NCRDs Sterling Institute Of Management Studies

A REPORT ON Business Ethics Social Economic Values & Responsibilities Trusteeship Management

Submitted To:
Prof. Tasnim

Submitted By:
Swati Jadhav (19 ) Sumit Jagtap (20) Ankur Jain (21) Mohnish Joshi (22) Vaidehi Joshi (23) Sameep Kadakia

(24)

Managerial Ethics
Managerial Ethics is a major factor affecting how socially responsive an enterprise will be in the long term. Manager's ethical standards in the enterprise determine the type of response it will make as it reacts to the tension between the; forces for change and stability. Proactive responses are likely to be more ethical since they will go beyond minimum legal requirements. They are more consistent with the high social expectations as discussed earlier. Reactive responses on the contrary either conform only with the minimum legal requirements or even attempt to avoid legal requirements through long court cases, lobbying efforts to avoid responsibility and so forth. The ethics of an enterprise's managers are a key factor in decision making and may be formed by many forces. The feed back can be classified into two types: Positive feed back Negative feed back

Positive feed back serves to reinforce and establish a tendency toward special responsiveness firmly with an enterprise's mode of functioning. It indicates that the type .of response action chosen was correct and effective. Negative feed back tends to cause an enterprise to limit or withdraw further efforts at social responsiveness. The feed back that an enterprise receives on its social responsiveness will help to determine: The type of response option chosen (including the choice to be primarily proactive or reactive) The relative strength of forces for change and stability. An enterprise's current capacity to respond.

The various key stake-holder groups for an enterprise are: Society Suppliers Owners Governments Competitors Community Customers Employees Society as a whole responds to events through: Protests Increasing expectations for enterprise social responsibility Public policy debates Changing or enacting new laws Deregulation or new governmental regulations In all the about above, the owners viability of and the return enterprises on involved (on are their concerned economic investment

own). As far as the managers are concerned, the major result of the conflict between stake holders' pressures for social responsiveness and for economic performance results in increased complexity in decision taking. They can no longer concentrate on pursuing a single goal for themselves or enterprise owners and consider the many and often conflicting interests of all stake holders. These stake holder groups are directly linked to the model of social responsiveness and form the major? Elements that comprise forces for change or stability. Pressure a large stake-holder group does not always produce the exact change that was intended. The government and its various regulator}* bodies which comprise a major stake-holder in most enterprises, usually Serve as forces for change in the direction of more social responsiveness. Other stake holders, such as owners, are usually forces for stability hence less responsive. Managers serve as a major

stake holder 5roup internal to an enterprise. Managers use corporate resources to Protect themselves from public criticism. Their resistance to change the unwillingness to admit potential problems shows that they are 'Kely to serve as major sources of enterprise stability.

Four-Stage Continuum:
Archie B-carroll views social responsibility as a four-stage continuum. Economic responsibility Legal responsibility Ethical responsibility Discriminatory responsibility

Ethical responsibilities are additional behaviours and activities that are not necessarily codified into law but nevertheless are expecte of business by society's members; discriminatory responsibilities are not legally required or even demanded by ethics. Corporations accep them in order to meet society's expectations. Ethical responsibilities are additional behaviors and activities that are not necessarily codified into law but nevertheless are expected of business by society's members; discriminatory responsibilities are not legally required.

Social Responsibility
Social responsibility is an ethical or ideological theory that an entity whether it is a government, corporation, organization or individual has a responsibility to society. This responsibility can be "negative," in that it is a responsibility to refrain from acting (resistance stance) or it can be "positive," meaning there is a responsibility to act (proactive stance). While primarily associated with business and governmental practices, activist groups and local communities can also be associated with social responsibility, not only business or governmental entities. There is a large inequality in the means and roles of different entities to fulfill their claimed responsibility. This would imply the different entities have different responsibilities, in so much as states should ensure the civil rights of their citizens, that corporations should respect and encourage the human rights of their employees and that citizens should abide with written laws. But social responsibility can mean more than these examples. Many NGOs accept that their role and the responsibility of their members as citizens is to help improve society by taking a proactive stance in their societal roles. It can also imply that corporations have an implicit obligation to give back to society (such as is claimed as part of corporate social responsibility and/or stakeholder theory). Social responsibility is voluntary; it is about going above and beyond what is called for by the law (legal responsibility). It involves an idea that it is better to be proactive toward a problem rather than reactive to a problem. Social responsibility means eliminating corrupt, irresponsible or unethical behavior that might bring harm to the community, its people, or the environment before the behavior happens. In todays society a business must maintain ethical principles in order to be successful. (Kaliski, 2001) Businesses can use ethical decision making to strengthen their businesses in three main ways. The first way is to use their ethical decision making

