BBA VI Semester Business and Society

1. BBA VI Semester Business and Society POST RAJ POKHAREL M.Phil. (TU) 01/2010), Ph.D. in Progress

2. Unit I: Business and Society Relationship 7 hours Concept of business and society; Relationship between business and society - A systems perspective; Forces shaping business and society relationship; Changing societal expectations - growing emphasis on ethical values; The changing workplace - external factors influencing the workplace, government intervention, women at work; Corporate efforts to promote diversity. Unit II : Fundamentals of Corporate Social Responsibility 8 hours Concept of corporate social responsibility (CSR); Basic elements of social responsibility; Benefits of CSR to business and society; Historical evolution of CSR; Drivers of CSR; Theories of CSR - shareholder value theory and stakeholder theory; Concept of corporate citizenship and corporate social performance. Unit IV: Business Ethics 9 hours Concept of business ethics; Causes and consequences of ethical problems; Core elements of ethical character; Making ethics work in organizations - top management commitment and involvement, codes of ethics, principle-based international standards; Ethics training programs - encouraging ethical behavior, ethics audits, corporate ethics awards; Whistle blowing; Impact of ethics on business and society. Unit V: Corporate Governance 7 hours Concept, scope and significance of corporate governance; Theories governing corporate governance - Agency theory, transaction cost economics, stewardship theory; Governance of corporate entities; Challenges for good corporate governance; Impact of governance on business, society and the economy. Unit VI: CSR, Business Ethics and Corporate Governance Issues in Nepal 9 hours Management and status of CSR in Nepal; The role of Government in promoting CSR in Nepal; Legal provisions governing CSR in Nepal; Ethical business practices and issues in Nepal; Corporate governance system in Nepalese organizations; Suggestions for improving existing ethical practices and corporate governance system in Nepal.

3. Unit III: Business and its Stakeholders 8 hours Concept; Types of stakeholders; Stakeholder analysis - stakeholder interests, stakeholder power, and stakeholder coalitions; Stakeholder activism; Managing key stakeholder issues - CSR in the marketplace, CSR in the workplace, CSR in the community, and CSR in the ecological environment; Making trade-offs; Creating a win-win situation between business and society.

4. Stakeholders Stake + holder A stake is an interest or a share in an undertaking A stakeholder, then, is an individual or a group that has one or more of the various kinds of stakes in a business. … Those who directly or indirectly influence the operation of the business

5. Stakeholder groups can be divided into two categories: • Market stakeholders • Nonmarket stakeholders The Stakeholders of Business

6. Stakeholder groups can be divided into two categories: • Market stakeholders • Nonmarket stakeholders • Market stakeholders are those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services • Nonmarket stakeholders are people or groups who—although they do notengage in direct economic exchange with the firm—are affected by or can affect its actions The Stakeholders of Business

7. Further Distinction • Internal stakeholders are those, such as employees and managers, who are employed by the firm • They are “inside” the firm, in the sense that they contribute their effort and skill, usually at a company worksite • External stakeholders are those who—although they may have important transactions with the firm—are not directly employed by it

8. Types of Stakes

9. WHO ARE BUSINESS’S STAKEHOLDERS? • Production, Managerial, and Stakeholder Views

11. Stakeholders view of the firm

12. Primary social stakeholders include: • Shareholders and investors • Employees and managers • Customers • Local communities • Suppliers and other business Partners Primary nonsocial stakeholders include: • The natural environment • Future generations • Nonhuman species Secondary social stakeholders include: • Government and regulators. • Civic institutions • Social pressure groups • Media and academic commentators • Trade bodies • Competitors Secondary nonsocial stakeholders include: • Environmental pressure groups • Animal welfare organizations

13. Core stakeholders are a specific subset of strategic stakeholders that are essential for the survival of the organization. Strategic stakeholders are those stakeholder groups that are vital to the organization and the particular set of threats and opportunities it faces at a particular point in time. Environmental stakeholders are all others in the organization’s environment that are not core or strategic.

14. High Keep Satisfied Engage Closely and Influence Actively Power Monitor (minimum effort) Keep Informed Low Interest Low High Stakeholder AnalysisPower, Interest and Coalitions Stakeholder power ……. as the extent to which stakeholders are able to persuade or coerce others into making decisions, and following certain courses of action. A stakeholder coalition is a group of stakeholders working together to support policies they believe in

15. Stakeholder Analysis • It is part of every manager’s job • Process whereby identify relevant stakeholders and analyze their interest and power • 4 questions are asked to analyze stakeholders: • Who are the relevant stakeholders? • What are the interests of each stakeholder? • What is the power of each stakeholder? • How are coalitions likely to form?

