BBA-Indian Ethos in Management

Unit-1(Have to add on page no. 45)

Q. 13 Media has a very important role to play in ensuring
Corporate Governance. Discuss the statement with suitable
examples.
Ans. Corporate Governance has emerged as a response to many of
corporate failures and widespread dissatisfaction about the functioning of
the corporate sector. They are powerful system by which corporate bodies
are

directed

and

controlled.

Primarily

concerned

with

Power

and

Accountability of Corporate.
The Corporate Governance refers to relationship between Owners,
Directors and Managers. BODs are the Centre of Corporate Governance.
Corporate governance serves not only the companys interest but also the
society at large. Distribution of Rights And Responsibilities among different
participants-Board, Manager, Shareholders, Stakeholder It covers issues
like- The legal issues of investors, The system of Electing the BODs, The
Composition of Board and its various Committees, System of Checks and
balances, Ethics, Maximization of Owners wealth by Managers, The ability
of the board to maintain Surveillance.
Need for Corporate Governance in India
Post liberalization period (1993-1995) was a boom period, Capital
through Public issues,

Many Fake companies came in, which are now

nowhere, Indian companies getting Global thus more transparency

demanded

by

Foreign

investors,

Collaborators,

buyers.

Stories

of

Accounting Juggleries, Family owned business (family leaders appointed

directors

which

are

teethless),

Growing

awareness

towards

Good

Corporate Governance, Improving Ethical climate, Shadow Directors

Good governance
Good

governance

has

major

characteristics.

It

is

participatory,

consensus oriented, accountable, transparent, responsive, effective and

efficient, equitable and inclusive and follows the rule of law. It assures that
corruption is minimized, the views of minorities are taken into account and
that the voices of the most vulnerable in society are heard in decisionmaking. It is also responsive to the present and future needs of society.

Characteristics of good governance:

Participation
Participation by both men and women is a key cornerstone of good
governance. Participation could be either direct or through legitimate
intermediate institutions or representatives. It is important to point out
that representative democracy does not necessarily mean that the
concerns of the most vulnerable in society would be taken into
consideration in decision making. Participation needs to be informed and
organized. This means freedom of association and expression on the one
hand and an organized civil society on the other hand.
Rule of law
Good governance requires fair legal frameworks that are enforced
impartially. It also requires full protection of human rights, particularly
those of minorities. Impartial enforcement of laws requires an independent
judiciary and an impartial and incorruptible police force.
Transparency
Transparency means that decisions taken and their enforcement are
done in a manner that follows rules and regulations. It also means that
information is freely available and directly accessible to those who will be
affected by such decisions and their enforcement. It also means that

enough information is provided and that it is provided in easily

understandable forms and media.
Responsiveness
Good governance requires that institutions and processes try to
serve all stakeholders within a reasonable timeframe.
Consensus oriented
There are several actors and as many view points in a given society.
Good governance requires mediation of the different interests in society to
reach a broad consensus in society on what is in the best interest of the
whole community and how this can be achieved. It also requires a broad
and long-term perspective on what is needed for sustainable human
development and how to achieve the goals of such development. This can
only result from an understanding of the historical, cultural and social
contexts of a given society or community.
Equity and inclusiveness
A societys well being depends on ensuring that all its members feel
that they have a stake in it and do not feel excluded from the mainstream
of society. This requires all groups, but particularly the most vulnerable,
have opportunities to improve or maintain their well-being.
Effectiveness and efficiency
Good governance means that processes and institutions produce
results that meet the needs of society while making the best use of
resources at their disposal. The concept of efficiency in the context of
good governance also covers the sustainable use of natural resources and
the protection of the environment.
Accountability
Accountability is a key requirement of good governance. Not only
governmental institutions but also the private sector and civil society
organizations must be accountable to the public and to their institutional
stakeholders. Who is accountable to whom varies depending on whether
decisions or actions taken are internal or external to an organization or
institution. In general, an organization or an institution is accountable to

those who will be affected by its decisions or actions. Accountability

cannot be enforced without transparency and the rule of law.