to increase productivity. This can be done through programs that employees feel directly enhance their benefits given by the corporation, like better health care or a better pension program. One thing that all companies must keep in mind is that employees are stakeholders in the business. They have a vested interest in what the company does and how it is run. When the company is perceived to feel that their employees are a valuable asset and the employees feel they are being treated and such, productivity increases. A second way that businesses can use ethical decision making to strengthen their businesses is by making decisions that affect its health as seen to those stakeholders that are outside of the business environment. (Kaliski, 2001) Customers and Suppliers are two examples of such stakeholders. If we were to look at companies like Johnson & Johnson, their strong sense of responsibility to the public is well known. (Hogue, 2001) In particular, take for instance Johnson & Johnson and the Tylenol scare of 1982. When people realized that some bottles of Tylenol contained cyanide they quit buying Tylenol, stocks dropped and Johnson & Johnson lost a lot of money. But they chose to loose even more money and invest in new tamper resistant seals and announce a major recall of their product. There was no certain amount for this situation; Johnson & Johnson had to lose money to be socially responsible. But in the long run they gained the trust of their customers. Now when people look at other products, there is a sense of faith and trust in that Johnson & Johnson would not allow a product to harm people just to meet their own bottom line. A third way that business can use ethical decision making to secure their businesses is by making decisions that allow for government agencies to minimize their involvement with the corporation. (Kaliski, 2001) For instance if a company is proactive and follows the EPA guidelines for admissions on dangerous pollutants and even goes an extra step to get involved in the community and address those concerns that the public might have; they would be less likely to have the EPA investigate them for environmental concerns. A significant element of current thinking about privacy, however, stresses "self-regulation" rather than market or government mechanisms for protecting personal information (Swire , 1997) Most rules and regulations are formed due to public outcry, if there is not outcry there often will be limited regulation

CORPORATE SOCIAL RESPONSIBILITY Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll and Buchholtz 2003, p. 36). The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law. A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a broader view of its responsibilities that includes not only stockholders, but many other constituencies as well, including employees, suppliers, customers, the local community, local, state, and federal governments, environmental groups, and other special interest groups. Collectively, the various groups affected by the actions of an organization are called "stakeholders." The stakeholder concept is discussed more fully in a later section. Corporate social responsibility is related to, but not identical with, business ethics. While CSR encompasses the economic, legal, ethical, and discretionary responsibilities of organizations, business ethics usually focuses on the moral judgments and behavior of individuals and groups within organizations. Thus, the study of business ethics may be regarded as a component of the larger study of corporate social responsibility. Carroll and Buchholtz's four-part definition of CSR makes explicit the multi-faceted nature of social responsibility. The economic responsibilities cited in the definition refer to society's expectation that organizations will produce good and services that are needed and desired by customers and sell those goods and services at a reasonable price. Organizations are expected to be efficient, profitable, and to keep shareholder interests in mind. The legal responsibilities relate to the expectation that organizations will comply

with the laws set down by society to govern competition in the marketplace. Organizations have thousands of legal responsibilities governing almost every aspect of their operations, including consumer and product laws, environmental laws, and employment laws. The ethical responsibilities concern societal expectations that go beyond the law, such as the expectation that organizations will conduct their affairs in a fair and just way. This means that organizations are expected to do more than just comply with the law, but also make proactive efforts to anticipate and meet the norms of society even if those norms are not formally enacted in law. Finally, the discretionary responsibilities of corporations refer to society's expectation that organizations be good citizens. This may involve such things as philanthropic support of programs benefiting a community or the nation. It may also involve donating employee expertise and time to worthy causes.

