Corporate Governance, Values & Ethics

Unit 1

Lecture 1-2 An Overview of Subject: Introduction of corporate governance

It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs. Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large.

Lecture 3
What is corporate governance?

Issues related to Corporate Governance

Corporate Governance is the system by which companies are directed and controlled Cadbury Report (UK), 1992 to do with Power and Accountability: who exercises power, on behalf of whom, how the exercise of power is controlled. Sir Adrian Cadbury, in Reflections on Corporate Governance, Ernest Sykes Memorial Lecture, 1993 the process and structure to direct and manage the business and affairs of the corporation with the objective of enhancing shareholder value, which includes ensuring the financial viability of the business. Where were the Directors? Guidelines for Improved Corporate Governance in Canada, TSE, 1994 Corporate governance involves a set of relationships between a companys management, its board, its shareholders and other stakeholders ...also the structure through which objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Preamble to the OECD Principles of Corporate Governance, 2004 fundamental objective of corporate governance is the enhancement of the long-term shareholder value while at the same time protecting the interests of other stakeholders. SEBI (Kumar Mangalam Birla) Report on Corporate Governance, January, 2000 Trusteeship obligations inherent in company operations, where assets and resources are pooled and entrusted to the managers for optimal utilization in the stakeholders interests. A Gandhian Definition

Corporate governance is essentially about leadership (Principles for Corporate Governance in the Commonwealth):

Leadership for efficiency; Leadership for integrity; Leadership with responsibility; and Leadership which is transparent and which is accountable. In simple words the manner through which a Corporation run for Achieving its Objectives Transparency of its Operations Accountability & Reporting Good Corporate Citizenship The Processes & Operating Relationships that Best Achieve Organisational Goals ."Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interest of individuals, corporations and society.

Lecture 4
Need of Corporate governance Why Corporate Governance? (Origin)
The liberalization and de-regulation world over gave greater freedom in management. This would imply greater responsibilities. The players in the field are m an y . Competition brings wake weakness in standards of reporting and accountability. in its

Market conditions are increasingly becoming complex in the light of global developments like WTO, removal of barriers/reduction in duties. The failure of corporate due to lack of transparency and disclosures and instances of falsification of accounts/embezzlement and the effect of such undesirable practices in other companies
Sudden collapse of several giants (Enron, world.com) Need for a scientific and loophole proof CG around the world Tackling the Problem Harmpel Committee 1996 Cadbury Report 1992 Inception of CG in UK
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Unethical and dishonest practices adopted by the guardians of Corporate Governance in 1990s

Lecture 5-6 Corporate Governance Code & Code of Corporate Practices

Shareholder right and obligation Shareholder equitable treatment Audit transparency and disclosure Stakeholder role in corporate governance. Role of BOD Nominated and non-executive directors- members. Compensation for executive

Lecture 7 Corporate Social Responsibility

Consequent to increasing globalisation, greater environmental and social awareness, and more efficient communication, the concept of companies responsibilities beyond the purely legal or profit-related has gained new impetus. In order to succeed, business now has to be seen to be acting responsibly towards people, planet and profit (the so-called 3Ps) sometimes also known as the triple-bottom line. Indian companies are now expected to discharge their stakeholder responsibilities and societal obligations, along with their shareholder-wealth maximisation goal. Corporate Social Responsibility (CSR) has been defined by the European Commission as the integration by companies of social and environmental concerns in their business operations and in the interaction with their stakeholders on a voluntary basis. CSR is about managing companies in a socially responsible manner. Business and society are interdependent. The well being of one depends on the on the other. Companies engaged in CSR are reporting benefits to their reputation and their bottom line. CSR is a voluntary action that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of wider society. CSR is to day a strategically important and challenging development for European business and policy makers taking root in a broad variety of industrial sectors. Environment, safety and health at work are very much an integral part of the CSR concept, companies recognise that they cannot be good externally, while having a poor social performance internally. The perspective taken is that for an organisation (or a community) to be sustainable (a long run perspective) it must be financially secure (as evidenced through such measures as profitability); it must minimise (or ideally eliminate) its negative environmental impacts; and, it must act in conformity with

societal expectations. These three factors are obviously highly inter-related. Many companies now report regularly on the subject producing Sustainability and/or CSR (Corporate Social Responsibility) reports whose content is increasingly scrutinised by investors and financial institutions.

Evolution of Corporate Social Responsibility

In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles). Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with noneconomic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental tilt). The majority of these CSR projects are established in Africa. A more common approach of CSR is through the giving of aid to local organizations and impoverished communities in developing countries. Some organizations do not like this approach as it does not help build on the skills of the local people, whereas communitybased development generally leads to more sustainable development. The term CSR came in to common use in the early 1970s, after many multinational corporations formed, although it was seldom abbreviated. The term stakeholders, meaning those on whom an organization's activities have an impact, was used to describe corporate owners beyond shareholders as a result of an influential book by R Freeman in 1984. CSR is an evolution in the approach towards sustainable development: while the 1992 Rio Earth Summit focused on environmental management, the 2002 World Summit on Sustainable Development (WSSD) focused on a broader set of issues, including poverty reduction and social development. Since 2000 the CSR concept has pushed further and further up the corporate agenda as business strives to act responsibly towards people, planet and profit (the so-called 3Ps). Some driving forces pushing CSR up the corporate agenda (including OSH) are: Informed investors recognise that the business risk (both internal and external) for companies that successfully manage their social and environmental impact is lower than the business average; Consumers prefer products that are produced in a socially responsible way Increased concern about the damage caused by economic activity to the environment Transparency of business activities brought about by the media and modern information and communication technologies
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Search for new forms of global governance

Lecture 8 CSR: An Indian Scenario

Nearly all-leading corporate in India are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, Coca Cola India, Pepsico and ITC Welcome group, among others. In fact, four Indians, including Sunil Mittal, Chairman and Managing Director of the Bharti Group, NRI businessman Anil Agarwal, Shiv Nadar, HCL Technologies Chairman and NGO activist Rohini Nilekani were featured in the Forbes list of '48 Heroes of Philanthropy'. In 2005, the Mahindra Group celebrated its 60th anniversary by renewing its commitment to Corporate Social Responsibility. It pledged to dedicate 1% of its profit (after tax), on a continuous basis towards Corporate Social Responsibility. A unique kind of ESOPs - Employee Social Options was launched to enable Mahindra employees to involve themselves in socially responsible activities of their choice. The Group also announced a special gift: to provide free cochlear implants to 60 profoundly hearing-impaired, under-privileged children. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR). Corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. Assochams Eco Pulse Study on CSR for 2009-10, released in June 2009, says some 300 corporate houses, on an aggregate, have identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment, health as well as rural development. Further, according to a survey carried out in June 2008 by TNS India (a research organisation) and the Times Foundation, over 90 per cent of all major Indian organisations surveyed were involved in CSR initiatives. The leading areas that corporations were involved in were livelihood promotion, education, health, environment, and women's empowerment. In another study undertaken by automotive research company, TNS Automotive, India has been ranked second in global corporate social responsibility. The study was based on a public goodwill index and India received 119 points in the index against a global average of 100. Thailand was at the top slot with 124 points.

Measurement of progress toward sustainable development

Taking responsibility for its impact on society means in the first instance that a company accounts for its actions. Social accounting, a concept describing the communication of social and environmental effects of a company's economic actions to

particular interest groups within society and to society at large, is thus an important element of CSR. Corporate Social Reporting is another dimension of CSR. Companies that already produce CSR reports have found that the process of developing a sustainability report provides a warning of trouble spots and unanticipated opportunities in supply chains, in communities, among regulators, and in reputation and brand management. Reporting helps management evaluate potentially damaging developments before they develop into unwelcome surprises.

Lecture 9 Corporate Social Reporting

Reporting and external communication is a significant part of CSR and one that is no longer restricted to the largest multinationals. Recent statistics indicate that up to half of the UKs top 250 companies produce some sort of CSR report. The UN sponsored Global Reporting Initiative (GRI) has developed a set of reporting guidelines for CSR reporting. These Guidelines organise sustainability reporting in terms of economic, environmental, and social performance (also known as the triple bottom line). This structure has been chosen because it reflects what the most widely accepted approach to defining sustainability is currently. The Global Reporting Initiative (GRI) is a multi-stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These Guidelines are for voluntary use by organisations for reporting on the economic, environmental, and social dimensions of their activities, products, and services. The GRI incorporates the active participation of representatives from business, accountancy, investment, environmental, human rights, and research and labour organisations from around the world. Started in 1997, GRI became independent in 2002, and is an official collaborating centre of the United Nations Environment Programme (UNEP) and works in cooperation with UN Secretary-General Kofi Annans Global Compact. GRI is probably the most significant triple bottom line, multi-stakeholder, consensus-based, public reporting guidelines or frameworks currently at the international level. There are national-level initiatives being driven by governments, businesses and non-governmental organisations alike, and many of them are aligning with GRI to allow ease of use in the international arena. Socially Responsible Investing (SRI) is also closely linked to CSR, and there are a number of measurement indices such as FTSE4Good and the Dow Jones Sustainability Index which rate companies CSR performance. ISO is also planning to develop an International Standard for social responsibility. The objective is to produce "a guidance document, written in plain language which is understandable and usable by nonspecialists" and not intended for use in certification.

Grey Areas
Another driver of CSR is the role of independent mediators, particularly the government, in ensuring that corporations are prevented from harming the broader social
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well, including people and the environment. CSR critics such as Robert Reich argue that governments should set the agenda for social responsibility by the way of laws and regulation that will allow a business to conduct them responsibly. The issues surrounding government regulation pose several problems. Regulation in itself is unable to cover every aspect in detail of a corporation's operations. This leads to burdensome legal processes bogged down in interpretations of the law and debatable grey areas. General electric is an example of a corporation that has failed to clean up the Hudson River after contaminating it with organic pollutants. The company continues to argue via the legal process on assignment of liability, while the cleanup remains stagnant. The second issue is the financial burden that regulation can place on a nation's economy. This view shared by Bulkeley, who cites the Australian federal government's actions to avoid compliance with the Kyoto Protocal in 1997, on the concerns of economic loss and national interest.

Future Agenda
There are plans to also introduce CSR in the small and medium enterprises (SME) sector to increase its reach in remote areas. The Tamil Nadu government has presented its Corporate Social Responsibility Awards, to corporate companies including Oil and Natural Gas Corporation (ONGC), Chennai Petroleum Corporation Limited (CPCL), Steel Authority of India (SAIL) and Orchid Chemicals and Pharmaceuticals, for their CSR activities in different spheres, including agriculture, education, women's empowerment and new and renewable energy. Although corporate India is involved in CSR activities, the central government is working on a framework for quantifying the corporate social responsibility (CSR) initiatives of companies to promote them further. According to Mr Salman Khurshid, Minister for Corporate Affairs, one of the ways to attract companies towards CSR work is to develop a system of CSR credits, similar to the system of carbon credits which are given to companies for green initiatives. Future agenda for CSR shall adopt a bill making it mandatory for the largest Indian companies, investors and state owned companies to include information on corporate social responsibility (CSR) in their annual financial reports and also include it: information on the companies policies for CSR or socially responsible initiatives (SRI); information on how such policies are implemented in practice and; information on what results have been obtained so far and managements expectations for the future with regard to CSR/SRI.

Lecture 10: Revision Lecture 11: Assignment 1

Q1. Give a brief introduction of corporate governance. Q2. Discuss various definitions of corporate governance? Q3. How corporate governance is essentially about leadership (Principles for Corporate Governance in the Commonwealth)? Q4. Discuss corporate governance in your own term.

Q5. How it is the Processes & Operating Relationships that Best Achieve Organisational Goals? Q6. Why Corporate Governance is required? Q7. Give a sketch of origin of corporate governance. Q8. What is the need of corporate governance? Q9. What is corporate social responsibility? Q10. Discuss the evolution of Corporate Social Responsibility.

Lecture 12-13 Corporate governance & Role of board

Corporate governance is about commitment to values and about ethical business conduct. It is about how an organization is managed. This includes its corporate and other structures, its culture, policies and the manner in which it deals with various stakeholders. Accordingly, timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the company is an important part of corporate governance. This improves public understanding of the structure, activities and policies of the organization. Consequently, the organization is able to attract investors, and to enhance the trust and confidence of the stakeholders. Corporate governance guidelines and best practices have evolved over a period of time and in India, are enshrined in clause 49 of the Listing Agreement 1. Board of Directors The Company believes that at the core of its corporate governance practice is the Board, which oversees how the management serves and protects the long- term interests of all the stakeholders of the Company. An active, well informed and independent board is necessary to ensure the highest standards of corporate governance. 1.1 Composition of the Board The Board of Directors of the Company shall comprise of an optimum combination of executive and non-executive Directors. Fifty percent of the Board of Directors shall comprise of non executive Directors. The Chairman of the Board shall be an Executive Director. No Director shall be a member of more then 10 committees or act as Chairman of more than five committees across all companies in which he is a Director. The Directors shall inform the Company annually as to their other Directorships/ Chairmanships and shall promptly notify the Company of changes, if any. 1.2 Meetings of the Board The Board shall meet at least four times a year (including on the occasion of the Annual General meeting of the shareholders of the Company) with a maximum time gap of 3 months between any two meetings. The dates of the Board Meetings shall be decided on at the beginning of the financial year. Directors shall be expected to attend at least 50% Board meetings in year. However, the Company recognizes that it may not be possible for each Director to be physically present at every meeting. The Company shall

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endeavour to effectively use its video/ teleconferencing facilities to facilitate the participation of these Directors. 1.3 Availability of Information to the Board The Board shall have complete and unfettered access to any information within the Company. Such Information would include, but would not be limited to the following: a. Annual operating plans and budgets and any updates; b. Capital budgets and any updates; c. Quarterly results for the company and its operating divisions or business segments; d. Minutes of meetings of audit committee and other committees of the board; e. The information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal of Chief Financial Officer and the Company Secretary; f. Show cause, demand, prosecution notices and penalty notices which are materially important; g. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems; h. Any material default in financial obligations to and by the Company, or substantial non payment for the goods sold by the company; i. Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed Strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company; j. Details of any joint venture or collaboration agreement; k. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property; l. Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like singing of wage agreement, implementation of Voluntary Retirement Scheme etc.; m. Sale of material nature, of investments, subsidiaries, assets, which is not in normal course of business; n. Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material; o. Non- compliance of any regulatory, statutory nature or listing requirements and shareholders services such as non payment of dividend, delay in share transfer etc. 1.4 Non executive Directors Discussions The Board shall have separate meetings with non- executive Directors to update them on all business - related issues and new initiatives. In such meetings, the executive Directors and other Senior Management personnel may make presentations on relevant issues. In
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addition, the non - executive Directors may meet periodically in executive session, i.e. in the absence of the Chairman, any executive Director and management and the agenda for such meetings shall be fixed. 2. Board Committees It is the general policy of the Company that the Board of Directors shall consider all major decisions. Thus, the Board Committees structure is limited to those Committees considered to be basic to, or required for, the operation of a publicly owned company. The guidelines for the board Committees, viz, Audit Committee, Investors Grievances Committee, Compensation Committee, Corporate Governance committee are set out below. The Board is responsible for constituting, assigning, co-opting and fixing terms of service for the Committee Members of various Committees and delegates these powers to the Committees. Recommendations of the Committees shall be submitted to the full Board for approval. The frequency and agenda of meetings of each of these committees shall be determined by the chairman of the board/executive Director in consultation with the Chairmen of the concerned committees. Unless specified elsewhere in this Code, the Committees shall meet as and when the need arises. Unless specified elsewhere in this Code, the quorum of the meetings shall be either 2 members or one third of the members of the Committee, whichever is higher. 2.1 Audit Committee The primary objective of the Audit Committee of the company is to monitor and provide effective supervision of the managements financial reporting process with a view to ensure accurate, timely and proper disclosures and transparency, integrity and quality of financial reporting. The Audit Committee will also from time to time as may be required oversee the work carried out in the financial reporting process by the management, including the internal auditor and the statutory auditor and shall take note of the processes and safeguards employed be each. The Audit Committee shall have the power to investigate any activity within its terms of reference, seek information from any employee when necessary and obtain external legal or professional advice from experts when necessary. The Audit Committee shall be a qualified and independent Audit Committee comprising minimum three directors as members. Two thirds of the members of Audit Committee shall be independent directors. The members of Audit committee shall be financially literate. At least one member shall have accounting or related financial management knowledge. The Company Secretary shall be the Secretary of Audit Committee. The quorum shall be either two members or one third of the members of the audit committee whichever is greater; however, there shall be a minimum of two independent members present. Responsibilities of the Audit Committee The Audit Committee shall:

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(i) Recommend to the Board, the appointment, re appointment and, if required the replacement or removal of the statutory auditor and the fixation of audit fees. (ii) Provide an open avenue of communication between the statutory auditor, internal auditor and Board; (iii) Meet at least 4 times every year or more frequently as the circumstances necessitate. The Audit Committee may invite such of the executives and representatives of the auditors of the Company, as it considers appropriate (and particularly the head of the finance function) to be present at the meetings of the Committee. However, the Audit Committee may also meet without the presence of any executives or representatives of the auditors of the Company; (iv) Confirm and assure the independence of the external auditor and objectivity of the internal auditor; (v) Review all related party transactions; (vi) Review the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; (vii) Review with the statutory auditor and the management the adequacy of the internal system and consider related findings and recommendations of the statutory auditor and internal auditor, together with the managements responses; (viii) Consider and pre-approve any non-auditing services that may be provided by the statutory auditor. (ix) Review and discuss with the management and statutory auditors the annual audited financial statements, including the disclosures under the Managements discussion and analysis of financial condition and results of operations; (x) Review the companys financial and risk management policies; Roles of the board of directors The roles of the board of directors include: future opportunities, threats and risks in the external environment and current and future strengths Establish vision, mission and values Determine the company's vision and mission to guide and set the pace for its current operations and future development. Determine the values to be promoted throughout the company. Determine and review company goals. Determine company policies

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Set strategy and structure Review and evaluate present and, weaknesses and risks relating to the company. Determine strategic options, select those to be pursued, and decide the means to implement and support them. Determine the business strategies and plans that underpin the corporate strategy. Ensure that the company's organisational structure and capability are appropriate for implementing the chosen strategies.

Delegate to management Delegate authority to management, and monitor and evaluate the implementation of policies, strategies and business plans. Determine monitoring criteria to be used by the board. Ensure that internal controls are effective. Communicate with senior management.

Exercise accountability to shareholders and be responsible to relevant stakeholders Ensure that communications both to and from shareholders and relevant stakeholders are effective. Understand and take into account the interests of shareholders and relevant stakeholders. Monitor relations with shareholders and relevant stakeholders by gathering and evaluation of appropriate information. Promote the goodwill and support of shareholders and relevant stakeholders.

Responsibilities of directors
Directors look after the affairs of the company, and are in a position of trust. They might abuse their position in order to profit at the expense of their company, and, therefore, at the expense of the shareholders of the company. Consequently, the law imposes a number of duties, burdens and responsibilities upon directors, to prevent abuse. Much of company law can be seen as a balance between

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allowing directors to manage the company's business so as to make a profit, and preventing them from abusing this freedom. Directors are responsible for ensuring that proper books of account are kept. In some circumstances, a director can be required to help pay the debts of his company, even though it is a separate legal person. For example, directors of a company who try to 'trade out of difficulty' and fail may be found guilty of 'wrongful trading' and can be made personally liable. Directors are particularly vulnerable if they have acted in a way which benefits them. The directors must always exercise their powers for a 'proper purpose' that is, in furtherance of the reason for which they were given those powers by the shareholders. Directors must act in good faith in what they honestly believe to be the best interests of the company, and not for any collateral purpose. This means that, particularly in the event of a conflict of interest between the company's interests and their own, the directors must always favour the company. Directors must act with due skill and care. Directors must consider the interests of employees of the company.