Social Performance of Business in India

Many business organizations in India have also contributed greatly
in the area of social responsibility. Associated cement companies (ACC)
has been rendering social service for over four decades. The company has
set up the schools, health centers, bunds, local countryside and agrobased industries, and cooperative societies in village with the sole
objective of providing employment and improving the quality of rural life.
Following help from ACC, farmers in Andhra Pradesh have doubled their
per acre yield of rice, whereas those in Bihar began to raise a crop of
protein- rich soyabeans as a matter of routine.
ACC is spending approximately Rs. 6 lakh annually on its staff,
which works for rural development programmes with direct investment.
The Mafatlal Group follows a slightly different line in social performance. It
spends a huge fund on rural welfare programmes for helping the poor. It
constructs homes for the homeless, provides drinking water, and
distributes book, stationery and scholarships in rural areas.
The Tata Iron and Steel Company is the first industrial organization
in the country to have carried out a social audit of its performance in the
year 1979. In the public sector, Bharat Heavy Electrical Ltd. (BHEL) is
endeavouring to play a prominent role in the area of social responsibility.
All division of BHEL, are aware of their social role and have drawn
comprehensive scheme for the welfare of their employees in social role
and have drawn comprehensive scheme for the welfare of their employees
in township and for those living in nearby areas. The company is engaged
in identifying specific problems of communities and in coordinating the
efforts with the local bodies, authorities and voluntary agencies in
providing speedy relief to them.
The active involvement of BHEL and its employees in the welfare of
the surrounding communities is helping the organization to earn the
goodwill of the local population and to have a better understanding of
their problems. Jobs done by BHEL units in this respect include provision of
drinking water facilities, construction of external sewers, roads and
culverts, providing health facilities, improving the quality of life by
redesigning jobs, improving educational facilities and so-on.

Many Indian companies have given Value Added Statement in

their annual reports in place of a social reporting. This statement exhibit
the contribution and surplus made by them through their business
activities and also disclosure as to how the same has been distributed to
different segment of the society such as employees, government and
shareholders, etc. Beside, Social Income Statement and Social Balance
Sheet given by some Indian companies in their annual reports would prove
very useful to the users and other interested persons. The government
should make it obligatory on the part of the companies to report their
Social Performance during the year through statements and/or other
means of disclosure.
Introduction of Media
In general, "media" refers to various means of communication. For
example, television, radio, and the newspaper are different types of
media. The term can also be used as a collective noun for the press or
news reporting agencies. In the computer world, "media" is also used as a
collective noun, but refers to different types of data storage options.
Types of media and history
Media especially refers to two main divisions, the print media such
as Newspapers & Magazines and the electronic media such as Radio and
Television. The role of the media in a democratic country is to relay the
facts to the people. Media especially categorized in to two main divisions.
One is Print Media and another one is Electronic Media.
1) Print Media would be Newspapers and Magazines.
2) Electronic Media would be Radio and Television.
Role of media
Media role can be seen as key to creating awareness of Corporate
Governance in business houses. Communication between Media and
Corporate bodies directly and through efficient public relations or mass
communications can be vital to ensure good governance and human
rights. Media must be on the front line in disseminating impartial news for
ensuring transparency in the corporate sector. Media have a watchdog role
to ensure accountability and transparency of corporate sector. Media also
need to improve their capacity to play the watchdog role.

