Bgs Module 1

WHAT IS THE BUSINESS –GOVERNMENT –SOCIETY FIELD?
In the universe of human endeavor, we can distinguish subdivisions of economic,

political, and social activity - that is, business, government, and society – in every
civilization throughout time. Interplay among these activities creates an environment in
which business operate, the business-government-society (BGS) filed is the study of this
environment and its importance for managers.
Business: It is a Profit-making activity that provides products and services to satisfy
human needs.
Government: Structures and processes in society that authoritatively make and apply
policies and rules.
Society: A network of human relations composed of ideas, institutions, and material
things.
• Ideas: An intangible object of thought.

• Value: An enduring belief about which fundamental life choices are correct.
• Institution: A formal pattern of relations that links people together to accomplish
a goal.
• Material things: Tangible artifacts aofsociety that shapes and areshaped by
ideas and institutions.
IMPORTANCE OF BGS TO MANAGERS

• Ø To understand the role of Business in society
• Ø To understand the business power in society
• Ø It becomes criteria for managerial decisions
• Ø To understand the extent of corporate responsibility
• Ø To know the ethical duties of managers and the need for regulations
• Ø To succeed in meeting business objectives
• Ø To excel in managerial performance
• Ø To monitor the non-economic environment by taking stock of the situation
before anything happens.
• Ø By recognizing that a company operates not only within markets but within a
society is critical.
• Ø To think beyond pro
fit, to understand the forces governing social responsibility
•
NATURE OF BUSINESS
• Society cannot do without business as much as business needs society.
• The Purpose of Business goes beyond earning of pro
fit;
• a) Business is an important institution in society
• b) Be it for the supply of goods and services
• c) Creation of Job opportunities
• d) Offer better quality of life
• e) Contributing to economic growth of the country.
BUSINESS TODAY
· Modern business is dynamic
· Today’s business is characterized by diversi
fication
BUSINESS IN THE NEAR FUTURE

• · Large organizations are replaced by mini organization
• · File pushing and paper shuf
fling will be done by information technology
• · Flat organization
• · Authority structure will
flow downward
• · No definite job – jobs change for 5 years
• · Remuneration will depend on one’s contribution to organization.
BUSINESS GOALS
• · Profit
• · Growth
• · Power-economic and political power.
• · Employees satisfaction and development
• · Quality products and Services
• · Market leadership
• · Challenging
• · Joy of creation
• · Service to society.
BUSINESS ENVIRONMENT
Ø Business environment refers to all external forces, which have a bearing on functioning of
business.
Ø Environmental factors “are largely if totally
not ,external and beyond the control of
individual industrial enterprises and their management.
Ø Business environment poses threats tofirma or offers immense opportunities for
potential market exploitation.
TYPES OF ENVIRONMENT
1. Technological environment
2. Economic environment
3. Political environment
4. Natural environment
5. Global or International environment
6. Socio-cultural environment
Interdependence of B&G Conflict of B&G
1. ECONOMIC PLANNING 1. Economic policy

2. Industrial policy • Taxation
3. Industrial licensing • Interest rate.
4. Labourlaws 2. legal changes
5. Regulation of foreign trade
Interdependence of B&S Conflict of B&S

1. As A Promoter Of Economic 1. Creation of monopolies
Growth 2. Emergence of oligopolies
2. As a contributor of standard 3. Exploitation of workers
of living of people 4. Causing environmental
3. As a provider of employment degradation
4. As a source of revenue 5. Corporate greed
5. As participant in project to 6. Unethical practices
promote public welfare 7. Exploitation of natural
6. As a promoter and protector resources
of stakeholders interest 8. Production of hazardous
product
ROLE OF B TOWARDS ROLE OF G TOWARDS B ROLE OF GTOWARDSS ROLE OF G

G TOWARDS
1. To Obey Law 1. To pass & 1. Military 1. Prod: &
2. Payment Of execute laws activities supply of
Taxes 2. Maintain law & 2. Civic quality
3. Social order ammenties items
responsibility 3. Providing 3. Education 2. Fair trade
4. Inputs to money & credit 4. Justice and practice
govt: 4. Building administratio 3. Contributio
5. Govt: infrastructure n n to socieet
contracts 5. Research welfare
6. Govt: 6. Provide 4. Well-being
services information of
7. Active 7. Control employees
participation monopolies 5. Social &
in politics 8. Awarding psychologi
patent & rights cal
9. Protection satisfaction
of
employees
6. Developme
nt of H.R.
7. Upliftment
of
SEBP(Socia
lly &
Economical
ly
Backward
People)
8. EMPLOME
NT
CREATION
9. Promotion
of social
justice
10.
Stakeholders of business and their role
In business, a stakeholder is usually an investor in your company whose actions

determine the outcome of your business decisions. Stakeholders don't have to be equity
shareholders. They can also be your employees, who have a stake in your company's
success and incentive for your products to succeed. They can be business partners,
who rely on your success to keep the supply chain going. Every business takes a
different approach to stakeholders. The roles of stakeholders differ between
businesses, dependent on the rules and responsibilities laid out at the founding of your
company or as your business evolved over the years. The most common finition
de of a
stakeholder, however, is a large investor that has the clout to hold a viable "stake" in your
company.
Decision Making
The most common gathering of stakeholders in a publicly traded company is the board
of directors, comprised of high-ranking executives and occasional outsiders who hold
large amounts of equity in the company. Any one of these stakeholders has the power
to disrupt decisions or introduce new ideas to the company. The board of directors has
the power to appoint all levels of senior management - including the CEO - and remove
them if necessary. Members of the board dictate the future of the company and are
involved in all major business decisions.
Direct Management
While the board of directors is a more "hands off" approach to controlling a company,
some stakeholders prefer the "hands on" approach by directly assuming management
positions. Stakeholders can take over certain departments - such as human resources
or research and development - to micromanage the business and insure success. In
privately owned and publicly traded companies, large investors often directly participate
in business decisions on the management level.
Investors
Stakeholders are regarded as large investors, who will either increase or decrease their
stakes in your company according to your financial performance. Ideally, they act as
guardian angels for everyday investors, poring over
financial reports and pressuring
management to change tactics if necessary. Certain stakeholders, known as activist
investors, will make wildly unpredictable investments and divestitures in order to move
the share price and attract media attention to a certain issue. Carl Icahn is well known
for this high pressure tactic, which is used to mold companies more to his liking.
Corporate Conscience
Large stakeholders are generally high file
proinvestors, and would like to steer clear of
companies that trample human rights and environmental laws. They monitor your
company's outsourcing activities and globalization initiatives, and may vote against your
business decisions if they are deemed harmful to the company's long-term goals.
Other Responsibilities
Of course, this is only a broad description of stakeholder responsibilities. Ideally, you'll
have stakeholders who care about these four issues, but more often than not,
short-term profits take precedence over long-term sustainability. While stakeholders
may own your company, it's easier to control your investors when your company is
privately held than publicly traded. Often times, the large
fluxin
of cash from a
successful IPO turns out to be a deal with the devil when your company is suddenly
taken over by a board of directors that ousts you. Onflip
theside, however, stakeholders
can keep your company grounded and focused on its mostfitable pro products and
sustain your company's earnings growth.
Stakeholders are individuals or groups that have an interest in the success and
progression of a company. Internal stakeholders include silent partners, shareholders
and investors. External stakeholder groups might include neighboring businesses,
strategic partners or community bodies such as schools. The role of the stakeholder
varies depending on the organization and the particular project being developed or
decided upon.
Internal Stakeholder Roles

Internal stakeholders usually havefinancial
a interest in the organization. These include
shareholders, the board of directors and investors. These stakeholders are said to have
a vested interest in the success of the company because offinancial
a investment. As
such, they usually have morefluence
in than external stakeholders.
One of the main roles internal stakeholders have is voting rights based on the number of
shares owned or the percentage of the company owned. The board of directors usually
votes for things like new acquisitions, liquidations, key position hiring, and oversight and
budget items including distributed pro
fits. Those with larger stakes in the company
might meet with leaders, brainstorm development or marketing ideas, and identify new
areas for market penetration.
External Stakeholder Roles

External stakeholders generally don't have "skin in the game," meaning they haven't
invested any personal or organizational funds to the company. These stakeholders don't
vote on company decisions. However, the external stakeholder is concerned with
decisions a company makes and may meet with leadership or present information to
the board of directors to review ideas, community concerns and other issues.
The roles of external stakeholders oftenflectre the community, government or
environmental concerns. For example, an automotive manufacturer seeking to build a
new plant might need to meet with the city council and the environmental protection
agency representatives to review potential bene fits and disadvantages to the
community and environment. Ignoring external stakeholders could lead to stalling or
blocking of projects. It is best to allow external stakeholders a voice in the process and
brainstorm with them regarding solutions that work for the company and the community
alike.
Businesses and the Community

Businesses and communities must work together because they need each other.
Businesses provide jobs and economic growth. Communities provide the customer
base that fuels sales. Internal and external stakeholders work with businesses to ensure
profitability and sustainability, coordinating with communities. Business leaders should
look to stakeholders as valuable resources and not obstacles in moving the company
forward.
It helps to involve external stakeholders early in any new project development. The
earlier feedback is provided, the less time and money might be wasted on nonviable
ideas. With stakeholder input, solutions or compromises can be made. For example,
waiting to speak with the city council about a new commercial land development until
you need building permits might result in unforeseen community backlash that
ultimately stalls or stops the project. Business leaders can protect all interests with
clear communication.
A stakeholder in a business setting is responsible for the outcomes (positive or
negative) of the business. A stakeholder may also have made an investment in the
business, which also causes her to have an interest in the business's success or failure.
Stakeholders have different roles within a business, and it depends on the rules, titles
and responsibilities laid out either when the business was initially established or as the
business grows and changes.
Voting and Decision-making

Stakeholders may be responsible for voting on signi
ficant changes in the business.
Voting can take place annually based on the corporate structure of the business or
during any meeting. Stakeholders such as board of directors may vote to elect
management that will be entrusted to make all the major decisions
on his own.
Stakeholders may intervene if the business is performing unsatisfactory.
Management
Stakeholders can hold signi
ficant management positions where they may report directly
to the president, CEO or chief
financial officer. Within certain departments, the manager
may be a stakeholder because his decisions may cause the success or failure of that
department's performance, Management may be responsible for hiring personnel within
that department, providing training and informing the department of any updates or
changes in the business's policies and procedures.
Investing
Stakeholders are commonly responsible for maintaining or achieving a return on
investment. Sometimes, the investment can be made on a consistent basis over time.
For example, consistently investing in stocks through one company is an example of a
stakeholder that is continuously increasing her stake in the company. Stakeholders are
responsible for reviewing the
financial data of the company to ensure that the business
is performing well and that they are not losing their investment. They may also be
responsible for voting on allocation of certain funds.
Social and Environmental Responsibilities
Stakeholders must continuously ensure that decisions they are making for the business
are doing little to harm society and the environment. They may choose to use an
alternate resource if they realize that current resources are becoming scarce.
Stakeholders can donate money to a country that is in need or they may choose to limit
their depletion of resources or exploitation of the workers in a certain location (such as
a third-world country). They continuously monitor the decisions the company is making
to ensure that the public interest is always
first and foremost before pro
fit.
Business ethics
Ethicsor moral philosophy is a branch ofphilosophythat involves systematizing,
defending, and recommending concepts of right and wrong conduct. The termethics
derives fromAncient Greekἠθικός (ethikos), fromἦθος (ethos), meaninghabit
' ,
custom'. Thefield of ethics, along with
aesthetics concern matters ofvalue, and thus
comprisethe branch ofphilosophycalled axiology.
Ethics seeks to resolve questions of human moralityby defining concepts such asgood
and evil, right andwrong, virtueand vice, justice and crime. As a field of intellectual
inquiry, moral philosophyalso is related to thefields of moral psychology , descriptive
ethics, andvalue theory.
Business ethics are moral principles that guide the way a business behaves. The same
principles that determine an
individual”sactions also apply to business.
Acting in an ethical way involves distinguishing between “right” and “wrong” and then
making the “right” choice. It is relatively easy to identify unethical business practices.
For example, companies should not use child labour. They should not unlawfully use
copyrighted materials and processes. They should not engage in bribery.
However, it is not always easy to create similar hard-and-fast
finitions
de of good ethical
practice. A company must make a competitive return for its shareholders and treat its
employees fairly. A company also has wider responsibilities. It should
minimiseany
harm to the environment and work in ways that do not damage the communities in
which it operates. This is known as corporate social responsibility.
ethics
What are The rules of conduct recognized in Morals
they? respect to a particular class of human Principles or habits with
actions or a particular group or culture.
respect to right or wrong
conduct. While morals also
prescribe dos and don'ts,
morality is ultimately a
personal compass of right and
wrong.
Where do Social system - External Individual– Internal
Social system - External Individual– Internal
they come
from?
Why we do it?Because society says it is the right thing
Because we believe in
to do. something being right or
wrong.
Flexibility Ethics are dependent on others for Usually consistent, although
definition. They tend to be consistent can change if an individual’s
within a certain context, but can vary beliefs change.
between contexts.
The "Gray" A person strictly following Ethical A Moral Person although
Principles may not have any Morals atperhapsbound by a higher
all. Likewise, one could violate Ethicalcovenant, may choose to
Principles within a given system of rulesfollow a code of ethics as it
in order to maintain Moral integrity. would apply to a system.
"Make itfit"
Origin Greek word "ethos" meaning"character " Latin wordmos"
" meaning
"custom"
AcceptabilityEthics are governed by professional and Morality transcends cultural
legal guidelines within a particular timenorms
and place
Basis for Ethics Values