Calling a directors' meeting A director, or the secretary at the request of a director, may call a directors' meeting. A secretary may not call a meeting unless requested to do so by a director or the directors. Each director must be given reasonable notice of the meeting, stating its date, time and place. Commonly, seven days is given but what is 'reasonable' depends in the last resort on the circumstances Non-executive directors Legally speaking, there is no distinction between an executive and non-executive director. Yet there is inescapably a sense that the non-executive's role can be seen as balancing that of the executive director, so as to ensure the board as a whole functions effectively. Where the executive director has an intimate knowledge of the company, the non-executive director may be expected to have a wider perspective of the world at large. The chairman of the board The articles usually provide for the election of a chairman of the board. They empower the directors to appoint one of their own number as chairman and to determine the period for which he is to hold office. If no chairman is elected, or the elected chairman is not present within five minutes of the time fixed for the meeting or is unwilling to preside, those directors in attendance may usually elect one of their number as chairman of the meeting. The chairman will usually have a second or casting vote in the case of equality of votes. Unless the articles confer such a vote upon him, however, a chairman has no casting vote merely by virtue of his office.

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Since the chairman's position is of great importance, it is vital that his election is clearly in accordance with any special procedure laid down by the articles and that it is unambiguously minuted; this is especially important to avoid disputes as to his period in office. Usually there is no special procedure for resignation. As for removal, articles usually empower the board to remove the chairman from office at any time. Proper and clear minutes are important in order to avoid disputes. Role of the chairman The chairman's role includes managing the board's business and acting as its facilitator and guide. This can include: Determining board composition and organisation; Clarifying board and management responsibilities; Planning and managing board and board committee meetings; Developing the effectiveness of the board.

Shadow directors In many circumstances, the law applies not only to a director, but to a 'shadow director'. A shadow director is a person in accordance with whose directions or instructions the directors of a company are accustomed to act. Under this definition, it is possible that a director, or the whole board, of a holding company, and the holding company itself, could be treated as a shadow director of a subsidiary. Professional advisers giving advice in their professional capacity are specifically excluded from the definition of a shadow director in the companies legislation.

Lecture 14-15 Corporate Governance system worldwide

The Australian listed market is characterised by:

significant blockholders engaged in private rent extraction; institutional investor powerlessness; a strong relationship between management and blockholders, which results in a weak market for corporate control; and a historic weakness in public and private securities regulation, which allows the creation and perpetuation of crucial blocks to information flow.

These characteristics suggest that the system of corporate governance of the Australian listed market has been mischaracterized as an outsider system; rather, it tends towards an insider system.

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ASICs new enforcement policy has already resulted in a change in the way that listed companies treat information. By far the greatest effect of this new enforcement policy has been on companies wishing to return to the capital markets to raise further funds. Companies such as AMP Ltd and Tower Ltd have been forced to disclose negative information before attempting to raise fresh funds, which has resulted in a dramatic, negative effect on their share prices. Additionally, in the 200203 reporting year, 27 listed companies had restrictions placed on their capital raising abilities because they failed to comply with financial reporting disclosure requirements. In the same period, 89 listed companies had stop orders issued against them on new share issues because information was missing from prospectuses. This policy change also seems to be having an effect on shareholder participation rates: 2003 saw the highest ever level of shareholder voting in widely held Australian listed companies. ASIC has also started to address disclosure problems surrounding related party transactions. Under the Corporations Act, directors are required to get shareholder approval for any related party transactions that are not at arms length. In reality, this means that the board can decide whether a transaction is at arms length or not and disclose accordingly. As a result, disclosures under the Corporations Act represent only the tip of the iceberg as regards related party transactions. In any event, ASIC found that almost three quarters of the documents it examined that related to disclosures in the 200203 financial year failed to provide enough information to shareholders for them to make an informed decision. Most commonly, that failure related to the value of the transaction. In August 2004, ASIC began a campaign to crack down on related party disclosure documents. The recent CLERP 9 amendments regarding continuous disclosure infringement notices and civil penalty liability for those involved in continuous disclosure breaches should accelerate this process. One of the issues raised by the HIH Royal Commission was the culture of complacency within the board of HIH Insurance regarding conflicts generally. The Commission focused in particular on disclosure of related party transactions. Related party transactions were common, but no procedures were in place to deal with them. Indeed, the chairman of the company did not see this as part of his role at all. The Commission described how one director considered that his personal interests were so well known that he had no need to disclose them. Another failed to provide sufficient information to allow the other directors to decide whether a related party transaction that he disclosed was in the companys interests. As a result of this complacency, the Commission recommended that the disclosure requirements of the Corporations Act, the relevant accounting standards and the ASX Listing Rules be reviewed as a matter of priority to ensure clear and comprehensive disclosure of directors remuneration and other benefits in whatever form. The CLERP 9 amendments on remuneration of directors and executives, and disclosure rules, reflect this concern. In essence, since 2002, key institutions regulating the Australian listed market have acted to unblock channels of information flow. As a result, the environment may become more favourable to securitisation than intermediation. The changes may thus be the catalysts that move the system of corporate governance of the Australian listed market towards an

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outsider system. If so, it would seem to endorse the law matters thesis that adopting shareholder protection norms is crucial to the emergence of an outsider system, so long as one accepts that some level of private or state enforcement is essential. However, in their most recent work, La Porta et al claimed that there is no evidence that state enforcement benefits stock markets and that there is strong evidence that laws facilitating private regulation through disclosure and liability rules enforceable by shareholders are the key factors. If the corporate governance system of the Australian listed market is indeed moving towards an outsider system, this would support their earlier thesis. However, because the transition has been led by regulatory enforcement, this seems to run contrary to their latest work. Only time will tell and Australia may provide an interesting test case for both their claims. Corporate governance outcomes are the result of complex interactions between institutions that differ according to the cultural, social and economic conditions in which they emerge. As well as the differences between the corporate governance systems of the UK and the US on one hand and Australia on the other, there are other key differences that are beyond the scope of this article. For example, the industrial relations system in Australia is very different from that in the UK and the US. Australias listed companies operate in an economy with very high labour standards. It may be that one reason Australian companies can maintain those labour standards is that they do not have the financial demands from their blockholders that UK and US companies have from their arms-length shareholders. Adopting outsider norms could easily have a detrimental effect on the ability of Australian listed companies to support such high standards. This could be problematic in a country that is currently experiencing a very low birth rate,with an ageing working population inclined to retire early, reliant on attracting skilled labour from overseas and experiencing a wave of outward migration for the first time since the 1970s. Two major waves of corporate collapses in the Australian listed market indicate that it has urgent corporate governance problems. It is submitted that they stem from the nature of the markets insider system of corporate governance. The result of having blockholders exercising control is that management is protected from bad decisions. Historically, it has not had to disclose bad news. Even where disclosure is now required, the close relationship between management and blockholders ensures that a hostile bid is unlikely. Thus, as long as management does not interfere with blockholder interests, it goes largely unmonitored. Indeed, in companies where blockholders exert direct control, there is no accountability mechanism at all. Blockholder control can have positive effects as it may encourage growth-oriented policies and stability. However, it can also encourage bad management practices. Unfortunately, these practices seem widespread in the Australian context. One international management comparison study in 2003 found that Australian managers lagged behind in 27 of 31 causal factors that help shape the culture of organisations. It found 87 per cent of Australian organisations had a culture of blame, indecision and mindless conformity.

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The solutions to corporate failures in outsider systems such as the UK and the US have been based largely on ensuring the accountability of management to shareholders. Such solutions would be unlikely to solve the accountability problem in the Australian context because part of the problem is that management is in reality accountable only to blockholders. Solutions that increase the accountability of management to shareholders may therefore only increase the accountability of management to blockholders. However, their interests differ significantly from those of arms-length shareholders, such as small individual shareholders and institutional shareholders. While there are real corporate governance problems in the Australian listed market, adopting wholesale norms exclusively from the UK and the US runs the risk of not only failing to solve those problems but of actually making them worse. 1. The shareholder-centered model used in America includes dispersed ownership, strong legal protection for shareholders and indifference to other stakeholders. The hybrid model combines features from both the shareholder and stakeholder models, defined by a less clear separation between dispersed ownership and managerial control. In other words, stakeholders have more influence over the operation of the company. 2. These days scandals at Enron and the like have prompted economists to question whether other countries would really choose to follow a U.S. corporate governance model that has steered so many shareholders wrong. 3. It seems, scandals or not, that separate economies go about corporate governance in different ways, as Guillen concludes in his paper. "The question I ask myself and I try to answer is whether in different countries around the world the same sorts of practices regarding corporate governance are being adopted," he says. "Even in these times of globalization where you have the expansion of markets throughout the world and more coordination by governments, different systems of corporate governance exist." 4. In fact, globalization seems to encourage countries and firms to be different, to look for a distinctive way to make a dent in international competition rather than to converge on a best model, suggests Guillen. Good reasons can be found to explain why corporate governance strategies are different across countries, he notes. "The reasons have to do with the way in which firms are trying to compete in the global marketplace -- more specifically the kinds of products and services [they offer], how much product differentiation they use and whether they are producing a lot of quantities at low cost," Guillen explains 5. Take Korean auto manufacturers, for example. As companies that make a lot of standard-quality automobiles, their money-making strategy is to get big as fast as they can in order to sell more low-cost cars, says Guillen. They go about this by borrowing money quickly, often through bank loans. Consequently, their
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corporate governance structure is one in which the government, through banks, has influence over what goes on in the company, and the car maker has a say in government issues. That relationship influences Korean corporate governance. 6. French corporate governance is another prime example of the effectiveness of different strategies, notes Guillen. French corporations are often criticized for a governance approach that involves an intricate network of public agencies, large firms and banks. As a result, these companies excel at producing a specific type of product. "The French do certain things very well when it comes to products that require that kind of collaboration between government and business," explains Guillen, noting that French-designed high-speed trains and nuclear reactors are among the best in the world.

Lecture 16-17 Transparency Management & Corporate Disclosure

Understanding the evolution of financial statements and disclosure in the private sector is critical to seeing the remarkable similarity between the evolution of Right to Information issues in the private sector and the current debates on the same topic in our public institutions: While the history of private enterprise is thousands of years old, a relevant launchpad to understand the modern corporation, and its associated concepts of limited liability and disclosure etc. can be with the corporations of the 17th century. Of special interest to India is that no institution offers a better case study here than the East India Company: Between 1600 and 1617 the company sponsored 113 voyages, each supplied with newly subscribed capital and treated as a separate venture. At the end of each voyage assets as well as earnings were subject to divisions among the shareholders. Profit was easily measured by the individual investor: he gained to the extent that he got back more than he had paid in. One of the first attempts to deny stockholders access to the records of their company occurred during 1633. After a decline in the fortunes of the East India Company, some stockholders moved for the appointment of a committee of inspectors. The Governor (Chairman) refused to put the motion to the meeting and the governing committee decided that no-one should be permitted to read or copy, or to ravel and dive into the accounts without its consent. During 1841 a Select Committee was requested to inquire into the State of the Laws respecting Joint Stock Companies with a view to the greater security of the public in Great Britain. It published its First Report during 1844, including the following recommendations:
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The periodical holding of meetings, the periodical balancing, audit and publication of accounts, (would make) the Directors and officers more immediately responsible to the shareholders. Periodical accounts, if honestly made and fairly audited, cannot fail to excite attention to the real state of a concern; and by means of improved remedies, parties to mismanagement may be made more amenable for acts of fraud and illegality. It is expedient that the accounts of every such Company be open to the inspection of the shareholders: and that the annual balance-sheet, together with the reports of the auditors thereon, be registered. This report heralded the beginning of the never ending attempts to enforce proper disclosure of the affairs of corporations, the birth of the modern accountancy and audit professions and the eventual supervision by entities such as stock exchanges, central banks and securities commissions. Some of the Modes of Deception Adopted by these companies recorded in the Report were: By the issue of prospectuses and advertisements containing false statements as to the authority under which it exists, as to the amount of capital of the Company, or as to the period of its establishment; By the concoctors and managers living at great expense, entertaining their neighbours, and thereby endeavouring to fortify themselves against suspicion; By the making up of fraudulent accounts, so as to deceive the directors and the shareholders, which has been facilitated sometimes by the accounts not being audited, or by the accountant being a near kinsman of the managing director, the only party taking an active part in the concern; By declaring dividends out of capital, on false representations of profits realized; The 1844 Report was followed by the first general Companies Act, the Joint Stock Companies Act 1844 which provided for The institution of the Office of the Registrar of Joint Stock Companies Documentary information relating to companies to be kept for public inspection; The preparation and delivery of full and fair audited balance sheets and the auditors reports thereon to all shareholders,

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The reading thereof and of the report of the directors at the annual meetings of companies, and the filing of the balance sheets and auditors reports at the Office of the Registrar; The right of shareholders to inspect the books of account of their companies. The Limited Liability Act was subsequently passed in 1855. This introduced the concept of general limited liability for shareholders i.e.their liability for the companys debts, if it became bankrupt, was limited to the amount of share capital which they had invested. It was felt important that the companys creditors should be aware of the limited liability status of the company, and the requirement for companies to have limited or ltd in their name dates from this time. It was this 1855 Act which finally established companies as the major instrument in economic development. After this legislation, businesses mostly fell into two categories:incorporated companies and conventional partnerships. The numbers of incorporated companies increased steadily, in particular towards the end of the 19th century. By 1914 around 65,000 were registered; by 1945 about 200,000 As early as 1877, The Economist was among many institutions who were advocating the imposition of a form of account on companies, to be adopted for regular disclosure. Numerous amendments and related statutory enactments followed during the ensuing years which culminated in the Companies (Consolidation) Act 1908. A provision was made for including a statement in the form of a balance sheet in the annual return to the Registrar of Companies. In the United States, progress on corporate disclosure followed the standards set in England, until the early 1900s. As late as the 1920s many corporations still kept sales figures secret, some did not depreciate assets, failed to treat non-operating income consistently, did not separate retained earnings from paid-in capital and did not disclose asset write-ups. It was after the Great Depression of 1929 that substantial changes were brought in. The English Companies Act of 1929 served as the foundation for Felix Frankfurter and his team in drafting the Securities Act of 1933. Importantly, the 1929 Act was the source of two major components of the current American securities regulation regime, the concept of full disclosure and the possibility of civil liabilities of the registrant, its officers, directors, and experts. Beyond the functional value of the 1929 Act is the reflection of the vision of the nations leadership at the time. President Roosevelts policy, which championed full disclosure as the preferable remedy to the malaise of American financial markets at the time can best

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be understood by Louis Brandeiss famous maxim: Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants. Even as late as 1932, the New York Stock Exchange expressed concern about the wide variety of accounting and reporting methods used by companies whose securities it listed. A committee of the American Institute of Accountants under the chairmanship of George May was appointed to formulate improved accounting standards which could then be enforced through listing requirements. The committees final report contained five recommendations: 1.To promote consistency, corporations listing their stock on the exchanges were asked to adhere to certain broad accounting principles, within this framework, each firm could adopt the accounting methods it preferred. 2.Each listed company would prepare a summary of accounting methods used in its statements. This summary would be formally approved by the firms board of directors, would be filed with the exchange, and would be available on request to any stockholder. 3.The procedures listed in this summary would be consistently followed from year to year and would not be changed without prior notice to the Stock Exchange and to the companys investors. 4.Financial statements were to be the representations of management. The auditors task was to inform stockholders whether the methods adopted by each company were actually being used, whether they were compatible with generally accepted principles of accounting, and whether they were being applied consistently. 5.The committee suggested that a qualified group of accountants, lawyers, and corporate officials draw up an authoritative list of accounting principles to help corporations in preparing their own lists of proceduresls. The committee had two specific tasks: to educate the public as to why a variety of accounting methods was necessary, and to suggest ways to curtail this variety and gradually make the better methods universal. In 1938 the Haskins and Sells Foundation commissioned three educators, T H Sanders (Harvard), H R Hatfield (Berkeley), and Underhill Moore (Yale Law School) to formulate a code of accounting principles which would be useful in the clarification and improvement of corporate accounting and of financial reports issued to the public. In preparing A Statement of Accounting Principles they interviewed both makers and users of accounting data, reviewed the periodical literature, and studied laws, court decisions, and current corporate reports. A seminal document in the evolution of the universalisation of accounting principles was Paton and Littletons An Introduction to Corporate Accounting Standards (1940), the most coherent statement of principles to emerge from this period. This document set

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the tone for much of the subsequent evolution of corporate financial disclosure practices in the ensuing decades. The last fifty years have seen greater flesh being added to this skeleton of financial reporting that evolved in the mid 1930s and 40s, somewhat contemporaneously in the United States as well as in Great Britain. This process of continuously raising the bar on disclosure standards is never-ending, as evidenced by the recent example being the Sarbanes-Oxley Act following the collapse of Enron. The creation of standardised financial statements is not a guaranteed safety ticket to proper institutional conduct rather that it provides a springboard from which stakeholders can hopefully procure sufficient early warning signals about the true state of an institution. The fundamental principles behind the creation of these standards have been the guiding lights of all material and legislation: creating a level-playing field for all stakeholders by providing regular, detailed, and standardised information about the state of an institution.

Lecture 18-19 Investor Protection in India

The Primary function of Securities and Exchange Board of India under the SEBI Act, 1992 is the protection of the investors interest and the healthy development of Indian financial markets. No doubt, it is very difficult and Herculean task for the regulators to prevent the scams in the markets considering the great difficulty in regulating and monitoring each and every segment of the financial markets and the same is true for the Indian regulator also. But what are the responsibilities of the regulators to set the system right once the scam has taken place, especially the responsibility of redressing the grievances of the investors so that their confidence is restored? The redressal of investors grievances, after the scam, is the most challenging task before the regulators all over the world and the Indian regulator is not an exception. One of the weapons in the hand of the regulators is the collection and distribution of disgorged money to the aggrieved investors. SEBI had issued guidelines for the protection of the investors through the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. These Guidelines have been issued by the Securities and Exchange Board of India under Section 11 of the Securities and Exchange Board of India Act, 1992. Future Overcast of the Investors SEBI being a premiere institution for dealing with the problems relating to securities has advanced a long way towards protecting the investors from the hazards of the predators existing in the market. The real scenario which came as a consequence was that only the big fishes could escape the net and the small ones were still striving to uphold their existence. In this matter, according to a daily newspaper it has become clear that SEBI had already received suggestion and advice regarding the need for a separate enactment concerning the small investors. As far as it is concerned, the Government has thought of

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introducing an independent legislation on investor protection to safeguard the interests of small investors. A separate legislation had also been recommended in the report prepared by Mr. Mitra, who was commissioned by the Finance Ministry to draw up the terms of reference for a new Bill. A debate has been on over the need for a separate legislation for protecting the interests of small investors, considering that there are multiple agencies involved in policing companies that raise funds from the public be it public listed companies, or NBFCs (Non Banking Financial Companies). These include the capital markets regulator, SEBI, the banking regulator, RBI, and the Department of Company Affairs (DCA) which is responsible for regulating unlisted companies. SEBI has been in favour of a separate regulatory agency for the protection of small investors. The regulator had earlier submitted a proposal to the Finance Ministry, outlining the need for a new Act. The setting up of a comprehensive fund for the protection of investors has also been recommended by Mr. Mitra which we see in reality to have already existed today. In fact, the report has suggested that the existing Investor Protection Fund, the corpus of which is to come from unclaimed dividends, should be merged with the new fund.