The Media can play a role in Corporate Governance by affecting

reputation at least 3 ways

that Anyone seeing the ad would read it,

Anyone reading the ad would understand it, Anyone understanding it

would feel free to ask questions of any board members they encountered
Media attention can drive politicians to introduce Corporate Law
reforms in the belief that inaction would hurt their future political careers
or shame them in the eyes of Public opinion In the Traditional
understanding of Reputation, Managers wages in the future depend on
Shareholders and Employers belief that how much advantage they are
going to take of the situation that they are not monitored. Thos concern
about Monetary Penalty that they may have to face they always behave
like good managers Image in the eyes of the Public. As given in the first
example, Robert Monk said bout the Advertisement.
Role of Media in pressuring corporate managers and directors to
behave in ways those are socially acceptable. Sometimes this coincides
with Shareholders value maximization. Media affects companies policy
toward the environment and the amount of corporate resources that are
diverted to the sole advantage of controlling shareholders. Here I have
quoted two examples though not Indian but will very well explain the
effect of Media on corporate governance.
EXAMPLE 1. In April 1992, the Wall Street Journal published a
strange advertisement. It was a full-page picture of a silhouette (outline)
of the board of directors of Sears Roebuck with the title The
nonperforming assets of Sears This advertisement was paid for by
shareholders activist Robert Monks. He exposed all the directors, identified
them by name that were responsible for the poor performance of Sears
Stock. The Directors greatly embarrassed by the advertisement chose to
adopt many of the proposals which were given by Robert Monks even
though he had received only 12% of the votes in the previous election for
board members and had failed to get a seat on the board.
EXAMPLE 2. On March 8 1988, all the major US networks broadcast a tape
of a Panamanian tunaboat the Maria Luisa, killing hundreds of dolphins
while fishing for tuna. Building on Public outrage, the Earth Island Institute,
GREENPEACE and the Humane Society launched a boycott of Tuna.

The Restaurant chains took tuna off the menu and many stopped
using tuna until it was dolphin safe i.e. fished with nets that were not
killing dolphins. On April 12, 1990, Heinz announced that it would sell
dolphin safe tuna .Within hours the two other largest tuna producers made
a similar commitment. These episodes suggest that the Media may play a
role in shaping corporate policy
EXAMPLE 3: Dhaka, Oct 1 (BDNEWS) - Media's role is crucial to create
awareness about corporate governance in business houses, speakers said
at a roundtable in Dhaka Saturday. Communications between media and
corporate bodies directly and through efficient public relations (PR) or
Mass Communications (MC) personnel can be vital to ensure good
governance and human rights, they told the roundtable titled "Corporate
Governance: Bridging Corporate Sector and Media".
Management

and

Resources

Development

Initiative

(MRDI)

organized the roundtable with support from Manusher Jonno at a city

hotel, which was participated by business association leaders, chief
executives/representatives

of

insurance,

mobile

phone,

cement,

hospitality companies and newspaper editors. Moazzem Hossain, editor of

the Financial Express, moderated the roundtable. Jamal Uddin Ahmad,
managing director of Jaroms Industries Ltd said, CSR is (Corporate Social
Responsibility) the vehiclet serve humanity.
Media must be at the frontline in disseminating impartial news for
ensuring transparency in the corporate sector, said Ahmed, also the
former deputy prime minister of Bangladesh. Dewan Sultan Ahmed, vice
president of Federation of Bangladesh Chambers of Commerce and
Industry (FBCCI), told that the business people should focus on business,
not politics. Mohiudding Babar, communication manager of Lafarge Surma
Cement Ltd, said media have a watchdog role to ensure accountability and
transparency of the corporate sector.
Media also need to improve their capacity to play the watchdog
role, he added. Nasir A Choudhury, managing director of Green Delta
Insurance Company Ltd., said government should introduce incentives for
companies that practice corporate social responsibilities. He sought media
role to promote corporate governance and social responsiveness. Shyamal
Dutt, acting editor of the daily Bhorer Kagoj, said business interest of

media overshadows role towards social responsiveness. He also stressed

on governance in media to ensure accountability.
Media do affect Corporate Policy
The extent of Diffusion of the Press also affects the role it has. Press
cannot be important if it is not read. Press freedom and Independence also
has some impact on the effect it has. Countries with a large newspaper
circulation have better environmental responsiveness on average. Religion
is major factor affecting literacy of the country and its propensity to read.
Shareholder Activists and the Press
Shareholder activists such as Robert Monks have found the press
useful in their fight with
Management in US but some recent events in the Republic of Korea
indicate that there is a Strong Shareholders take advantage of their
position at the expense of small investors. National Corporate Laws give
few rights to outside investors. The strength of protection for minority
shareholders and expectations in relation to law enforcement is low. The
beginning of efforts to force change in Korea dates back to 1996. The
formation of PSPD (Peoples Solidarity for Participatory Democracy) driven
by Jang Ha Sung of Korea University As in the US the Investor Activists
relied on both one.
The most imp successful challenge to date has been the battle to
stop insider dealings in SK Telecom
SK Telecom has been an extremely profitable company but its
financial results did not show it up because the company used transfer
pricing to benefit two companies (almost 100% owned by the Chairman of
SK Telecom and his relatives). The PSPD draw attention to these Policies.
After the London based Newspaper Financial Times picked up the Story, a
media campaign ensued to attract proxy votes. This campaign involved
publishing advertisements in newspapers and using television and Radios.
In March 1998 SK Telecoms Directors capitulated and agreed to the
PSPDs request.
Institutional Investors
While institutional investors have many legal mechanisms to
encourage change in corporate policies, the presence of an active Press