Comparison
Meaning Ethics refers to the guidelinesValue is defined as the

for conduct, that address principles and ideals, that
question about morality. helps them in making
judgementof what is more
important.
What are System of moral principles. Stimuli for thinking.
they?
Consistency Uniform Differs from person to

person
Tells What is morally correct or What we want to do or
incorrect, in the given
situation.achieve.
Determines Extent of rightness or Level of importance.

wrongness of our options.
What it Constrains Motivates

does?
Business Ethics - Introduction

Ethics is a subject of social science that is related with moral principles and social
values. 'Business Ethics' can be termed as a study of proper business policies and
practices regarding potentially controversial issues, such as corporate governance,
insider trading, bribery, discrimination, corporate social responsibility,
fiduciary
and
responsibilities.
Businesses must abide by some basic principles. It should provide quality goods and
services at reasonable prices to their consumers. It must also avoid adulteration,
misleading advertisements, and other unfair malpractices.
A business must also perform other duties such as distributing fair wages, providing
good working conditions, not exploiting the workers, encouraging competition, etc.
Business Ethics – De
finition
There are many de
finitions of business ethics, but the ones given by
Andrew Crane
and
Raymond C.Baumhartare considered the most appropriate ones.
According to Crane, "Business ethics is the study of business situations, activities, and
decisions where issues of right and wrong are addressed."
Baumhartdefines, "The ethics of business is the ethics of responsibility. The business
man must promise that he will not harm knowingly."
Features of Business Ethics
There are eight major features of business ethics −
• Code of Conduct− Business ethics is actually a form of codes of conduct. It lets
us know what to do and what not to do. Businesses must follow this code of
conduct.
• Based on Moral and Social Values
− Business ethics is a subject that is based on
moral and social values. It offers some moral and social principles (rules) for
conducting a business.
• Protection to Social Groups− Business ethics protect various social groups
including consumers, employees, small businesspersons, government,
shareholders, creditors, etc.
• Offers a Basic Framework − Business ethics is the basic framework for doing
business properly. It constructs the social, cultural, legal, economic, and other
limits in which a business must operate.
• Voluntary
− Business ethics is meant to be voluntary. It should be self-practiced
and must not be enforced by law.
• Requires Education & Guidance− Businessmen should get proper education and
guidance about business ethics. Trade Associations and Chambers of
Commerce should be active enough in this matter.
• Relative Term− Business ethics is a relative term. It changes from one business
to another and from one country to another.
• New Concept− Business ethics is a relatively newer concept. Developed
countries have more exposure to business ethics, while poor and developing
countries are relatively backward in applying the principles of business ethics.
Principles of Business Ethics
The principles of business ethics are related to social groups that comprise of
consumers, employees, investors, and the local community. The important rules or
principles of business ethics are as follows −
• Avoid Exploitation of Consumers − Do not cheat and exploit consumer with
measures such as artificial price rise and adulteration.
• Avoid Profiteering− Unscrupulous business activities such as hoarding,
black-marketing, selling banned or harmful goods to earn exorbitant
fitspro
must
be avoided.
• Encourage Healthy Competition − A healthy competitive atmosphere that offers
certain benefits to the consumers must be encouraged.
• Ensure Accuracy − Accuracy in weighing, packaging and quality of supplying
goods to the consumers has to be followed.
• Pay Taxes Regularly− Taxes and other duties to the government must be
honestly and regularly paid.
• Get the Accounts Audited
− Proper business records, accounts must be
managed. All authorized persons and authorities should have access to these
details.
• Fair Treatment to Employees
− Fair wages or salaries, facilities and incentives
must be provided to the employees.
• Keep the Investors Informed
− The shareholders and investors must know about
the financial and other important decisions of the company.
• Avoid Injustice and Discrimination
− Avoid all types of injustice and partiality to
employees. Discrimination based on gender, race, religion, language, nationality,
etc. should be avoided.
• No Bribe and Corruption− Do not give expensive gifts, commissions and payoffs
to people having in
fluence.
• Discourage Secret Agreement − Making secret agreements with other business
people to influence production, distribution, pricing etc. are unethical.
• Service before Pro
fit − Accept the principle of "service
first and profit next."
• Practice Fair Business
− Businesses should be fair, humane,ficient
ef and
dynamic to offer certain bene
fits to consumers.
• Avoid Monopoly − No private monopolies and concentration of economic power
should be practiced.
• Fulfil Customers’ Expectations
− Adjust your business activities as per the
demands, needs and expectations of the customers.
• Respect Consumers Rights
− Honor the basic rights of the consumers.
• Accept Social Responsibilities
− Honor responsibilities towards the society.
• Satisfy Consumers’ Wants − Satisfy the wants of the consumers as the main
objective of the business is to satisfy the consumer’s wants. All business
operations must have this aim.
• Service Motive− Service and consumer's satisfaction should get more attention
than profit-maximization.
• Optimum Utilization of Resources
− Ensure optimum utilization of resources to
remove poverty and to increase the standard of living of people.
• Intentions of Business− Use permitted legal and sacred means to do business.
Avoid Illegal, unscrupulous and evil means.
FollowWoodrow Wilson 's rules − There are four important principles of business ethics.
These four rules are as follows −
• Rule of publicity− According to this principle, the business must tell the people
clearly, what it tends to do.
• Rule of equivalent price
− The customer should get proper value for their money.
Below standard, outdated and inferior goods should not be sold at high prices.
• Rule of conscience in business− The businesspersons must have conscience
while doing business, i.e. a morale sense of judging what is right and what is
wrong.
• Rule of spirit of service
− The business must give importance to the service
motive.
Example of Unethical Business Practices
Satyam Computers, a global IT company, was defamed in a notorious list of companies
involved in fraudulent
financial activities. The list includes names such as Enron,
WorldCom,Parmalat, Ahold, Allied Irish, Bearings and Kidder Peabody.
Satyam’sCEO, RamalingaRaju, accepted his role in a broad accounting impropriety that
had overstated the company’s net revenue andfit. proThe company had earlier reported
a cash reserve of approximately $1.04 billion that actually existed only in books but not
in reality.
In his letter to his board, exposing the fraud,

Satyam’sRaju showed the propensity of the
fraud. He stated that, “What started as a marginal gap between actual operating
fitspro
and ones reflected in the books of accounts continued to grow over the years. It has
attained unmanageable proportions. …”
Later, he described the process as “like riding a tiger, not knowing how to get off without
being eaten.”
12 Ethical Principles for Business Executives

1. HONESTY.Ethical executives are honest and truthful in all their dealings and they do
not deliberately mislead or deceive others by misrepresentations, overstatements,
partial truths, selective omissions, or any other means.
2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of
their convictions by doing what they think is right even when there is great pressure to
do otherwise; they are principled, honorable and upright; they
fightwill
for their beliefs.
They will not sacri
fice principle for expediency, be hypocritical, or unscrupulous.
3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust.
They are candid and forthcoming in supplying relevant information and correcting
misapprehensions of fact, and they make every reasonable effort to fillful
the letter and
spirit of their promises and commitments. They do not interpret agreements in an
unreasonably technical or legalistic manner in order to rationalize non-compliance or
create justifications for escaping their commitments.
4. LOYALTY. Ethical executives are worthy of trust, demonstrate
fidelity and loyalty to
persons and institutions by friendship in adversity, support and devotion to duty; they do
not use or disclose information learned in con
fidence for personal advantage. They
safeguard the ability to make independent professional judgments by scrupulously
avoiding undue influences and conflicts of interest. They are loyal to their companies
and colleagues and if they decide to accept other employment, they provide reasonable
notice, respect the proprietary information of their former employer, and refuse to
engage in any activities that take undue advantage of their previous positions.
5. FAIRNESS.Ethical executives and fair and just in all dealings; they do not exercise
power arbitrarily, and do not use overreaching nor indecent means to gain or maintain
any advantage nor take undue advantage of another’s mistakes or ficulties.
dif Fair
persons manifest a commitment to justice, the equal treatment of individuals, tolerance
for and acceptance of diversity, the they are open-minded; they are willing to admit they
are wrong and, where appropriate, change their positions and beliefs.
6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent
and kind; they like the
Golden Rule,help those in need, and seek to accomplish their
business objectives in a manner that causes the least harm and the greatest positive
good.
7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human
dignity, autonomy, privacy, rights, and interests of all those who have a stake in their
decisions; they are courteous and treat all people with equal respect and dignity
regardless of sex, race or national origin.
8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their
business activities.
9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing
their duties, are well informed and prepared, and constantly endeavor to increase their
proficiency in all areas of responsibility.
10. LEADERSHIP. Ethical executives are conscious of the responsibilities and
opportunities of their position of leadership and seek to be positive ethical role models
by their own conduct and by helping to create an environment in which principled
reasoning and ethical decision making are highly prized.
11. REPUTATION AND MORALE. Ethical executives seek to protect and build the
company’s good reputation and the morale of its employees by engaging in no conduct
that might undermine respect and by taking whatever actions are necessary to correct
or prevent inappropriate conduct of others.
12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal
accountability for the ethical quality of their decisions and omissions to themselves,
their colleagues, their companies, and their communities.
DIFFERENT FORMS OF BUSINESS ETHICS