SEBIs step towards investor protection

SEBI amends Disclosure and Investor Protection (DIP) guidelines Securities and Exchange Board of India (SEBI) has amended the SEBI (Disclosure and Investor Protection) Guidelines, 2000 vide circular dated November 29, 2007. The highlights of the amendments are: 1.Fast Track Issues (FTIs) : Listed companies satisfying specified requirements can make Fast Track Issues through Follow-on Public Offerings and Rights Issues. The eligibility criteria for the purpose, inter alia, include minimum market capitalisation of public holding, trading turnover, track record of compliance with listing requirements and investor grievance redressal, etc. 2. Issue of Indian Depository Receipts (IDRs) : The guidelines have been amended to enable all categories of investors to apply for IDR issues subject to at least 50% of the issue being subscribed by Qualified Institutional Buyers (QIBs). The minimum application value in IDR issues has been reduced to Rs.20,000/- from Rs.2,00,000/-. Presently, only QIBs can apply in an issue of IDRs. 3. Quoting of PAN mandatory : Quoting of PAN in application forms for public/ rights issues has been made mandatory, irrespective of the value of application. Presently, applicants in public and rights issues are required to disclose their PAN/GIR in the application form only if they are making an application for a value exceeding Rs.50,000/-. 4. Discount in issue price : Companies making public issues are permitted to issue securities to retail individual investors / retail individual shareholders at a discounted price, provided that such discount does not exceed 10% of the price at which securities are issued to other categories of public. For the purpose, ?retail individual shareholder? has been defined to mean a shareholder (i) whose shareholding is of value not exceeding Rs. 1,00,000/- as on

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the day immediately preceding the record date, and (ii) who makes application or bids in a public issue for value not exceeding Rs 1,00,000/-. Presently, the Guidelines do not provide for issuance of shares at differential price to investors within the net public offer category. 5.Reservation for shareholders in listed companies : Application by shareholders of listed companies under the reserved quota has been restricted to retail individual shareholders. Presently, listed companies making public issues can make reservation on competitive basis for its existing shareholders who, as on the record date, are holding shares worth up to Rs. 50,000/-. Further, there is no limit on the value of the application made by such shareholders. 6.Deletion of the chapter on Guidelines for Issue of Capital by Designated Financial Institutions (DFIs)? : The special dispensations given to DFIs have been removed by deleting the chapter on ? Guidelines for Issue of Capital by DFIs from SEBI (DIP) Guidelines. SEBI had introduced separate guidelines in 1992 for primary issuances by DFIs, to place companies / corporations / institutions engaged mainly in financing of developmental activities and playing a catalytic role in the infrastructure development of the country on a different footing. Presently, DFIs operationally compete on equal footing with private entities and DFIs, as a concept, may have outlived its utility. 7. Apart from the above, SEBI has also made certain miscellaneous amendments either to delete certain provisions, which have become redundant or in respect of which, there have been requests for exemption on regular basis. SEBI, if not 100%, than for sure it has been near to 100% success as far as the protections of the investors are concerned. As we have seen that via different guidelines it had made it sure that no stone remains unturned in the path of the mission of protecting the investors. But at present the two greatest challenges are the scams relating to mutual fund and the disgorgement of money. As regards to the mutual fund problem, according to a current issue in a newspaper it had become clear that, the Capital market regulator SEBI is concerned about the kind of service mutual funds are providing to their investors and wants the industry to focus on the hassle-free redemptions and also conduct an investor survey, in their own interest. Furthermore Mr.C.B. Bhave while pointing towards the mutual fund institutions commented that, Take up investor survey to find out what they feel about your products, why do they like certain products., Focus on what the client wants, as this will be in your interest, he added. He also assured that SEBI would be having an advisory committee for the MF institutions. The SEBI Chairman also suggested setting up of a depository that will maintain database of all mutual fund investors across the country, much in line with the depositories for the equity market. SEBI is also planning to hold a workshop for the trustees to get their feedback and to know their requirements. The regulator has also decided to set up a mutual fund advisory committee to address the issues faced by the industry. In India, the position is not so well and hence the picture is not clear as to how the disgorged money is to be treated. Generally, the payments received by way of penalties are deposited in Consolidated Fund of India. In its first ever disgorgement order on 21st

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November, 2006, in Karvey case, SEBI directed NSDL, CDSL and eight depository participants (DPs) to return Rs115.81 crore in six months. The DPs include Karvey, HDFC Bank, Khandwala Securities, IDBI Bank, Jhavei Securities, ING Vysya Bank, PR Stock Broking and Pratik Stock Vision. On the issue of disgorgement, in the order passed in the Karvey case, SEBI said, It is well established worldwide that the power to disgorge is an equitable remedy and is not a penal or even a quasi- penal action. Thus it differs from actions like forfeiture and impounding of assets or money. Unlike damages, it is a method of forcing a defendant to give up the amount by which he or she was unjustly enriched. The point of importance here is that the order was passed with the need felt to restore confidence about the market process in the minds of investors who were deprived of their entitlement to shares under the IPO as a result of illegal cornering of shares by some financiers. The Wadhwa Committee report of December 2007 recommended making good deprived investors in money terms, which, it seems, went well with the SEBI, as understood from its order of disgorgement.

Lecture 20: Revision Lecture 21: Assignment 2

Q1. What are the driving forces of Corporate Social Responsibility? Q2. Give a brief sketch of CSR Initiatives in India. Q3. What do you mean by the measurement of progress toward sustainable development? Q4. Discuss the concept of Corporate Social Reporting. Q5. What do you mean by Socially Responsible Investing? Q6. Critically examine the grey areas of CSR. Q7. Discuss the future Agenda of CSR. Q8. What is the role of board in ensuring corporate governance? Q9. Discuss the composition of board? Q10. Discuss the criteria of meetings in the board.

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Unit 2

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Lecture 22 Values Impact In Business

Values create a lot of impact in business: 1. Honesty & Mitigation of Corruption 2. Integrity 3. Righteousness Act 4. Unity 5. Harmony

Lecture 23-24 Indian Value System and Values

Ancient Indian philosophers did not neglect the social, the economic, and the emotional aspects of life. A careful study of ancient Indian history would reveal that this country was materially progressive and economically sound. Speaking of prosperity of India in ancient times, Radhakrishnan says, She knew how to chisel stone, draw pictures, burnish gold and weave rich fabrics. She developed all arts, fine and industries, which furnish the conditions of civilized existence. Her ships crossed the oceans and her wealth brimmed over Judea, Egypt and Rome. Her conceptions of man and society, morals and religion were remarkable for the time. We cannot reasonably say that the Indian people reveled in poetry and mythology, and spurned science and philosophy, though it is true that they were more intent on seeking the unity of things than emphasizing their sharpness and separation. It was therefore, natural for the philosophers of that time to bring about a synthesis of the social and economic, the emotional and spiritual life. She developed all arts, fine and industries, which furnish the conditions of civilized existence. Her ships crossed the oceans and her wealth brimmed over Judea, Egypt and Rome. Her conceptions of man and society, morals and religion were remarkable for the time. We cannot reasonably say that the Indian people reveled in poetry and mythology, and spurned science and philosophy, though it is true that they were more intent on seeking the unity of things than emphasizing their sharpness and separation. It was therefore, natural for the philosophers of that time to bring about a synthesis of the social and economic, the emotional and spiritual life.

Lecture 25 Teaching from Scriptures

Indian ethics is the actual application of moral ideals, whereas Western ethics is a mere discussion of ethical problems. RigVeda as well as Atharva Veda mention honesty, nonviolence, truthfulness, modesty, agreeable speech, Brahmacharya (celibacy), religious conviction, and purity of heart as the important virtues that are praiseworthy. These very virtues are mentioned in the Bhagavadgita as divine qualities. Thus the Vedic philosophy
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lays emphasis on right conduct as the means of the development of the personality of the individual. Hence in a way the ethics of the Vedas is the ethics of right action. The existence of four major divisions (Varnas) of society, viz. (i) the Brahmana, the priestly class; (ii) the Ksatriya, the ruling class, (iii) the Vaisya, the professional class; and (iv) the Sudra, the labouring class, is clearly indicated in Vedic literature, the classification of that was not based on birth but on the work. The Vedic hymns refer to the metaphysical and social nature of the four major classes. The Purusarthas (a balanced and integrated view of life), Artha (Wealth) becomes evil only when it is misused on account of lack of wisdom. The Upanishads repeatedly point out that everything that is desired is desired for the sake of the self. The concept of duty or Dharma in the Upanishads is not negative but out and out positive. It does not command us to give up or renounce the world, but rather to engage in the worldly strife, always aiming at the spiritual goal and subordinating all other desires to the strongest desire, or love for God. The Upanishadic notion of Kama (desire) is described as follows: Kama, which we are asked to renounce, is not desire as such, but only the animal desire, lust, the impulsive craving of the brute man. Freedom from Kama is not blank passivity. Natural desires and inclinations are the springboard of all human actions. Therefore it is an important human value. To sum up, we may say that Artha, Kama, Dharma and Moksa are at the same time essential methods for leading a meaningful life. Neither the path of indulgence (Pravirtti Marga) nor that of asceticism (Nivirti Marga) is desirable. Indulgence in the enjoyment of the pluralistic spatio-temporal world without insight into its spiritual monistic basis is as harmful, antisocial, and anti-ethical as indulgence in a lower pantheism and equating good with evil without recognition of pluralistic nature of the empirical world is disastrous. The Bhagavadgita follows the philosophy of Samadarsana (the view of the Ultimate Reality) and Visamavarttana (differentiated behaviour in the empirical world) to the core. Referring to this devotion to duty, it has been remarked in the Bhagavad-Gita that one should prefer death, while performing ones own Dharma to a change of professional duty.

Svardharme ninhanam sreyad, paradharmo bhayavahah.

The highest goal, the summum bonum is not only the well being, of human beings but of all the living creatures. The following Sanskrit verse sums up the Indian ethical ideal.

Sarve bhabantu sukhinah sarve santu niramayah, Sarve bhadrani pasyantu makaschit dukhabhagabhavet.
May all be at ease; may all be sinless; may all experience happiness; may none experience suffering. The four ends of life, viz: Artha, or wealth, for the development of body, Kama, or the fulfillment of desires, for the development of mind, Dharma, or morality, for the development of intellect, and finally Moksa, or spiritual perfection, for the development of the soul. Thus this ethico-metaphysical system is present clearly in the Rigvedic philosophy and it is also reflected in the Upanishads, which emphasize the oneness of the universe and hence entail the same non-dual reality as the goal of the cosmos, of society, and of the individual. The Four Noble Truths (arya satya) are:

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There is suffering (dukha), There is cause of suffering (dukha samudaya) There is a cessation of suffering (dukha-nirodha) There is a way leading to cessation of suffering (dukha-nirodha-gamini pratipat)

The Eight-fold Path (Buddhism) is: 1) Right Resolve (sankalpa) 2) Right Intention (samyag drsti) 3) Right Speech (vak) 4) Right Action (karmanta) 5) Right Livelihood or right living (ajiva) 6) Right Concentration (samadhi) 7) Right Effort (vyayama) 8) Right Mindedness or Right Thought (smrti)

Lecture 26 Ethical context of Vedas & Upanishads

The word Upanishad literally means "sitting down near" and implies studying with a spiritual teacher. The Upanishads were written by sages of India between the eighth and fourth centuries BC, The seven Upanishads presented complete in this collection are drawn from the twelve principal Upanishads and appear in what is considered their chronological order, the KENA, KATHA, and ISHA being considered pre-Buddhist and thus from the eighth or seventh centuries BC. The name KENA comes from the first word which means "By whom." ISHA comes from the first word meaning "Lord." PRASHNA comes from the word for "question." The gods referred to in these Upanishads are Agni the god of fire, Vayu the god of air or wind, Indra the god of heroic power and storms, Rudra a god of destruction and of healing, Savitri a sun god or goddess, Brahma the creator, and Vishnu the preserver. In the KATHA UPANISHAD 5 the city of eleven gates refers to the nine openings in the body, the navel, and the sagittal suture on top of the head and in the SHVETASHVATARA UPANISHAD 3 the nine-gated city refers merely to the body's nine openings. The triad in MUNDAKA 1 refers to the first three Vedas, while the triad in SHVETASHVATARA 1 seems to refer to three aspects of God. In MUNDAKA 3 Vedanta means the end of the Vedas. Different Upanishads serve as commentaries or extensions of each of the four Vedas (Rig Veda, Yajur Veda, Sama Veda and Atharva Veda). The oldest and longest of the Upanishads are the Brihad-Aranyaka and the Chandogya; scholars vary on when they first were written and estimates range the 16th to 7th century BCE. There is great scholarly consensus that many of the early Upanishads are pre-Buddhist. Initially there were over two hundred Upanishads but only fifteen or so were considered to be primary
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by the philosopher Shankara. The Upanishads were not fully recorded until 1656, at the order of Dara Shakoh. The philosopher and commentator Shankara is thought to have composed commentaries on eleven mukhya or principal Upanishads, those that are generally regarded as the oldest, spanning the late Vedic and Mauryan periods. The Muktika Upanishad (predates 1656) contains a list of 108 canonical Upanishads and lists itself as the final one. Although there are a wide variety of philosophical positions propounded in the Upanishads, commentators since Shankara have usually followed him in seeing idealist monism as the dominant one The following list includes the eleven "principal" (mukhya) Upanishads commented by Shankara, and accepted as shruti by most Hindus. Each is associated with one of the four Vedas (Rigveda (?V), Samaveda (SV), White Yajurveda (?YV), Black Yajurveda (KYV), and Atharvaveda (AV)) Aitareya (?V) Brhadaranyaka (SYV) Taittir?ya (KYV) Ch?ndogya (SV) Kena (SV) ?sa (SYV) Svetasvatara (KYV) Katha (KYV) Mundak (AV) Mandukya (AV) Prasna (AV)

These philosophical and meditative tracts form the backbone of Hindu thought. Of the early Upanishads, the Aiterya and Kaushitaki belong to the Rig Veda, Kena and Chandogya to the Sama, Isha and Taittereya and Brihadaranyaka to the Yajur, and Prasna and Mundaka to the Atharva. (Associated Upanishad and Vedic book taken from Radhakrishnan Indian Philosophy, Vol.1). In addition, the Mandukya, Katha, Svetashvatara are very important. Others also include Mahanarayana and Maitri Upanishads as key.

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Lecture 27 Teaching from Ramayana

The Ramayana, the saga of Rama's life written by Valmiki, is widely acclaimed as among the greatest of all Indian epics. The narrative is regarded as a veritable treatise on social sciences, offering lessons that transcend both time and space. In fact, this famous Grantha carries useful tips on ethics and values, statecraft and politics, and even general and human resources management. The Ramayana can serve as a useful reference book for those willing to learn. With Rama Rajya as a model for good governance, the Ramayana is a must read for practitioners of statecraft. More so, because much fuss is being made today over Ayodhya being the birthplace of Rama and the controversy over the building of a Ram temple at the Ramjanmabhoomi. The Ayodhya Kanda, the second chapter, contains comprehensive lessons on good governance. When Bharata, the younger brother of Rama, goes to meet the latter in the forest to request him to return to Ayodhya and rule, the two brothers enter into a long and instructive dialogue. Rama counsels Bharata on governance. From quality of ministers and the importance of strategy sessions, to temperance in administration to justice, Rama expounds on all the subtleties of statecraft in a lucid manner. Apparently, Rama seems to be inquiring of Bharata his well-being, whether all is well at Ayodhya - in fact, however, in the process, the lessons on effective governance are offered in a powerful manner. Though the dialogue between the two brothers runs into several pages and a thorough reading is required to understand the intricacies, some important lessons are obvious, particularly the ones given on pages 441-449 of the Valmiki Ramayana. A critical factor in good governance is the quality of ministers. Rama asks Bharata whether he has appointed courageous, knowledgeable, strong-willed men with a high emotional quotient as his ministers, because quality advice is the key to effective governance. The emphasis is on competence and confidentiality. Rama's advice to Bharata is to take a decision on a complex issue neither unilaterally nor in consultation with too many people. There should be an efficient core group. Teamwork is an important principle in management, and Rama applied the same in search of Sita and was successful in the mission. Another one is in an organisation one must be treated affectionately which Rama did when he met Guhan and Vibhishana. Management principles such as encouraging lower category of employees, rewards for good work, self-motivation, decision-making, recognition, market survey, market exploitation, time management and the art of communication are aligned with instances in the epic. The book is a valuable one, giving new interpretation to Ramayana.
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One of the most obvious incidences, in which use management principles is very clearly visible is that of Hanuman going to Lanka. His mission was to locate Sita there and give her Lord Rams message. When it became clear that Sita was in Lanka, Jamvant asked Hanuman to go there. He helped him in realising his true potential and motivated him to go in the enemys camp. Once mentally prepared for the job and reached there, first thing which Hanuman did was to completely analyse the situation in Lanka. He did a complete study about the Lankans, assessing their strengths and weaknesses, the various threats and opportunities which he had in the enemys camp. This is what management is all about Ascertaining the goals, or job to be done. Getting mentally prepared for it. Having a right plan. Analyzing the strengths and weaknesses of the competitor and what threats and opportunities are there in the business. This SWOT [strength, weakness, opportunities and threats] analysis is one of the most important aspects of modern day management. Moreover Jamvant motivating Hanuman is a classic example of a good Manager helping his personnel to realise their potential and acting accordingly. 2. The other example which I would like to talk about here is that of good and bad managers. A good manager is the one, who can get his work done even from the rivals. In Ramayana Sughriv has shown some of the best managerial characteristics. As a successful manager he had Ram to work accordingly and got his kingdom back from a brother who was far mightier than him. A good example of getting into strategic alliance with others to achieve your desired goal. Using his managerial skills he even had Angad to work for him. Angad was the son of his brother whom he got killed by Ram. Had Sughriv been a bad manager then the same Angad would have proved to be his arch nemesis. In the same Ramayana, again and again Ravana has shown the signs of a bad manager, and hence led to the demise of his kingdom. From the starting itself he ignored the suggestions of his managers and got his kingdom in the state of war with Ram. Moreover during a crisis, a company needs its best of the managers to bail it out of the same. A good manager listens to what his subordinates has to say and tries to keep them together especially when the organization needs them the most. But Ravanas mismanagement was responsible for Vibhishan [one of the wisest manager he should have listened to] leaving him amidst a crisis. 3. It is said that businesses are run on relations. A manager who can nurture good relations with the employees, clients and anyone in whose contact the organization and the manager comes in, can do wonders for his company. Lord Ram was very good at it. He was the master of nurturing relations. His prowess at it was so great that while Ravana was lying wounded in the battle field and was about to die, he shared some important lessons which he had learnt in his life. The same Ravana, who at the same time had not responded to Lakshman, when he was sent to seek Ravanas wisdom by Ram, was more than happy in sharing his knowledge with Ram. Dharma (or) Righteousness: In todays world where people have no time to relax and are ready to do anything to get what they want or to reach the heights they have dreamt from childhood, there is a tendency to forget Dharma or to suppress it for a while, which is itself equal to not following Dharma. But a true leader is the one who realises the value of righteousness in all his activities. To better understand the situation, try putting

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yourself in the shoes of a famous retailer or a CEO of a mega pharmaceutical company. Can you not do the right thing to your customers? Imagine someone doing a small mistake in a service based industry, and then your whole goodwill will come down to pieces. And if what management gurus have observed is right, losing Goodwill will make you lose the entire thing in the totality. 2. Being Humble: - This probably is the easiest thing to do yet the most beneficial quality one can possess at any time. This truly shows the real leader in you. Have you ever come across a person who is arrogant because of his success? I am sure you would have. But did you hate that attitude? Didnt you wish that you never go in front of the person again? In short, if you were carrying the same attitude, people working for you would probably feel the same about you. Being authoritative or showing power or dictatorship is probably the old warlord formula that doesnt suit the current scenario. It does not work for too long for anyone. Instead do this when you walk in your work place and see the difference. Be humble, smile at everyone as if you really love them, show genuine concern, help as much as you can wholeheartedly, and think that your worst enemy is none other than your own negative attitude. I know a good friend of mine who has climbed up the corporate ladder pretty quickly when compared to his peers. And the secret mantra?!! He has the natural process of carrying a big smile that would lighten up your soul and make you feel welcome. He would crack jokes on you, but none that would hurt you ever. He has the natural instinct to say the right thing the gentlest way. He never bosses around his peers or subordinates, instead makes them all feel very important and involved into his conversation. And as the result he is heading the banking division of a major software giant and is managing more than 350+ employees reporting to him. Now that doesnt sound big, does it?!! 3. The King maker: - This is the quality which someone would not acquire if they did not have the above two that i mentioned here. The quality of a true Leader of the 21st Century is to create more leaders. Every organisation today talks about moving ahead in the race by creating more leaders than the competitor. My own organisation has laid out rigid plans to do the same and they probably are doing it quite comfortably than give witnessed so far in my career. So why is it important to create more leaders to face competition?!! In todays world the one man show does not promise success like the earlier days. Truly distributed responsibility and empowerment creates more changes for good and more chances to win. So naturally it becomes quintessential for every department, every unit, every organisation, every economy, every government to create more and effective leaders than ever before. It promises more innovation, more tasks completed, more projects concluded, more promises achieved and most of all more trust from people than ever before. Having mentioned the above 3 qualities which i already mentioned in the first part, i am now moving on to the next lessons to be learnt from the Ramayana. Lord Rama was a man of pure and fair compassion towards all. When he was asked to go on 14 years in the Jungles, he started off from Ayodhya being followed constantly by the citizens of Ayodhya. So much was his love for his people that he let them follow him until he was sure that they would be satisfied to have been with him. But the moment they fell asleep in the banks of Tamasa, he silently left them to move into forests. Such was his compassion and love for even the citizens of the nation to which he was a prince.

