involved in any business is delicate, sensitive, and hazardous. Noncompliance with regulations can result in serious legal and financial consequences for a company. As a result, it is the organization's responsibility to follow the laws. Two important COMPANY regulatory legislations in India are: Competition Act,2002 - The Act aimed at promoting competition through prohibition of anti- competitive practices, abuse of dominance by an enterprise and regulation of combinations such as mergers and acquisitions. The Competition Act of 2002 is a comprehensive law with the goal of promoting fair competition, catching up with the global economy, protecting consumers' interests, and ensuring a stable market for India. Foreign Trade Policy: The new Foreign Trade Policy (FTP) takes an integrated view of the overall development of India’s foreign trade and goes beyond the traditional focus on pure exports. Indian EXIM policy encompasses a wide range of policy decisions made by the government in the area of foreign trade, including imports and exports from the country, as well as export promotion initiatives, strategies, and programmes. 9.5 KEYWORDS Exploitation: the action or fact of treating someone unfairly in order to benefit from their work. Secularism: the principle of the separation of government institutions and persons mandated to represent the state from religious institutions and religious dignitaries. Amendment: minor change or addition designed to improve a text, piece of legislation, etc. Socialistic: is a social and economic system characterized by social ownership of the means of production and co-operative management of the economy, as well as a political theory and movement that aims at the establishment of such a system. A forward discountis a term that denotes a condition in which the forward or expected future price for a currency is less than the spot price. It is an indication by the market that the current domestic exchange rate is going to decline against another currency 9.6 LEARNING ACTIVITY 1. State the advantage of the Competition Act over the MRTP Act. 201 CU IDOL SELF LEARNING MATERIAL (SLM)
--------------------------------------------------------------------------------------------------------------- - __________________________________________________________________________ 2. Differentiate between FTP 2009-14 & FTP 2015-20. --------------------------------------------------------------------------------------------------------------- - __________________________________________________________________________ 9.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Write a note on the MRTP Act, 1969 2. Explain the Necessity of abiding by the Government Regulation for the business. 3. Discuss the rationale of CCI 4. What do you understand by the Regulation of the Combination? 5. Which behaviour are prohibited by the Competition Act,2002? Long Questions 1. What are the purposes of the Competition Act,2002? 2. Explain the concept of EXIM Policy with objectives. 3. What are the features of FTP 2009-14? 4. Mention the Highlights of EXIM Policy (2015-2020). 5. Discuss the role of EXIM Bank of India B. Multiple Choice Questions: 1. _____________ shows a country's earning and payments in foreign exchange a. Capital Account Balance b. Current Account Balance c. Trade Balance d. Foreign Exchange Balance 2. The sanctioned wealth of Exim Bank is ______ and the paid-up asset is Rs. 100 crores completely endorsed by the Central Government. a. Rs. 200 crores 202 CU IDOL SELF LEARNING MATERIAL (SLM)
b. Rs. 300 crores c. Rs. 500 crores d. Rs. 200 crores 3. What is the objective of the Merchandise Exports from India Scheme (MEIS) introduced by FTP 2015-20? a. For increasing exports of notified services b. Increasing the employment c. Increasing the share price of the companies d. For export of specified goods to specified markets 4. ____________________had completely scrapped the assets limit for MRTP companies. a. The Industries (Development and Regulation Act), 1951 b. The SEBI Act c. The Industrial Policy, 1991 d. The Indian Patent Act 5. ____________are the activities followed by some of the organization in misrepresenting, misleading, deceiving or twist the facts related to goods and services. a. Restrictive Trade Practices b. Unfair Trade Practices c. Fair Trade Practices d. Perfect Trade Practices Answers 1-b, 2-a, 3-d, 4-c, 5-b 9.8 REFERENCES Text Books: Francis Cherunilam , Business and Environment, Text and Cases, [Himalaya Publishing House], 203 CU IDOL SELF LEARNING MATERIAL (SLM)
C. Fernando, Business Environment Kindle Edition, Pearson K.Aswathappa, Essentials Of Business Environment, Himalaya Publishing House SHAIKH SALEEM, BUSINESS ENVIRONMENT, Pearson Ian Worthington, Chris Britton, The Business Environment, Financial Times/ Prentice Hall. Reference Books: Morrison J, The International Business Environment, Palgrave MISHRA AND PURI, Indian Economy, Himalaya Publishing House, New Delhi Business Environment Raj Aggarwal Excel Books, Delhi Strategic Planning for Corporate Ramaswamy V McMillan, New Delhi Dahl Modern political analysis. Englewood Cliffs, N.J: Prentice-Hall. Open Text Source: Dhamija, Dr. Ashok (2009). Prevention of Corruption Act. LexisNexis India. p. 2049. ISBN 9788180385926. Subrata K. Mitra and V.B. Singh. 1999. Democracy and Social Change in India: A Cross-Sectional Analysis of the National Electorate. New Delhi: Sage Publications. ISBN 81-7036-809-X (India HB) ISBN 0-7619-9344-4 (U.S. HB). Bakshi; P M (2010). Constitution Of India, 10/e. Universal Law Publishing Company Limited. pp. 48–.ISBN 978-81-7534-840-0. www.yourarticlelibrary.com https://courses.lumenlearning.com/ 204 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT 10:SOCIAL ENVIRONMENT STRUCTURE 10.0 Learning Objectives 10.1 Introduction 10.2 Relationship between Society and Business 10.3 Business Ethics 10.3.1 Importance 10.3.2 Principles of Business Ethics 10.3.3 Examples of Ethics at Workplace 10.4 Corporate Social Responsibility 10.4.1 Background theories of CSR 10.4.2 Scope of CSR 10.4.3 CSR at Dr. Reddy’s 10.5 Summary 10.6 Keywords 10.7 Learning Activity 10.8 Unit End Questions 10.9References 10.0 LEARNING OBJECTIVE After studying this unit, you will be able to Illustrate the relationship of Business with Society Explain the impact and expectation of Society on Business Highlight the significance of ethical practices in Business Analyze the CSR concept and its relevance with performance of Business 10.1 INTRODUCTION The social environment consists of the summation of a society's beliefs, customs, practices and behaviours. It is completely man-made which is different than the natural environment in which we live. Each and every society has its own social environment. Some of the customs, 205 CU IDOL SELF LEARNING MATERIAL (SLM)