1. GENERAL BUSINESS ETHICS
2. PROFESSIONAL BUSINESS ETHICS
3. ETHICS OF ACCOUNTING INFORMATION
4. ETHICS OF PRODUCTION
5..ETHICS OF SALES AND MARKETING
6. ETHICS OF INTELLECTUAL PROPERTY, SKILLS AND KNOWLEDGE
7. INTERNATIONAL BUSINESS ETHICS
Limitations of ethical Business Practices
Even though ethical business practices have positive impacts on businesses, there are
also limitations that it may have on them, especially in the current business
environment. One of the limitations lies in the cost they incur in executing corporate
social responsibility initiatives. AccordingLindgreen
to and Swaen (2010), CSR policies
are meant to make sure that the organizations recognize and deliver their
responsibilities to all stakeholders, which include the community, suppliers and
consumers. Whilst it is argued by proponents of CSR that it will have long-termfits, bene
the initialfinancial cost to the organization is usually quite high. In addition to this,
Hopkins (2012) argues that implementing CSR initiatives may cause the company to
lose its focus on its main objective, which is making a fit.
proHowever, given that
companies depend on customers to make pro fits, they are obliged to ensure that they
attract them by all means, one of them being creation of a good reputation through CSR
initiatives.
Pride et al. (2009) argue that ethical business practices minimize the opportunities for
business to increase their profits. With reference to developing countries that are still
characterized by corruption, multinational companies that are ethical may decline to
offer bribes forfavours. Therefore, they might fail to set up operations in such countries
or if they start operations, an unfair competition orchestrated by political forces may
limit them from attaining their operational capacity. There are also several companies
where employees may be paid low wages or raw materials are bought are sub-standard
prices to increase their pro
fitability. Such “opportunities” may be missed out by
companies that dedicated to acting ethically. However, it can be argued that restriction
of company freedoms by ethical practices is bene ficial to the wider society.
Importance
of businessethics
1. satisfyingBasic Human Needs: Being fair, honest and ethical is one the basic
human needs. Every employee desires to be such himself and to work for an
organization that is fair and ethical in its practices.
2. Creating Credibility:An organization that is believed to be driven by moral values
is respected in the society even by those who may have no information about the
working and the businesses or an organization. Infosys, for example is perceived
as an organization for good corporate governance and social responsibility
initiatives. This perception is held far and wide even by those who do not even
know what business the organization is into.
3. Uniting People and Leadership:An organization driven by values is revered by its
employees also. They are the common thread that brings the employees and the
decision makers on a common platform. This goes a long way in aligning
behaviors within the organization towards achievement of one common goal or
mission.
4. Improving Decision Making: A man’s destiny is thesum totalof all the decisions
that he/she takes in course of his life. The same holds true for organizations.
Decisions are driven by values. For example an organization that does not value
competition will be
fierce in its operations aiming to wipe out its competitors and
establish a monopoly in the market.
5. Long Term Gains: Organizations guided by ethics and values are fitable
pro in the
long run, though in the short run they may seem to lose money. Tata group, one
of the largest business conglomerates in India was seen on the verge of decline
at the beginning of 1990’s, which soon turned out to be otherwise. The same
company’s Tata NANO car was predicted as a failure, and failed to do well but the
same is picking up fast now.
6. Securing the Society: Often ethics succeeds law in safeguarding the society. The
law machinery is often found acting as a mute spectator, unable to save the
society and the environment. Technology, for example is growing at such a fast
pace that the by the time law comes up with a regulation we have a newer
technology with new threats replacing the older one. Lawyers and public interest
litigations may not help a great deal but ethics can.
Ethics tries to create a sense of right and wrong in the organizations and often when the
law fails, it is the ethics that may stop organizations from harming the society or
environment.
What is the 'Triple Bottom Line )'
(TBL
Triple bottom line (TBL) is a concept which seeks to broaden the focus onfinancial
the
bottom line by businesses to include social and environmental responsibilities. A triple
bottom line measures a company's degree social
of responsibility
, its economic value,
and its environmental impact.
The phrase was introduced in 1994 by John Elkingtonand later used in his 1997 book
"Cannibals with Forks: The Triple Bottom Line of 21st Century Business." A key
challenge with the triple bottom line, according
Elkington
to , is the difficulty of
measuring the social and environmental bottom lines, which necessitates the three
separate accounts being evaluated on their own merits.
Sustainability has been an often mentioned goal of businesses, nonpro
fits and
governments in the past decade, yet measuring the degree to which an organization is
being sustainable or pursuing sustainable growth can beficult.
dif
John Elkingtonstrove to measure sustainability during the mid-1990s by encompassing
a new framework to measure performance in corporate America.1 This accounting
framework, called the triple bottom line (TBL), went beyond the traditional measures of
profits, return on investment, and shareholder value to include environmental and social
dimensions. By focusing on comprehensive investment results—that is, with respect to
performance along the interrelated dimensions offits,
propeople and the planet—triple
bottom line reporting can be an important tool to support sustainability goals.
Interest in triple bottom line accounting has been growing across for-pro
fit, nonprofit
and government sectors. Many businesses and nonpro fit organizations have adopted
the TBL sustainability framework to evaluate their performance, and a similar approach
has gained currency with governments at the federal, state and local levels.
This article reviews the TBL concept, explains how it can be useful for businesses,
policy-makers and economic development practitioners and highlights some current
examples of putting the TBL into practice.
The Triple Bottom Linefined

De
The TBL is an accounting framework that incorporates three dimensions of
performance: social, environmental andfinancial. This differs from traditional reporting
frameworks as it includes ecological (or environmental) and social measures that can
be difficult to assign appropriate means of measurement. The TBL dimensions are also
commonly called the three Ps: people, planet and fits.
pro We will refer to these as the
3Ps.
Well beforeElkingtonintroduced the sustainability concept as "triple bottom line,"
environmentalists wrestled with measures of, and frameworks for, sustainability.
Academic disciplines organized around sustainability have multiplied over the last 30
years. People inside and outside academia who have studied and practiced
sustainability would agree with the generalfinition
de of AndrewSavitz for TBL. The TBL
"captures the essence of sustainability by measuring the impact of an organization's
activities on the world ... including both its fitability
pro and shareholder values and its
social, human and environmental capital. 2
The trick isn't de

fining TBL. The trick is measuring it.
Calculating the TBL

The 3Ps do not have a common unit of measure. Pro
fits are measured in dollars. What
is social capital measured in? What about environmental or ecological health? Finding a
common unit of measurement is one challenge.
Some advocate monetizing all the dimensions of the TBL, including social welfare or
environmental damage. While that would have the fit bene
of having a common
unit—dollars—many object to putting a dollar value on wetlands or endangered species
on strictly philosophical grounds. Others question the methodfinding
of the right price
for lost wetlands or endangered species.
Another solution would be to calculate the TBL in terms of an index. In this way, one
eliminates the incompatible units issue and, as long as there is a universally accepted
accounting method, allows for comparisons between entities, e.g., comparing
performance between companies, cities, development projects or some other
benchmark.
An example of an index that compares a county versus the nation's performance for a
variety of components is the Indiana Business Research Center's Innovation Index.
There remains some subjectivity even when using an index however. For example, how
are the index components weighted? Would each "P" get equal weighting? What about
the sub-components within each "P"? Do they each get equal weighting? Is the people
category more important than the planet? Who decides?
Another option would do away with measuring sustainability using dollars or using an
index. If the users of the TBL had the stomach for it, each sustainability measure would
stand alone. "Acres of wetlands" would be a measure, for example, and progress would
be gauged based on wetland creation, destruction or status quo over time. The
downside to this approach is the proliferation of metrics that may be pertinent to
measuring sustainability. The TBL user may get metric fatigue.
Having discussed the difficulties with calculating the TBL, we turn our attention to
potential metrics for inclusion in a TBL calculation. Following that, we will discuss how
businesses and other entities have applied the TBL framework.
What Measures Go into the Index?

There is no universal standard method for calculating the TBL. Neither is there a
universally accepted standard for the measures that comprise each of the three TBL
categories. This can be viewed as a strength because it allows a user to adapt the
general framework to the needs of different entities (businesses or nonpro
fits), different
projects or policies (infrastructure investment or educational programs), or different
geographic boundaries (a city, region or country).
Both a business and local government agency may gauge environmental sustainability
in the same terms, say reducing the amount of solid waste that goes into fills,
landbut a
local mass transit might measure success in terms of passenger miles, while a
for-profit bus company would measure success in terms of earnings per share. The TBL
can accommodate these differences.
Additionally, the TBL is able to be case (or project) speci
fic or allow a broad
scope—measuring impacts across large geographic boundaries—or a narrow
geographic scope like a small town. A case (or project) speci
fic TBL would measure the
effects of a particular project in a speci
fic location, such as a community building a
park. The TBL can also apply to infrastructure projects at the state level or energy policy
at the national level.
The level of the entity, type of project and the geographic scope will drive many of the
decisions about what measures to include. That said , the set of measures will ultimately
be determined by stakeholders and subject matter experts and the ability to collect the
necessary data. While there is significant literature on the appropriate measures to use
for sustainability at the state or national levels, in the end, data availability will drive the
TBL calculations. Many of the traditional sustainability measures, measures vetted
through academic discourse, are presented below.
Economic Measures
Economic variables ought to be variables that deal with the bottom line and
flowtheof
money. It could look at income or expenditures, taxes, business climate factors,
employment, and business diversity factors. Speci
fic examples include:
• Personal income
• Cost of underemployment
• Establishment churn
• Establishment sizes
• Job growth
• Employment distribution by sector
• Percentage offirms in each sector
• Revenue by sector contributing to gross state product
Environmental Measures
Environmental variables should represent measurements of natural resources and
reflect potential in
fluences to its viability. It could incorporate air and water quality,
energy consumption, natural resources, solid and toxic waste, and land use/land cover.
Ideally, having long-range trends available for each of the environmental variables would
help organizations identify the impacts a project or policy would have on the area.
Specific examples include:
• Sulfur dioxide concentration
• Concentration of nitrogen oxides
• Selected priority pollutants
• Excessive nutrients
• Electricity consumption
• Fossil fuel consumption
• Solid waste management
• Hazardous waste management
• Change in land use/land cover
Social Measures
Social variables refer to social dimensions of a community or region and could include
measurements of education, equity and access to social resources, health and
well-being, quality of life, and social capital. The examples listed below are a small
snippet of potential variables:
• Unemployment rate
• Female labor force participation rate
• Median household income
• Relative poverty
• Percentage of population with a post-secondary degree or certi
ficate
• Average commute time
• Violent crimes per capita
• Health-adjusted life expectancy
Data for many of these measures are collected at the state and national levels, but are
also available at the local or community level. Many are appropriate for a community to
use when constructing a TBL. However, as the geographic scope and the nature of the
project narrow, the set of appropriate measures can change. For local or
community-based projects, the TBL measures of success are best determined locally.
There are several similar approaches to secure stakeholder participation and input in
designing the TBL framework: developing a decision matrix to incorporate public
preferences into project planning and decision-making,
3 using a "narrative format" to
solicit shareholder participation and comprehensive project evaluation,

4 and having
stakeholders rank and weigh components of a sustainability framework according to

community priorities.
5 For example, a community may consider an important measure
of success for an entrepreneurial development program to be the number of

woman-owned companies formed overfive-yeara time period. Ultimately, it will be the
organization's responsibility to produce
final
a set of measures applicable to the task at
hand.
Who Uses the Triple Bottom Line?