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Lord Rama, along with his consort Sita and brother Lakshmana went to the forests but stopped at one place and waited for long hours for a friend. He was a hunter and king of the jungle Saraayu. His name was Guha. It is written in Valmiki Ramayana that Lakshmana was amazed and puzzled by the compassion and love of Lord Rama that made him wait for an ordinary hunter for so long. When Guha heard the news that Lord Rama was in his jungle Kingdom, he jumped in joy like a baby and came yelling & running towards the Lord. But when he was near the Lord, he became calm and peaceful and did not know what to do next. Such was his respect for the Lord, that even though Lord Rama considered him as his best friend, Guha always respected the Lord for his great virtues. But Lord Rama, seeing this hesitation, hugged Guha and embraced him like a mother who embraces his son who returns home after long years. He caught the hands of the Hunter and pulled him towards Lakshmana and said Dear Lakshmana, do you remember him ? He is the King of this jungle, the King of Saraayu and my dear friend Guha. Rama never mentioned the word Hunter to Lakshmana or Sita while introducing. Such was his pure compassion for all human beings irrespective of their status, position, caste, creed, or region. When Lord Rama was later in Lanka, he welcomed Vibishana, the brother of his own enemy King Ravana to his side and embraced him like a brother. He knew that Vibishana was although the brother of the Demon King Ravana, he still had his heart full of pure devotion and love for the Lord. He made him his best friend instantly even though there were some arguments and feelings against this in his camp. Lord Rama even disarmed the King Ravana on the first battle and sent him home to come the next day with more weapons. He had the wonderful spirit of truth and a heart of Gold that led him to this path where he could see even his enemy with eyes of compassion and love. He showed humanity to his enemy too. His love and never ending compassion for his loyal bhaktha Shri Hanuman is something that has no boundaries. Lord Shri Hanuman too reciprocates it by never allowing the Lord Rama to walk on bare foot from the time he saw Hanuman till the time he reached back Ayodhya. Lord Hanuman himself had a great compassion for everyone he dealt with. This quality is again the make of a true leader. Every leader should trust his followers

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and he must show equal treatment and thereby a virtue of dealing fair and clean with all his people. That again proves the fact that he needs to have the heart to deal with people with respect and love. He needs to respect their space, their emotions, and their beliefs and guide them the most compassionate way.

A good administrator can ensure high returns from minimum investments. Rama tells Bharata to prefer one wise man to a thousand fools as it is the wise that can ensure prosperity during an economic crisis. Even if there is one minister who is really effective, the king will gain immensely. Appointing tested men of noble lineage and integrity for strategic positions is the key to successful government. Moderate taxes should be levied on the people, lest they revolt. Rama wants Bharata to treat his soldiers well and pay their legitimate wages on time. Delays in payment of wages and other allowances can lead to dangerous consequences. Trade and agriculture are important and Rama wants Bharata to ensure good irrigation facilities rather than being overly dependent on rains. Traders need to be ensured of a fear-free environment and their grievances should be redressed promptly. Protecting the forests and maintaining livestock have also been dealt with as important aspects of effective governance. In fact, the vision of the Ramayana has eternal relevance. Law and justice, finance and business, corruption framing of innocents for monetary gains, injustice to the poor are all mentioned. Rama's words of advice to Bharata are as relevant today as they were in the Treta period, the time when Rama is believed to have lived. It is worthwhile to ponder over the thoughts and deeds of Rama rather than expend valuable time and energy fighting over his birthplace and whether a temple should be constructed there. For the benefit of present and future generations, Rama gave valuable tips to Bharata on good governance. We should focus on this aspect rather than on outward worship.

Lecture 28 Teaching from Bhagwada Geeta/Mahabharata

"Mind is very restless, forceful and strong, O Krishna, it is more difficult to control the mind than to control the wind ..." ......Arjuna to Sri Krishna One of the greatest contributions of India to the world is Holy Gita. Arjuna got mentally depressed when he saw his relatives with whom he has to fight. To motivate him the Bhagavad Gita is preached in the battle field Kurukshetra by Lord Krishna to Arjuna as counseling to do his duty while multitudes of men stood by waiting. It has got all the management tactics to achieve the mental equilibrium and to overcome any crisis situation. The Bhagavad Gita can be experienced as a powerful catalyst for transformation. Bhagavad gita means song of the Spirit, song of the Lord. The Holy Gita has become a secret driving force behind the unfoldment of one's life. In the days of doubt this divine book will support all spiritual searches. This divine book will contribute
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to self reflection, finer feeling and deepen one's inner process. Then life in the world can become a real education, dynamic, full and joyful, no matter what the circumstance. May the wisdom of loving consciousness ever guide us on our journey? What makes the Holy Gita a practical psychology of transformation is that it offers us the tools to connect with our deepest intangible essence and we must learn to participate in the battle of life with right knowledge? Mind can be one's friend or enemy. Mind is the cause for both bondage and liberation. The word mind is derived from man to think and the word man derived from manu (sanskrit word for man). "The Supreme Lord is situated in everyone's heart, O Arjuna, and is directing the wanderings of all living entities, who are seated as on a machine, made of the material energy." There is no theory to be internalized and applied in this psychology. Ancient practices spontaneously induce what each person needs as the individual and the universal coincide. The work proceeds through intellectual knowledge of the playing field(jnana yoga), emotional devotion to the ideal(bhakti yoga) and right action that includes both feeling and knowledge(karma yoga). With ongoing purification we approach wisdom. The Bhagavad Gita is a message addressed to each and every human individual to help him or her to solve the vexing problem of overcoming the present and progressing towards a bright future. Within its eighteen chapters is revealed a human drama. This is the experience of everyone in this world, the drama of the ascent of man from a state of utter dejection, sorrow and total breakdown and hopelessness to a state of perfect understanding, clarity, renewed strength and triumph. Management has become a part and parcel of everyday life, be it at home, in the office or factory and in Government. In all organizations, where a group of human beings assemble for a common purpose, management principles come into play through the management of resources, finance and planning, priorities, policies and practice. Management is a systematic way of carrying out activities in any field of human effort. Its task is to make people capable of joint performance, to make their weaknesses irrelevant, says the Management Guru Peter Drucker. It creates harmony in working together - equilibrium in thoughts and actions, goals and achievements, plans and performance, products and markets. It resolves situations of scarcity, be they in the physical, technical or human fields, through maximum utilization with the minimum available processes to achieve the goal. Lack of management causes disorder, confusion, wastage, delay, destruction and even depression. Managing men, money and materials in the best possible way, according to circumstances and environment, is the most important and essential factor for a successful management. Management guidelines from the Bhagavad Gita There is an important distinction between effectiveness and efficiency in managing.

Effectiveness is doing the right things.

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Efficiency is doing things right. The general principles of effective management can be applied in every field, the differences being more in application than in principle. The Manager's functions can be summed up as: Forming a vision. Planning the strategy to realise the vision. Cultivating the art of leadership. Establishing institutional excellence. Building an innovative organisation. Developing human resources. * Building teams and teamwork. Delegation, motivation, and communication. Reviewing performance and taking corrective steps when called for.

Thus, management is a process of aligning people and getting them committed to work for a common goal to the maximum social benefit - in search of excellence. The critical question in all managers minds is how to be effective in their job. The answer to this fundamental question is found in the Bhagavad Gita, which repeatedly proclaims that `you must try to manage yourself.' The reason is that unless a manager reaches a level of excellence and effectiveness, he or she will be merely a face in the crowd. Old truths in a new context The Bhagavad Gita, written thousands of years ago, enlightens us on all managerial techniques leading us towards a harmonious and blissful state of affairs in place of the conflict, tensions, poor productivity, absence of motivation and so on, common in most of Indian enterprises today and probably in enterprises in many other countries. The modern (Western) management concepts of vision, leadership, motivation, excellence in work, achieving goals, giving work meaning, decision making and planning, are all discussed in the Bhagavad Gita. There is one major difference. While Western management thought too often deals with problems at material, external and peripheral levels, the Bhagavad Gita tackles the issues from the grass roots level of human thinking. Once the basic thinking of man is improved, it will automatically enhance the quality of his actions and their results. The management philosophy emanating from the West is based on the lure of materialism and on a perennial thirst for profit, irrespective of the quality of the means adopted to achieve that goal. This phenomenon has its source in the abundant wealth of the West and so 'management by materialism' has caught the fancy of all the countries the world over, India being no exception to this trend. My country, India, has been in the forefront in importing these ideas mainly because of its centuries old indoctrination by colonial rulers, which has inculcated in us a feeling that anything Western is good and anything Indian is inferior. The result is that, while huge funds have been invested in building temples of modem

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management education, no perceptible changes are visible in the improvement of the general quality of life - although the standards of living of a few has gone up. The same old struggles in almost all sectors of the economy, criminalisation of institutions, social violence, exploitation and other vices are seen deep in the body politic.

The Source of the Problem

The reasons for this sorry state of affairs are not far to seek. The Western idea of management centres on making the worker (and the manager) more efficient and more productive. Companies offer workers more to work more, produce more, sell more and to stick to the organisation without looking for alternatives. The sole aim of extracting better and more work from the worker is to improve the bottom-line of the enterprise. The worker has become a hireable commodity, which can be used, replaced and discarded at will. Thus, workers have been reduced to the state of a mercantile product. In such a state, it should come as no surprise to us that workers start using strikes (gheraos) sit-ins, (dharnas) go-slows, work-to-rule etc. to get maximum benefit for themselves from the organisations. Society-at-large is damaged. Thus we reach a situation in which management and workers become separate and contradictory entities with conflicting interests. There is no common goal or understanding. This, predictably, leads to suspicion, friction, disillusion and mistrust, with managers and workers at cross-purposes. The absence of human values and erosion of human touch in the organisational structure has resulted in a crisis of confidence. Western management philosophy may have created prosperity for some people some of the time at least - but it has failed in the aim of ensuring betterment of individual life and social welfare. It has remained by and large a soulless edifice and an oasis of plenty for a few in the midst of poor quality of life for many. Hence, there is an urgent need to reexamine prevailing management disciplines - their objectives, scope and content. Management should be redefined to underline the development of the worker as a person, as a human being, and not as a mere wage earner. With this changed perspective, management can become an instrument in the process of social, and indeed national, development. Now let us re-examine some of the modern management concepts in the light of the Bhagavad Gita, which is a primer of management-by-values. Utilization of Available Resources The first lesson of management science is to choose wisely and utilise scarce resources optimally. During the curtain raiser before the Mahabharata War, Duryodhana chose Sri Krishna's large army for his help while Arjuna selected Sri Krishna's wisdom for his support. This episode gives us a clue as to the nature of the effective manager - the former chose numbers, the latter, wisdom.

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Attitudes towards Work Three stone-cutters were engaged in erecting a temple. An HRD Consultant asked them what they were doing. The response of the three workers to this innocent-looking question is illuminating. 'I am a poor man. I have to maintain my family. I am making a living here,' said the first stone-cutter with a dejected face. 'Well, I work because I want to show that I am the best stone-cutter in the country,' said the second one with a sense of pride. 'Oh, I want to build the most beautiful temple in the country,' said the third one with a visionary gleam. Their jobs were identical but their perspectives were different. What the Gita tells us is to develop the visionary perspective in the work we do. It tells us to develop a sense of larger vision in our work for the common good. Work commitment. A popular verse of the Gita advises `detachment' from the fruits or results of actions performed in the course of one's duty. Being dedicated work has to mean `working for the sake of work, generating excellence for its own sake.' If we are always calculating the date of promotion or the rate of commission before putting in our efforts, then such work is not detached. It is not `generating excellence for its own sake' but working only for the extrinsic reward that may (or may not) result. Working only with an eye to the anticipated benefits, means that the quality of performance of the current job or duty suffers through mental agitation of anxiety for the future. In fact, the way the world works means that events do not always respond positively to our calculations and hence expected fruits may not always be forthcoming. So, the Gita tells us not to mortgage present commitment to an uncertain future. Some people might argue that not seeking the business result of work and actions makes one unaccountable. In fact, the Bhagavad Gita is full of advice on the theory of cause and effect, making the doer responsible for the consequences of his deeds. While advising detachment from the avarice of selfish gains in discharging one's accepted duty, the Gita does not absolve anybody of the consequences arising from discharge of his or her responsibilities. Thus the best means of effective performance management is the work itself. Attaining this state of mind (called `nishkama karma') is the right attitude to work because it prevents the ego, the mind, from dissipation of attention through speculation on future gains or losses. Motivation - Self and Self-Transcendence It has been presumed for many years that satisfying lower order needs of workers adequate food, clothing and shelter, etc. are key factors in motivation. However, it is a common experience that the dissatisfaction of the clerk and of the Director is identical only their scales and composition vary. It should be true that once the lower-order needs are more than satisfied, the Director should have little problem in optimising his

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contribution to the organisation and society. But more often than not, it does not happen like that. (`The eagle soars high but keeps its eyes firmly fixed on the dead animal below.') On the contrary, a lowly paid schoolteacher, or a self-employed artisan, may well demonstrate higher levels of self-actualisation despite poorer satisfaction of their lower-order needs. This situation is explained by the theory of self-transcendence propounded in the Gita. Self-transcendence involves renouncing egoism, putting others before oneself, emphasising team work, dignity, co-operation, harmony and trust and, indeed potentially sacrificing lower needs for higher goals, the opposite of Maslow. "Work must be done with detachment.It is the ego that spoils work and the ego is the centrepiece of most theories of motivation. We need not merely a theory of motivation but a theory of inspiration." The Great Indian poet, Rabindranath Tagore (1861-1941, known as "Gurudev") says working for love is freedom in action. A concept which is described as "disinterested work" in the Gita where Sri Krishna says, "He who shares the wealth generated only after serving the people, through work done as a sacrifice for them, is freed from all sins. On the contrary those who earn wealth only for themselves, eat sins that lead to frustration and failure." Disinterested work finds expression in devotion, surrender and equipoise. The former two are psychological while the third is determination to keep the mind free of the dualistic (usually taken to mean "materialistic") pulls of daily experiences. Detached involvement in work is the key to mental equanimity or the state of `nirdwanda'. This attitude leads to a stage where the worker begins to feel the presence of the Supreme Intelligence guiding the embodied individual intelligence. Such de-personified intelligence is best suited for those who sincerely believe in the supremacy of organisational goals as compared to narrow personal success and achievement. Work Culture An effective work culture is about vigorous and arduous efforts in pursuit of given or chosen tasks. Sri Krishna elaborates on two types of work culture `daivi sampat' or divine work culture and `asuri sampat' or demonic work culture. Daivi work culture - involves fearlessness, purity, self-control, sacrifice, straightforwardness, self-denial, calmness, absence of fault-finding, absence of greed, gentleness, modesty, absence of envy and pride. Asuri work culture - involves egoism, delusion, personal desires, improper performance, work not oriented towards service. Mere work ethic is not enough. The hardened criminal exhibits an excellent work ethic. What is needed is a work ethic conditioned by ethics in work. It is in this light that the counsel, `yogah karmasu kausalam' should be understood. `Kausalam' means skill or technique of work which is an indispensable component of a work ethic. `Yogah' is defined in the Gita itself as `samatvam yogah uchyate' meaning an unchanging equipoise of mind (detachment.) Tilak tells us that acting with an equable mind is Yoga.

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(Bal Gangadhar Tilak, 1856-1920, the precursor of Gandhiji, hailed by the people of India as "Lokmanya," probably the most learned among the country's political leaders. For a description of the meanings of the word "Yoga", see foot of this page.) By making the equable mind the bed-rock of all actions, the Gita evolved the goal of unification of work ethic with ethics in work, for without ethical process no mind can attain equipoise. The guru, Adi Sankara (born circa 800 AD), says that the skill necessary in the performance of one's duty is that of maintaining an evenness of mind in face of success and failure. The calm mind in the face of failure will lead to deeper introspection and see clearly where the process went wrong so that corrective steps could be taken to avoid shortcomings in future. The principle of reducing our attachment to personal gains from the work done is the Gitas prescription for attaining equanimity. It has been held that this principle leads to lack of incentive for effort, striking at the very root of work ethic. To the contrary, concentration on the task for its own sake leads to the achievement of excellence and indeed to the true mental happiness of the worker. Thus, while commonplace theories of motivation may be said to lead us to the bondage or extrinsic rewards, the Gitas principle leads us to the intrinsic rewards of mental, and indeed moral, satisfaction. Work Results The Gita further explains the theory of `detachment' from the extrinsic rewards of work in saying: If the result of sincere effort is a success, the entire credit should not be appropriated by the doer alone If the result of sincere effort is a failure, then too the entire blame does not accrue to the doer. The former attitude mollifies arrogance and conceit while the latter prevents excessive despondency, de-motivation and self-pity. Thus both these dispositions safeguard the doer against psychological vulnerability, the cause of the modem managers' companions of diabetes, high blood pressure and ulcers. Assimilation of the ideas of the Gita leads us to the wider spectrum of `lokasamgraha' (general welfare) but there is also another dimension to the work ethic - if the `karmayoga' (service) is blended with `bhaktiyoga' (devotion), then the work itself becomes worship, a `sevayoga" (service for its own sake.) Sound mental health is the very goal of any human activity - more so management. Sound mental health is that state of mind which can maintain a calm, positive poise, or regain it when unsettled, in the midst of all the external vagaries of work life and social existence. Internal constancy and peace are the pre-requisites for a healthy stress-free mind. Some of the impediments to sound mental health are:

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Greed - for power, position, prestige and money. Envy - regarding others' achievements, success, rewards. Egotism - about one's own accomplishments. Suspicion, anger and frustration. Anguish through comparisons.

The driving forces in today's businesses are speed and competition. There is a distinct danger that these forces cause erosion of the moral fibre, that in seeking the end, one permits oneself immoral means - tax evasion, illegitimate financial holdings, being `economical with the truth', deliberate oversight in the audit, too-clever financial reporting and so on. This phenomenon may be called as `yayati syndrome`. In the book, the Mahabharata, we come across a king by the name of Yayati who, in order to revel in the endless enjoyment of flesh exchanged his old age with the youth of his obliging youngest son for a thousand years. However, he found the pursuit of sensual enjoyments ultimately unsatisfying and came back to his son pleading him to take back his youth. This `yayati syndrome' shows the conflict between externally directed acquisitions (extrinsic motivation) and inner value and conscience (intrinsic motivation.) Management needs those who practice what they preach `Whatever the excellent and best ones do, the commoners follow,' says Sri Krishna in the Gita. The visionary leader must be a missionary, extremely practical, intensively dynamic and capable of translating dreams into reality. This dynamism and strength of a true leader flows from an inspired and spontaneous motivation to help others. "I am the strength of those who are devoid of personal desire and attachment. O Arjuna, I am the legitimate desire in those, who are not opposed to righteousness," says Sri Krishna in the 10th Chapter of the Gita. The despondency of Arjuna in the first chapter of the Gita is typically human. Sri Krishna, by sheer power of his inspiring words, changes Arjuna's mind from a state of inertia to one of righteous action, from the state of what the French philosophers call `anomie` or even alienation, to a state of self-confidence in the ultimate victory of `dharma' (ethical action.) When Arjuna got over his despondency and stood ready to fight, Sri Krishna reminded him of the purpose of his new-found spirit of intense action - not for his own benefit, not for satisfying his own greed and desire, but for the good of many, with faith in the ultimate victory of ethics over unethical actions and of truth over untruth. Sri Krishna's advice with regard to temporary failures is, `No doer of good ever ends in misery.' Every action should produce results. Good action produces good results and evil begets nothing but evil. Therefore, always act well and be rewarded.