beliefs, practices and behaviours are similar across cultures, and some are not. For example, an American traveling to Britain will find many familiar practices but not so much if travelling to China. The beliefs, values and norms of a society determine how individuals and organisations should be inter-related. As society has created the social environment, so business operations are considered as external social environment. Social environment is a web of distinct element of values, beliefs and customs of diverse culture that makes it more convoluted. Even organization defines social environment within their boundaries as an internal social environment which is made up of practice, beliefs and conduct. Therefore, organization can manage internal social environment more than the external social environment. It is almost not possible for business to manage the fundamental norm of the particular society, which sometime acts as a crucial aspect of business operation. Let’s discuss dominant elements of Social environment as follows: a) Social concerns, such as the role of business in society, environmental pollution, corruption, use of mass media, and consumerism. b) Social perspective and morale, such as assurance of society from business, social norms, beliefs, traditions and practices, changing patterns of way of life and materialism. c) Family principles- Family structure and the changes in it, outlook towards and within the family, and family integrity. d) Part of women in society, stance of children and adolescents in family and society. e) Grade of Education, understanding and perception of rights, and determination of members of society. 10.2 RELATIONSHIP OF BUSINESS AND SOCIETY Society, in its broadest sense, refers to human beings and to the social structures they collectively create. Society means sub division of human being who belongs to specific interest group, community or country. Also, business is constructed humans, so organization is also an important part of the society. On the other hand, business from the rest of society which is possible due to presence of defined limits. Organization is involved in interchange of resources with its external environment across these dividing borders. For example, businesses recruit employees, buy raw material, and borrow money; they also sell products, donate time, and pay taxes.A simple diagram of the relationship between the two appears in Figure 10.2.1. 206 CU IDOL SELF LEARNING MATERIAL (SLM)
Fig 10.1 Relationship between Business and Society Business activities impact other activities in society, and actions by various social actors and governments continuously affect business. 10.2.1 System Theory According to System Theory, business (social aspects) has to continuously deal with the social structure (external environment) in which it is integrated. Organization is involved in interchange with different strata of the society like government officials, competitors, consumers, media and different groups and individuals. System theory has always presented the impressive platform to perceive the correlation between the business and its external environments. Interactive social system is established when society and business are considered at the same time. They are dependent on each other and as they are interlinked, they always affect each other. Even though they are different but still a strong relation exists between them. They are both separate and connected. As society has an implication for various business function and also business is important commercial aspect of the society and society is an important cultural aspect of the business. 10.2.2 Business and Stakeholder Relationship According to the stakeholder theory of the firm, the corporations serve a broad public purpose: to create value for society. Business is drive by profit objectives of promoters and that is main reason of their existence. Business is always dedicated to satisfy their shareholders and for this they are continuously involved in delivering quality products and services to the consumers and designs such initiatives that contribute in growth and development of employees. 207 CU IDOL SELF LEARNING MATERIAL (SLM)
Generally, we used the term stakeholder for investors who have stake or who has bought shares of the company. In broader sense, stakeholders have effects on business and they are employees, consumers, investors, board of directors, CEO and Managers, suppliers, government and media. Also, federations and trade association falls under the category of stakeholders. Different individuals with different background share a relationship with business, which is defined by the level of relation exists between them and the business. Some stakeholders are involved in the process of value creation by accessing the resources and some exert influence on value chain. Decision making process in influenced by small number of shareholders and it can become complex with large pool of stakeholders. Manager’s decision purely relies on understanding the significance of relationship and interaction with the stakeholders. Stakeholders act as an asset if they have optimistic bond with the company or pessimist if interaction of business and stakeholder is not considered properly. Negative perception can cause damage to business. Business is more alert and does not conduct the business close to any community or society that objects its presence. Not adhering to the environmental laws business may attract the lawsuits and loses their respective market share. Stakeholders are divided into Market and Nonmarket Stakeholders. Market stakeholders defines as those who are actively participates in monetarytransactions with the business that exists primarily for providing goods and services to the society. Investors put their money in business and expect returns on their investment in the form of dividends and capital gains. Employees in the exchange of compensation offers skills and capabilities to be utilized for smooth operations of business. Even the expectation of workforce is to ensure professional and personal development at workplace and business expects loyalty, productivity and performance. Suppliers supply quality raw material on as per the schedule against payment and Creditors offers money at interest. Market intermediaries like retailers, distributors and wholesalers contributes in distribution of products and services in exchange of money. Consumers that contribute in achieving good profit margin as they buy goods and services of the organization. So, business maintains two- way interaction with the society. 208 CU IDOL SELF LEARNING MATERIAL (SLM)