Basic Concepts of Economic Value

Economic value is one of many possible ways to define and measure value. Although other types of value are often important, economic values are useful to consider when making economic choices choices that involve tradeoffs in allocating resources. Measures of economic value are based on what people want their preferences. Economists generally assume that individuals, not the government, are the best judges of what they want. Thus, the theory of economic valuation is based on individual preferences and choices. People express their preferences through the choices and tradeoffs that they make, given certain constraints, such as those on income or available time. The economic value of a particular item, or good, for example a loaf of bread, is measured by the maximum amount of other things that a person is willing to give up to have that loaf of bread. If we simplify our example economy so that the person only has two goods to choose from, bread and pasta, the value of a loaf of bread would be measured by the most pasta that the person is willing to give up to have one more loaf of bread. Thus, economic value is measured by the most someone is willing to give up in other goods and services in order to obtain a good, service, or state of the world. In a market economy, dollars (or some other currency) are a universally accepted measure of economic value, because the number of dollars that a person is willing to pay for something tells how much of all other goods and services they are willing to give up to get that item. This is often referred to as willingness to pay.

The economic concept of value is that value is human driven (i.e., it is anthropocentric), meaning that goods and services are not considered to have value unless humans place value on them [willingness to pay]. From a strict economic perspective, there is no such thing as intrinsic or natural value. Of course, this focus on human-based value leads economists to measure market and nonmarket values using monetary instruments such as dollars. In general, when the price of a good increases, people will purchase less of that good. This is referred to as the law of demandpeople demand less of something when it is more expensive (assuming prices of other goods and peoples incomes have not changed). By relating the quantity demanded and the price of a good, we can estimate the demand function for that good. From this, we can draw the demand curve, the graphical representation of the demand function. It is often incorrectly assumed that a goods market price measures its economic value. However, the market price only tells us the minimum amount that people who buy the good are willing to pay for it. When people purchase a marketed good, they compare the amount they would be willing to pay for that good with its market price. They will only purchase the good if their willingness to pay is equal to or greater than the price. Many people are actually willing to pay more than the market price for a good, and thus their values exceed the market price. In order to make resource allocation decisions based on economic values, what we really want to measure is the net economic benefit from a good or service. For individuals, this is measured by the amount that people are willing to pay, beyond what they actually pay. Thus, two goods that sell for the same price may have different net benefits. The economic benefit to individuals is often measured by consumer surplus. This is graphically represented by the area under the demand curve for a good, above its price.

The economic benefit to individuals, or consumer surplus, received from a good will change if its price or quality changes. For example, if the price of a good increases, but peoples willingness to pay remains the same, the benefit received (maximum willingness to pay minus price) will be less than before. If the quality of a good increases, but price remains the same, peoples willingness to pay may increase and thus the benefit received will also increase. Economic values are also affected by the changes in price or quality of substitute goods or complementary goods . If the price of a substitute good changes, the economic value for the good in question will change in the same direction. For example, wheat bread is a close substitute for multi-grain bread. So, if the price of multi-grain bread goes up, while the price of wheat bread remains the same, some people will switch, or substitute, from multi-grain to wheat bread. Therefore, more wheat bread is demanded and its demand function shifts upward, making the area under it, the consumer surplus, greater. Similarly, if the price of a complementary good, one that is purchased in conjunction with the good in question, changes, the economic benefit from the good will change in the opposite direction. For example, if the price of butter increases, people may buy less of both bread and butter. If less bread is demanded, then the demand function shifts downward, and the area under it, the consumer surplus, decreases. Producers of goods also receive economic benefits, based on the profits they make when selling the good. Economic benefits to producers are measured by producer surplus, the area above the supply curve and below the market price. The supply function tells how many units of a good producers are willing to produce and sell at a given price. The supply curve is the graphical representation of the supply function. Because producers would like to sell more at higher prices, the supply curve slopes upward.

If producers receive a higher price than the minimum price they would sell their output for, they receive a benefit from the salethe producer surplus. Thus, benefits to producers are similar to benefits to consumers, because they measure the gains to the producer from receiving a price higher than the price they would have been willing to sell the good for. When measuring economic benefits of a policy or initiative that affects an ecosystem, economists measure the total net economic benefit. This is the sum of consumer surplus plus producer surplus, less any costs associated with the policy or initiative.