increases their influence. It provides cheap way to impose penalties on

companies and to coordinate the response of other investors.
Unit-3(have to add on page no.75)
Q.7 Write short note on : Democracy Judiciary Machinery.
Ans. Democracy is a political system in which the chosen representatives
of the people govern the country. All the adult citizens have the right to
vote without any discrimination of caste, creed, religion, sex or economic
status. People cast votes on the principle of universal adult franchise to
elect the candidates. The candidate who gets the maximum number of
votes is declared elected.
The party which either has the majority of members or has the support of
members from other parties to make the majority forms the government.
Thus, in effect, the power to elect the government lies in the hands of the
people. In a democracy, all the functions are executed as per the
provisions of the Constitution which inter alia upholds the values of
equality between the citizens. Abraham Lincoln aptly called democracy
the government of the people, for the people and by the people.
In a democratic system as is evident from the Indian democratic system,
there are three major wings-the legislature, the executive and the
judiciary. No democracy can work if any of these is missing or does not
work properly. The legislature means the members of central or state
government machinery who have the power to make laws. The executives
mean the body of officials and administrators who have the power to
implement the laws enacted by the legislature.
The judiciary is comprised of the total judicial system in the country, viz.
courts, judges and justices and is vested with the power to ensure justice,
fairness and the rule of law by deciding cases filed by the people who
have been denied some genuine right or privilege.
All the three parts of democratic system are important in their respective
way. But the judiciary is considered to be the most important. In the Indian
democratic system, the judiciary consists of lower as well as district level
courts-whether civil or criminal, the High Courts of the State and the
Supreme Court of India. The lower courts decide the small cases of theft,

cheating, etc. while the higher courts decide the cases of fraud, crime,
assault and betray and murder, in their jurisdiction.
They also have the power to decide on the appeals filed against the
decision of the lower court. The respective High Courts of the State have
the power to hear the appeals against the decision of the District or
Sessions Courts within the State. The Supreme Court is the apex court of
the country. The cases which can be filed in the Supreme Court include: (i)
appeals against the decisions of any High Court of any State; (ii) cases
where an issue of fundamental rights is involved; (iii) disputes between
two or more Indian States; (iv) disputes in which there are Centre and one
or more States on one side and one or more States on the other. The
decision of the Supreme Court of India is final and binding on all the
parties involved.
Democracy

gives

equal

rights

to

all

the

citizens

without

any

discrimination. But what happens if a citizen is denied some right or is

discriminated against? He can immediately go to a court of law and seek
justice. The court will consider his case and give decision as per law. If the
person has been denied some right, he will get decision in his favour.
Democracy thrives on equality of all citizens. Where there is no equality
among the citizens there is no democracy. It is only the judiciary which
ensures this equality.
Indias Constitution has given the citizens certain fundamental rights such
as: right to equality, right to practise any religion, right to adopt any
profession and to live in any part of India, right to assemble peacefully and
without arms, etc. There is also freedom of speech, travel, get education
and prosper in life. Some new rights have been given to the people of
India like the Right to Information, which though not a fundamental right
has a legal sanction. Under this, a person can ask for any official
information from the concerned department or office which is required by
him in execution of a function or activity.
These rights-fundamental or otherwise, freedoms and liberties are the
lifeline of democracy. If they are not protected, democracy will lose its
meaning. In India, the judiciary protects these rights and is, therefore,
called the watchdog of democracy. Under certain circumstances some of