Fig 10.2: Business Firm and its Market stakeholders Nonmarket stakeholders include the community, various levels of government, nongovernmental organizations, the media, business support groups, and the general public. They neither have any effect on business functions and operations nor business tries to influence them. Figure 9.2.3 represents the nonmarket stakeholders of business (also called secondary stakeholders by some theorists). Non-government organization involves natural environment which not a stakeholder. 209 CU IDOL SELF LEARNING MATERIAL (SLM)
Fig 10.3: Business Firm and Non-Market Stake-Holder 10.3 BUSINESS ETHICS Concept: Business ethics is all about the morality of an organization. It indicates various procedures and practices adopted by the organization to create an environment where all employees are respected, treated with fairness and honesty is maintained in each and every operation. Business ethics is meant for all the levels i.e., it is applicable from top management till new joinee’s. Business ethics provides framework that will define what is right and acceptable behaviour and conduct at workplace. Business ethics will promote corporate governance, implementing HR and organizational policies throughout the organization and addressing conflicts through grievance procedure. Business ethics will also serve as mechanism to reduce or prohibit misconducts like bribery, biased behaviour of seniors, sexual harassment, etc. 10.3.1 Importance of Business Ethics Business is the sub system existing in the society and thus, its operations should be advantageous for the society. Such firm enjoys the tag of being ethical and honest in operations as they adopt right practices and ensures quality in their offerings which are beneficial for the society. Another important aspect for business to stick to ethics is that they prevent themselves in getting involved in any kind of misconduct which is against legal system of the country. Business respects their stakeholders and that is reflected in their conduct. Ethical companies have strong brand image in the eyes of customers, employees, creditors and investors. Ethical conduct of business increases the value of shares in the market, enjoys customer’s and employee’s loyalty. Even ethical practices adopted by business can help to build brand equity and increase the market share. Like Tata company- is the most ethical company in India, so they enjoy reasonable market share and consumer base because of this. Competitive advantage can be maintained by adopting ethical practices. Consumers are more loyal to ethical brands and also such business able to fascinate talent pool and end up selecting highly competitive individuals. Also, cost of recruitment and selection will gradually decrease in such organization as employee’s commitment is very high and thus, reducing attrition rate. Adopting business ethics in finance, human resource, marketing and production helps organization to maintain competitive advantage as well as help to achieve good rankings in global market. Relevance Of Ethics in Business 210 CU IDOL SELF LEARNING MATERIAL (SLM)
Business ethics principle was dated back during barter system, when trust was the basis of all commodity exchange. The modern approach of Business Ethics came into existence after rise of anti-big business protest groups in 1970. Government played a very active role and converted Business ethics into legislation and so we have seen business to adhere to the practice of Corporate Governance and Corporate Social responsibility. Since more than a decade most of the corporates are contributing for social cause like environment protection initiatives, public health and education, improving infrastructure and lifestyle of region where business is operating. This kind of initiatives got embedded in the organizational policy and now they are one of the main objectives of sustainable development. So, business ethics is an important dimension of internal environment of an organization and treated as moral duty of business to adopt morale principle towards stake holders. The principles of business ethics are adopted in each and every function of Organization. Ethics in Finance: Implement ERP modules and centralized system to manage the finance and accounts of the organization which is transparent and easily visible to all the other functions where they can easily relate investment vs. returns. Ethics in Marketing: Clear communication regarding product and service details to consumers, updating all the records and communications with customer, maintenance of sales records and developments provide precise data sharing among all the levels of marketing with Top management. Ethics in Human Resource Management: HR policy ensures ethical guidelines are in place with respect to the different functions of HR like recruitment, training, performance appraisal, so on. Ethics in Production: Quality management and improved customer service on real time basis are few of the domain where ethics principle is implemented successfully. 10.3.2 Principles of Business Ethics There are various distinctive approaches involved in Business Ethics. Business ethics is based on few basic principles that acts as a guideline for corporates to practice it. 211 CU IDOL SELF LEARNING MATERIAL (SLM)
Fig 10.4: Principle of Business Ethics Leadership: Leaders represent the theme of organization which implies they are the representation of Organizational culture and values to the internal as well as to the external environment. If Leaders at all levels practices and exemplify the importance of ethics in day- to-day function then whole organization follows the same. So, it’s very important the ethical people are assuming the role of managers and top management to set the approach. Respect: It is used in many senses. As we show courtesy to elders and young ones at home. Similarly, showing courtesy at workplace plays a very important role. Managers always encourage their subordinates to participate and share their opinions regarding operations, strategies and performance standard. This way team members feel important and sense of belongingness is developed. Respect is always expressed in the form of appreciation, encouragement, empathy and concern. Leaders with such quality are termed as People oriented leaders and they enjoy team loyalty as reward. Same way respect can be expressed to customers by providing efficient complaint resolution systems and approachable customer service. Fairness: Adopting the equity principle in conduct at employee-level as well at organizational level. If customer service is catering the query of customer who has bought low value product in the same way as customer service is provided with to the customer who has bought high value product. Similarly, recognizing the performance of new-hire in the same way as it is done for Assistant Manager. 212 CU IDOL SELF LEARNING MATERIAL (SLM)