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Lecture 29 Ethics in the Hebrew Bible

Jewish tradition classically schematizes these prescriptions into 613 mitzvot ("commandments"), beginning with "Be fruitful and multiply" (God's command to all life) and continuing on to the seven laws of Noah (addressed to all humanity) and the several hundred laws, which apply specifically to Jews (such as the kashrut dietary laws). Jewish tradition also records the aforementioned distinction between commandment's that relate to man's interaction with fellow man and those that effect his relationship with God Many commandments are remarkable in their blending of the two roles. For example, observance of Shabbat is couched in terms of recognizing God's sovereignty and creation of the world, while also being presented as a social-justice measure to prevent overworking one's employees, slaves, and animals. As a result, the Bible consistently binds worship of the Divine to ethical actions and ethical actions with worship of the Divine. The gem of Old Testament ethics is the Biblical command to "love thy neighbor as thyself." Later traditions recognized its prominence by claiming that all other commands are just means by which to accomplish this lofty goal. The commands of the Old Testament appear in a particular context, namely that of an Iron Age Canaanite people. Thus, some commands, such as the prohibition of theft, are near-universal, while others, such as levirate marriage and the holding of slaves, record how to go about specific ancient practices. To understand the nature of these latter Old Testament commands, a full understanding of the ancient practice is necessary. In particular, understanding the way it was practiced in neighboring and pre-Biblical societies allows one to grasp the novelty of the Old Testament's preferred method. This method has enjoyed considerable attention in the realm of Biblical court law. Understanding the Iron Age legal context highlights the ethics inherent in Old Testament legal theory. A quick survey of non-Israelite legal codes from the time produces the following patterns: punishment for mere economic crimes can be capital; punishment for murder can be a mere fine or economic recompense; a man's family can be punished for crimes he did; a high ranking ruler can pardon one subject from crimes he committed against another subject; executions were often highly symbolic, disrespectful, and unusual. 1) Bible Teaching About Time Management What the Bible says about time management is simple: it is to your great advantage. Paul insisted, Therefore be careful how you walk, not as unwise men, but as wise, making the most of your time, because the days are evil. Esmie and I have found the process to be a large part of any successful plans. All of us have been given resources, and how we organize and spend them determines how well we achieve the plans, goals, and tasks God has given each of us to accomplish. Time management is really activity management, because activities are what you plug into the days time slots. And, those selected activities are the steps toward achieving the most of what God wants you to accomplish for Him.
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There are many issues involved in time management, but here we only have time to explain a few key principles. Read on. Success is just around the corner. Make a List Remember that time management flows out of goal setting (link) and plans. The sharper your goals are, the easier to organize your time. Make a list of everything you need to do to carry out your goals. Break big tasks down into small more manageable tasks. Estimate how long it will take you to do each item. Organize your tasks for the day, week, month, year, etc. For example, Esmie and I take two or three days at the first of every year, go off to a place away from distractions, pray, and make our major yearly goals. We get the big picture first, and then begin to break the big goals down into monthly and weekly tasks. This practice of writing down the tasks will remove the frustration of trying to remember everything that you need to do. If you dont write down your tasks, you are bound to forget some things. Furthermore, you will worry and waste time trying to remember what you forgot, rather than investing that time in creative thinking and focused execution. Prioritize After you make the list, then prioritize the tasks based on your most important goals. Do first things first. Shove less important tasks down the priority list. Do one item at a time. Your conscious mind can only process one thing at a time, and that means we can only focus on one thing at a time. If you have multiple projects in front of you that you are trying to do all at once, your attention becomes fractured, and you become panicky. Consequently, pick up one part of the project, focus and finish it, put it aside, and go on to the next. When you get those overwhelmed feelings, it just means you want everything done at once which is an impossibility. Interruptions sometimes crop up, and you cannot completely finish a project because of a deadline imposed by another project, or an emergency. But, the main point is to set aside a block of time, and focus on one task at a time. Additionally, sometimes plans must be changed. Make allowances for interruptions. Beware of the urgent crowding out the important. Many times people will frantically come to you with a small problem, and take your time away from the important thing you need to do. Guard against it. Locate time wasters, and avoid them. Schedules and Deadlines Some type of calendar or day-timer is imperative for time management. The appointments you make, the deadlines you face, the projects to start, the places you need to be all of these activities need to be written in a calendar. The calendar, then, becomes your schedule. Schedules are merely plans that specify time periods within which activities are to be accomplished. The purpose of scheduling activities is to break down a project into discrete tasks, order those tasks in the logical sequence of steps needed to complete the project, and then plot the steps against time or target dates. Allow enough time for each step or task. Some tasks can be done in parallel, but sometimes one step needs to be finished before the next step can be started. The following chart illustrates how to accomplish an overall project that contains many sub parts, and is targeted to time.

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It is helpful to have a large calendar or white board in the office or planning area, and then write down all the necessary scheduled events so all can see. Mark down all the vacations, important events, deadlines, who is assigned what tasks, etc. Delegating Responsibilities What the Bible says about delegation can be seen in the case of Jethro advising Moses to divide up the work, select good people to lead and judge the Israelites, yet under Moses supervision (Exodus 18:1-27). Many things can be done by others, which frees up your time to focus on those things that only you, the leader, can do. Here are some guidelines. Have your secretary, wife, etc. answer the phone, open the mail, and do the routine matters. Give adequate and clear instructions, training, and expectations to the person, and then let them do the work. Dont micromanage by looking over their shoulders and telling them how to do every detail. Make sure you give the authority to the person to carry out the assignment. Make clear who is to report to whom, when, and how. Dont give a task to one person, and then give it to another person. The first person will feel humiliated. Determine when you will follow up and check how things are going. Decide what you are going to check. Put the inspection times in your calendar. People have a tendency to put greater focus and effort on what you inspect rather that what you expect. Reward for good results, and give correction when needed. Guard against the pendulum effect, which is drifting from you doing everything, to complete abdication of knowing what is going on. 2) Bible Teaching About Stress Management This Bible teaching about stress management gives a holistic overview of bringing tension down to a controllable size. You will find relief, whether you feel overwhelmed, helpless, frustrated and out of control, are drinking too much to unwind, have painful head and muscle aches from unrelenting tension, live in a constant state of desperate anxiety or have just burned out and given up. As you have already learned from another study on understanding (link to understanding stress) this affliction, the consequences can be very serious and certainly will disrupt your quality of life and relationships. The Environment Stress comes from the way we interact with events in our outer social, physical and spiritual world. For example, we get caught up in traffic, miss an appointment, become frustrated, and then lash out with anger. If you are an impatient, short fused, hostile Type A personality, then matters become even worse. One event might make me more edgy than it would you, because you have better skills and experience to handle the situation. Perhaps you have a more positive, optimistic personality and are not uptight over little things. Here are some examples of possible pressure provoking events in the environment. Inadequate communication skills or systems. Inadequate skills in relationships that cause conflict. Poor time management skills that keep you behind your deadlines. Problems in the workplace such as problems with fellow workers.
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Insufficient parenting skills that keep the family in an uproar. Inability to make or handle money correctly, which brings the constant hassle of bill collectors. This is the catch all category that identifies the area that causes you the most hassle in your life. Again, the environmental events are situation specific to each individual. The Mental Distortions The second area for stress management is your mental outlook. Over the years you have learned and stored away attitudes, beliefs, and values. You use these thoughts to give meaning and interpret the events in your social, physical, and spiritual world. However, many times those thoughts are distortions of what is real. In other words, how you perceive things determines your response. Your basic personality type also comes into play. The way to corral and tame those haywire thoughts is by replacing your distortions with Bible truth. That way you see reality the way God does. Your priorities and perceptions become more accurate and clear though never perfect in this life. Fortune Telling Fortune telling is what you tell yourself when faced with some imagined threat. It is telling yourself, What if this or that happens. It is borrowing trouble that never comes. The logical error is that most of the stuff we fear never happens. However, our body doesnt know the imagined threat doesnt exist, but it responds as if it were real. Things become stress city when there is no threat. The way out of this trap is for every What if, substitute a So what! For example, you tell yourself, What if I fail in this class! The answer back is So what? It is not the best result, but I have learned something, and next time I will study harder. Another method is to write down every dreadful thing you imagine is going to happen. Save the list for two or three months, and then review it. You will find that probably none or very few of the events actually came to pass. You worried yourself over imaginary threats. Mind Reading This is another lie we tell ourselves. Perhaps you think your boss doesnt like your work. You stew about it and worry yourself sick. The fact is you dont know, because you cannot read your bosses mind. It is best to go ask him or her, and then you will know and make any needed corrections. Magnification Some people make mountains out of molehills they blow things all out of proportion. Are you that way? Here are words to listen for, Oh! This is horrible, terrible, awful, and I cannot stand it! Little things become terrible things in their mind. Learn to trust God and let Him figure out the hard things (Proverbs 3:5-10; Matthew 6:25-34). Not much in our own personal life is terrible. Let me tell you what is horrible. It is standing on the 84th floor of the world trade center in New York City on September 11, 2001. You look over your shoulder to see a huge wall of flaming jet fuel coming at you from the plane that struck the building.

The Morals and Ethics of the Quran

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Basic Principles in Islamic Morality: The Islamic moral system stems from its primary creed of belief in One God as the Creator and Sustainer of the Universe. Islam considers the human race to be a part of Gods creation, and as His subjects. From an Islamic perspective, the purpose of human life is to worship God, by leading this worldly life in harmony with the Divine Will, and thereby achieve peace in this world, and everlasting success in the life of the hereafter. Muslims look to the Glorious Quran and the Traditions of the Prophet as their moral guides.The Glorious Quran says: "It is not righteousness that ye turn your faces Towards east or West; but it is righteousness- to believe in Allah and the Last Day, and the Angels, and the Book, and the Messengers; to spend of your substance, out of love for Him, for your kin, for orphans, for the needy, for the wayfarer, for those who ask, and for the ransom of slaves; to be steadfast in prayer, and practice regular charity; to fulfil the contracts which ye have made; and to be firm and patient, in pain (or suffering) and adversity, and throughout all periods of panic. Such are the people of truth, the Allah-fearing." [Al-Quran 2:177] This verse underscores the Islamic belief that righteousness and piety is based, before all else on a true and sincere faith. The key to virtue and good conduct is a strong relation with God, who sees all, at all times and everywhere. He knows the secrets of the hearts and the intentions behind all actions. Therefore, Islam enjoins moral behavior in all circumstances; God is aware of each one when no one else is. It may be possible to deceive the world, but its not possible to deceive the Creator. The love and continuous awareness of God and the Day of Judgment enables man to be moral in conduct and sincere in intentions, with devotion and dedication. Say: the things that my Lord hath indeed forbidden are: shameful deeds, whether open or secret; sins and trespasses against truth or reason; assigning of partners to Allah, for which He hath given no authority; and saying things about Allah of which ye have no knowledge. [Al-Quran 7:33] It is interesting that the Quran refers to sins and trespasses against truth or reason. It is an indication of Gods blessing to every human being, of an innate moral sense. Such a moral sense, when uncorrupted by family or society, is what leads people to commendable acts of virtue. Islam aims to enhance and amplify the moral sense in every human being and adorn the individuals character with the noblest of virtues. The Islamic moral principles therefore, appeal naturally to the human intellect, while elevating the pursuit of morality to the level of worship. This is because Islam holds every action that is done with the goal of attaining of Gods pleasure to be worship. Morality and the individual The guiding principle for the behavior of a Muslim is what the Quran refers to as Al `Amal Assalih or virtuous deeds. This term covers all deeds, not just the outward acts of worship. Some of the most primary character traits expected of a Muslim are piety, humility and a profound sense of accountability to God. A Muslim is expected to be humble before God and with other people. Islam also enjoins upon every Muslim to exercise control of their passions and desires.

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Islam warns against vanity and excessive attachment to the ephemeral pleasures of this world. While it is easy to allow the material world to fill our hearts, Islam calls upon human beings to keep God in their hearts and to use the material world in moderation and in accordance with Gods guidance. The Glorious Quran says: "The Day whereon neither wealth nor sons will avail, but only he (will prosper) that brings to Allah a sound heart" [Al-Quran: 26:88-89] Charity is one of the most commendable acts in Islam. In fact, Zakah, the annual charity that is obligatory on every Muslim who has accrued wealth above a certain level, is one of the pillars of Islam. Gratitude in prosperity, patience in adversity, and the courage to uphold the truth, even when inconvenient to one, are just some of the qualities that every Muslim is encouraged to cultivate. Morality and Society For an individual as well as a society, morality is one of the fundamental sources of strength, just as immorality is one of the main causes of decline. While respecting the rights of the individual within a broad Islamic framework, Islam is also concerned with the moral health of the society. Thus, everything that leads to the welfare of the individual and the society is morally good in Islam, and whatever is harmful is morally bad. Given its importance to a healthy and just society, Islam supports morality and matters that lead to the enhancement of morality, and stands in the way of corruption and matters that lead to the spreading of corruption. The injunctions and prohibitions in Islam are to be seen in this light. Conclusion Morality in Islam addresses every aspect of a Muslim's life, from greetings to international relations. It is universal in its scope and in its applicability. A Muslim is expected to not only be virtuous, but to also enjoin virtue. He/She must not only refrain from evil and vice, but must also actively engage in asking people to eschew them. In other words, they must not only be morally healthy, but must also contribute to the moral health of society as a whole. The Prophet Mohammed (peace be upon him) summarized the conduct of a Muslim when he said: "My Sustainer has given me nine commands: to remain conscious of God, whether in private or in public; to speak justly, whether angry or pleased; to show moderation both when poor and when rich, to reunite friendship with those who have broken off with me; to give to him who refuses me; that my silence should be occupied with thought; that my looking should be an admonition; and that I should command what is right." Lecture 30: Revision Lecture 31: Assignment 3 Q1. What do you mean by the availability of information to the board? Q2. What is the role of board committees? Q3. What do you mean by audit committees? Q4. What are the responsibilities of audit committees? Q5. Discuss the characteristics of market system in Australia.
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Q6. What is the status of corporate governance system in Australia? Q7. What is Corporate Disclosure? Q8. Discuss the role of SEBI in ensuring corporate governance in India? Q9. Discuss the composition of board? Q10. Discuss the criteria of meetings in the board. Lecture 31: Assignment 4 Q1. What insight holy Ramayana can provide to the present managers regarding good governance? Q2. Give an example of team work from the Ramayana. Q3. Give an example to achieve the mission from vision through the Ramayana. Q4. Who have shown the good managerial skills in Ramayana? Q5. Who have shown the bad managerial skills in Ramayana? Q6. Critically examine the character of Rama as an administrator. Q7. Discuss the teaching from Vedas. Q8. Discuss the teaching from Upanishads. Q9. Discuss the four noble truths (arya satya)? Q10. Define the eight-fold path (Buddhism)?

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Unit 3

Lecture 33 Ethical Impact in Business

With the growing strength of consumer movements and rising levels of awareness among stakeholders, corporations are realizing that stakeholders and consumers are no longer indifferent to unethical practices like financial irregularities, tax-evasion, poor quality products and services, kick-backs, non-compliance with environmental issues, and hazardous working conditions. Discussion on ethics in business is necessary because business can become unethical, and there are plenty of evidences as in today on unethical corporate practices. Even Adam Smith, in whose name neo-liberal laissez-faire is advocated opined that People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. Business does not operate in a vacuum. Firms and corporations operate in the social and natural environment. By virtue of existing in the social and natural environment, business is duty bound to be accountable to the natural and social environment in which it survives. Irrespective of the demands and pressures upon it, business by virtue of its existence is bound to be ethical, for at least two reasons: one,

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because whatever the business does affects its stakeholders and two, because every juncture of action has trajectories of ethical as well as unethical paths wherein the existence of the business is justified by ethical alternatives it responsibly chooses. One of the conditions that brought business ethics to the forefront is the demise of small scale, high trust and face-to-face enterprises and emergence of huge multinational corporate structures capable of drastically affecting everyday lives of the masses. This part of business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it should be seen as unethical for a company to consider the interests and rights of anyone else. Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated. Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept v. shareholder concept. Ethical issues concerning relations between different companies: e.g. hostile takeovers, industrial espionage. Leadership issues: corporate governance; Corporate Social Entrepreneurship Political contributions made by corporations. Law reform, such as the ethical debate over introducing a crime of corporate manslaughter. The misuse of corporate ethics policies as marketing instruments.

Many Indian companies too have recognized the importance of integrity, transparency, and open communications. They believe that the goodwill resulting from adopting and successfully implementing a code of business ethics will, in the long run, translate into economic gains. Today, investors want to ensure that the companies they invest in are not only managed properly, but also have proper corporate governance. They regard corporate governance as a control mechanism that ensures the optimum use of the human, physical and financial resources of an enterprise. Companies have now begun to integrate ethics into their corporate cultures and concentrate on putting appropriate corporate governance mechanisms in place. Business Ethics and Corporate Governance discusses the theories of ethics and corporate governance, and explains how they can be applied in various business situations.

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Lecture 34-35 Ethical issues in Capitalism & Market system

Capitalism generally refers to a combination of economic practices that became institutionalized in Europe between the 16th and 19th centuries, especially involving the centrality of wage labor and the formation and trade in ownership of corporations for buying and selling goods, especially capital goods (including land and labor power), in a relatively free (meaning, free from state control) market competing (and contentious) theories that developed in the 19th century, in the context of the industrial revolution, and 20th century, in the context of the Cold War, meant to justify the private ownership of capital, to explain the operation of such markets, and to guide the application or elimination of government regulation of property and markets and beliefs about the advantages of such practices. Capitalism as an economic system Some proponents of capitalism (like Milton Friedman) tend to emphasise the role of efficient free markets, which, they claim, promote individual freedom and democracy. For many (like Wallerstein), capitalism hinges on the elaboration of an economic system in which goods and services are traded in markets, and capital goods belong to non-state entities, onto a global scale. For others (like Marx), it is defined by the creation of a labor market. As Marx observed (see also Hilaire Belloc) capitalism is also distinguished from other market economies with private ownership by the concentration of the means of production in the hands of a few. According to Karl Marx, the treatment of labor as a commodity led to people valuing things more according to their price rather than their usefulness (see commodity fetishism) and to an expansion of the system of commodities. Marx observed that some people bought commodities in order to use them, while others bought them in order to sell elsewhere at a profit. Much of the history of late capitalism involves what David Harvey called the "system of flexible accumulation" in which more and more things become commodities the value of which is determined by their exchange rather than by their use. Thus not only are pins commodities; shares of ownership in a factory that makes pins become commodities; then options on shares become commodities; then portions of interest rates on bonds become commodities, and so on. The predominance of commodity speculation in modern capitalism very much shapes its results. The following example introduces many of the ideas involved in capitalism. When starting a business, the initial owners typically provide some money (the Capital) which is used by the business to buy or rent some means of production. For example, the enterprise may buy or rent a piece of land and a building; it may buy machinery and hire workers (Labour). If more money is needed than the initial owners are willing to provide,
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the business may to borrow a limited amount of extra money with a promise to pay it back with interest - in effect it may rent more capital. The business then has a degree of legal authority, and thereby hopefully control, over a set of factors of production (as economists call them). The business can register as a corporate entity, meaning that it can act as a type of virtual person in many matters before the law (see Companies for listing of such entities). The owners can pay themselves some of the income derived from the business (Dividends), sell shares in the company, or they can sell all of the equipment, land, and other assets, and split the proceeds between them. Traditionally capitalist economies have had corporations working along the lines of the above example existing in parallel with other types of organisation such as governments, sole traders, partnerships and sometimes cooperatives, credit unions, and other entities. Observers do not always agree which of these organisations, or which features of them are part of capitalism, although most often companies, or many features of their operation, are included as part of the definition. Additionally, many of the characteristics and techniques of business workings in the above example existed before capitalism, and many have continued to be added. So this leaves much room for debate. However, many people agree that it was around the time when share-trading in corporate bodies became common and widely understood that capitalism can be said to have begun, even though there is often disagreement that it was the share-trading itself that defined capitalism. Such share trading first took place widely in Europe during the 17th century and continued to develop and spread thereafter, although the word "Capitalism" itself did not come into use until the 19th century. One can view shares as converting company ownership into a commodity - the ownership rights are divided into units (the shares) for ease of trading in them. In a similar way, one can view bonds as a commoditization of debt. Other financial instruments have come into being since the early years of capitalism those have commoditised fluctuations in markets, future prices, classes of items, and many other things. Increases in communications technologies have helped facilitate an increase in the number and availability of financial instruments, and the ease of trading. Under the bulk of capitalist economies, a predominant proportion of productive capacity has belonged to corporate bodies such as companies. Therefore, to a large degree, authority over productive capacity has resided with the owners of companies. Within legal limits and the financial means available to them, the owners of each company can decide how it will operate. This normally includes deciding the following things (among many others):

which land production will take place on, how many people to employ, what activities employees will do, which machines and tools to use for production.