Businesses, nonprofits and government entities alike can all use the TBL.
Businesses
The TBL and its core value of sustainability have become compelling in the business
world due to accumulating anecdotal evidence of greater long-term fitability.
pro For
example, reducing waste from packaging can also reduce costs. Among firms the that
have been exemplars of these approaches are General Electric, Unilever, Proctor and
Gamble, 3M andCascade Engineering .10 Although these companies do not have an
index-based TBL, one can see how they measure sustainability using the TBL concept.
Cascade Engineering, for example, a privatefirm that does not need tofile the detailed
financial paperwork of public companies, has identi
fied the following variables for their
TBL scorecard:
• Economic
o Amount of taxes paid
• Social
o Average hours of training/employee
o From welfare to career retention
o Charitable contributions
• Environmental/Safety
o Safety incident rate
o Lost/restricted workday rate
o Sales dollars per kilowatt hours
o Greenhouse gas emissions
o Use of post-consumer and industrial recycled material
o Water consumption
o Amount of waste to land
fill
Nonpro
fits
Many nonpro fit organizations have adopted the TBL and some have partnered with
privatefirms to address broad sustainability issues that affect mutual stakeholders.
Companies recognize that aligning with nonpro fit organizations makes good business
sense, particularly those nonpro
fits with goals of economic prosperity, social well-being
and environmental protection.
11
• Food and Agriculture(economic): Explore new economic models that support

sustainable food and agriculture while raising public awareness of the value of
organic and biodynamic farming.
• Ecological Stewardship (environmental): Provide funding to organizations and
projects devoted to sustaining, regenerating and preserving the earth's
ecosystems, especially integrated, systems-based and culturally relevant
approaches.
• Education and the Arts
(social): Fund education and arts projects that are holistic
and therapeutic.
Government
State, regional and local governments are increasingly adopting the TBL and analogous
sustainability assessment frameworks as decision-making and performance-monitoring
tools
The Triple Bottom Line concept developed by John Elkingtonhas changed the way
businesses, nonprofits and governmentsmeasure sustainability and the performance of
projects or policies. Beyond the foundation of measuring sustainability on three
fronts—people, planet and profits—theflexibility of the TBL allows organizations to
apply the concept in a manner suitable to their speci
fic needs.
There are challenges to putting the TBL into practice. These challenges include
measuring each of the three categories,finding applicable data and calculating a project
or policy's contribution to sustainability. These challenges aside, the TBL framework
allows organizations to evaluate the rami
fications of their decisions from a truly
long-run perspective.
3p’s
Corporate Social Responsibility
The Ministry of Corporate Affairs has notified Section 135 and Schedule VII of the
CompaniesAct 2013 as well as the provisions of the Companies(Corporate Social
Responsibility Policy) Rules, 2014 to come into effect from April 1, 2014.
With effect from April 1, 2014, every company, private limited or public limited, which
either has a net worth of Rs 500croreor a turnover of Rs 1,000 croreor net profit of Rs
5 crore, needs to spend at least 2% of its average net pro
fit for the immediately
preceding threefinancial years on corporate social responsibility activities.
The CSR activities should not be undertaken in the normal course of business and must
be with respect to any of the activities mentioned in Schedule VII of the 2013 Act.
Contribution to any political party is not considered to CSRbe a activity and only
activities in India would be considered for computingCSR expenditure.
The net worth, turnover and net fitsproare to be computed in terms of Section 198 of
the 2013 Act as per the profit and loss statement prepared by the company in terms of
Section 381 (1) (a) and Section 198 of the 2013 Act. While these provisions have not yet
been notified, is has been clari
fied that if net pro
fits are computed under the Companies
Act, 1956 they needn't be recomputed under the 2013 Act. fits Profrom any overseas
branch of the company, including those branches that are operated as a separate
company would not be included in the computation of net profits of a company.
Besides, dividends received from other companies in India which need to comply with
the CSR obligations would not be included in the computation of net fits
pro
of a
company.
The CSR Rules appear to widen the ambit for compliance obligations to include the
holding and subsidiary companies as well as foreign companies whose branches or
project offices in Indiafulfil the specified criteria. There is a need for clarity with respect
to the compliance obligations of a company as well as its holding and subsidiary
companies.
The activities that can be undertaken by a companyfulfil to its CSR obligations include
eradicating hunger, poverty and malnutrition, promoting preventive healthcare,
promoting education and promoting gender equality, setting up homes for women,
orphans and the senior citizens, measures for reducing inequalities faced by socially
and economically backward groups, ensuring environmental sustainability and
ecological balance, animal welfare, protection of national heritage and art and culture,
measures for the bene fit of armed forces veterans, war widows and their dependents,
training to promote rural, nationally recognized,
Paralympicor Olympic sports,
contribution to the prime minister's national relief fund or any other fund set up by the
Central Government for socio economic development and relief and welfare of SC, ST,
OBCs, minorities and women, contributions or funds provided to technology incubators
located within academic institutions approved by the Central Government and rural
development projects.
However, in determining CSR activities to be undertaken, preference would need to be
given to local areas and the areas around where the company operates.
To formulate and monitor the CSR policy of a company, a CSR Committee of the Board
needs to be constituted. Section 135 of the 2013 Act requires the CSR Committee to
consist of at least three directors, including an independent director. However, CSR
Rules exempts unlisted public companies and private companies that are not required
to appoint an independent director from having an independent director as a part of
their CSR Committee and stipulates that the Committee for a private company and a
foreign company need have a minimum of only 2 members.
A company can undertake its CSR activities through a registered trust or society, a
company established by its holding, subsidiary or associate company or otherwise,
provided that the company has speci fied the activities to be undertaken, the modalities
for utilization of funds as well as the reporting and monitoring mechanism. If the entity
through which the CSR activities are being undertaken is not established by the
company or its holding, subsidiary or associate company, such entity would need to
have an established track record of three years undertaking similar activities.
Companies can also collaborate with each other for jointly undertakingactivities,
CSR
provided that each of the companies are able individually report on such projects.
A company can build CSR capabilities of its personnel or implementation agencies
through institutions with established track records of at least three years, provided that
the expenditure for such activities does not exceed 5% of the total CSR expenditure of
the company in a single financial year.
The CSR Rules specify that a company which does not satisfy the speci fied criteria for a
consecutive period of three financial years is not required to comply with the CSR
obligations,implying that a company not satisfying any of the speci
fied criteria in a
subsequentfinancial year would still need to undertake CSR activities unless it ceases
to satisfy the specified criteria for a continuous period of three years. This could
increase the burden on small companies which do not continue to makeficant signi
profits.
The report of the Board of Directors attached to thefinancial statements of the
Company would also need to include an annual report on the CSR activities of the
company in the format prescribed in the CSR Rules setting out inter alia a brief outline
of the CSR policy, the composition of the CSR Committee, the average netfitpro for the
last threefinancial years and the prescribed CSR expenditure. If the company has been
unable to spend the minimum required on its CSR initiatives, the reasons for not doing
so are to be specified in the Board Report.
INTRODUCTION:
In the new Companies Act 2013, there is the new provisionfor the “CorporateSocial
Responsibility
” under the Section 135 of the Companies Act 2013. By followingthe
provision of the CSR, the companies are giving something back to the society.
APPLICABLE SECTION SECTIONS & RULES:
Section 135 (CorporateSocial Responsibility) and Schedule VII and Rules (Corporate
Social Responsibility Policy) Rules, 2014
of the Companies Act 2013.
APPLICABILITY OF THE CSR:
The applicability of the CSR provisions on the certain class of Companies having:
(a) net worth of the company rupees Five hundred
croreor more; OR
(b) turnover
of the company rupees One thousand
croreor more; OR
(c) net profit of the company rupeesfive croreor more.
during any financial year to constitute a Corporate Social Responsibility (CSR)
Committee of the Board. Any financial year has been clarified as to implyany of the
three precedingfinancial years.
Note: the provisions of CSR are not only applicable to Indian companies, but also
applicable to branch and project fices
of of a foreign company in India.
CALCULATION OF CONTRIBUTION UNDER CSR:
The company spends, in everyfinancialyear,at least 2% of the *averagenet profits of
the companymade duringthe three immediatelyprecedingfinancialyears,in pursuance
of its Corporate Social Responsibility Policy:
Activities
of the company shall give preferenceto the local area and areas aroundit
where it operates, for spending the amount earmarked for Corporate Social
Responsibility activities de
fined under theSchedule VII
of the Companies Act 2013.
If the company fails to spend such amount,the Board shall, in its report made under
clause (o) of sub-section (3) of section 134, specify the reasons for not spending the
amount.
* “averagenet profits” shall be calculatedin accordance withthe provisionsof Section
198 of the Companies Act 2013.
CONSTITUTION OF THE CSR COMMITTEE:
The CSR committee shall be constitutedwith3 or more directors,out of whichat least
one director shall be an Independent Director.
Types of the Company Board of CSR Committee
Liﬆed Companies 3 or More Directors including at leaﬆ one

Independent Director
Public Company 3 or More Directors including at leaﬆ one

Independent Director
Note: if the company is not required to

independent director then no need of
independent director in the CSR committee.
Private Company 2 Directors
Branch and Project Offices of a At leaﬆ 2 persons, one person resident in India
Foreign Company authorised to accept on behalf of the company
service of process any notices or other documents
served on the company and another person shall
be nominated by the foreign company
The composition of the Corporate Social ResponsibilityCommittee is requiredto be

disclosed in the Board’s report prepared under the Act.
CSR COMMITTEE S FUNCTIONS:
In accordance with section 135 the functions of the CSR committee include:
(a) formulatingand recommendingto the Board, a CSR Policy whichshall indicatethe
activities to be undertaken by the company as speci
fied in Schedule VII;
(b) recommendingthe amount of expenditure to be incurred on the CSR activities.
(c) monitoringthe CorporateSocial ResponsibilityPolicy of the company from time to
time.
(d) Furtherthe rules provide that the CSR Committee shall institute a transparent
monitoringmechanismfor implementationof the CSR projects or programsor activities
undertaken by the company.
The CSR Committee shall formulateand recommendto the Board,a policy whichshall
indicate the activities to be undertaken (CSR Policy); recommend the amount of
expenditureto be incurredon the activitiesreferredand monitorthe CSR Policy of the
company. The Board shall take into account the recommendationsmade by the CSR
Committee and approve the CSR Policy of the company.
DISPLAY OF CSR ACTIVITIES ON THE COMPANY’S WEBSITE:
The Board of Directors of the company shall, after taking into account the
recommendationsof CSR Committee, approve the CSR Policy for the company and
disclose contents of such policy in its report and the same shall be displayedon the
company’s website, if any, as per the particulars speci
fied in the Annexure.
CLARIFICATION:
1. “Net Worth”
means the aggregate value of the paid-upshare capital and all reserves
created out of the profits and securities premium account, after deducting the
aggregate value of the accumulated losses, deferredexpenditureand miscellaneous
expenditurenot writtenoff, as per the audited balance sheet, but does not include
reserves created out of revaluation of assets, write-back of depreciation and
amalgamation.
2. “Turnover”means the aggregate value of the realizationof amount made from the
sale, supplyor distributionof goods or on account of services rendered,or both, by the
company during a financial year;
3. ‘Net Profit’ means the net profit of a company as per its financial statement
(calculatedas per followedby the section 198 of the CompaniesAct 2013), but shall not
include the following
:
(i) any profit arising from any overseas branch or branches of the company whether
operated as a separate company or otherwise; and
(ii) any dividendreceivedfrom otherin companies in India,whichare coveredunderand
complying with the provisions of section 135 of the Act.
It has also been clarified in the Rules that everycompany whichceases to satisfy the
criteria mentioned above for three consecutive financial years shall not be required to –
(a) constitutea CSR Committee; and
(b) comply with the provisions contained in section 135, till such time it meets the
criteria speci
fied in sub section (1) of section 135.
CONCLUSION:
In this way the CSR policy establishing a guideline for compliance with the provisions of
Regulations to dedicate a percentage of Company‘s profits for social projects and an
opportunities for the company to participate in socially
responsible initiatives.
What is 'Corporate Social Responsibility (CSR)'

Corporate social responsibility (CSR) is a self-regulating business model that helps a
company be socially accountable — to itself, its ﬆakeholders, and the public. By
practicing corporate social responsibility, also called corporate citizenship, companies
can be conscious of the kind of impact they are having on all aspects of society
including economic, social, and environmental. To engage in CSR means that, in the
normal course of business, a company is operating in ways that enhances society and
the environment, inﬆead of contributing negatively to it.
Corporate Social Responsibility refers to a code of conduct and action beyond what is
required by laws, regulations and trade rules.
Corporate social responsibility can be anything from a corporation taking ﬆeps to
operate in a clean, ecologically friendly way, to social and ethical educational programs
for its employees, to various charitable endeavors and community involvement.
Activities permitted under Corporate Social Responsibility (CSR)

The following activities can be performed by a company to accomplish its CSR obligations:
• Eradicating extreme hunger and poverty
• Promotion of education
• Promoting gender equality and empowering women
• Reducing child mortality
• Improving maternal health
• Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria

and other diseases
• Ensuring environmental suﬆainability,
• Employment enhancing vocational skills, social business projects
• Contribution to the Prime Miniﬆer’s National Relief Fund or any other fund set up by the
Central Government or the State Governments for socio-economic development, and
• Relief and funds for the welfare of the Scheduled Caﬆes, the Scheduled Tribes, other
backward classes, minorities and women and such other matters as may be prescribed.
Breaking Down 'Corporate Social Responsibility (CSR)'