Honesty: ‘Honesty is the best policy’, that is what we have learnt through fable stories. Such approach is not only the propounding impact on an individual personality but it is in similar fashion is integrated in the Organizational culture as well. Being Transparent, admitting mistakes, setting examples by improving the mistakes and in return such practices are followed by subordinates assure Honest in the operations. It also implies that certain behaviour is not appreciated like lies, holding back important information related to any project and so on. Similarly, with customers avoiding mis-selling like passing on lucrative information about product and services which are not true. Integrity: Prioritizing organizations and team goals over personal wishes is the courageous decision that is always expected from trustworthy manager. Trustworthy, honesty and integrity are inter-related aspect. Honesty and integrity principle will lead to trustworthy behaviour. Defining right is all different then practising it. Managers and top-manager who practice of selecting right activities even if it cost loss to them in person, is the one who possess integrity. Such people submerged this dimension in the organizational operations with their continuous efforts resulting in formation of Ethical firm. 10.3.3 Examples of Ethical Behavior in the Workplace: While understanding the basic principles of business ethics is important, it is arguably more important to understand how these ideas apply to day-to-day business operations. Here are some examples of how ethical behaviours can be practically applied. Putting Customer Needs First Companies that build their workplace culture around putting customer needs first and hiring people who engage in this behavior are participating in ethical behaviours. For example, if a customer comes into a store looking for a product that meets very specific needs, it's important to provide them the best product for the situation described instead of upselling them or encouraging them to buy a product that won't meet their needs. However, it is important to ensure that the \"customer first\" attitude does not unintentionally result in the unethical treatment of employees -- such as encouraging them to work more overtime than allowed, forcing them to endure abuse from customers with no safe way to escape the situation, and more. Being Transparent Transparency and clear communication is paramount when it comes to ethical workplace behaviours. Employees and consumers alike should never be lied to or told untruths, as this breaks trust within the business. For example, when faced with a public relations crisis, companies should call a meeting and address the problem directly with their employees. It's important to truthfully describe the situation as it unfolded, present solutions, and accept criticism humbly. Prioritizing Workplace Diversity 213 CU IDOL SELF LEARNING MATERIAL (SLM)
Part of being fair is providing everyone with an equal opportunity to be employed at the company. While there is much political debate around how to create workplace fairness, it is undeniable that providing equal opportunity for employment to every applicant is an ethical standard. For example, if someone notices that management tends to hire the same type of person, they may suggest getting employees more involved in the hiring process. This will introduce different perspectives to the hiring process and increase the possibility that different kinds of applicants will be selected for a position. Respecting Customer Information Many businesses collect the personal information of their customers, whether it's payment information, health information, or similar. One of the priorities for any business should be securing and protecting this information. For example, a hospital may create and enforce aggressive policies around staff sharing patient information on social media. Having an employee share this kind of information on their personal accounts is not only disrespectful of the patient's privacy, but could also put the hospital at risk of violating HIPAA regulations. Providing Resources for Reporting Unethical Behavior If an employee notices unethical behavior in the workplace, they should have an outlet to report these behaviours. The business is responsible for putting this infrastructure in place and designing it in a way that insulates the employee from harm. For example, a research university should have a neutral office of compliance that is organizationally detached from the research arm of the institution. This provides a neutral space where academics can report unethical studies or harmful practices without fear of workplace repercussions. 10.4 CORPORATE SOCIAL RESPONSIBILITY Definitions The World Business Council for Sustainable Development in its publication Making Good Business Sense by Lord Holme and Richard Watts used the following definition: “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. The above definition provides base for that distinct societies and culture will have diverse perspective of corporate social responsibility which will differ from region to region or country to country. Philanthropic model is adopted in the USA, wherein corporates fulfil the obligations of CSR by paying taxes and donating some share for charity work. While European organization believes in incorporating social responsibility in their business functions and through their operations, they direct their efforts to improve the communities. Thus, the above models are more feasible as: 214 CU IDOL SELF LEARNING MATERIAL (SLM)
(i) Business operations are not only involved in profit making but they are socially active that is embedded in the methodology of business. It will improve competitiveness in the industry and contribute in expanding the profit margins. (ii) CSR is the second priority when it comes to philanthropic approach, but that gets its importance when corporates want to earn some social incentives. CSR activities will get defined differently for different countries as there is vast difference in lifestyle and social concerns. So, CSR cannot be restricted to single definition. Also, different business will prioritize different social concern or issue. Noteworthy, the role of Manager is emphasized to create equilibrium between return-on-investment objective and taking care of social initiatives related to employees, consumers and society in broader sense. Nobel laureate, economist Milton Friedman, says: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it engages in open and free competition, without deception or fraud.”7 To Henry Ford, “The purpose of business is to do as much good as we can, everywhere for everybody concerned… and incidentally to make money”. No wonder the meaning of the concept of Corporate Social responsibility seems to differ from person to person according to their own sensitivity. To Manmohan Singh, Prime Minister of India, “Corporate social responsibility is no philanthropy. It is not charity. It is an investment in our