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In larger companies, authority is usually delegated in a hierarchical system of management. When company ownership is spread among many shareholders, the shareholders generally have votes in the exercise of authority over the company in proportion to the size of their share of ownership. Importantly, the owners receive any profits or proceeds generated by the productive capacity that they own - sometimes in the form of dividends, other times in the form of profits being re-invested in the capacity that is owned. The price at which ownership of productive capacity sells is generally in rough proportion to the profits currently being generated and/or expected to be generated by that productive capacity in the future. There is therefore a financial incentive for owners to exercise their authority in ways that increase the productive capacity of what they own. Various owners are motivated to various degrees by this incentive - some give away a proportion of what they own, others seem very driven to increase their holdings. Nevertheless the incentive is always there, and it is credited by many as being a key aspect behind the growth exhibited by capitalist economies. What is capitalism good for? One important modern argument is that capitalism simply isn't a system, merely a set of questions, challenges, and assertions regarding human behavior. Like biology, or ecology and its relationship to animal behavior, it is made complex by human language, culture and ideas. Jane Jacobs and George Lakoff argued separately that there was a Guardian Ethic which was fundamentally related to nurturing and protection of life, and a Trader Ethic more related to the unique primate practice of trade. Jacobs thought that the two were made and kept separate in history, and that any collaboration between them was corruption, i.e. any unifying system that claimed to make assertions regarding both, would simply be serving itself. Other doctrines focus narrowly on the application of capitalist means to natural capital (Paul Hawken) or individual capital (Ayn Rand) - assuming a more general moral and legal framework which discourages these same mechanisms when applied to non-living beings coercively, e.g. "creative accounting" combining individual creativity with the complex instructional base of accounting itself. Aside from the very narrow arguments advancing specific mechanisms, it is quite difficult or pointless to distinguish critiques of capitalism from critiques of Western European civilization, colonialism or imperialism. These arguments often recur interchangeably within the context of the extremely complex anti-globalization movement, which is often (but not universally) described as "anti-capitalist". Weakness As any history of capitalism will show, there are many ideas and theories of how economic activity should be conducted. Capitalism is not a monolithic system but is composed of many dynamic strands. Which ideas predominate at any particular time will

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depend on the perceived needs of the moment and agreements reached. For example, following World War II the preeminent need was to prevent a repetition of the interwar errors of judgment that had proved so disastrous. The world desperately needed monetary stability, economic expansion, and a regime that would encourage free trade. The 1944 Bretton Woods Conference developed a monetary and economic architecture for the postwar world designed to accomplish these objectives. The International Monetary Fund and the World Bank were its immediate creations. But economist John Maynard Keynes, who played an influential role at the meetings, had actually argued for even more: he wanted to see a postwar world currency, a semi-autonomous supranational central bank, and an international monetary system that would require both surplus and deficit economies to self-correct rather than put the burden solely on deficit economies to deflate. In other words, he believed, whether nations ran a deficit or a surplus economy, all needed to do their part to achieve economic growth and stability in the world. The framework of this postwar architecture remains in place today and has been largely responsible for the remarkable fruits of prosperity we see all around us. But the gold standard established at Bretton Woods has long since been abandoned in favor of floating exchange rates. And a chorus of voices increasingly calls for reforms more in keeping with the particular needs of todays world: different circumstances dictate alterations in the way capitalism functions. Some of those changed circumstances include modern-day global warmingnow almost universally understood to be spurred on by human activity. The workings of capitalism have to be urgently modified, say environmentalists, if we are to head off an increasingly likely global catastrophe. There are also those who take umbrage at the essentially selfish nature of the capitalist system. They object to the unfettered, social-Darwinian, survival of the fittest-style workings of the free market and insist that additional international controls are needed to force globalized capitalism to function more equitably. Some observers note that much of the world aspires to live like the upper levels of American society, as universally projected in movies and on TVthat is, in waste and excessand they further note the futility of such a dream. For that to become a global reality, we would need the resources of several worlds. Other concerned parties have mounted concerted campaigns for rich economies to relieve the poorest economies of their debts in an effort to end global poverty, and to massively contribute to disease eradication (especially HIV/AIDS) among those nations ill equipped to help them. And, of particular current concern, is the fear that a global industrialized agribusiness is fueling the likelihood of disease pandemics such as avian flu. Schumpeter was already aware more than 60 years ago that the workings of capitalism also undermine the family. Today, in effect validating his point, personal debt in many prosperous nations has reached astronomic proportions. Steven Pressman summarizes Schumpeters concern as expressed in the latters 1942 book, Capitalism, Socialism and

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Democracy: Capitalism is all about satisfying individual wants, while the family requires sublimating ones desires and compromising. The family, however, is important for capitalism because it is a main reason for saving. Families save so that if anything happens to the main breadwinner, other family members will be provided for. By undermining the motivation to save, capitalism destroys its own foundationthe capital needed for future growth Then there is Nobel prizewinning economist Amartya Sen, who believes the true object of economic activity should not be mere consumption and growth but the development of human potential. The Indian economist suggests that furthering peoples various abilities should be the goal of the capitalistic system: increasing literacy rates, increasing personal options and free choice, being concerned for people and their development, and establishing a society where individuals work for the good of all. He believes that the success of developing economies should be judged by improving life expectancy, literacy, health and education. His concern about people reaching their human potential is aimed particularly at women, who are often seen as an economic drain in the developing world and are therefore undervalued as human beings and less likely to receive necessary food and medical attention when resources are short. The result, in many cases, is untimely death. Sen further makes a distinction between economic growth, which merely raises per capita income and output, and economic development, which improves the lot of all within the community. There are plenty of reasons, then, to conclude that capitalism today has serious flaws in the way it works, rendering it a far-from-ideal economic system. We see that it was not just Marx who predicted its eventual collapse: today numerous voices are raised in protest that the system needs to be fundamentally changed. So where does this leave the worlds best economic hope? Are we to conclude that todays capitalism is the ideal and that there is likely to be none better? Its also important to ask how the working of capitalism squares with Western civilizations moral and ethical bedrock, the Bible. More directly, would the God of the Hebrew Scriptures approve of the current dominant economic order? Ethics & Capitalism Capitalism is ethical on utilitarian grounds. Private property and unregulated free markets produce the greatest net social benefits of any socioeconomic system: laissez-faire Limited role of government: Protect private property Enforce contracts

Therefore, government regulation of business is unethical on utilitarian grounds

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Lecture 36 Ethics and social responsibility

Ethics are talked about frequently and addressed in the news when unethical decisions are found. Sadly, people do not hear about ethics when others are engaging in ethical behavior on a daily basis. Keep in mind that things that are not illegal may be unethical. Ethics are an individual belief system that consists of knowing what is right and wrong. Ethics can vary person to person. Ethics is in part analyzing decisions, beliefs, and actions. Within the business context, businesses are expected to have good ethical values and act socially responsible. The problem is that the ethics of a business is a mixture of individual sets of ethics. This is why it is important to have good individuals as employees. It is also equally important that when you go to work somewhere that you feel like you share the values of those you work with. Ethics is not just talking about the right thing. It is doing what is right in every decision that is made. Social responsibility can be an example of ethical behavior. It is enhancing society in general. However, a business cant afford to go around doing good deeds if there is no potential pay off. If the business were to loose too much money, then it would cease to exist, hurt customers, and leave employees jobless. There are some that argue that social responsibility is shown only when companies go beyond what is optional, and really intend to create a benefit for others besides the company. Additionally, some companies may not benefit from some forms of social responsibility. These businesses should focus on what they do best as a business and give back what they can. Examples of socially responsible behavior range from projects that raise money for research on diseases, raising money for the needy, requiring workers to volunteer within the community, recalling products that may be dangerous, promoting recycling, and offering free services to the disadvantaged. There are innumerable ethical dilemmas that may arise in a business setting. Some of them are more obvious while some of them are more obscure. There is a simple basis that helps keep decisions in perspective. Businesses should operate in a manner that is legal, profitable, ethical, and within social norms. By being within social norms means that you need to use society to gauge if your decisions are appropriate. Some cultures would define what is ethical differently from other cultures. Due to the fact that all businesses need to be profitable, sometimes there is an over emphasis on making more money. Social norms should govern what is appropriate to compensate individuals as well as to charge customers. Profit expectations and goals should not require a business to cut corners in an unethical way or to misrepresent or twist facts. Then where do ethics come from? People begin to develop their internal beliefs from the time they are small children. Factors such as the conditions that an individual grows up in affect the way that they see the world. For example if a child was raised in a household with a lot of violence, they might feel that fighting is okay. The beliefs of the peers around you may influence how you see things. It is human nature to want to belong and some are more apt to give into peer pressure. People have a lot in common with their peers due to similar values in the first place. However, it is hard to find two people that feel exactly the same about every situation. Some people would feel that if they found
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money that they should be able to stick it in their pocket and keep it. Others would feel as if they should take it to the lost and found area. Keeping money that you find on the ground in a public place is not illegal, but some people would not be able to benefit from a situation while the person who lost it could be potentially found. Powerful situational factors may cause people to compromise their values and resort to measures that they would not normally take. If someone is having financial problems, then they are more likely to steal. An individual that is very angry with another person may have a hard time being objective and fair. Then why do people engage in unethical behaviors? Many people feel that they wont be caught. An employee that steals a few dollars out of petty cash may eventually result to taking large amounts of cash if they are never caught. Someone with lots of authority may feel like they can cover their tracks by lying to subordinates. Some people are unethical because they can justify what they are doing. If an employee sees other people not being punished for unethical behavior, then they may feel like they should be able to do it to. Some individuals make a poor choice and instead of coming clean about it feel the need to make more choices to cover it up. Once bad decisions are made, they tend to get worse until they are eventually caught. The biggest reason people are unethical is because they feel that they can gain from it, or that they need to hide something that can hurt them. There are many things that an organization can do to facilitate good ethical behaviors. One of the best things to do is to make sure that the underlying culture of an organization promotes strong values. People should not be punished for coming forward with problems. As a matter of fact, workers should be allowed to communicate problems anonymously. Some organizations have a phone number to call or a suggestion box. Always allow employees to share any ethical concerns with authority above them when there are ambiguities about the right thing to do. Include a code of ethics as a written document for employees to read. Develop brochures, mission statements, and other media that express the company beliefs. Higher authorities within the organization should possess the beliefs and demonstrate the values that they want to see their employees have. Another method for implementing ethical conduct is to make sure that unethical conduct cant occur. The ability to safeguard resources is an important function of internal controls. Examples of internal controls are to make sure that more than one employee works with cash and accounting related materials. This way there is more than one person who knows what is going on and can identify theft. Other methods are to require signatures, to lock up valuables, use security cameras, have employees rotate jobs, and randomly check employee work. The more secure your business is, the less likely that individuals within the organization will make unethical decisions.

Ethics of Production
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of

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permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk. Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping). Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health. Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.

Lecture 37 Ethics in marketing

Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media ethics. Fundamental issues in the ethics of marketing Value-oriented framework, analyzing ethical problems on the basis of the values which they infringe (e.g. honesty, autonomy, privacy, transparency). An example of such an approach is the AMA Statement of Ethics. Stakeholder-oriented framework, analysing ethical problems on the basis of which they affect (e.g. consumers, competitors, society as a whole). Process-oriented framework, analysing ethical problems in terms of the categories used by marketing specialists (e.g. research, price, promotion, placement).

None of these frameworks allows, by itself, a convenient and complete categorization of the great variety of issues in marketing ethics. Power-based analysis Contrary to popular impressions, not all marketing is adversarial, and not all marketing is stacked in favour of the marketer. In marketing, the relationship between producer/consumer and buyer/seller can be adversarial or cooperative. For an example of cooperative marketing, see relationship marketing. If the marketing situation is adversarial, another dimension of difference emerges, describing the power balance between producer/consumer or buyer/seller. Power may be concentrated with the producer (caveat emptor), but factors such as over-supply or legislation can shift the power towards the consumer (caveat vendor).

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Identifying where the power in the relationship lies and whether the power balance is relevant at all are important to understanding the background to an ethical dilemma in marketing ethics. Is marketing inherently evil? The position is based on the argument that marketing necessarily commits at least one of three wrongs: Damaging personal autonomy. The victim of marketing in this case is the intended buyer whose right to self-determination is infringed. Causing harm to competitors. Excessively fierce competition and unethical marketing tactics are especially associated with saturated markets. Manipulating social values. The victim in this case is society as a whole, or the environment as well. The argument is that marketing promotes consumerism and waste.

Market research Ethical danger points in market research include: Invasion of privacy. Stereotyping.

Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. However if conducted irresponsibly, stereotyping can lead to a variety of ethical undesirable results. In the AMA Statement of Ethics, stereotyping is countered by the obligation to show respect ("acknowledge the basic human dignity of all stakeholders") Market audience Ethical danger points include: Targeting the vulnerable (e.g. children, the elderly). Excluding potential customers from the market: selective marketing is used to discourage demand from undesirable market sectors or disenfranchise them altogether.

Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and obese ("plus-size") markets. Contrary to the popular myth that ethics and profits do not mix, the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus-size. Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled.[8] A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries from AIDS drugs. Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud and others. The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.[
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In the case of children, the main products are unhealthy food, fashion ware and entertainment goods. Children are a lucrative market: "...children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion", but are not capable of resisting or understanding marketing tactics at younger ages ("children don't understand persuasive intent until they are eight or nine years old". At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the school ground is also controversial (see marketing in schools). The following is a select list of online articles: Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. See Nestle infant milk formula scandal. Another vulnerable group is mentally unstable consumers. The definition of vulnerability is also problematic: for example, when should indebtedness be seen as vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?

Ethics in advertising and promotion

Issues over truth and honesty In the 1940s and 1950's, tobacco used to be advertised as promoting health. Today an advertiser who fails to tell the truth not only offends against morality but also against the law. However the law permits "puffery" (a legal term).The difference between mere puffery and fraud is a slippery slope: "The problem... is the slippery slope by which variations on puffery can descend fairly quickly to lies." See main article: false advertising. Issues with violence, sex and profanity Sexual innuendo is a mainstay of advertising content (see sex in advertising), and yet is also regarded as a form of sexual harassment. Violence is an issue especially for children's advertising and advertising likely to be seen by children. Taste and controversy The advertising of certain products may strongly offend some people while being in the interests of others. Examples include: feminine hygiene products, hemorrhoid and constipation medication.The advertising of condoms has become acceptable in the interests of AIDS-prevention, but are nevertheless seen by some as promoting promiscuity. Some companies have actually marketed themselves on the basis of controversial advertising - see Benetton. Sony has also frequently attracted criticism for unethical content (portrayals of Jesus which enfuriated religious groups; racial innuendo in marketing black and white versions of its PSP product; graffiti adverts in major US cities).Negative advertising techniques, such as attack ads. In negative advertising, the advertiser highlights the disadvantages of competitor products rather than the advantages of their own. The methods are most familiar from the political sphere

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Lecture 38 Ethics in Human Recourses

Human resource management occupies the sphere of activity of recruitment, selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues where ethics really matters. The field since operate surrounded by market interests that commodify and instrumentalize everything for the sake of profit claimed in the name of shareholders, it should be predictable that there will be contesting claims of HR ethics . Predictably, ethics of human resource management is a contested terrain like other sub-fields of business ethics. Business Ethicists differ in their orientation towards labour ethics. One group of ethicists influenced by the logic of neoliberalism proposes that there can be no ethics beyond utilizing human resources towards earning higher profits for the shareholders. The neo-liberal orientation is challenged by the argument that labour well being is not second to the goal of shareholder profiteering. Some others look at human resources management ethics as a discourse towards egalitarian workplace and dignity of labour. Market, obviously, is not inherently ethical institution that could be lead by the mythical invisible hand alone; neither, it can be eluded that market is inherently unethical. Also, ethics is not something that could be achieved through establishment of procedures, drawing codes of ethics, or enactment of law or any other heteronymous means, though their necessity could remain unquestioned .However, though market need not be the cause of moral or ethical hazards it may serve an occasion for such hazards. The moral hazards of HRM would be on increase so much as human relations and the resources embedded within humans are treated merely as commodities. Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. See also: affirmative action, sexual harassment. Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking. Issues affecting the privacy of the employee: workplace surveillance, drug testing. See also: privacy. Issues affecting the privacy of the employer: whistle-blowing. Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law. Occupational safety and health.

Lecture 39: Assignment 5

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Q1. Discuss the ethics described in the holy Hebrew Bible. Q2. What glorious Quran says regarding the moral values and ethics? Q3. Define morality and the individual as described in the Quran. Q4. What is the relationship of morality and society according to Quran? Q5. What moral values & ethics are discussed in Bhagwada? Q6. Discuss the management guidelines from the Bhagavad Gita. Q7. Discuss the sources of problem according to Geeta. Q8. What do you mean by attitude towards work? Give an example. Q9. Discuss the work culture defined by Shri Krishna in Geeta. Q10. Discuss the work theory of detachment described in Geeta.

Lecture 40: Assignment 6

Q1. Define the impediments of sound mental health. Illustrate with examples. Q2. Write an essay on the teaching of Bhagwada Geeta. Q3. Discuss the impact of business ethics on corporate governance. Q4. What is capitalism? Q5. Define capitalism as an economic system? Q6. What is capitalism good for? Q7. Discuss the weakness of capitalism. Q8. Define ethical context of capitalism. Q9. What is the relationship between ethics and social responsibility? Q10. Discuss the fundamental ethical issues in marketing.

Lecture 41 Ethics in finance

Fundamentally finance is a social science discipline. The discipline shares its border with behavioural science, sociology, economics, accounting and management. Finance being a discipline concerned technical issues such as the optimal mix of debt and equity financing, dividend policy, and the evaluation of alternative investment projects, and more recently the valuation of options, futures, swaps, and other derivative securities, portfolio diversification etc., often it is mistaken to be a discipline free from ethical burdens. However frequent economic meltdowns that could not be explained by theories of business cycles alone have brought ethics of finance to the forefront. Finance ethics is overlooked for another reason: issues in finance are often addressed as matters of law rather than ethics. Looked closer into the literature concerning finance ethics one can be convinced that as it is the case with other operational areas of business, the ethics in finance too is vehemently disputed. Operational areas of financial ethics

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In the sections devoted to Financial Ethics in Business Ethics text books ethics of financial markets, financial services and financial management are discussed. Fairness in trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audit, external audit are discussed in them. Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the Creative accounting, earnings management, misleading financial analysis. Financial markets. Executive compensation: concerns excessive payments made to corporate CEO's and top management. Bribery, kickbacks, and facilitation payments: while these may be in the (shortterm) interests of the company and its shareholders, these practices may be anticompetitive or offend against the values of society.

1. Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships. A "conflict of interest" exists when an individual's private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company. 2. Provide information that is full, fair, accurate, complete, objective, relevant, timely and understandable, including in and for reports and documents that the Company files with, or submits to, the SEC and other public communications made by the Company. 3. Comply with all applicable laws, rules and regulations of federal, state and local governments, and other appropriate private and public regulatory agencies. 4. Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated. 5. Respect the confidentiality of information acquired in the course of business except when authorized or otherwise legally obligated to disclose the information. I acknowledge that confidential information acquired in the course of business is not to be used for personal advantage. 6. Proactively promote ethical behavior among my associates at the Company and as a responsible partner with industry peers and associates. 7. Maintain control over and responsibly manage all assets and resources employed or entrusted.

Ethics in IT (Information Technology)

Information ethics is the field that investigates the ethical issues arising from the development and application of information technologies. It provides a critical framework for considering moral issues concerning informational privacy, moral agency (e.g. whether artificial agents may be moral), new environmental issues (especially how agents should one behave in the info sphere), problems arising from the life-cycle

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(creation, collection, recording, distribution, processing, etc.) of information (especially ownership and copyright, digital divide). Information Ethics is related to the fields of computer ethics and the philosophy of information. Dilemmas regarding the life of information are becoming increasingly important in a society that is defined as "the information society". Information transmission and literacy are essential concerns in establishing an ethical foundation that promotes fair, equitable, and responsible practices. Information ethics broadly examines issues related to ownership, access, privacy, security, and community. Information technology affects fundamental rights involving copyright protection, intellectual freedom, accountability, and security.