Corporate social responsibility is a broad concept that can take many forms depending
on the company and induﬆry. Through CSR programs, philanthropy, and volunteer
efforts businesses can bene fit society while booﬆing their own brands. As important as
CSR is for the community, it is equally valuable for a company. CSR activities can help
forge a ﬆronger bond between employee and corporation; they can booﬆ morale; and
can help both employees and employers feel more connected with the world around
them.
In order for a company to be socially responsible, it firﬆ needs to be responsible to itself
and its shareholders. Often, companies that adopt CSR programs have grown their
business to the point where they can, and want, to give back to society. Thus, CSR is
primarily a ﬆrategy of large corporations. Also, the more visible and successful a
corporation is, the more responsibility it has to set ﬆandards of ethical behavior for its
peers, competition, and induﬆry.
CSR in Action — Starbucks
Long before its initial public offering (IPO) in 1992, Starbucks was known for its keen
sense of corporate social responsibility, and commitment to suﬆainability and
community welfare. Starbucks has achieved CSR mileﬆones such as reaching 99
percent ethically sourced coffee; creating a global network of farmers; pioneering green
building throughout its ﬆores; contributing millions of hours of community service; and
creating a groundbreaking college program for its partner/employees. Going forward,
Starbucks’s goals include hiring 10,000 refugees across 75 countries; reducing the
environmental impact of its cups; and engaging its employees in environmental
leadership.
Published Standards for CSR

In 2010, the International Organization for Standardization (ISO) released a set of
voluntary ﬆandards meant to help companies implement corporate social
responsibility. Unlike other ISO ﬆandards, ISO 26000 provides guidance rather than
requirements because the nature of CSR is more qualitative than quantitative, and its
ﬆandards cannot be certified. Inﬆead, ISO 26000 clarifies what social responsibility is
and helps organizations translate CSR principles into effective actions. The ﬆandard is
aimed at all types of organizations regardless of their activity, size, or location. And,
because many key ﬆakeholders from around the world contributed to developing ISO
26000, this ﬆandard represents an international consensus.
Businesses often invest in creating and supporting their brand, as well as in monitoring
the perceptions held by their customers, employees and the general public. A
company’s social responsibility efforts typically factor heavily into these perceptions.
Corporate social responsibility is a commitment to do more than just serve the needs
and expectations of customers and shareholders. It can also mean going beyond
business basics and serving a social need. Through corporate social responsibility
programs, including responsible business practices, philanthropy and volunteer efforts,
businesses can benefit society while boosting their brand.
Socially Responsible Companies Muﬆ Firﬆ Meet Business Responsibilities

In general, businesses have a hierarchy of responsibilities to meet, ranging from the
basic (making a pro
fit) to the benevolent (bene
fiting society). Here are some examples:
• Economic Responsibilities - A business exiﬆs to make a profit for shareholders. If it
fails to do so, it likely won’t be able to pay its employees, taxes and other obligations. A
corporate social responsibility program (CSR program) cannot be implemented until a
business is profitable.
• Legal Responsibilities - Following the law is the foundation of corporate responsibility. A
company cannot benefit society if it does not adhere to labor and tax laws or applicable
induﬆry regulations.
• Ethical Responsibilities - Once a company is profitable and meets its legal
responsibilities, it can move up the ladder to ethical responsibilities, which might include
paying higher wages, offering employees better benefits, avoiding trade with
unscrupulous companies or providing jobs to those who would otherwise have difficulty
finding work.
• Philanthropic Responsibilities - As a company meets its economic, legal and ethical
responsibilities, it can consider taking on philanthropic responsibilities. Corporate
philanthropy ranges in size and scope, and can include everything from donating time to
a local charity to building a children’s hospital.
More and more companies see corporate social responsibility as going beyond giving
money to organizations in need.
Types of Corporate Social Responsibility Programs

Many non-pro fit and charitable organizations can bene
fit from corporate social
responsibility programs. Local and national groups such as food banks, shelters and the
Red Cross receive donations of cash and volunteer labor from businesses all across the
country. This direct giving is one type of CSR program.
Many companies can also choose to take a long-term, strategic look at CSR. They
actually create products or provide services that help
fill a societal need. Examples
include:
• A company that specializes in job training for disabled adults
• A business that aims to find alternative uses for used goods, to keep them out of
landfills
• A group that brings inveﬆors into a declining area to revitalize it and create green
technology jobs
Some firms have a strong foundation of corporate social responsibility, which governs
everything from the products and services they produce to the hours they dedicate to
volunteer work.
Three Companies Known for Corporate Social Responsibility

Companies that are profitable, follow the law and have strong corporate social
responsibility programs are more common than you think. Here are three of the most
widely-known, successful companiesthat are also good corporate citizens:
1. IBM - The technology giant has been environmentally friendly for decades, with a focus
on developing more efficient supply chains, and creating technology that helps other
companies achieve their suﬆainability goals. IBM also promotes employee well-being
and diversification, and works on issues such as education, health, literacy, and culture.
2. Patagonia - This popular clothing company has focused heavily on CSR, with all
products made under fair labor practices and safe working conditions. Patagonia
recently launched its Common Threads Partnership, which offers used Patagonia
clothing in four outlets across the United States. Cuﬆomers can trade in jackets, pants,
shirts and more for credit on new clothing. This effort has helped advance the
company’s recycling efforts by keeping Patagonia clothing out of landfills.
3. Starbucks - The international coffee company has seen firﬆhand how shifting weather
patterns can affect coffee farms. Starbucks supports progressive climate change policy
and works with the countries that produce its coffee to conserve, preserve and reﬆore
their foreﬆs. The company also provides thousands of employees with college benefits,
has a supplier diversity program and raises funds for various organizations in need.
ISO 26000 - Social responsibility

Business and organizations do not operate in a vacuum. Their relationship to the
society and environment in which they operate is a critical factor in their ability to
continue to operate effectively. It is also increasingly being used as a measure of their
overall performance.
ISO 26000 provides guidance on how businesses and organizations can operate in a
socially responsible way. This means acting in an ethical and transparent way that
contributes to the health and welfare of society.
ISO 26000:2010
ISO 26000:2010 provides guidance rather than requirements, so it cannot be certified to
unlike some other well-known ISO ﬆandards. Inﬆead, it helps clarify what social
responsibility is, helps businesses and organizations translate principles into effective
actions and shares beﬆ practices relating to social responsibility, globally. It is aimed at
all types of organizations regardless of their activity, size or location.
The ﬆandard was launched in 2010 following five years of negotiations between many
different ﬆakeholders across the world. Representatives from government, NGOs,
induﬆry, consumer groups and labour organizations around the world were involved in
its development, which means it represents an international consensus.
The Indian Constitution
1. The constitution of India is the supreme law of India.
¬ It lays down the
framework de fining fundamental political principles, establishes¬the
structure,
procedures, powers and duties of citizens. The nation is governed on the basis
of this constitution.
¬ The constitution was adopted by the constituent assembly
on 26 November, 1949 ¬ and came into effect on 26 January, 1950.
The Constitution of India is comprehensive and consists of various provisions that
affect every citizen of India. There are certain economic implications of the Indian
constitutions
Economic Importance The preamble of the Indian Constitution guarantees to its every
citizen: Economic justice Liberty of Thought, Expression, Belief, Faith and Worship
Equality of Status and of
Opportunity.
The constitution of India was adopted on November 26, 1949. Some provision of the
constitution came into force on same day but the remaining provisions of the constitution came
into force on January 26, 1950. This day is referred to the constitution as the “date of its
commencement”, and celebrated as the Republic Day. The Indian Constitution is unique in its
contents and spirit. Through borrowed from almost every constitution of the world, the
constitution of India has several salient features that distinguish it from the constitutions of
other countries
BharatRatna Babasaheb Dr. B.R.Ambedkar, the Chief Architect of Constitution of India,
Social justice denotes the equal treatment of all citizens without any social distinction based on
caste, colour, race, religion, sex and so on. It means absence of privileges being extended to any
particular section of the society, and improvement in the conditions of backward classes (SCs,
STs, and OBCs) and women. Social Justice is the foundation stone of Indian Constitution.
Indian Constitution makers were well known to the useminimality
and of various principles of
justice. They wanted to search such form of justice which could fillful
the expectations of whole
revolution. Pt.Jawahar Lal Nehru put an idea before the Constituent Assembly
First work of this assembly is to make India independent by a new constitution through which
starving people will get complete meal and cloths, and each Indian will get best option that he
can progress himself
1. There are six types of fundamental rights in the constitution.

¬ Part III (Articles 12-35)
deals with the Fundamental Rights granted to individuals.
¬ The Indian Constitution
incorporates a list of Fundamental Rights and guarantees their inviolability by executive
and legislative authorities.
¬Fundamental Rights and Business
2. Right to Equality
3. Right to Freedom
4. Right against Exploitation
5. Right to Freedom of Religion Cultural and Educational
6. Rights Right to Constitution al Remedies
7. 13. Right to Equality (Articles 14 to 18): Equality to all citizens of India without any
discrimination on grounds of religion, race, caste, gender, and place of birth or any of
them. It also gives them access to shops, public restaurants, hotels, places of public
entertainment etc., and is free to use wells, tanks, roads and places of public resort
maintained at state funds. Also, no person shall be denied employment on grounds of
religion, race, caste, sex, descent, and place of birth, residence or any of them. According
to this articlesthe business should provide equality before law, social equality and
economic equality.
Article 19 enshrines the fundamental rights of the citizens of this country. The seven
sub-clauses of Article 19(1) guarantee the citizens seven different kinds of freedom and
recognize them as their fundamental rights. Article 19 considered as a whole furnishes a very
satisfactory and rational basis for adjusting the claims of individual rights of freedom and the
claims of public good.
8. 14. Six fundamental rights in the nature of ‘freedom’ are guaranteed to the citizens as
per this article:i)( Freedom of speech and expression. (ii) Freedom of peaceful assembly
without arms. (iii) Freedom of association. (iv) Freedomof movement throughout the
territory of India. (v)Freedom to reside or settle in any part of the territory. (vi) Freedom
to practice any profession, or to carry on any occupation, trade or business Right to
Freedom (Articles 19 to 22)
9. Right against Exploitation (Articles 23 to 24)
. The owner of the factories are guided to make provision for safety and welfare of the workers
and they compulsorily appointlaboura welfare officer. Economic Importance The Factories
Act help to prevent exploitation of women and children employees. The government takes
necessary steps to remove bonded labour
. Right to Freedom of Religion (Articles 25 to 28)

No one shall be forced to transfer property or any agreement of a business nature in the name
of a particular religion. Economic Importance Nobodycan be compelled to pay tax for the
welfare of any specific religion. The government cannot spend tax money for the
development of any religion.
Cultural and Educational Rights (Articles 29 to 30)
21. The aided institution cannot refuse admission to any of the citizens on the ground that he
belongs to a particular caste, religion, language or region. Economic Importance
The state
does not discriminate to give economic assistance to the minority institutions.
Right to Constitutional Remedies (Article 32)

23. At the same time the state has the power to impose reasonable restrictions on such rights
in the interest of the people. The fundamental rights enumerated in the constitution guarantee
a number of economic and social rights to the citizens
The social justice scenario is to be investigated in the context of two streams of entitlements:
(a) sustainable livelihood, which means access to adequate means of living, such as shelter,
clothing, food, access to developmental means, employment; education, health, and resources;
(b) social and political participation (enabling or empowering means), which is built on the
guarantee of fundamental rights, and promotion and empowerment of the right to participation
in the government, and access to all available means of justice, and on the basis of which
“justice as a politicalprogramme ” becomes a viable reality. We require therefore a study based
on select illustrations of various issues relating to government policies on topics such as: (a)
the right to food and water; (b) housing, which includes resettlement and rehabilitation; (c)
access to education, (d) access to provisions of health and healthcare, (e) right to work, and (f)
access to information and the right to communication. In short, one of the important ways in
which the inquiry will proceed will be through taking stock of various forms that have
occasioned the articulation of ideas of social justice
The preamble of the Indian Constitution guarantees to its every citizen:

(i) Economic Justice:
The Indian Constitution laid down social, economic and political justice to every citizen in the
country. It is, therefore, the duly of the business
organisationsto provide social, economic and
political justice to every citizen.
(ii) Liberty of Thought, Expression, Belief, Faith and Worship:
This has been accepted in our constitution that every citizen has liberty of thought, expression,
belief, faith and worship. According to this concept every business,
organisationshould have
liberty of thought, expression etc., with everyone.
(iii) Equality of Status and of Opportunity:
According to this concept every businessman should believe and give equal opportunity to
others. This can be achieved through eradication of poverty. This does not mean winning gap
between the poor and rich.
II. Fundamental Rights and Business:

The Indian Constitution incorporates a list of Fundamental Rights and guarantees their
inviolability by executive and legislative authorities. Part III (Articles 12-35) deals with the
Fundamental Rights granted to individuals. These rights were finalisedby the committee of the
Constituent Assembly headed by SardarVallabhbhaiPatel.
The fundamental rights are superior to ordinary laws; they can be altered only through
constitutional amendments. Originally, the fundamental Rights were seven but in 1978, through
the 44th amendment of the constitution, the right to property was removed from the list of
fundamental rights.
The six types of fundamental rights of the constitution are as follows:
(1) Right to Equality (Articles 14 to 18):

Articles 14 to 18 deal with right to equality. The Constitution clearly provides that the state shall
not deny to any person equality before law or the equal protection of law within the territory of
India. It cannot discriminate against any citizen on grounds of religion, race, caste, sex, and
place of birth or any of them.
It means that every citizen has access to shops, public restaurants, hotels, places of public
entertainment etc., and is free to use wells, tanks, roads and places of public resort maintained
at state funds.
In the employment aspects, the appointment tofices of under the state also equal opportunity
shall be provided to all the citizens, and no person shall be denied employment on grounds of
religion, race, caste, sex, descent, and place of birth, residence or any of them.
Again, to make the right to equality a reality;
untouchabilityhas been abolished and its practice
in any form has been made an offence punishable in accordance with law. According this to
articles the business should provide equality before law, social equality and economic equality.
(2) Right to Freedom (Articles 19 to 22):

Articles 19 to 22 enumeratescertain positive rights conferred by the Constitution in order to
promote the ideal of liberty promised in the preamble. Six fundamental rights in the nature of
‘freedom’ are guaranteed to the citizens in the article (originally there were seven, but now right
to property is deleted).
The six Freedoms are as follows:
(i) Freedom of speech and expression.
(ii) Freedom of peaceful assembly without arms.
(iii) Freedom of association.
(iv) Freedomof movement throughout the territory of India.
(v) Freedom to reside or settle any part of the territory.
(vi) Freedomto practiseany profession, or to carry on any occupation, trade or business.
The right to freedom is also applied equally in business. The businessmen can express their
problems freely to the government and can get a solution to it. Similarly, every citizen has the
right to choose any business or profession and can form unions, and conduct meetings.
(3) Right against Exploitation (Articles 23 to 24):

Articles 23 to 24 deal with the right against exploitation and seek to prevent exploitation of
weaker sections of society by unscrupulous persons as well as the state. Article 23 prohibits
traffic in human beings, involuntary work without payment and other forms of labourforced.
Article 24 prohibits the employment of children below 14 years of age in factories and
hazardous occupations, employing women employees in night shifts in factories etc.
Economic Importance:
The economic importance of right against exploitation is
(i) The government takes necessary steps to remove bonded
labour.
(ii) The Factories Acthelp to prevent exploitation of women and children employees.
(iii) The owner of the factories are guided to make provision for safety and welfare of the
workersad they compulsorily appointlabour
a welfare officer, it in the factory 500 01 more
workers are employed.
(4) Right to Freedom of Religion (Articles 25 to 28):

Articles 25 to 28 deal with the right to freedom of religion. Subject to public order, morality,
health etc., the citizens enjoy freedom of conscience and are free to profess,
practiseand
propagate any religion.
However, the state can regulate or restrict the economic,
financial, political or other secular
activities associated with religious practices. No citizen can be compelled to pay any taxes the
proceeds of which are to be spent for the promotion or maintenance of any particular religion or
religious domination.
The Economic importance of the right to freedom of religion is
(i) The government cannot spend tax money for the development of any religion.
(ii) Nobody can be compelled to pay tax for the welfare of any speci
fic religion.
(iii) No one shall be forced to transfer of property or any agreement of a business nature in the
name of a particular religion.
(5) Cultural and Educational Rights (Articles 29 to 30):

Article 29 stipulates that the State shall not impose upon it any culture other than the
community s own culture. A minority community has the right to preserve its culture and
religious interests. Article 30 confers upon a minority community the right to establish and
administer educational institutions of its choice.
A notable feature of the educational and cultural right is that unlike other fundamental rights, it
is not subject to any restriction, except that the State can make special provisions for the
advancement of any socially and educationally backward classes of citizens.
The economicimportancesof cultural and educational rights are:
(i) The state does not discriminate to give economic assistance to the minority institutions.
(ii) The aided institution cannot refuse admission to any of the citizens on the ground that he
belongs to a particular caste, religion, language or region.
(6) Right to Constitutional Remedies (Article 32):

This right has been described by Dr.
Ambedkaras the ‘heart and soul of the Constitution. In tact
the mere declaration of fundamental rights is useless unless effective remedies are available
for their enforcement. This has been ensured under Article 32 which grants the right to move
the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by
the Constitution.
Clause (2) of Article 32 confers power on the supreme court to issue appropriate directions or
orders to writs, including writs in the name of habeas corpus,
mandamas, prohibition,
quo-warrant and certiorari for the enforcement of any of the rights conferred by Part III of the
constitution.
Thus, the fundamental rights enumerated in the constitution guarantee a number of economic
and social lights to the citizens. At the same time the state has the power to impose reasonable
restrictions on such rights in the interest of the people.
The Economic Functions

Of a Government
include:
1. Protection of private property and maintaining law and order / national
defence.
2. Raising taxes.
3. Providing public services not provided in a free market (e.g. health care,
education, street lighting)
4. Limit market failure through the regulation of markets, e.g. regulations on
environment/
labour markets/monopoly.
5. Macroeconomic management, e.g. use of fiscal and monetary policy to control
business cycle – recession and in
flation.
6. Reducing inequality/poverty
The 7 Major Government Regulations on Business
Federal business laws fall into seven basic categories. Note that each might not impact
your business the same way—entire categories might not be a huge concern for your
business, depending on your industry. But you’ll want to make sure your company is in
compliance withall of them with the same level of importance and attention. Your
business lawyercan help you out tofigure out what, exactly, applies to you.
Here’s a rundown of the business regulation categories to look out for:
1. Tax Code
For most small business owners, government regulation questions almost always begin
with taxes. But there’s more to taxes than merely paying them—knowing business
which
taxes to pay, when to pay them, and how to set up your business to account for future
tax payments can spare you a ton of headaches when it comes time to write the
government a check.
Every company registered within the United States has to pay federal taxes. Most
companies will also have to pay state taxes, depending on the state in which the
company is registered. These are unavoidable. Avoiding taxes—or deciding not to pay
them outright—comes with hefty penalties and potential jail time
.
But thekinds of taxes you’ll pay depends on how you formed your business. In this
regard, not all businesses are treated the same.
Sole proprietorships
pay taxes
differently than, say,
S-corporations. Here’s a full rundown of the different
taxes for
business structuresto help you determine what your business needsfile. to Despite the
differences between each kind of business, there are a few general termssould
you
know:
• Income tax:Most businesses file an annual income tax return. Businesses must
pay income tax as they earn and receive income, and then
file a tax return at the
end of the year.
• Estimated tax:Estimated tax payments offer an alternative to paying income tax
throughout the year as your company earns money. Sole proprietors, partners,
and S-corporation shareholders must usually make estimated tax payments if
they expect to owe $1,000 or more once they
file their return. Note that
corporations are usually required to make estimated tax payments if expect to
make more than $500 or more in income.
• Employment tax: Companies that have employees are expected to pay taxes
related to having staff on their payroll. These include Social Security and
Medicare taxes, federal income tax withholding, and federal unemployment tax.
For more information, see the IRS page on Employment Taxes for Small
Businesses.
• Excise taxes:Excise taxes are paid when your business makes purchases on
specific goods, and are often included in the price of the product. One common
example of excise tax is the purchase of gasoline, where applicable taxes are
baked into the price per gallon rather than as a tally at the end of the transaction.
You may be under certain excise tax law if you manufacture or sell certain goods,
use various kinds of equipment, receive payment for certain kinds of services,
and much more. For additional information, refer toIRS theguide on Excise
Taxes.
2. Employment and Labor Law
You’ll need to know the vast array of federal and state labor laws if your business is
going to hire employees or independent contractors. Thankfully, if you’re just starting
out, you can take advantage of the Department of Labor’s
FirstStepEmployment Law
Advisor. This resource helps employers determine which major federal employment
laws apply to their business or organization, the record keeping and reporting
requirements required, and which on-site posters they need to hang in their
fice or
of
work site.
Here are the most common labor laws:
• Wages and hours: According to the Department of Labor, the
Fair Labor
Standards Act (FLSA)prescribes standards for wages and overtime pay. This act
affects most private and public employment, and requires employers to pay
covered employees at least the federal minimum wage and overtime pay of
one-and-one-half-times the regular rate of pay (unless theyexempt
are
employees).
• Workplace safety and health:
The Occupational Safety and Health Administration
(OSHA) requires that employers, under the
OSH Act, “provide their employees
with work and a workplace free from recognized, serious hazards.” The OSH Act
is enforced through workplace inspections and investigations.
• Equal opportunity: Most employers with at least 15 employees must comply with
equal opportunity laws enforced by the Equal Employment Opportunity
Commission (EEOC). The EEOC mandates that certain hiring practices, such as
gender, race, religion, age, disability, and other elements are not allowed to
influence hiring practices.
• Non-US citizen workers: The federal government mandates that employers must
verify that their employees have permission to work legally in the United States.
There are severalemployment categories , each with different requirements,
conditions, and authorized periods of stay (for employees who are not legal
residents or citizens).
• Employee benefit security:If your company offers pension or welfare bene
fit
plans, you may be subject to a wide rangefiduciary,
of disclosure, and reporting
requirements under the
Employee Retirement Income Security Act.
• Unions:If your business has union employees, you may needfiletocertain
reports and handle relations with union members in speci
fic ways. See theOffice
of Labor Management Standards ’ website for more information.
• Family and medical leave: the Family and Medical Leave Act (FMLA) requires
employers with 50 or more employees to provide 12 weeks of unpaid,
job-protected leave to eligible employees for the birth or adoption of a child, or
for the serious illness of the employee or a spouse, child, or parent.
• Posters:Some Department of Labor states require notices to be shared or
posted in the workplace for employees’ view (for example, alcohol warnings and
hand-washing reminders). Fortunately, elaws
the Poster Advisoris an easy way
to determine which posters you need, and you can use it to get free electronic
and printed copies in multiple languages.
3. Antitrust Laws
Any time a company conspires with its competitors, third-party vendors, or other
relevant parties, it may run afoul of antitrust laws. You can easily familiarize yourself
with the SBA’s handy list of issues that antitrust laws strive to address, such as the
following:
• Conspiring tofix market prices:
Discussing prices with competitors—even if it
affects a small marketplace.
• Price discrimination:
Securing favorable product prices from buyers when other
companies can’t.
• Conspiring to boycott:Conversations with other businesses regarding the
potential boycott of another competitor or supplier.
• Conspiring to allocate markets or customers:Agreements between competitors
to divide up customers, territories, or markets are illegal. This provision applies
even when the competitors do not dominate the particular market or industry.
• Monopolization: Preserving a monopoly position through the acquisition of
competitors, the exclusion of competitors to the given market, or the control of
market prices.
4. Advertising
A good advertising strategycan do wonders for your business. But before you dive in,
you’ll need to make sure that you’re playing by the rules. For example, you have to make
sure the claims in your ads are not untruthful or purposely deceptive. Violating these
rules can result in
fines, which defeats the purpose of your advertising infirst
the place.
Here’s how you can avoid misleading customers:
• Comply with labeling laws for consumer products, meaning that you list out
ingredients and chemicals within your products.
• Know the specific rules for advertising and selling products over the internet.
• Understand the rules for advertising speci
fic products—whether be it alcoholic
beverages or 900 numbers. This’ll be speci
fic to your industry, and where working
with a lawyer who knows the rules around your business will really fit bene
you.
• Understand the rules for marketing and advertising over the phone or via email.
• Learn the rules for making environmentally friendly or “green” claims in
advertising. More on that below.
5. Environmental Regulations
You might need to acquaint yourself with various environmental protection laws,
depending on your industry or business. This is especially pertinent if you’re marketing,
say, cleaning products, food, or anything with claims to be natural, organic, or
eco-friendly. You’ll
find dozens of environmental rules and regulations that might affect
your small business, both at the federal and state level.
Here’s a sample of compliance measures you may need to take for your business. Note
that you may also need to consult your state environmental protection agency to make
sure you meet their
requirements aswell.TheEPA Small Business Gateway is a great
resource to make sure your business is in compliance with environmental law.
6. Privacy
Businesses with staff and employees wind up amassing a ton of sensitive personal
information about their employees. As a result, there are a variety of rules and
regulations about how employers must save and secure this data.
If your business discloses an employee’s private information, including Social Security
number, address, name, health conditions, credit card, bank numbers, or personal
history, not only do various laws exist to keep businesses from spreading this
information, but employees can sue for disclosing sensitive information.
Although employees have clear and specific rights to privacy in the workplace, the rights
are balanced against the employers’ privileges to monitor their business operations. It’s
important to understand what rights you have as a business to monitor employees, and
to be clear and transparent about that monitoring to your employees.
7. State Licensing
We’ve focused on federal laws and government regulations on business so far, but that
doesn’t meant that there aren’t ample state regulations to consider for your small
business. Many state and local governments have their own requirements for
businesses, and they’re just as important to understand as their federal counterparts.
Here’s a breakdown of the most common state licenses and laws, but check out our
State-by-State Guide to Business Licenses and Permitsto see what else your state
might require.
Roles and Responsibilities of the state governments
State governments have separate departments for proper functioning of the state.
States have jurisdiction over education, agriculture, public health, sanitation, hospitals
and dispensaries and many other departments.
• Internal security:
The state governments have to maintain the internal security,
law and order in the state. Internal security is managed through state police.
• Public order:
States have jurisdiction over police and public order
• Education:Providing a public education system, maintaining school buildings
and colleges, employment of teachers, providing help to under privileged
students all come under the education department of the state.
• Agriculture:The state governments have to provide support for farmers, funds
for best farming practices, disease prevention and aid during disasters such as
floods or droughts.
• Finances:State legislature handles the
financial powers of the state, which
includeauthorisationof all expenditure, taxation and borrowing by the state
government. It has the power to originate money bills. It has control over taxes
on entertainment and wealth, and sales tax.
• Reservation of bills:
The state governor may reserve any bill for the consideration
of the President.
• Transport:State government runs the rains, trams, bus and ferry services and
other public transportation in the cities and towns of the States.
• Water supply: Water supply to cities and towns for drinking, including irrigation
for farmers, is the responsibility of the State governments.
• Budget:State governments make budget for state.
Allocation of funds:
It has the power to give funds to all its organizations Zila
like
Parishad, corporation, and other departments
The Economic Functions