collective future. The simplest and the most significant definition of CSR was given by Mahatma Gandhi who said: “Wealth created from society has to be ploughed back into society. The sum and substance of all these definitions can be put into the following propositions: It is an attempt made by companies to be voluntarily responsible to ethical and social considerations. It is not a legal binding for the company, unlike corporate accountability (which makes company adhere to legal and social norms). Compulsion to implement such framework or implement decision that is favourable to the purpose and beliefs of the society. The set of obligations an organization has to project, enhance, and otherwise work to the betterment of the society in which it functions. Corporate Social Responsibility is the overall relationship of the corporate with all of its stakeholders. These include customers, employees, communities, owners/investors, government, suppliers and competitors. Different aspect of Corporate Social Responsibility includes employee engagement, generating employment opportunities, financial standards and benchmark achieved, contribution for the welfare of society. The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations placed on organizations by society at a given point of time (Carrol 1989). This could be explained by the following equation. 215 CU IDOL SELF LEARNING MATERIAL (SLM)
Corporate social responsibility is essentially a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. This means not only fulfilling legal expectations, but also going beyond compliance and investing in human capital, the environment and relations with stakeholders. To put in simpler terms, stakeholders are those organizations and individuals who have an interest or “stake” in the business or corporation and its success. This includes clients, the population of small business people, other business assistance organizations, other economic development organizations, legislators at the country, federal, and state levels, executive branches of government, executive departments and agencies, the staff and contracted consultants and trainers, vendors, and taxpayers. The list is very broad and inclusive. The development of CSR reflects the growing expectations of the community and stakeholders of the evolving role of companies in society and the response of companies to growing environmental, social and economic pressures. Through voluntary commitment to CSR, companies are hoping to send a positive signal of their behaviour to their various stakeholders (employees, shareholders, investors, creditors, consumers, regulators, NGOs and the Government) and in so doing make an investment in their future and help to increase profitability. Many driving forces are fostering the evolution of corporate social responsibility such as: New concerns and expectations from citizens, consumers, public authorities and investors in the context of globalization and large-scale industrial change Social criteria are increasingly influencing the investment decisions of individuals and institutions, both as consumers and as investors 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 10.4.1 Background Theories of CSR Social scientists have formulated several theories that justify the importance of corporates engaged in promoting social welfare of the society in which they operate. The following sections describe these theories: 1. The Trusteeship Model The Trusteeship Model adopts a realistic and descriptive perspective in viewing the current governing situation of a publicly held corporation, drawing from the continental European conception of the corporation as a social institution with a corporate personality. Kay and Silberston (1995) argue that a public corporation is not the creation of a private contract and thus not owned by any individual. Ownership is by definition where the owner 216 CU IDOL SELF LEARNING MATERIAL (SLM)
has exclusive rights of possession, use, gain and legal disposition of a material object. Yet shareholders merely own their shares in a company and trade their shares with others in the stock market. They do not have rights to possess and use the assets of the company, to make decision about the direction of the company, and to transfer the assets of the company to others. The residual claims of the shareholders are determined by the company and if the company's performance does not satisfy the shareholders requirements, the shareholders are left with a single option of “exit” rather than “voice” as shareholders, in general, are in no way able to monitor the management effectively and neither are interested in running corporate business. In this sense, the assumption that the corporation is owned by the shareholders is in fact meaningless. For Kay and Silberston, ownership rights are not important to business.11 Many public institutions such as museums, universities, and libraries perform well without clear owners. Indeed, the Indian Company Law does not explicitly grant shareholders ownership rights because the corporation is regarded as an independent legal person separate from its members, and shareholders are merely the “residual claimants” of the corporation. The company has its own assets, rights and duties, and has its own will and capacity to act and is responsible for its own actions. Therefore, Kay and Silberston reject the idea that management are the agents of shareholders. Instead, they suggest that managers are trustees of the corporation. The trusteeship model differs from the agency model in two ways: First, the fiduciary duty of the trustees is to sustain the corporation's assets, including not only the shareholders' wealth, but also broader stakeholders' value such as the skills of employees, the expectations of customers and suppliers, and the company's reputation in the community. Managers as trustees are to promote the broader interests of the corporation as a whole, not solely the financial interest of its shareholders. Second, managers have to balance the conflicting interests of current and future stakeholders and to develop the company's capacities in a long-term perspective rather than focus on short-term shareholder gains. To establish a trusteeship model, they ask for statutory changes in corporate governance, such as changing the current statutory duties of the directors, ensuring the power of independent directors to nominate directors and select senior managers and appoint CEOs for a fixed 4- year term and so on. 2. The Social Entity Theory The theory has, in recent years, been promoted by three major social thinkers—the Democratic Political theorist, Robert Dahl (1985) using economic democracy, Paul Hirst (1994) using associationism, and Jonathan Boswell (1990) using communication notion of property. The social entity conception of the corporation regards the company not as a private association united by individual property rights, but as a public association constituted through political and legal processes and as a social entity for pursuing collective goals with public objections. The social entity theory views the corporation as a social institution in society based on the grounds of fundamental value and moral order of the community. “With 217 CU IDOL SELF LEARNING MATERIAL (SLM)