5 types of Economic Values

Direct Use Value - Output of forest products, from timber to animal furs Indirect Use Value - Ecological functions of the ecosystem like watershed protection and carbon sequestration Option Value - Something like an insurance policy premium which people are willing to pay in order to insure the supply of something, the availability of which would otherwise by uncertain Bequest value - A willingness to pay to preserve a resource for the benefit of one's descendants Existence value - Values conferred by humans on the ecosystem regardless of its use. The sum of the above five values is the Total Economic Value of the ecosystem. A) Understanding economic models of natural resource utilization. Natural resources provide many goods and services for our society. Forests provide lumber for building houses and natural ecosystems for hiking and picnics; soil provides a medium for growing agricultural products; fisheries provide food and recreation. The first part of this course concentrates on reviewing how economic systems allocate these resources to potential users. After covering how markets are supposed to work, the course then focuses on market failure. Markets often fail to incorporate aesthetic or recreational values when allocating natural resources. In many cases, these market

failures cause environmental conflicts. By understanding how markets work, and how they fail, we can begin to see the advantages and disadvantages of using market systems to improve environmental conditions.

B) Understanding market failures. We will focus on four main types of market failure in this course: 1. Failure due to the presence of common property resources 2. Failure due to the presence of externalities 3. Failure due to the presence of public goods 4. Failure due to unaccounted for risk and information asymmetries It is important to understand where markets fail and how they fail before asking what should be done to eliminate the results of market failure. C) Understanding the potential and limitations of economic policy to correct market failure. With an understanding of how markets operate and how they fail, the course turns to a discussion of how policy can incorporate economics. Here we will learn about the following ways in which economics is used in environmental policy: Valuation of environmental or non market resources: Contingent valuation, travel Benefit-Cost analysis: What is it and how is it done? Mechanisms for correcting market failures: Command and control regulation, cost, and hedonic approaches.

taxes, and tradable discharge permits. D) Understanding how concepts apply to environmental problems. Case studies -- or examples from the real world -- will be used throughout the web units. They will provide you with an opportunity to learn about actual environmental problems and how economics might be used to help solve these problems. Through these

examples you will learn what questions are important to ask, what analysis must be performed before policies are enacted, and what policies are best for a given situation. Objectives At the end of this course, students should be able to: Identify critical economic factors in environmental issues Detail the social benefits and costs of environmental policy Understand economic methods for valuing social benefits and costs Apply environmental valuation studies to policy Critically analyze an environmental benefit-cost analysis Understand several contemporary environmental issues

The framework of natural resource and environmental economics The science of economics is concerned with the allocation of resources, and especially those resources that are scarce or limited in their availability. If a resource is not scarce, then there is no need to ration, or allocate, it among economic agents. Economics provides a framework for allocating scarce resources efficiently, where efficiency is defined in a very specific way (to be discussed later). From this perspective, economics is well suited to addressing environmental issues because environmental quality, like many other goods and services, is now considered to be a scarce resource. And, because many environmental issues involve complex tradeoffs between degradation (such as air or water pollution) and other economic goals (such as economic growth and job creation), economics can be used to help determine the efficient allocation. In short, the science of economics is built around the idea that it can evaluate the

potential tradeoffs among different goods and services in terms of monetary units, including environmental goods and services. It is important to realize that nearly all our decisions in life involve the evaluation of tradeoffs, whether small and simple (as in example 1 below) or large and complex (as in example 2). The principles behind how

economists evaluate problems are generally the same no matter how complex the problem might be -- its just the specifics of the quantitative analyses that might. How is economic value measured? The economic concept of value is that value is human driven (i.e., it is anthropocentric), meaning that goods and services are not considered to have value unless humans place value on them. From a strict economic perspective, there is no such thing as intrinsic or natural value. Of course, this focus on human-based value leads economists to measure market and nonmarket values using monetary instruments such as dollars. Philosophers, environmentalists, and recently even some economists, have

suggested that a complete focus on anthropocentric valuation may be an improper way to value environmental resources. Their argument is that environmental resources have value regardless of whether or not humans place values on them. This is often referred to as intrinsic value. This debate is likely to continue for some time, although the vast majority of economists continue to agree that natural resource values arise primarily from anthropocentric sources action. Using dollars as a common measure to value environmental resources provides This approach provides a common reference point, allowing policy makers to

an opportunity to make the comparisons between very different objects or courses of compare alternatives in terms of the values they are familiar with.

