compensation paid to non-executive directors may be fixed by BOD and should be approved by shareholder in general meeting . it should be disclosed in annual report. Co. should also disclose Non executive directors shares, stock holding. Disclose business risks -It is important to BOD to be fully aware of risks facing the business. It is important for shareholder to get accurate information about the process by which co. is manage their business risk. corporate executive boards to assess and disclose business risks in the annual reports of companies. -Management should place a report before entire board of directors every quarterly documenting the business risks faced by co., measure to address & minimize such risks and any limitations to risk taking capacity of business. The documents should be formally approved by BOD. disclose Application of fund Co. raising money through IPO should disclose the uses and application of funds by major category on quarterly basis as part of their qyuarterly declaration of unaudited financial results. On Annual basis the co. shall prepare a statement of funds utilized for purpose other than stated in the offer document/prospectus.

Non-mandatory recommendations included: moving to a regime where corporate financial statements are not qualified; instituting a system of training of board members; and evaluation of performance of board members.

As per the committee, these recommendations codify certain standards of 'good governance' into specific requirements, since certain corporate responsibilities are too important to be left to loose concepts of fiduciary responsibility. Their implementation through SEBI's regulatory framework will strengthen existing governance practices and also provide a strong incentive to avoid corporate failures.


Definition: Social Responsibility of business means duties and obligations of business towards different social groups i.e. shareholder, consumers, employees, local community and the society at large. Corporate social responsibility (CSR) can cut across almost everything you do and everyone you deal with. The suppliers you choose and the way you deal with them. How you treat your employees. How your business affects your local community. How your business affects the environment. This doesn't mean that you can't run a profitable business. In fact, CSR can help you improve your business performance. By looking ahead, you're ready to cope with new laws and restrictions. You avoid costs such as wasted energy or paying unnecessary waste fees. Perhaps most importantly, you can keep winning business from increasingly demanding customers. Factors that explain the need (significance) for social responsibility:

1. To protect environment: When the business starts misusing the resources to create wealth and satisfy human wants, it must be punished for its wrong deeds; and social responsibility is the ultimate answer. 2. Good public image: A business must voluntarily honour its social commitment for better public image as only such business enjoys a good reputation and good public support. 3. Concept of trusteeship: This concept states that a business must be held in trust legally and morally for the benefit of the people. 4. Minimize government control: To minimize government control, the business must come forward and carry out social responsibilities. 5. Better utilization: The ever increasing pollution, deforestation and ecological balance brings out the necessity to ensure better utilization of natural and human resources with minimum wastage and optimum use. 6. Assist the government: A progressive and socially aware business can join hands with the government in solving many social problems. 7. Accountability: Business is accountable for its social and economic performance, so business has to adopt positive attitude towards social responsibility. 8. Growth: Growth or Perish is the norm of the present era. The society would support only if the business organization has fulfilled its social obligations. 9. Growing awareness: Organizations has to be socially responsible as people are becoming more and more aware about environmental issues. 10.Moral duty: The business organizations have realized that certain actions even if legally right but morally wrong should not be adopted. 11.Enactment of laws: Government has enacted various laws. This has put not only moral pressure but also legal pressure on organization to adhere to the roles. 12.Consumerism: It is a consumer movement of the people, by the people and for the people to protect the consumers from the unethical practices followed by some enterprises. So, business organizations should fulfill social responsibilities and avoid public displeasure. Factors against the need (criticism) for social responsibilities: 1. Business is for profit: Business is an economic activity. Its main objective is to earn profit only. If business does social work it will have to divide its limited sources between economic and social activities. 2. Government responsibility: Let business pay taxes and allow government to fulfill its social commitment. Social responsibility is an area reserved for government and not for business. 3. Lack of social skill: Social welfare is full time work. Institutions like government, charitable or religious organizations, having knowledge, resource and dedication can do social welfare programmes 4. Overhead cost: The money spent on welfare programmes is expenditure. It will make company financially weak and affect the future expansion plans. 5. Charity: People must be made to realize that someone had worked hard for the services provided to them. It must provide opportunities for earning through efforts and hard work and should not offer donations. 6. Economic justification: There is no economic justification for the business to do social work. Social responsibility is not profitable for the business. 7. Legal restriction: The managers who are incharge of funds have lots of restrictions as to how to utilize the funds.

Q.29.EXPLAINCORPORATE SOCIAL RESPONSIBILITYTOWARDS STAKE HOLDERS CLASSIFICATION OF STAKEHOLDERS Internal stakeholders Management Shareholders Employees External stakeholders Consumers Suppliers Competitors Community EXPECTATIONS OF STAKEHOLDERS







Q.34.Explain CSR & Sustainable Development.