the fundamental value of human rights and standard of a corporation's usefulness is not whether it creates individual wealth, but sense of the meaning of the community by honouring individual dignity and promoting over all welfare.” Sullivan argues that corporations are granted charter entity for a commercial purpose, but more importantly, as a social entity for general community needs. The corporation identity and executives are representatives and guardians of all corporate stakeholder's interests. The recent resurgence of the moral aspect of stakeholder perspectives has been, in general, associated with the social entity conception of the corporation. 3. The Pluralistic Model The Pluralistic Model supports the idea of multiple interests of stakeholders, rather than shareholder interest alone. It argues that the corporation should serve and accommodate wider stakeholder interests in order to make the corporation more efficient and legitimate. It suggests that corporate governance should not move away from ownership rights, but that such rights should not be solely claimed by, and thus concentrated in, shareholders; ownership rights can also be claimed by other stakeholders, particularly employees. Stakeholders who make firm specific investments and contributions and bear risks in the corporation should have residual claims and should participate in the corporate decision making to enhance corporate efficiency. It is asserted that if corporations practise stakeholder management, their growth and profitability will increase and they will be more stable. The Four Models of Corporate Responsibility to Society Model Emphasis Proponent Ethical Voluntary commitment by companies to public welfare Mahatma Gandhi Statist State ownership and legal requirements determine Jawaharlal Nehru corporate responsibilities Liberal Corporate responsibilities limited to private owners Milton Friedman (shareholders) Stakeholder Companies respond to the needs of stakeholders— R. Edward Freeman customers, creditors, employees, communities, etc. 218 CU IDOL SELF LEARNING MATERIAL (SLM)
10.4.2Scope of CSR Three levels of social responsibility can be identified (evolution of areas of social responsibility): Market forces: Responding to the demands of the market. Managerial decisions that involve business responding to the economics of the market place by efficiently and effectively using resources. The greatest impact of business on society comes from “normal” operations, therefore, shows greatest social responsibility. Mandated actions: Government mandates or negotiated agreements (regulatory requirements and guidelines, contracts/agreements with stakeholders). Managerial decisions that reflect business responses to government mandated requirements and/or pressure group stakeholders (e.g. unions). Voluntary actions: Managerial decisions that are undertaken without outside pressure: voluntary social programmes Legal plus: “go beyond status” and regulatory requirements Respond to national consensus; recognized problems In areas with no consensus The following are the issues that are commonly addressed in corporate social responsibility The community, assistance in solving community problems Health and Welfare Education Human rights Natural environment Culture (i.e., music, arts, sports, etc.) The following sections outline the corporate social responsibilities to different groups of stakeholders. Social Responsibilities of Business Towards Consumers and Community Goods must meet the requirements of different classes, their tastes and purchasing power Goods must be reasonably priced, must be of dependable quality and of sufficient variety Provision of after-sales service advice, guidance and maintenance A fair widespread distribution of goods and services among all sections of consumers and community 219 CU IDOL SELF LEARNING MATERIAL (SLM)
Provision of free competition and prevention of concentration of goods in the hands of a limited number of producers or purchasers or groups Present a “good image” in the minds of the public for honesty and integrity of character Advertising policy should be based on moral/ethical principles. It should not mislead by false, misleading and exaggerated advertisements Support to educational, charitable and other programmes for the benefit of the community Social accountability to consumers and public regarding the business conditions Avoidance of social and moral dangers of “high spots” and “social tensions” Prevention of the growth of slums, improvement of housing conditions, elimination of crimes in industrial areas, and meeting the heavy costs of pollution and waste disposal Business should have a progressive outlook Proper training should be offered to the existing employees Should behave like a law-abiding citizen to the State To pay its dues and taxes to the state fully and honestly Maintain impartiality towards political affairs, i.e., to abstain from direct political involvement; and not to support political parties To follow honest trade practices, and avoid activities leading to restraint of trade and commerce To try not to contact public servants for selfish ends To sell commodities without adulteration Social Responsibilities Towards Employees Promote a spirit of cooperative endeavour between employees and employers through participation in decision making and in improving production and administration To pay fair and reasonable wages to labour and fair salaries to executives To develop and adopt a progressive labour policy based on recognition of genuine trade union right; settlement of disputes and conciliation; to create a sense of belonging to the business, and improving human qualities of labour by education, training, living conditions, housing, leisure and amenities To provide reasonable and just work conditions To recognize labourers as a “human being” and respect their dignity, and preserve their individual liberty Provide facilities for joint consultation and collective bargaining 220 CU IDOL SELF LEARNING MATERIAL (SLM)