Trusteeship management of assets

Nowadays it is a vital issue not only to save but also multiply the previously earned capital. The most simple way to accumulate funds is the bank deposit. However the bank rate is lower or at the best case can be compared with the current inflation. By investing money on the stock market one may receive the earning yield considerably outstripping the inflation, however individual control over the securities portfolio requires professional knowledge which far not everyone can command and considerable consumption of time. It is appropriate to avail of such services as individual trusteeship management of the investment company OEMK-Invest. This line of activity has been mastered by the Company since 1999. Trusteeship management is preferred by those who are lack of sufficient experience for taking decisions on control over the portfolio independently. Both natural persons and legal entities, residents and non-residents can become Clients of our Company. The main priority of the Companys work is to minimize risks of the trusteeship management promoter by investing money. Having submitted assets to trusteeship management you trust the Company to make operations of purchase/sale of securities in your interests. All deals decisions are taken by the trusteeship manager, but the main direction of his actions is set by the trusteeship management promoter, making the investment declaration. Here the trusteeship

management promoter can stipulate the securities list and securities shares in the portfolio managed by the trusteeship manager, and also can specify other requirements. All deposited funds of the trusteeship management promoter is kept on the separate account of the trusteeship manager separately from the Companys internal funds, and used only in conformity with the investment declaration. Paper investment is an uneasy task, demanding special knowledge and professionalism. The Client who has solved to work on the stock market independently, should devote almost all time to it, after all the investment efficiency depends on timeliness of decision-making and correctness of situation estimation. Trusting funds management to our Company, the Client frees himself to solve other problems, besides he receives professional control over assets, regular reports on investment situation, investment confidentiality. The Company adheres to an individual approach to each Client, discussing investment strategy in details, developing the very approach that fully suits to the Clients representations about admissible risks. Today this line of the companys activity is developing dynamically. As of the end of 2006 more than 1000 trusteeship management agreements have been concluded. Need to be mentioned following benefits of the trusteeship management: Potentiality of high income receipts; Opportunity to choose investment strategies which satisfy Clients requirements at the best; Opportunity to choose simultaneously number of investment strategies and validity periods; Comprehensive reporting of all actions carried out by the trusteeship manager; Depositing and withdrawal of funds at any time in course of the trusteeship management. As of the end of 2006 volume of funds invested in the trusteeship management increased 12,7 times and amounted to RUR 6 781 million which has been an all-time

high since 1999. For comparison in 1999 it was submitted RUR 36 million to trusteeship management provided by the Company. Volume of funds submitted to trusteeship management Specialists in the trusteeship management using their working experience make operations on investment of Clients funds in the most perspective securities both on the leading exchange floors and on the over-the-counter market with consideration of Clients individual requirements to reliability, earning yield and liquidity of investments. The main objective of Clients funds management is their saving and incrementing. Net earning yield from funds in trusteeship management in 2006 was in the range of 12-20 % for natural persons and 8-13 % for legal entities depending on the chosen investment strategy minus commission charges and taxes. Revenue earned in process of Clients funds management in form of dividends, interests and realized profit are invested into market instruments. Owing to their high liquidity the return of funds is always possible. In managing the property we provide absolute transparency and give regular reports to Clients regarding performed operations. Trusteeship, on the other hand, involves the administration of resources already under control. Trustee management tends to become more essential as the organization becomes more successful and its resources increase, such that these resources become established and must be managed more effectively. In reconciling the vision with the realities of surviving in the health care market, academic nursing centers must combine elements of both entrepreneurial and trustee management wisely and effectively. Emergent strategic action, based upon the premise that the environment is not controllable and indeed chaotic, is typical of entrepreneurial management, because it allows for organizations to respond to this chaos. Emergent strategy is a critical method

for organizations to adapt to unexpected plans and opportunities because it encourages action, allows opportunities for learning from these experiences, and transfers lessons learned to other components of the organization. Typically, academia has focused on the more traditional method of deliberate strategy characteristic in trusteeship management, and is often uncomfortable with the faster pace of decision making demanded by the use of emergent strategy characteristic of entrepreneurial management. Emergent strategy is a critical method for organizations to adapt to unexpected plans and opportunities because it encourages action, allows opportunities from learning from these experiences, and transfers lessons learned to other work within the academic enterprise.