Lecture 42-43 Ethical theories and approaches

Professional codes offer a basis for making ethical decisions and applying ethical solutions to situations involving information provision and use which reflect an organizations commitment to responsible information service. Evolving information formats and needs require continual reconsideration of ethical principles and how these codes are applied. Considerations regarding information ethics influence personal decisions, professional practice, and public policy. Therefore, ethical analysis must provide a framework to take into consideration many, diverse domains regarding how information is distributed. In the history of thinking about ethical questions in the West, several methods for analyzing these questions have emerged. Many of those methods can be classified under two main headings: Teleological methods and Deontological methods. Below is a brief description of each of these two methods of thinking about ethical questions. In our discussions about ethical situations in class -- the torture situation and the attempted suicide situation, as well as some others we'll be discussing in the coming weeks -- you'll want to be able to identify which kind of thinking is being used to come to the conclusions people come to. Are they using a primarily teleological approach (TEE LEE uh LAWJ ih kul), or are they using primarily a deontological approach (DEE AWN tuh LAWJ ih kul)? So here's what each kind of method is: 1. Teleological methods, sometimes called consequentialist methods, are based on estimating what the likely outcomes of a given course of action will be, and then choosing the method that has the most positive consequences and the fewest negative consequences. According to these methods, those actions should be chosen which lead to more positive and fewer negative consequences, and those actions should be rejected which lead to more negative consequences and fewer positive consequences. In class, for example, some of you who said that it would be good to torture the person who had been arrested argued that the outcomes would be better if we did torture him

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(lives saved, etc) than if we did not (thousands killed, etc). That is using a teleological or consequentialist kind of thinking to determine which course of action would be best. John Stuart Mills Utilitarianism is usually seen as the classical expression of consequentialist ethical thinking, and so is Joseph Fletchers Situation Ethics. Future lectures in the course will focus on Mills utilitarian method as the primary example of teleological ethical thinking. Mill's most famous book outlining this method is titled Utilitarianism. Fletcher's book on the subject, taking a somewhat different approach, is titled Situation Ethics. 2. Deontological methods, or duty-based, ethical systems, on the other hand, are those that simply claim, directly and simply, what the fundamental ethical duties are. The Ten Commandments (from Exodus and Deuteronomy in the Hebrew Torah) would be examples of deontological ethical thinking. According to the Ten Commandments, these actions -- honor your father and mother, do not steal, do not commit adultery, keep holy the sabbath, etc -- are stated as simply right things to do or wrong things to do. They are said to be our clear moral duty. The Ten Commandments do not merely suggest, for example, that you look at the consequences of actions and then weigh the possible outcomes to determine if an action is right or wrong. Instead they say that some actions are just plain right and others are just plain wrong. This is what characterizes deontological ethical methods: they simply state that some things are right or wrong. Some things are your duty to do (Greek deon: duty) and other things are your duty to avoid. Human Rights documents, for example, are instances of deontological thinking. When The Universal Declaration of Human Rights (UDHR, 1948) says, for example, that "No one shall be held in slavery or servitude" (article 4), or that "No one shall be subjected to torture" (article 5), it is saying these things are just plain wrong. When the UDHR says that "Everyone has the right to leave any country, including his own, and to return to his country" (article 13), or that " Everyone has the right to freedom of peaceful assembly and association" (article 20), or that "Everyone, without any discrimination, has the right to equal pay for equal work" (article 23), it is saying that these things are simply right and good. Human Rights documents, therefore, exemplify deontological thinking. After all, rights and duties are just the mirror images of each other. When these documents say that person A has a certain right, which means that person B (or state B) has the duty to see that that right is fulfilled. If person A has the right to not be tortured, then person B has the duty to not torture them. Rights and duties are just two sides of the same coin.

Lecture 44 INDIAN DESIGN ACT, 2000

(1) This Act may be called the Designs Act, 2000. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint; and different dates may be appointed for different

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provisions of this Act, and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 2. Definitions 2. Definitions: In this Act, unless there is anything repugnant in the subject or context, (a) "article" means any article of manufacture and any substance, artificial, or partly artificial and partly natural; and includes any part of an article capable of being made and sold separately; (b) "Controller" means the Controller-General of Patents, Designs and Trade Marks referred to in section 3; (c) "copyright" means the exclusive right to apply a design to any article in any class in which the design is registered; (d) "design" means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trade mark as defined in clause (v) of sub-section (1) of section 2 of the Trade and Merchandise Marks Act, 1958 (43 of 1958) or property mark as defined in section 479 of the Indian Penal Code (45 of 1860) or any artistic work as defined in clause (c) of section 2 of the Copyright Act, 1957.o(14 of 1957) (e) "High Court" shall have the same meaning as assigned to it in clause (i) of section 2 of the Patents Act, 1970 (39 of 1970) (f) "legal representative" means a person who in law represents the estate of a deceased person; (g) "original", in relation to a design, means originating from the author of such design and includes the cases which though old in themselves yet are new in their application; (h) "patent office" means the patent office referred to in section 74.of the Patents Act, 1970 (39 of 1970) (i) "prescribed" means prescribed by rules made under this Act; (j) "proprietor of a new or original design",(i) where the author of the design, for good consideration, executes the work for some other person, means the person for whom the design is so executed; (ii) where any person acquires the design or the right to apply the design to any article, either exclusively of any other person or otherwise, means, in the respect and to the extent in and to which the design or right has been so acquired, the person b whom the design or right is so acquired; and

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(iii) in any other case, means the author of the design; and where the property in or the right to apply, the design has devolved from the original proprietor upon any other person, includes that other person.

Lecture 45 THE PATENTS ACT, 1970

THE PATENTS ACT, 1970 [As Amended By the Patents (Amendment) Act, 1999] (1) This Act may be called the Patents Act, 1970. (2) It extends to the whole of India. (3) It shall come into force on such date* as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act, and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. Definition and interpretation 2. (1) in this Act, unless the context otherwise requires, 1. "Assignee" includes the legal representative of a deceased assignee and references to the assignee of the legal representative or assignee of that person; 2. "Controller" means the Controller General of Patents, Designs and Trade Marks referred to in section 73; 3. "Convention application" means an application for a patent made by virtue of section 135; 4. "Convention country" means a country notified as such under sub section (1) of Section 133; 5. "District court" has the meaning assigned to that expression by the Code of Civil Procedure, 1908 6. "exclusive licence" means a licence from a patentee which confers on the licensee, or on the licensee and persons authorised by him, to the exclusion of all other persons (including the patentee), any right in respect of the patented invention, and "exclusive licensee" shall be construed accordingly: 7. "Food" means any article of nourishment and includes any substance intended for the use of babies, invalids or convalescents as an article of food or drink; 8. "Government undertaking" means any industrial undertaking carried on (i) By a department of the Government, or (ii) By a corporation established by a Central, Provincial or State Act, which is owned or controlled by the Government, or

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(iii) by a Government company as defined in section 617 of the Companies Act, 1956,1 of 1956 and includes the Council of Scientific and Industrial Research and any other institution which is financed wholly or for the major part by the said Council; 9. "High Court" means,(i) In relation to the Union Territory of Delhi, ***the High Court of Delhi; (ii) in relation to the Union Territory of Arunachal Pradesh and the Union Territory of Mizoram, the Gauhati High Court (the High Court of Assam, Nagaland, Meghalaya, Manipur and Tripura);] (iii) In relation to the Union Territory of the Andaman and Nicobar Islands, the High Court at Calcutta; (iv) in relation to the Union Territory of the [Lakshadweep], the High Court of Kerala; (v) in relation to the Union Territory of Goa, Daman and Diu and the Union Territory of Dadra and Nagar Haveli, the High Court at Bombay; (vi) in relation to the Union Territory of Pondicherry, the High Court at Madras; (vii) in relation to the Union Territory of Chandigarh, the High Court of Punjab and Haryana; and (viii) in relation to any other State, the High Court for that State; (10). "Invention" means any new and useful(1) Art, process, method or manner of manufacture; (2) Machine, apparatus or other article; (3) Substance produced by manufacture, and includes any new and useful improvement of any of them, and an alleged invention; (11) "Legal representative" means a person who in law represents the estate of a deceased person; (12) "Medicine or drug" includes1. All medicines for internal or external use of human beings or animals, 2. All substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals, 3. All substances intended to be used or in the maintenance of public health, or the prevention or control of any epidemic disease among human beings or animals, 4. Insecticides, germicides, fungicides, weedicides and all other substances intended to be used for the protection or preservation of plants, 5. All chemical substances which are ordinarily used as intermediates in the preparation or manufacture of any of the medicines or substances above referred to; 13. "patent" means a patent granted under this Act and includes for the purposes of sections 44, 49, 50, 51, 52, 54, 55, 56, 57, 58, 63, 65, 66, 68, 69, 70, 78, 134, 140, 153,

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154, and 156 and Chapters XVI, XVII and XVIII, a patent granted under the Indian Patents and Designs Act, 1911; 14. "patent agent" means a person for the time being registered under this Act as a patent agent; 15. "patented article" and "patented process" mean respectively an article or process in respect of which a patent is in force; 16. "patentee" means the person for the time being entered on the register as the grantee or proprietor of the patent; 17. "patent of addition" means a patent granted in accordance with section 54; 18. "patent office" means the patent office referred to in section 74; 19. "person" includes the Government; 20. "person interested" includes a person engaged in, or in promoting, research in the same field as that to which the invention relates; 21. "prescribed" means, in relation to proceedings before a High Court, prescribed by rules made by the High Court, and in other cases, prescribed by rules made under this Act; 22. "prescribed manner" includes the payment of the prescribed fee; 23. "priority date" has the meaning assigned to it by section 11; 24. "register" means the register of patents referred to in section 67; 25. "true and first inventor" does not include either the first importer of an invention into India, or a person to whom an invention is first communicated from outside India.

Lecture 46 INDIAN COPYRIGHT ACT 1957

(1) This Act may be called the Copyright Act, 1957. (2) It extends to the whole of India. (3) It shall come into force on such date{ 21st January,1958, vide Notification No.269 dated 21-1-58 Gazette of India, Extraordinary Part II Section 3 page 167} as the Central Government may, by notification in the Official Gazette, appoint. 2 .Interpretation:- In this Act, unless the context otherwise requires,(a) "Adaptation" means,(i) In relation to a dramatic work, the conversion of the work into a non-dramatic work; (ii) in relation to a literary work or an artistic work, the conversion of the work into a dramatic work by way of performance in public or otherwise; (iii) In relation to a literary or dramatic work, any abridgement of the work or any version of the work in which the story or action is conveyed wholly or mainly by means of

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pictures in a form suitable for reproduction in a book, or in a newspaper, magazine or similar periodical; and (iv) In relation to a musical work, any arrangement or transcription of the work; (b) "Architectural work of art" means any building or structure having an artistic character or design, or any model for such building or structure; (c) "Artistic work" means--(i) A painting, a sculpture, a drawing (including a diagram, map, chart or plan), an engraving or a photograph, whether or not any such work possesses artistic quality; (ii) An architectural work of art; and (iii) Any other work of artistic craftsmanship; (d) "Author" means,(i) In relation to literary or dramatic work, the author of the work; (ii) In relation to a musical work, the composer; (iii) In relation to an artistic work other than a photograph, the artist; (iv) In relation to a photograph, the person taking the photograph; (v) In relation to a cinematograph film, the owner of the film at the time of its completion; and (vi) In relation to a record, the owner of the original plate from which the record is made, at the time of the making of the plate; (e) "Calendar year" means the year commencing on the 1st day of January; (f) "Cinematograph film" includes the sound track, if any, and "cinematograph" shall be construed as including any work produced by any mechanical instrument or by radiodiffusion; (g) "Delivery", in relation to a lecture, includes delivery by means of any mechanical instrument or by radio-diffusion; (h) "dramatic work" includes any piece for recitation, choreographic work or entertainment in dumb show, the scenic arrangement or acting form of which is fixed in writing or other wise but does not include a cinematograph film; (i) "Engravings" include etchings, lithographs, wood-cuts, prints and other similar works, not being photographs; (j) "Exclusive license" means a license which confers on the licensee or on the licenses and persons authorised by him, to the exclusion of all other persons (including the owner of the copy right), any right comprised in the copyright in a work, and "exclusive licensee" shall be construed accordingly; (k) "Government work" means a work which is made or published by or under the direction or control of--(i) The government or any department of the Government;

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(ii) Any Legislature in India; (iii) Any court, tribunal or other judicial authority in India; (l) "Indian work" means a literary, dramatic or musical work, the author of which is a citizen of India; (m) "Infringing copy" means, --(n) "Lecture" includes address, speech and sermon; (o) "Literary work" includes tables and compilations; (p) "Musical work" means any combination of melody and harmony or either of them, printed, reduced to writing or otherwise graphically produced or reproduced; (q) "Performance" includes any mode of visual or acoustic presentation, including any such presentation by the exhibition of a cinematograph film, or by means of radiodiffusion, or by the use of a record, or by any other means and , in relation to a lecture, includes the delivery of such lecture; (r) "performing rights society" means a society, association or other body, whether incorporated or not, which carries on business in India of issuing or granting licenses for the performance in India of any works in which copyright subsists; (s) "Photograph" includes photo-lithograph and any work produced by any process analogous to photography but does not include any part of a cinematograph film; (t) "plate" includes any stereotype or other plate, stone, block, mould, matrix, transfer, negative or other device used or intended to be used for printing or reproducing copies of any work, and any matrix or other appliance by which records for the acoustic presentation of the work are or are intended to be made; (u) "Prescribed" means prescribed by rules made under this Act; (v) "radio-diffusion" includes communication to the public by any means of wireless diffusion whether in the form of sounds or visual images or both; (w) "record" means any disc, tape, perforated roll or other device in which sounds are embodied so as to be capable of being reproduced there from, other than a sound track associated with a cinematograph film; (x) "Recording" means the aggregate of the sounds embodied in and capable of being reproduced by means of a record; (y) "Work" means any of the following works, namely:(i) A literary, dramatic, musical or artistic work; (ii) A cinematograph film; (iii) A record; (z) " work of joint authorship" means a work produced by the collaboration of two or more authors in which the contribution of one authors in which the contribution of one author is not distinct from the contribution of the other author or authors; (za) "Work of sculpture" includes casts and models.
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Lecture 47 TRADE MARKS ACT, 1999

(1) For the purposes of this Act, there shall be a trademarks registry and the Trade Marks Registry established under the Trade and Merchandise Marks Act, 1958 should be the Trade Marks Registry under this Act. (2) The head office of the Trade Marks Registry shall be at such place as the Central Government may specify, and for the purpose of facilitating the registration of trade marks, there may be established at such places as the Central Government may think fit branch offices of the Trade Marks Registry. (3) The Central Government may, by notification in the Official Gazette, define the territorial limits within which an office of the Trade Marks Registry may exercise its functions. (4) There shall be a seal of the Trade Marks Registry. (a) Which are devoid of any distinctive character, that is to say, not capable of Explanation: For the purposes of this section, earlier trade mark means (a) a registered trade mark or convention application referred to in section 154 which has a date of application earlier than that of the trade mark in question, taking account, where appropriate, of the priorities claimed in respect of the trade marks; (b) a trade mark which, on the date of the application for registration of the trade mark in question, or where appropriate, of the priority claimed in respect of the application, was entitled to protection as a well-known trade mark. (5) A trade mark shall not be refused registration on the grounds specified in sub-sections (2) and (3), unless objection on any one or more of those grounds is raised in opposition proceedings by the proprietor of the earlier trade mark. (6) The Registrar shall, while determining whether a trade mark is a well-known trade mark, take into account any fact which he considers relevant for determining a trade mark as a well-known trade mark including (i) the knowledge or recognition of that trade mark in the relevant section of the public including knowledge in India obtained as a result of promotion of the trade mark; (ii) the duration, extent and geographical area of any use of that trade mark; (iii) the duration, extent and geographical area of any promotion of the trade mark, including advertising or publicity and presentation, at fairs or exhibition of the goods or services to which the trade mark applies; (iv) the duration and geographical area of any registration of or any publication for registration of that trade mark under this Act to the extent they reflect the use or recognition of the trade mark;

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(v) the record of successful enforcement of the rights in that trade mark, in particular, the extent to which the trade mark has been recognised as a well-known trade mark by any court or Registrar under that record. (7) The Registrar shall, while determining as to whether a trade mark is known or recognised in a relevant section of the public for the purposes of sub-section (6), take into account (i) the number of actual or potential consumers of the goods or services; (ii) the number of persons involved in the channels of distribution of the goods or services; (iii) the business circles dealing with the goods or services, to which that trade mark applies. (8) Where a trade mark has been determined to be well-known in at least one relevant section of the public in India by any court or Registrar, the Registrar shall consider that trade mark as a well-known trade mark for registration under this Act. (9) The Registrar shall not require as a condition, for determining whether a trade mark is a well-known trade mark, any of the following, namely: (i) that the trade mark has been used in India; (ii) that the trade mark has been registered; (iii) that the application for registration of the trade mark has been filed in India; (iv) that the trade mark (a) is well known in; or (b) has been registered in; or (c) in respect of which an application for registration has been filed in, any jurisdiction other than India; or (v) that the trade mark is well-known to the public at large in India. (10) While considering an application for registration of a trade mark and opposition filed in respect thereof, the Registrar shall (i) protect a well-known trade mark against the identical or similar trade marks; (ii) take into consideration the bad faith involved either of the applicant or the opponent affecting the right relating to the trade mark. (11) Where a trade mark has been registered in good faith disclosing the material informations to the Registrar or where right to a trade mark has been acquired through use in goods faith before the commencement of this Act, then, nothing in this Act shall prejudice the validity of the registration of that trade mark or right to use that trade mark on the ground that such trade mark is identical with or similar to a well known trade mark.

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COLLECTIVE MARKS Special provisions for collective marks (1) The provision of this Act shall apply to collective marks subject to the provisions contained in this Chapter. (2) In relation to a collective mark the reference in clause (zb) of sub-section (1) of section 2 to distinguishing the goods or services of one person from those of others shall be construed as a reference to distinguishing the goods or services of members of an association of persons which is the proprietor of the mark from those of others. Collective mark not to be misleading as to character or significance A collective mark shall not be registered if it is likely to deceive or cause confusion on the part of public in particular if it is likely to be taken to be something other than a collective mark, and in such case the Registrar may require that a mark in respect of which application is made for registration comprise some indication that it is a collective mark. Application to be accompanied by regulations governing use of collective marks (1) An application for registration of a collective mark shall be accompanied by the regulations governing the use of such collective mark. (2) The regulations referred to in sub-section (1) shall specify the persons authorised to use the mark, the conditions of membership of the association and, the conditions of use of the mark, including any sanctions against misuse and such other matters as may be prescribed. Acceptance of application and regulations by Registrar If it appears to the Registrar that the requirements for registration are satisfied, he shall accept the application together with the regulations, either unconditionally or subject to such conditions including amendments of the said regulations, if any, as he may deem fit or refuse to accept it and if accepted shall notify the regulations. Regulations to be open to inspection The regulations referred to in sub-section (1) of section 63 shall be open to public inspection in the same way as the register as provided in section 148. Amendment of regulations Any amendment of regulations referred to in sub-section (1) of section 63 shall not be effective unless the amended regulations are filed with the Registrar, and accepted and published by him in accordance with section 64.

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Infringement proceedings by registered proprietor of collective mark In a suit for infringement instituted by the registered proprietor of a collective mark as plaintiff the court shall take into account any loss suffered or likely to be suffered by authorised users and may give such directions as it thinks fit as to the extent to which the plaintiff shall hold the proceeds of any pecuniary remedy on behalf of such authorised users. Additional grounds for removal of registration of collective mark The registration of a collective mark may also be removed from the register on the ground(a) that the manner in which the collective mark has been used by the proprietor or authorised user has caused it to become liable to mislead the public as a collective mark; or (b) that the proprietor has failed to observe, or to secure the observance of the regulations governing the use of the mark. Explanation I: For the purposes of this Chapter, unless the context otherwise requires, authorised user means a member of an association authorised to use the registered collective mark of the association. Explanation II: For the purposes of this Act, use of a collective mark by an authorised user referred to in Explanation I shall be deemed to be the use by the registered proprietor thereof.