Help development of proper leadership from among the employees Guarantee religious, social and political freedom to workers to take part in the civic activities Social Responsibilities Towards Owners and Inter-business To provide a fair return or dividend on the capital invested Give fair and impartial treatment to all Develop healthy cooperative business relationship between different business Advance of such unfair practices as price-rigging, undercutting, patronage, unfair canvassing and unethical advertisements Help in the control of monopoly and promotion of healthy competition 10.4.3 CSR at Dr. Reddy’s Fig 10.5 CSR at Dr. Reddy’s DRF - ABOUT DRF’S EDUCATION PROGRAM Our education program started with education for street children to discourage child labor. DRF started several school projects to help children from marginalized communities get access to quality education. 221 CU IDOL SELF LEARNING MATERIAL (SLM)
Youth ABOUT GROW To address the vast disconnect between the demand and supply of skilled human resources – largely because of the poor quality of skill training – GROW focuses on improving ‘Core Employability’ skills to ensure the student is equipped with appropriate knowledge for his/her sector-of-choice and help kick start their career. Rural Household MITRA focuses on empowering small and marginal farmers by nudging them to adopt latest technologies and best farming practices. The program bridges the lack of last-mile delivery of agriculture extension services at the grass roots by helping marginal farmers to access existing public extension facilities, engage with agri-scientists and embrace best farming practices, and more importantly, to impart this to other farmers through peer learning and sharing. We envision a sustainable and scalable community platform to address the last-mile delivery challenges, which can be replicated across the country to benefit 100 million small and marginal farmers. ABOUT FLHTL (First Level Health Team Leaders) First Level Health Team Leaders (FLHTL) play a crucial role within the Primary Health Care system and research confirms the need for enhancement of managerial and leadership skills as a key lever to improve health outcomes. While it has been a priority to impart technical skills to health workers -including FLTHL- it is noted that managerial and leadership skill building has been relegated to the periphery. DRF aims to address this gap by building an intervention for enhancing Managerial and Leadership skillsets for FLHTL. We expect a tangible shift in behavioural change resulting in effective leadership of FLHTLs and increased performance of the Indian Primary Health Care System ABOUT ACE DRF’s Action for Climate and Environment Program (ACE) focuses on climate-proofing the livelihoods of small and marginal farmers to the increasingly adverse impacts of climate change by pushing or nudging them to adopt climate-friendly technologies and farming practices. The program seeks to leverage the agriculture sector’s immense inherent potential 222 CU IDOL SELF LEARNING MATERIAL (SLM)
for mitigating emissions by encouraging the adoption of technologies and practices that sequester carbon and lower GHG emissions. It focuses on a co-benefit approach that aims at identifying strategies that prioritize win-win solutions aimed at capturing not only climate benefits but also secondary economic, social or environmental improvements in a single measure or policy. (Dr. Reddy’s foundation.org) 10.5 SUMMARY The survival and success of any business depends upon the thorough understanding of internal and external factors of business environment and adopting such environmental scanning techniques which not only provide the framework for organizational restructuring in present situation but also provides strong foundation for future growth and expansion. The focus of business is not only restricted to the technological development and competitive advantage but to achieve sustainable development. Thus, business needs to cater all the stakeholders and achieve globally competitive position. Some of the important factors and influences operating in this environment are as follows: a) Social concerns, b) Social attitudes and values, c) Family structure and the changes in it, d) Role of women in society, position of children and adolescents in family and society. e) Educational levels Leveraging business ethics wisely can result in increased brand equity overall. Types of Business Ethics – Caring, Fairness, Trust, Respect. Social scientists have formulated several theories that justify the importance of corporates engaged in promoting social welfare of the society in which they operate The Trusteeship approach The Social Entity approach The Pluralistic approach The four Model of CSR are Ethical Statist Liberal Stakeholder 223 CU IDOL SELF LEARNING MATERIAL (SLM)
Three levels of social responsibility Market forces Mandated Actions Voluntary Actions 10.6 KEYWORDS Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. Business transparency is the process of being open, honest, and straightforward about various company operations. A social concern is any issue, problem, or conflict that is a high priority for a society to solve or prevent. Society, in its broadest sense, refers to human beings and to the social structures they collectively create. The term stakeholderrefers to persons and groups that affect, or are affected by, an organization’s decisions, policies, and operations. 10.7 LEARNING ACTIVITY 1. Justify “thou shalt nots and its respective Do’s and Don’ts ___________________________________________________________________________ ___________________________________________________________________________ 2. How business and society are inter-related? ___________________________________________________________________________ ___________________________________________________________________________ 10.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain the Trusteeship theory (Topic 10.4.1) 2. Write a note on Scope of CSR 3. Explain the relevance of Business Ethics in Business 4. What is Business Ethics? Elaborate. (Topic 10.3) 224 CU IDOL SELF LEARNING MATERIAL (SLM)
5. What is System theory? (Topic 10.2) Long Questions 1. Compare the role of an organization as a social responsibility towards consumer, employees and inter-business 2. Discuss the different tools adopted by an organization to implement Business Ethics. 3. General behaviour of ethics adopted and practiced at workplace. 4. Why Business and stakeholder relationship highlights the necessity of Business ethics and CSR? 5. State the role of Market and non-Market Stake holders? What is the priority for business and Why? B. Multiple choice Questions 1. Social responsibility becomes an integral part of the ______________. a. Wealth Creation Process b. Union Budget c. Stock listing d. Increasing employee’s turnover. 2. What is the “thou shalt not’s? a. Procedures b. Code of Conduct c. Code of Ethics d. Training 3. Business ethics is a ________field because there are so many different topics that fall under its umbrella. a. Small b. Mix c. Narrow d. Broad 225 CU IDOL SELF LEARNING MATERIAL (SLM)