What is CSR?

The concept of social responsibility means going beyond the fulfilment of legal requirements by investing more in human capital, the environment, and relations with stakeholders. It is a voluntary instrument, but must be implemented reliably so that it fosters trust and confidence among stakeholders. "CSR is the integration by companies of social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis." CRS means the commitment of business to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development SUSTAINABLE DEVELOPMENT Sustainability refers to the long term maintenance of systems according to environmental, economic and social consideration. The Bruntland Commision in 1987 defined sustainable development as meeeting of the present without compromising the ability of future generations to meet their own needs. CORPORATE SUSTAINABILITY Corporate sustainability is a business approach that creates long-term consumer and employee value by not only creating a green strategy aimed towards the natural environment, but taking into consideration every dimension of how a business operates in the social, cultural, and economic environment. Also formulating strategies to build a company that fosters longevity through transparency and proper employee development. corporate sustainability describes business practices built around social and environmental considerations. For businesses, sustainability is a powerful and defining idea: a sustainable corporation is one that creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts. It operates so that its business interests and the interests of the environment and society intersect. A sustainable business stands an excellent chance of being more successful tomorrow than it is today, and remaining successful, not just for months or even years, but for decades or generations. People - Planet - Profit. With increasing globalisation, greater environmental and social awareness and more efficient communication, the concept of companies' responsibilities beyond the purely legal or profit-related has gained new impetus. Businesses need to be seen acting responsibly towards people(society), planet(Environment) and profit. Sustainability reporting It means communicating an organizations economic, environmental & social opportunities & challenges to stakeholder. Companies increasingly emphasise the importance of relationship with external parties, ranging from consumers to investors to community groups, as key to their business success. Transparency & open dialogue about performance, priorities and future sustaibaility plans helps to strengthen these partnership and to build trust. CONCLUSION Even though companies are taking serious efforts for the sustained development, some critics still are questioning the concept of CSR. There are people who claim that Corporate Social Responsibility underlies some ulterior motives while others consider it as a myth. Is CSR really a stalking horse for an anti-corporate agenda? The reality is that CSR is not a tactic for brand building; however, it creates an internal brand among its employees. Indulging into activities that help society in one way or the other only adds to the goodwill of a company.


Triple bottom line

Triple bottom lines mean expanding the traditional reporting framework to take into account ecologist and social performance in addition to financial performance. TBL = Financial performance+ Ecological performance+ social performance It captures an expanded spectrum of values and criteria for measuring organizational (and societal) success: economic, ecological and social. Triple bottom line in business: The phrase Triple bottom line was first used in 1989 by John Elkington, co-founder of a consultancy focused on sustainability. For businesses, sustainability is a powerful and defining idea: a sustainable corporation is one that creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts. It operates so that its business interests and the interests of the environment and society intersect. A sustainable business stands an excellent chance of being more successful tomorrow than it is today, and remaining successful, not just for months or even years, but for decades or generations. Increasingly, businesses are expected to find ways to be part of the solution to the worlds environmental and social problems. The best companies are finding ways to turn this responsibility into opportunity. We believe that when business and societal interests overlap, everyone wins. Sometimes referred to as "TBL", or "3BL. Triple bottom line simply stands for People Planet Profit People This is also known as Human Capital. It means fair & beneficial business practices towards labour and community and region in which a corporation conducts its business.It really just means treating your employees right, but furthermore also the community where your business operates. In this part of the Triple Bottom Line model, business not only ensures a fair day's work for a fair day's pay; but also reinvesting back some of its gains into the surrounding community through sponsorships, donation or projects that go towards the common good. -A TBL business would not use child labour and monitor all contracted companies for child labour exploitation. It would pay fair salaries to its workers. It would maintain a safe work environment. Tolerable working hours. It would not exploit community or its labour force for self interest.

Planet This is Natural Capital. It refers to sustainable environmental practices. A business will strive to minimize its ecological impact in all areas - from sourcing raw materials, to production processes, to shipping and administration. .A 3BL business will -Carefully manage its consumption of energy & non-renewable. -Reducing manufacturing waste. -refrain from the production of toxic items. Not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals. -not conduct any activity which lead to depletion of resources. Profit This is more about making a honest profit than raking a profit at any cost - it must be made in harmony with the other two principles of People and Planet. It means not only monetary profit from business activities but real economic benefit enjoyed by the host society. Profit in TBL = internal profit +real economic profit in terms of social & environmental impact.