Lecture 48: Assignment 7

Q1. What do you mean by power-based analysis? Q2. What do you think is marketing inherently evil? Q3. Discuss the ethical danger points in market research. Q4. Discuss the ethical danger points in market audience and illustrate with example. Q5. Critically examine the ethical considerations in advertising and promotion. Q6. Evaluate the ethical considerations in the field of finance. Q7. Discuss the ethical considerations in Human Recourses. Q8. What do you mean by ethics in IT (Information Technology?) Q9. Discuss teleological approach in brief. Q10. Discuss deontological approach in brief.

Lecture 49: Assignment 8

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Q1. What do you mean by intellectual property rights? Q2. What do you mean by adaptation in Copyright Act, 1957? Q3. What do you mean by Artistic work in Copyright Act, 1957? Q4. What is the meaning of publication for the purpose of Copyright Act, 1957? Q5. Define the powers and procedures of copyright board. Q6. Discuss the works in which copyright subsists. Q7. What is the meaning of copyright? Q8. What are not inventions under the Patents Act? Q9. Discuss the patentable inventions under the Patents Act? Q10. What do you mean by corporate strategy?

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Unit 4

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Lecture 50-51 Corporate strategy

Anti-competitive practices influence the economy by discouraging foreign investors, encouraging inefficiencies and mismanagement, sustaining artificially high prices, misallocating scarce resources, increasing unemployment, fostering corrupt and criminal practices and, in general, preventing the growth that the country or industry could have attained otherwise.

Strategies for Monopolization

Exclude competitors from distribution channels This is common practice in many countries. Open threats are made by the manufacturers of popular products: "If you distribute my competitor's products - you cannot distribute mine. So, choose." Naturally, retail outlets, dealers and distributors always prefer the popular product to the new, competing, one. This practice not only blocks competition but also innovation, trade and choice or variety. Organized labor acts in the same way. They exclude the competition and create an artificial pricing environment with distorted market signals with the onset of globalization and liberalization encompassing almost every industry of the world, industries is gradually opening up on the world stage from the narrow confines of its national boundaries. The firms operating in the industries now have to take production decisions depending on global demand and market conditions and depending on the economic scenario in world markets. The term global industry specifically means an industry where a firms competitive position in one country is affected by its position in other countries and the reverse is also true. The industries exhibiting global pattern in todays world include automobiles, television sets, commercial aircrafts and boats, sporting equipment, watches, clothing, semiconductors, copiers and also the transfer of funds. The basic features of the global industry include the interconnection of communication networks and databases around the world, which in turn, leads to the Global Information Infrastructure or GII. The fast spreading of information regarding supply and demand in one market quickly gets transferred to the other world markets using the computers and satellites of today. With the onset of globalization and liberalization encompassing almost every industry of the world, industries are gradually opening up on the world stage from the narrow confines of its national boundaries. The firms operating in the industries now have to take production decisions depending on global demand and market conditions and depending on the economic scenario in world markets. Multinational Corporation

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A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE)[1], is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred as an international corporation. ILO defined MNC as a corporation which has his managerial head quarters in one country known as the home country and operates in several other countries known as host countries. The first modern MNC is generally thought to be the Dutch East India Company. Nowadays many corporations have offices, branches or manufacturing plants in different countries than where their original and main headquarter is located. This often results in very powerful corporations that have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization. The presence of such powerful players in the world economy is reason for much controversy.

Lecture 52 Information Technology

Information technology (IT) is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware", according to the Information Technology Association of America (ITAA). IT deals with the use of electronic computers and computer software to convert, store, protect process, transmit, and securely retrieve information. Today, the term information has ballooned to encompass many aspects of computing and technology, and the term has become very recognizable. IT professionals perform a variety of duties that range from installing applications to designing complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as the management and administration of entire systems. Information technology is starting to spread farther than the conventional personal computer and network technology, and more into integrations of other technologies such as the use of cell phones, televisions, automobiles, and more, which is increasing the demand for such jobs. When computer and communications technologies are combined, the result is information technology, or "infotech". Information technology is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information. In recent days ABET and the ACM have collaborated to form accreditation and curriculum standard for degrees in Information Technology as a distinct field of study separate from both Computer Science and Information Systems. SIGITE is the ACM

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working group for defining these standards. The Worldwide IT services revenue totaled $763 billion in 2009.

Lecture 53
COMPETITIVE STRATEGY COMPETITIVE STRATEGY consists of moves to Attract customers Withstand competitive pressures Strengthen firms market position OBJECTIVES Earn a COMPETITIVE ADVANTAGE Cultivate clientele of LOYAL CUSTOMERS Knock the socks off rivals, ethically & honorably

COMPETITIVE STRATEGY, narrower in scope than business strategy, focuses on managements plan to compete successfully

Lecture 54 Benchmarking
Benchmarking is the process of comparing the business processes and performance metrics including cost, cycle time, productivity, or quality to another that is widely considered to be an industry standard benchmark or best practice. Essentially, benchmarking provides a snapshot of the performance of your business and helps you understand where you are in relation to a particular standard. The result is often a business case and "Burning Platform" for making changes to make improvements. The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes. Benchmarking is most used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others. Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.

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Cost of benchmarking
The three main types of costs in benchmarking are: Visit Costs - This includes hotel rooms, travel costs, meals, a token gift, and lost labor time. Time Costs - Members of the benchmarking team will be investing time in researching problems, finding exceptional companies to study, visits, and implementation. This will take them away from their regular tasks for part of each day so additional staff might be required. Benchmarking Database Costs - Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice now.

The cost of benchmarking can substantially be reduced through utilizing the many internet resources that have sprung up over the last few years. These aim to capture benchmarks and best practices from organizations, business sectors and countries to make the benchmarking process much quicker and cheaper. Types of benchmarking Process benchmarking - the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration. Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity. Benchmarking from an investor perspective- extending the benchmarking universe to also compare to peer companies that can be considered alternative investment opportunities from the perspective of an investor. Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms. Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses. Strategic benchmarking - involves observing how others compete. This type is usually not industry specific, meaning it is best to look at other industries. Functional benchmarking - a company will focus its benchmarking on a single function to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison.

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Best-in-class benchmarking - involves studying the leading competitor or the company that best carries out a specific function. Operational benchmarking - embraces everything from staffing and productivity to office flow and analysis of procedures performed.

Lecture 55 Total Quality Management

(TQM) is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and other organizational objectives. TQM empowers an entire organization, from the most junior employee to the CEO, with the responsibility of ensuring quality in their processes. In particular, TQM provides management with the ability to ensure quality through more streamlined and effective process-improvement channels. A great range of organisations have deployed TQM, including small companies, large companies, and government departments (e.g., NASA). TQM is no more relevant to any one type of organization than any other; on the contrary, it is a philosophy appropriate to any situation in which quality assurance is important. Principles of TQM 1- Be Customer focused : what ever you do for quality improvement , remember that ONLY customers determine the level of quality , what ever you do to foster quality improvement , training employees , integrating quality into processes management , ONLY customers determine whether your effort were worthwhile. 2-Insure Total Employee Involvement: This done after you removes fear from work place, then empower employee ... you provide the proper environment. 3- Process Centered: fundamental part of TQM is to focus on Process thinking. 4- Integrated system: All employee must know business mission and vision , must monitor the process .an integrated business system may be modeled by MBNQA or ISO 9000. 5- Strategic and systematic approach: Strategic plan must integrate quality as core component. 6- Continual Improvement: using analytical and creative thinking in finding ways to become more effective. 7- Fact Based Decision Making: decision making must be ONLY on data, not personal thinking or situational.

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8- Communication: communication strategy, method and timeliness must be well defined. TQM Implementation Approaches No one solution is effective for planning and implementing TQM concepts in all situations. Following are generic models for implementing Total quality management Theory: 1- Train top management on TQM principles. 2- Assess the current: Culture, customer satisfaction, quality management system. 3- Top management determines the core values and principles to be used and communicate them. 4- Develop TQM master plan based on steps 1, 2, 3. 5- Identify and prioritize customer needs and determine products or service to meet those needs. 6- Determine the critical processes to produce those products or services. 7- Create process improvement teams. 8- Managers should support effort by planning, training, time.... to the teams. 9- Integrate changes for improvement in daily process management and standardizations take place. 10- Evaluate progress against plan (step 8) and adjust as needed. 11- Constant employee awareness and feedback on status are provided and a reward/ recognition process is established. Strategies to develop TQM 1-TQM elements approach:Take key business process and use TQM Tools to foster improvement. e.g.: quality circles, statistical process control, taguchi method, quality function deployment. 2 - The guru approach: using the guides of one of the leading quality thinker. 3- Organization model approach: the organization use Benchmarking or MBNQA as model for excellence.

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4- Japanese total quality approach: companies want to get deming prize use deming principles.

Lecture 56 Brand Building

Brand is the image of the product in the market. Some people distinguish the psychological aspect of a brand from the experiential aspect. The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience. The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created within the minds of people and consists of all the information and expectations associated with a product or service. People engaged in branding seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace. The art of creating and maintaining a brand is called brand management. Orientation of the whole organization towards its brand is called integrated marketing. Careful brand management seeks to make the product or services relevant to the target audience. Therefore cleverly crafted advertising campaigns, can be highly successful in convincing consumers to pay remarkably high prices for products, which are inherently extremely cheap to make. This concept, known as creating value, essentially consists of manipulating the projected image of the product so that the consumer sees the product as being worth the amount that the advertiser wants him/her to see, rather than a more logical valuation that comprises an aggregate of the cost of raw materials, plus the cost of manufacture, plus the cost of distribution. Modern value-creation branding-andadvertising campaigns are highly successful at inducing consumers to pay, for example, 50 dollars for a T-shirt that cost a mere 50 cents to make, or 5 dollars for a box of breakfast cereal that contains a few cents' worth of wheat. Brands should be seen as more than the difference between the actual cost of a product and its selling price - they represent the sum of all valuable qualities of a product to the consumer. There are many intangibles involved in business, intangibles left wholly from the income statement and balance sheet which determine how a business is perceived. The learned skill of a knowledge worker, the type of metal working, the type of stitch: all may be without an 'accounting cost' but for those who truly know the product, for it is these people the company should wish to find and keep, the difference is incomparable. Failing to recognize these assets that a business, any business, can create and maintain will set an enterprise at a serious disadvantage. 5 Steps to Brand Building 1. Identify your reasons-to-believe.

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Your brand promise is irrelevant if your customers do not believe it. Therefore, your promise must be supported by reasons-to-believe. This will automatically add substance to the promise and define specific expectations for the customer. For example, an automobile manufacturer promises potential customers that Car XYZ is an "intelligent choice for serious drivers." What makes it an intelligent choice? Why should the customer believe this promise? To address this question effectively, the manufacturer could frame its promise with two reasons-to-believe... sporty performance and safety. These two reasons in essence define "intelligent choice" and clearly set customer expectations. They also give the company specific direction for designing the customer experience through tangible customer touch points like vehicle design features, advertising campaigns, dealer sales approaches, and customer service activities. 2. Identify customer touch points. Each individual step in your business process contains a number of touchpoints when the customer comes in contact with your brand. Your ultimate goal is to have each touch point reinforce and fulfill your marketplace promise. Walk through your commercial processes. How do you generate customer demand? How are products sold? How do your customers use your products? How do you provide aftersales support? This comprehensive trace of your marketing, selling, and servicing processes allows you to create a simple touch point map that defines your customers' experiences with your brand. 3. Determine the most influential touchpoints. All touchpoints are not created equal. Some will naturally play a larger role in determining your company's overall customer experience. For example, if your product is ice cream, taste is typically more important than package design. Both are touchpoints, but each has a different effect on our customers experiences as a whole. To determine the touchpoints driving your customers' overall experience, your organization can use a wide array of techniques ranging from quantitative research to institutional knowledge. The methods you use will depend on the complexity of your products, commercial processes, and your existing knowledge base. 4. Design the optimal experience. Once you have completed the above three steps to building a brand, you should be able to design your optimal customer experience.

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Determine how to express each reason-to-believe at each key touch point. For example, how can you reinforce sporty performance (a reason-to-believe) in product design, at the dealership, and in marketing campaigns (the influential touch points)? 5. Align the organization to consistently deliver the optimal experience. A holistic approach to aligning your organization to consistently deliver the optimal experience is essential. Identify the people, processes, and tools that drive each key touch point. Look beyond employees that have direct contact with your customers. The impacts of behind-the-scenes employees are less obvious but no less important. Similarly, the impact of workflow processes and tools (i.e. technology systems) on the customer experience may be less intuitive but crucial to consistent delivery. Identify which activities don't align with your envisioned customer experience. Determine how to address them so that these components can be brought into alignment.

Brand equity
Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name. And, at the root of these marketing effects is consumers' knowledge. In other words, consumers' knowledge about a brand makes manufacturers/advertisers respond differently or adopt appropriately adept measures for the marketing of the brand. The study of brand equity is increasingly popular, as some marketing researchers have concluded that brands are one of the most valuable assets that a company has. Brand equity is one of the factors, which can increase the financial value of a brand to the brand owner, although not the only one

Promotion Strategies
A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organisations promotional strategy can consist of: Advertising: Is any non-personal paid form of communication using any form of mass media? Public relations: Involves developing positive relationships with the organisation media public. The art of good public relations is not only to obtain favorable publicity within the media, but it is also involves being able to handle successfully negative attention. Sales promotion: Commonly used to obtain an increase in sales short term. It could involve using money off coupons or special offers. Personal selling: Selling a product service one to one.

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Direct Mail: Is the sending of publicity material to a named person within an organisation. There has been a massive growth in direct mail campaigns over the last 5 years. Spending on direct mail now amounts to 18 bn a year representing 11.8% of advertising expenditure. Organisations can pay thousands of pounds for databases, which contain names and addresses of potential customers. Direct mail allows an organisation to use their resources more effectively by allowing them to send publicity material to a named person within their target segment. By personalising advertising, response rates increase thus increasing the chance of improving sales. Listed below are links to organisation who's business involves direct mail.

Lecture 57 Corporate Restructuring

Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Alternate reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring. In education, restructuring refers a requirement in the No Child Left Behind act of 2001, which requires schools identified as chronically failing for 5 years or more to undertake rapid changes that affect how the school is led and instruction delivered. Executives involved in restructuring often hire financial and legal advisors to assist in the transaction details and negotiation. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations. The basic nature of restructuring is a zero sum game. Strategic restructuring reduces financial losses, simultaneously reducing tensions between debt and equity holders to facilitate a prompt resolution of a distressed situation. Steps: * Ensure the company has enough liquidity to operate during implementation of a complete restructuring * Produce accurate working capital forecasts * Provide open and clear lines of communication with creditors who mostly control the company's ability to rise financing * Update detailed business plan and considerations

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Lecture 58 Acquisitions & Mergers

An acquisition, also known as a takeover or a buyout or "merger", is the buying of one company (the target) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Another type of acquisition is reverse merger, a deal that enables a private company to get publicly listed in a short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly listed shell company, usually one with no business and limited assets. Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful.[citation needed] The acquisition process is very complex, with many dimensions influencing its outcome The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock

Lecture 59 Supply Chain Management

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally."
Supply chain management problems

Supply chain management must address the following problems: 1. Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers. 2. Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of
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3.

4. 5. 6.

transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL). Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trades-offs are key to developing the most efficient and effective Logistics and SCM strategy. Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional. Activities/functions Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American Productivity & Quality Center (APQC) Process Classification

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Framework SM a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint.

Lecture 60 Diversification
Diversification in finance means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, often less risk than the least risky of its constituents. Therefore, any risk-averse investor will diversify to at least some extent, with more risk-averse investors diversifying more completely than less risk-averse investors. Diversification is one of two general techniques for reducing investment risk. The other is hedging. Diversification relies on the lack of a tight positive relationship among the assets' returns, and works even when correlations are near zero or somewhat positive. Hedging relies on negative correlation among assets, or shorting assets with positive correlation. It is important to remember that diversification only works because you reduce investment in each individual asset. If you start with $10,000 in one stock and put $10,000 in another stock, you have more risk, not less. Diversification requires you to sell $5,000 of the first stock to put in the second. Then you will have less risk. Hedging, in contrast, reduces your risk without selling any of your original position. The risk reduction from diversification does not mean anyone else has to take more risk. If person A owns $10,000 of one stock and person B owns $10,000 of another, both A and B will reduce their risk if they exchange $5,000 of the two stocks, so each now has a more diversified portfolio. Example: The simplest example of diversification is provided by the proverb "don't put all your eggs in one basket". Dropping the basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them. In finance, an example of an undiversified portfolio is to hold only one stock. This is risky; it is not unusual for a single stock to go down 50% in one year. It is much less common for a portfolio of 20 stocks to go down that much, even if they are selected at random. If the stocks are selected from a variety of industries, company sizes and types (such as some growth stocks and some value stocks) it is still less likely. Further diversification can be obtained by investing in stocks from different countries, and in different asset classes such as bonds, real estate and commodities like heating oil or gold.

Diversification
Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets.
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Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry which the business is already in. At the corporate level, it is generally [clarification needed] and it is also very interesting entering a promising business outside of the scope of the existing business unit. Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. Note: The notion of diversification depends on the subjective interpretation of new market and new product, which should reflect the perceptions of customers rather than managers. Indeed, products tend to create or stimulate new markets; new markets promote product innovation.

Horizontal Organizations
The vertical/functional hierarchy has been the mainstay of business since the industrial revolution. But it has its problems. In fact, the vertical design all but guarantees fragmented tasks, overspecialization, fiefdom, turf wars, the urge to control from the top--all the negatives that foster organizational paralysis. The concept of horizontal organization has been hailed in Fortune as "a model corporation for the next fifty years" and in a Business Week cover story as "the real thing." But until now, management books have offered only piecemeal accounts of what the organization of the future might look like. For instance, we see how Ford Motor Company's Customer Service Division turned to the horizontal organization to meet a highly ambitious goal--to get the customer's car fixed right, on time, the first time, at a competitive price, in convenient locations. We see how a horizontal design radically improved the performance of OSHA (the federal agency that oversees occupational safety), transforming it from a bureaucratic enforcer of regulations to a proactive problem-solver in a concerted effort to improve working conditions and save lives. And we see how Xerox combined both vertical and horizontal designs successfully, a case that underscores when a firm can best use the horizontal organization to achieve their goals.

Fundamental Principles of the Horizontal Organization

The twelve fundamental guiding principles for creating horizontal organizations according to Ostroff are the following: The first five principles concern the design of the organization: 1. Organize around cross-functional core processes. 2. Install process owners 3. Make teams, not individuals, the cornerstone of organizational design and performance. 4. Integrate with customers and suppliers.

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5. Decrease hierarchy by eliminating non-value-added work and by giving team members the authority to make decisions. The next seven principles concern the institutionalization of the change: 1. Build a corporate culture of openness, cooperation, and collaboration, a culture that focuses on continuous performance improvement and values employee empowerment, responsibility, and well-being. 2. Empower people by giving them the tools, skills, motivation and authority they need. 3. Use information technology to help people reach performance objectives and deliver the value proposition to the customer. 4. Measure for end-of-process performance objectives as well as customer satisfaction, employee satisfaction, and financial contribution. 5. Redesign functional departments or areas to work as partners in process performance with core process groups. 6. Emphasize multiple competencies and train people to handle issues and work productively in cross-functional areas. 7. Promote multi-skilling, the ability to think creatively and respond flexibly to challenges that arise in the work that teams do. All core processes lead to one end objective: Creating and delivering something of value to the customer.

Assignment 9
Q1. Discuss the strategies for Monopolization. Q2. Write a brief note on Competitive strategy. Q3. Discuss the concept of Benchmarking. Q4. What are the popularity and benefits from benchmarking? Q5. What do you mean by Collaborative benchmarking? Q6. Discuss the cost of benchmarking. Q7. What do you understand by technical Benchmarking/Product Benchmarking? Q8. Discuss various types of benchmarking. Q9. Give an idea about Metric Benchmarking. Q10. What is the phenomenon of Total Quality Management?

Assignment 10
Q1. Write an essay on Brand Building. Q2. Write a note on Brand equity.

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Q3. Discuss various promotional strategies for the success in the business. Q4. What is the concept of Corporate Restructuring? Q5. What do you understand by Acquisitions & Mergers? Q6. What do you mean by supply chain management? Q7. Discuss the activities/functions of supply chain management? Q8. What do you mean by diversification? Q9. What is the concept of horizontal/flat organizations? Q10. Elucidate the characteristics of Horizontal organizations.

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