Of a Government
include:
1. Protection of private property and maintaining law and order / national
defence.
2. Raising taxes.
3. Providing public services not provided in a free market (e.g. health care,
education, street lighting)
4. Limit market failure through the regulation of markets, e.g. regulations on
environment/labourmarkets/monopoly.
5. Macroeconomic management, e.g. use of fiscal and monetary policy to control
business cycle – recession and in
flation.
6. Reducing inequality/poverty
Business Laws & Regulations in India

Many business laws in India precede the country’s independence in 1947. For example,
the Indian Contract Act of 1872is still in force, although speci
fic contracts such as
partnerships and the sale of goods are now covered by newer laws.Partnership
The Act
of 1932 covers partnership firms in India. Business laws regulating chartered
accountants and cost accountants were passed in 1949 and 1959, respectively. The
Banking Regulation Act of 1949 continues to regulate private banking companies and
manage banks in India. In 2012, it was amended by the Banking Law (Amendments)
Act. Under these amendments, the Reserve Bank of India (RBI) was given power to
restrict voting rights and shares acquisition in a bank. The RBI established the Depositor
Education and Awareness Fund. Banks are now able to issue both equity and preference
shares under RBI guidelines.
While India is often criticized for complex regulations, it is important to keep in mind
that that in some cases, these laws are simpler than those of the U.S. Furthermore,
most regulations are consistent across the country, and attorneys in India can practice
in any state. Filing lawsuits is seldom productive in most commercial disputes since
court cases can drag on for decades and collection can take even longer. For large
deals, binding third-country arbitration can be the best way to resolve disputes.
Following India’s economic development in the 21st century, the Ministry of Corporate
Affairs passed theCompetition Act of 2002and theLimited Liability Actin 2008. These
promote sustainable competition in markets, prohibit anti-competitive business
practices, and protect consumer interests while ensuring free trade.
The Parliament of India passes and amends regulations for both businesses and
investors. In addition to provisions from the Companies Act of 1956,Companies
the Act
of 2013 features provisions regarding mergers and acquisitions, board room
decision-making, related party transactions, corporate social responsibility, and
shareholding. The act was further amended throughCompanies
the Act of 2015
which
eliminated the procedural common seal, declarations for commencement of
businesses, and minimum paid-up capital requirements. The amendment also relaxed
governing-related party transactions while limiting access to strategic corporate
resolutions in India.
As a member of the International Labor Organization, India offers protections for
employees. These include the Payment of Wages Act of 1936, the Industrial
Employment Act of 1946, the Industrial Disputes Act of 1947, the Payment of Bonus Act
of 1965, and the 1972 Payment of Gratuity Act. Protections include annual bonuses of
8.33% and separation fees of about 15 days per year of employment. Other labor laws
such as the Building and Other Construction Workers Acts of 1996 and the Workmen’s
Compensation Act of 1923 (amended in 2000) are in effect. Passed in 1926, the Trade
Unions Actdeals with the registration, rights, liabilities, and responsibilities of trade
unions. TheIndustrial Disputes Act of 1946regulates trade unions and matters
between industrial employers and employees.
Business laws in India include consumer protection. The
Consumer Protection Act,
1986 mandates Consumer Dispute Redressal Forums at local and national levels. Older
laws, such as theStandards of Weights & Measures Act of 1956, ensure fair
competition in the market and free
flow of correct information from providers of goods
and services to consumers.
Due to the growth of trade, the Indian government passedForeign
the Trade
(Development and Regulation) Act of 1992 to facilitate imports and augment exports.
The latest EXIM Policy, known as the Foreign Trade Policy, was issued for April 2015 to
March 2020. TheService Exports from India Scheme (SEIS) replaced the Served from
India Scheme. The SEIS extends the duty-exempted scrip to Indian service providers and
provides noti
fied services in a specified mode outside the country. Under the Export
Promotion Capital Goods Scheme , the export obligation requires six times the duty
saved on imported capital goods; in the case of local sourcing of capital goods, the
export obligation is reduced by 25%. Beyond goods and services,Foreign
the Exchange
Management Act of 1999 regulates foreign exchange transactions including
investments abroad.
As a founding member of the World Trade Organization in 1995, India has updated
business laws regarding copyrights, patents, and trademarks to meet the Agreement on
Trade Related Aspects of Intellectual Property Rights. Indian companies and the federal
government honor global IP rights. However, because music copyrights are different in
India, both Indian and Western IP owners in the entertainment industry have suffered
due to digital piracy. Even so, there are few IP-related disputes outside of several
celebrated pharmaceutical industry cases. In 2013, India’s Supreme Court denied
Novartis an extension to update its cancer drugGlivecdue to “evergreening” charges.
E-commerce and online expansion of companies prompted India to create regulations
to cover cyber law and security compliances, such as the techno legal regulatory
provisions in the Companies Act of 2013. The Information Technology Act of 2000
is
the primary law for e-commerce regulation in India. In 2008, the IT Act was amended to
provide explicit legal recognition of electronic transactions.
A non-governmental organization (NGO) is a non-profit, citizen-based group that
functions independently of government. NGOs, sometimes called civil societies, are
organized on community, national and international levels to serve specific social or
political purposes, and are cooperative, rather than commercial, in nature
World NGO Day is observed annually on 27 February
How NGOs are Funded

As non-profits, NGOs rely on a variety of sources for funding, including:
• membership dues
• private donations
• the sale of goods and services
• grants
Types of NGOs
A number of NGO variations exist, including:
• BINGO: business-friendly international NGO (example: Red Cross)
• ENGO: environmental NGO (Greenpeace and World Wildlife Fund)
• GONGO: government-organized non-governmental organization (International
Union for Conservation of Nature)
• INGO: international NGO (Oxfam)
• QUANGO : quasi-autonomous NGO (International Organization for
Standardization [ISO])
NGO/GRO (governmental-related organizations) types can be understood by their

orientation and level of how they operate.
By orientation
• Charitable orientation
often involves a top-down effort with little participation or
input by beneficiaries. It includes NGOs with activities directed toward meeting the
needs of the disadvantaged people groups.
• Service orientation
includes NGOs with activities such as the provision of health,
family planning or education services in whichprogramme
the is designed by the
NGO and people are expected to participate in its implementation and in receiving
the service.
• Participatory orientation
is characterized by self-help projects where local people
are involved particularly in the implementation of a project by contributing cash,
tools, land, materials,
labouretc. In the classical community development project,
participation begins with the needfinition
de and continues into the planning and
implementation stages.
• Empowering orientation aims to help poor people develop a clearer understanding of
the social, political and economic factors affecting their lives, and to strengthen their
awareness of their own potential power to control their lives. There is maximum
involvement of the bene ficiaries with NGOs acting as facilitators.
[23]
By level of operation
• Community-based organizations
(CBOs) arise out of people's own initiatives. They
can be responsible for raising the consciousness of the urban poor, helping them to
understand their rights in accessing needed services, and providing such services.
• City-wide organizations include organizations such as chambers of commerce and
industry, coalitions of business, ethnic or educational groups, and associations of
community organizations.
• State NGOs include state-level organizations, associations and groups. Some state
NGOs also work under the guidance of National and International NGOs.
• National NGOs include national organizations such as the
YMCAs/ YWCAs, Bachpan
Bachao Andolan, professional associations and similar groups. Some have state
and city branches and assist local NGOs.
• International NGOs range from secular agencies such as Save the Children, SOS
Children's Villages
, OXFAM, Ford Foundation , Global march against child labor
,
and Rockefeller Foundation to religiously motivated groups. They can be responsible
for funding local NGOs, institutions and projects and implementing projects.
[23]
Apart from "NGO", there are alternative or overlapping terms in use,

including:
third-sector organization (TSO), non-profit organization (NPO), voluntary
organization (VO), civil society organization (CSO),
grassroots organization (GO), social
movement organization (SMO), private voluntary organization
(PVO), self-help organization (SHO) and non-state actors (NSAs).
In Portuguese, Spanish, French, Italian and other
Romance languages, the 'mirrored'
abbreviation "ONG" is in use, which has the same meaning as "NGO" (for
example Organisationnon-gouvernementale in French, OrganizaçãoNão
Governamental in Portuguese, Organizaciónno gubernamental
in Spanish,
or Organizzazionenon governativa in Italian).
Governmental-related organizations / non-governmental organizations are a
heterogeneous group. As a result, a long list of additional acronyms has developed,
including:
• BINGO: 'Business-friendly international NGO' or 'Big international NGO'
• SBO: 'Social Benefit Organization,' a positive, goal-oriented designation as a
substitute for the negative, "Non-" designations
• TANGO: 'Technical assistance NGO'
• TSO: 'Third-sector organization'
• GONGO: 'government-organized non-governmental organization' or
'government-operated NGOs' (set up by governments to look like NGOs in order to
qualify for outside aid or promote the interests of government)
[24]
• DONGO: 'Donor-organized NGO'