16. Stakeholder Analysis – Question 1Who are the Relevant Stakeholders? • Answer this question by drawing market and nonmarket stakeholder maps • Recognize that not all of groups are relevant to every situation • Examples: • Some businesses sell directly to the public and will not have retailers • A certain stakeholder may not be relevant to a particular decision/action

17. Stakeholder Analysis – Question 2 What are the interests of each stakeholder? • Analyzing stakeholder interests includes addressing: • What are the groups’ concerns? • What does the group want/expect from their relationship with the firm? • Examples: • Stockholders have an ownership interest, they expect to receive dividends and capital appreciation • Customers are interested in gaining fair value and quality in goods and services they purchase • Public interest groups advance broad social interests 1-17

18. Stakeholder Analysis – Question 3What is the power of each stakeholder? • Stakeholder power is the ability of a group to use resources to make an event happen or to secure a desired outcome • There are 4 types of stakeholder power: • Voting power • Economic power • Political power • Legal power • Informational power 1-18

19. Stakeholder Analysis – Question 4How are stakeholder coalitions likely to form? • Stakeholder groups often have common interests and will form temporary alliances to pursue these common interests • Coalitions are very dynamic (can change at any time) • Coalitions are increasing international • Internet has enabled coalitions to form quickly, across political boundaries • International alliances, coupled with media interest, can be a very powerful strategic force for companies 1-19

20. Stakeholder activism • Stakeholder activism is a way in which stakeholders can influence a corporation's behavior by exercising their rights/interests/lobbis. • They may directly/ indirectly influence the board of directors and management. • Shareholders influence on firm policy and practices through the use of ownership • Suppliers influence through the use of bargaining • User group influence through the demand of quality product at lower price

21. Managing key stakeholder issues Classroom Discussion: CSR in the marketplace, CSR in the workplace, CSR in the community, and CSR in the ecological environment

22. Making trade-offs; • Classroom discussion

23. Creating a win-win situation between businessand society. • Classroom discussion

24. Health Care Ethics I am the president and business manager of MedClaim, Inc. We do billing and accounting for medical doctors. In 1992, we were approached by a group of doctors. They owned seven mobile diagnostic testing centers in five different states and were interested in using our service. We started with this group and immediately began receiving dozens and sometimes hundreds of tests per month to bill to health, automobile, and worker’s compensation insurance. The nerve testing they were performing was a common medical test, but they were charging almost twice the normal rate, usually $2,600 per test. While this rate surprised us, there is no law against doctors charging whatever they want for services, so we processed the claims normally. As the number of tests we were processing for them increased, we began to notice strange circumstances surrounding their cases. Often, we would be unable to reach their patients at home to get additional information, because the phone numbers were completely wrong. When we could reach patients, they were very surprised and angry at the cost of the test and refused to cooperate. The referring physicians were sometimes unable to provide us data on cases, as if the patients had never existed, and they were always very evasive in dealing with us. Also, insurance companies began to watch these cases very carefully, at times rejecting fully half of the claims on grounds that either the patient’s condition did not support this expensive test or the license of the doctor prescribing it was invalid. After about a year of working with them, we discovered from some of their referring physicians that these clients of ours were paying $600 per patient to doctors for referrals. They had this kickback structured as an office rental fee to stay legal, but they were clearly violating the spirit of the law. This doctors’ group had grown to be our largest client, generating over $10,000 per month in revenue and submitting over $200,000 per month in bills. However, I decided to terminate our service to them immediately after discovering the true nature of their business. Even though we needed the revenue and referrals from this large client, I decided that I was not interested in building our business on corrupt health care providers. 1. Who are the stakeholders in this case, and what are their stakes? 2. Are there any ethical issues embedded in this situation? What are they? 3. Should MedClaim, Inc., scrutinize the claims as described or simply “do the paperwork” and mind its own business? What would you do?

25. Basic Texts 1. Lawrence, A. T., & Weber, J. Business and Society: Stakeholders, Ethics, Public Policy. New Delhi: Tata McGraw Hill. 2. Tricker, B. Corporate Governance: Principles, Policies and Practices. New Delhi: Oxford University Press. References 1. Mallin, C. A. Corporate Governance. New Delhi: Oxford University Press. 2. Steiner, J. F., & Steiner, G. A. Business, Government, and Society: A Managerial Perspective: Text and Cases. New Delhi: Tata McGraw Hill. 3. Carroll, A. B., & Buchholtz, A. K. Business S society: Ethics, Sustainability, and Stakeholder Management. New Delhi: Cengage Learning. 4. Blowfield, M., & Murray, A. Corporate Responsibility: A Critical Introduction. New Delhi: Oxford University Press. 5. Chatterji, M. Corporate Social Responsibility. New Delhi: Oxford University Press. 6. Francis, R. D., & Mishra, M. Business Ethics: An Indian Perspective. New Delhi: Tata McGraw Hill.