the rights are temporarily suspended. For example, if the law and order
situation worsens in a particular area due to violence, arson, etc. curfew is
imposed which means people cannot move out of their home for particular
hours.
This does not mean that democracy is in danger. Actually, these measures
are taken to save the citizens from being the victims of subversive
activities. Similarly, during emergency some rights are suspended. But
these are temporary phases and make no difference to the spirit of
democracy. Under normal circumstances, all the citizens enjoy the rights
given to them by the Constitution.
If any of the rights is encroached by another individual, organisation, body
corporate, a group of people or even by the State, the aggrieved person
can go to a court of law and seek justice. If his claim is found genuine, that
person will get justice, and at times with adequate compensation for
damages or harm caused to him by the denial of that right. There are
examples of lakhs of cases in India where the people have got fair
decisions through the courts.
Under some circumstances, the court has the power to direct the
government to take certain action so that the values of democracy are
upheld. Sometimes the judiciary directs the state or central government to
desist from certain partisan action. It can ask a certain department or
even the government to explain the reason of some action which in its
eyes was uncalled for. For example, the Supreme Court directed the
former ministers to vacate the government allotted residences, after
losing the ministership, up to certain date. The apex court has asked some
governors to explain their action of dismissing a government or of not
calling the majority party to form the government. Such actions can be
called to checks and balances of the judiciary on the legislative machinery.
Each citizen also has certain duties to abide by like paying the taxes,
respecting the rights of others, obeying the law, etc. These duties are
necessary to maintain equality and law and order. The rights can be
enjoyed by all the citizens if there is peace, social and economic security.
The court has the power to punish those who disobey the law or fail to
perform their duties as citizens of the country. Judiciary upholds the values

of democracy, but it has several constraints which hinder the efficient

performance of the courts.
In the first place there is a shortage of courts and judges which results in
the inordinate delays in deciding the cases. Thousands of cases are
pending in various courts in India including the Supreme Court. It is often
said that justice delayed is justice denied. How can the democracy be said
to exist if the justice is denied in this manner? The government has
established Fast Track Courts and Lok Adalats to clear the pendency and
separate minor cases from the major ones. The Panchayati Raj Institutions
(PRIs) are also being given powers to decide a certain type of cases so
that the courts are not clogged with a pile of cases. The situation is
improving as a result of these measures.
Corruption in the courts, expensive dispensation of justice, malpractices
and exploitative attitude of the lawyers, lack of evidence in some cases,
frequent changes in the stances of eyewitnesses and other witnesses,
interference of politicians, officials and other powerful persons are
maladies from which our judicial system suffers. Media is doing a good job
in exposing the cases involving such malpractices. It needs collective
efforts from people, officials and those directly engaged in meting out
justice to purge the judicial system from these ills so that it can become
the true savior of democracy even under trying circumstances.
Case study solution
Questions/Answers:
Q.1 how successful do you think Helen Bowers new plan will be?
Ans. Helen bowers new plan will not be successful, because of her
working approach. She wants to change her fathers approach. Human
resource is the life blood of any organisation, so we have to treat them like
a part of organisation. Human resource is very important part of any
company, because they work for organisation. We have to ask their ideas
and advise, and spend time to listen their complaints whenever required.
When they share their ideas and complaints about organisation, then it is
good for organisation. Helen had done a big mistake of not taking advice
of employees. She introduced a new plan without discussing with
employees, and because of this her plan was failed.
Q.2 what challenges does Helen confront?
Ans. Helen bowers confronted so many challenges, because of her new
plan.

1. She increased production quotes by twenty percent but output was only
marginally higher than before. Scrap rates had soared.
2. Payroll costs were indeed lower, but other personnel costs were up.
3. Performance reports indicated that turnover had increased substantially
and training costs had gone up.
4. She has shuts down company softball field which her father built, but
employees use it much.
5. Helen changed a number of operational procedures, she stopped
asking employees advice.
Q.3 If you were Helens consultant, what would you advise her to
do?
Ans. If I were Helens consultants then, advise her to apply her fathers
humanistic approach. Because human resources are the life blood of any
organisation, their ideas and advice is very necessary for company growth.
For introducing new working approach, she has to discuss with employees
and treat them like her father treat. Employees ideas and advice plays
very important role in a company.