• INGO: 'International NGO'
• QUANGO: 'Quasi-autonomousNGO,' or QUANGO refer to NGOs set up and funded by
government. The term is particularly prevalent within the UK (where there are more
than 1,200 of them), the Republic of Ireland, and the Commonwealth.
• National NGO: A non-governmental organization that exists only in one country. This
term is rare due to the globalization of non-governmental organizations, which
causes an NGO to exist in more than one country.
[25]
• CSO: 'Civil Society Organization'

• ENGO: 'Environmental NGO,' such Greenpeace
as and WWF
• PANGO: 'Party NGO,' set up by parties and disguised as NGOs to serve their political
matters.
• SNGO: 'Southern NGO'
• SCO: 'Social change organization'
• TNGO: 'Transnational NGO.' The term emerged during the 1970s due to the increase
of environmental and economic issues in the global community. TNGO includes
non-governmental organizations that are not fined
con to only one country, but exist
in two or more countries.
• GSO: Grassroots Support Organization
• MANGO: 'Market advocacy NGO'
• NGDO: 'Non-governmental development organization'
• PVDO: 'Private voluntary development
organisation'[26]
USAID refers to NGOs as private voluntary organizations
. However, many scholars have
argued that this de
finition is highly problematic as many NGOs are in fact state- or
corporate-funded and -managed projects and have professional .staff
[citation needed]
GRO/NGOs exist for a variety of reasons, usually to further the political or social goals
of their members or founders. Examples include improving the state of natural
the
environment , encouraging the observance of human rights , improving the welfare of the
disadvantaged, or representing a corporate agenda. However, there are a huge number
of such organizations and their goals cover a broad range of political and philosophical
positions. This can also easily be applied to private schools and athletic organizations.
Track II diplomacy
Main article:
Track II diplomacy
Track II dialogue, or Track II diplomacy, is transnational coordination that involves

non-official members of the government including EXPERET COMMUNITY as well as
former policy-makers or analysts. Track II diplomacy aims to get policymakers and
policy analysts to come to a common solution through discussions by unofficial means.
Unlike the Track I diplomacy where government ficials,
of diplomats and elected leaders
gather to talk about certain issues, Track II diplomacy consists of experts, scientists,
professors and otherfigures that are not involved in government affairs. The members
of Track II diplomacy usually have more freedom to exchange ideas and come up with
compromises on their own.
Legal Status
NGO has legal status under following laws
1. Any charitable society registered under society registration act 1860

2. Trust
3. Any ltd company formed under company law 1956 of India
A non-governmental organization (NGO) is an organization that is not part of a

government and was not founded by states. NGOs are therefore typically independent
of governments. Although the de finition can technically include for-pro
fit corporations,
the term is generally restricted to social, cultural, legal, and environmental advocacy
groups having goals that are noncommercial, primarily. NGOs are usually non-pro fit
organizations that gain at least a portion of their funding from private sources. Current
usage of the term is generally associated with the United Nations and authentic NGOs
are those that are so designated by the UN. Because the label "NGO" is considered too
broad by some, as it might cover anything that is non-governmental, many NGOs now
prefer the term private voluntary organization (PVO).
A non-governmental organization (NGO) is a legally constituted organization created by
natural or legal persons that operates independently from any government and a term
usually used by governments to refer to entities that have no government status. In the
cases in which NGOs are funded totally or partially by governments, the NGO maintains
its non-governmental status by excluding government representatives from
membership in the organization. The term is usually applied only to organizations that
pursue some wider social aim that has political aspects, but that are not overtly political
organizations such as political parties. Unlike the term "intergovernmental organization",
the term "non-governmental organization" has no generally agreed legal finition.
de In
many jurisdictions, these types of organization are called "civil society organizations" or
referred to by other names.
The term non-governmental organization or NGO was not in general currency before the
UN was formed. When 132 international NGOs decided to co-operate with each other in
1910, they did so under the label, the Union of International Associations. The League of
Nations officially referred to its "liaison with private organizations", while many of these
bodies at that time called themselves international institutes, international unions or
simply international organizations. The first draft of the UN Charter did not make any
mention of maintaining co-operation with private bodies. A variety of groups, mainly but
not solely from the USA, lobbied to rectify this at the San Francisco conference, which
established the UN in 1945. Not only did they succeed in introducing a provision for
strengthening and formalizing the relations with private organizations
previously
maintained by the League, they also greatly enhanced the UN's role in economic and
social issues and upgraded the status of the Economic and Social Council (ECOSOC) to
a "principal organ" of the UN. To clarify matters, new terminology was introduced to
cover ECOSOC's relationship with two types of international organizations. Under Article
70, "specialized agencies, established by intergovernmental agreement" could
"participate without a vote in its deliberations", while under Article 71 "non-governmental
organizations" could have "suitable arrangements for consultation". Thus, "specialized
agencies" and "NGOs" became technical UN jargon. Unlike much UN jargon, the term,
NGO, passed into popular usage, particularly from the early 1970s onwards.
Many diverse types of bodies are now described as being NGOs. There is no generally
accepted definition of an NGO and the term carries different connotations in different
circumstances. Nevertheless, there are some fundamental features. Clearly an NGO
must be independent from the direct control of any government. In addition, there are
three other generally accepted characteristics that exclude particular types of bodies
from consideration. An NGO will not be constituted as a political party; it will be
non-profit-making and it will be not be a criminal group, in particular it will be
non-violent. These characteristics apply in general usage, because they match the
conditions for recognition by the United Nations. The boundaries can sometimes be
blurred: some NGOs may in practice be closely identified with a political party; many
NGOs generate income from commercial activities, notably consultancy contracts or
sales of publications; and a small number of NGOs may be associated with violent
political protests. Nevertheless, an NGO is never constituted as a government
bureaucracy, a party, a company, a criminal organization or a guerrilla group. Thus, for
this article, an NGO is de
fined as an independent voluntary association of people acting
together on a continuous basis, for some common purpose, other than achieving
government of fice, making money or illegal activities. This basic approach will be
elaborated and modi fied below.
A 1995 UN report on global governance estimated that there are nearly 29,000
international NGOs. National numbers are even higher: The United States has an
estimated 2 million NGOs, most of them formed in the past 30 years. Russia has 65,000
NGOs. Dozens are created daily. In Kenya alone, some 240 NGOs come into existence
every year. The number of internationally operating NGOs is estimated at 40,000
National numbers are even higher: Russia has 277,000 NGOs; India is estimated to have
around 3.3 million NGOs.
TERMINOLOGY
NGOs are defined by the World Bank as "private organizations that pursue activities to
relieve suffering, promote the interests of the poor, protect the environment, provide
basic social services, or undertake community development".
PURPOSES OF THE NGOs
NGOs exist for a variety of purposes, usually to further the political or social goals of
their members. Examples include improving the state of the natural environment,
encouraging the observance of human rights, improving the welfare of the
disadvantaged, or representing a corporate agenda. However, there are a huge number
of such organizations and their goals cover a broad range of political and philosophical
positions. This can also easily be applied to private schools and athletic organizations.
TYPES OF NGOs
There are numerous possibilities to classify NGOs. The following is the typology the
World Bank uses
Operational NGOs:
Their primary purpose is the design and implementation of development-related
projects. One categorization that is frequently used is the division into relief-oriented or
development-oriented organizations; they can also be classi
fied according to whether
they stress service delivery or participation; or whether they are religious and secular;
and whether they are more public or private-oriented. Operational NGOs can be
community-based, national or international. Operational NGOs have to mobilize
resources, in the form offinancial donations, materials or volunteer labor, in order to
sustain their projects and programs. This process may require quite complex
organization. Charity shops, staffed by volunteers, in premises provided at nominal
rents and selling donated goods, end up providingfinance to the national headquarters.
Students in their vacations or during a break in their education provide labor for
projects. Finance obtained from grants or contracts, from governments, foundations or
companies,require time and expertise spent on planning, preparing applications,
budgeting, accounting and reporting. Major fund-raising events require skills in
advertising, media relations and motivating supporters. Thus, operational NGOs need to
possess an efficient headquarters bureaucracy, in addition to the operational staff in the
field.
Advocacy NGOs (sometimes called militant NGOs):
Their primary purpose is to defend or promote a speci
fic cause. As opposed to
operational project management, these organizations typically try to raise awareness,
acceptance and knowledge by lobbying, press work and activist events.
ROLES OF NGOs
Roles of NGO according to the expectation of people:
NGOs play a critical role in all areas of development. People and policy makers are
agree on one thing that NGOs play a very important role in development. Role of NGOs
vary over the years as the policy of government changes. NGOs are almost dependent
on polices of government. Socio economic development is a shared responsibility of
both i.e. government and NGOs. Role of NGOs are complementary but vary according to
polices of government. If we closely pursue the voluminous literature on NGOs many
roles can be found according to the expectations of people. The major development
roles ascribed to NGOs are to act as:
Planner and implementer of development programmers,
Mobiliserof local resources and initiative,
Catalyst, enabler and innovator,
Builder of self reliant sustainable society,
Mediator of people and government,
Supporter and partner of government
programmein activating delivery system
implementing rural development
programmes, etc.,
Agents of information,
Factor of improvement of the poor, and
Facilitator of development education, training,
professionalisation
, etc.
Basically NGOs role is to prepare people for change. They empower the people to
overcome psychological problem and opposition of oppress. Its role cannot be denied
The Role Of NGOs and Communities:
Some NGOs see themselves as champions of the poor, lobbying government to give
them a better deal. Others play a watchdog role, ensuring that governments and utilities
remain honest, focused on serving the people.
A third variety prefer
to focus at ground
level,finding ways to bring communities together to provide basic services to those in
most need. Many look to combine these roles within one
organisation.
Partnerships can struggle to accommodate these different visions, making it hard to
harness the skills, abilities and local contacts that NGOs offer to best effect. NGOs
themselves can be torn between engaging other stakeholders in order to provoke
change from the inside and maintaining their independence from the outside. Equally,
how partnerships can engage and relate to poor communities is not straightforward. In
some cases Community-BasedOrganisationsare preferred to NGOs as partners.
The Role of NGOs in Rural Transformation:
Ninety percent of the world's population lives below the poverty line. This is more
prominent in developing countries. There are a lot of schemes that are designed by the
Government to enrich the lives of the unfortunate and the underprivileged. As much as
the Government of Nations are assisting the down trodden and the underprivileged, an
equal measure is contributed by Non Governmental Organizations.
Non governmental organizations are funded by private donors and are also funded by
Government Initiatives. Non Governmental organizations function in the following areas
of uplifting the lives of the underprivileged.
Health, Housing and Food - Providing for basic facilities
Gender Inequality Issues in Developing countries
Care for HIV -AIDS affected children and adults
Elder Care - A large proportion of elders are being neglected and many NGOs and
private donors have built orphanages for elders and senior citizens
Providing for education and vocational training such as Computer Typing etc
The quantity and the quality of social reforms that are undertaken by this section of
workersis phenomenal. There are also concerns about fraud and pilferage of funds that
have been expressed. For the first time, similar to Manufacturing and other institutions
that are being audited for compliance using standards such as ISO, social institutions
are also audited by a social standard that has been developed in the United Kingdom.
Every fortunate citizen of the world should think calmly about charity
upliftment
and of
the downtrodden in some aspect or the other. It may not be necessary to own a
champion NGO, but just a thought to donate money, medicines and other assets to the
poor is sufficient.

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