4. This social environment created by a society-at-large in which a business functions can be referred to as its ___________ social environment a. Internal b. Lateral c. External d. Parallel 5. _______________, by contrast, are people and groups who are not engage in direct economic exchange with the firm—are nonetheless affected by or can affect its actions. a. Suppliers b. Non-market stakeholders c. Creditors d. Employees Answers 1-a, 2-c, 3-d, 4-c, 5-b 10.9REFERENCES Text Books: Francis Cherunilam , Business and Environment, Text and Cases, [Himalaya Publishing House], C. Fernando, Business Environment Kindle Edition, Pearson K.Aswathappa, Essentials Of Business Environment, Himalaya Publishing House SHAIKH SALEEM, BUSINESS ENVIRONMENT, Pearson Ian Worthington, Chris Britton, The Business Environment, Financial Times/ Prentice Hall. Justin Paul, “Business Environment”, Tata McGraw Hill Publications P.K.Ghosh : “Business Environment”, Sultan Chand Publishers, New Delhi Reference Books: Engineering Economic-Dr. Rajan Mishra by University Science Press The Gazette of India, Ministry of Law and Justice, New Delhi. No.311, June’16, 2006. 226 CU IDOL SELF LEARNING MATERIAL (SLM)
Morrison J, The International Business Environment, Palgrave MISHRA AND PURI, Indian Economy, Himalaya Publishing House, New Delhi Business Environment Raj Aggarwal Excel Books, Delhi Strategic Planning for Corporate Ramaswamy V McMillan, New Delhi Dahl Modern political analysis. Englewood Cliffs, N.J: Prentice-Hall. Open Text Source: Dhamija, Dr. Ashok (2009). Prevention of Corruption Act. LexisNexis India. p. 2049. ISBN 9788180385926. Subrata K. Mitra and V.B. Singh. 1999. Democracy and Social Change in India: A Cross-Sectional Analysis of the National Electorate. New Delhi: Sage Publications. ISBN 81-7036-809-X (India HB) ISBN 0-7619-9344-4 (U.S. HB). Bakshi; P M (2010). Constitution Of India, 10/e. Universal Law Publishing Company Limited. pp. 48–.ISBN 978-81-7534-840-0. International Journal of Scientific and Research Publications, Volume 2, Issue 12, December 2012 www.yourarticlelibrary.com https://courses.lumenlearning.com/ 227 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT 11: CONSUMER PROTECTION ACT 1986 228 STRUCTURE 11.0 Learning Objectives 11.1 Introduction 11.2 Consumer: 11.2.1 Rights & Responsibilities of Consumer 11.2.2 Exploitation of Consumers 11.3 Legal protection to Consumers 11.4 Consumer Protection Act, 1986 11.4.1 Jurisdiction and Objective 11.5 Consumer Protection Councils 11.5.1 Three – tier Enforcement machinery 11.5.2 Consumer Disputes Redressal Agencies 11.5.3 Consumer Complaints 11.5.4 Remedial Action 11.5.5 Penalties 11.6 Summary 11.7 Keywords 11.8 Learning Activity 11.9 Unit End Questions 11.10 References 11.0 LEARNING OBJECTIVES After studying this unit, Students will be able to Explain the meaning of consumer protection State the various problems faced by consumers Realize the need for consumer protection Identify the parties involved in consumer protection Outline the provisions of laws aimed at protecting consumers CU IDOL SELF LEARNING MATERIAL (SLM)
Discuss the jurisdiction of consumer courts established for redressal of consumer disputes 11.1 INTRODUCTION Consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors. The Consumer Protection Act, 1986 was enacted to provide a simpler and quicker access to redressal of consumer grievances. The Act for the first time introduced the concept of ‘consumer’ and conferred express additional rights on him. It is interesting to note that the Act doesn’t seek to protect every consumer within the literal meaning of the term. The protection is meant for the person who fits in the definition of ‘consumer’ given by the Act. 11.2 CONSUMER A consumer is an individual who buys products or services for personal use and not for manufacture or resale. A consumer is someone who can make the decision whether or not to purchase an item at the store, and someone who can be influenced by marketing and advertisements. Any time someone goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decision as a consumer. 11.2.1 Rights & Responsibilities of Consumer Rights Right to safety: It refers to the right of a consumer to be protected against hazardous effects of all possible consumption patterns and to all goods and services which may affect life and property. Right to choose: The right to choose means the right to be assured, wherever possible, access to a variety of goods and services at competitive prices. Right to information: The right to information not only means disclosure regarding weight or price or the MRP of the product, i.e. the physical properties of the product and service but also the legal implications of the transactions. Right to be consumer education: 229 CU IDOL SELF LEARNING MATERIAL (SLM)
Consumer education empowers consumers to exercise their consumer rights. It is perhaps the single most powerful tool that can take consumers from their present disadvantageous position, to strength them in the marketplace. Right to a safe and healthy environment: Since the beginning of civilization man has been disturbing the ideal balance of nature. Using natural resources is not harmful because nature has its own cleaning mechanism. But rapid industrialization, deforestation, etc. the environment is deteriorating fast. The need for environmental conservation is seen as a necessary defense against deteriorating quality of life world -wide. Consumers need to understand that only a safe environment can ensure the fulfillment of their rights. Right to basic needs: The right to basic needs is an important right which has been conferred by UN on developing countries for consumers to lead a normal life. Right to be heard: The right to be heard means that consumers should be allowed to voice their opinions and grievance at appropriate forums. The right to seek redressal: A consumer has the right to seek redressal for any goods, deficiency in services and loss due to unfair trade practices. Every day the manufactures are finding new ways of cheating and duping the consumer. Responsibilities Be Critically Aware The responsibility to be more alert and to question more – about prices, about quantity and quality of goods bought and services used. Be Involved The responsibility is to be assertive – to ensure that you get a fair deal as a consumer, but if you are passive, you are likely to be exploited. 230 CU IDOL SELF LEARNING MATERIAL (SLM)
Be Organized The responsibility is to join hands and raise voices as consumers; to fight in a collective and to develop the strength and influence to promote and protect consumer interest. Practice Sustainable Consumption The responsibility to be aware of the impact of your consumption on other citizens, especially the disadvantaged or powerless groups; and to consume based on needs – not wants. Be Responsible to the Environment The responsibility is to be aware and to understand the environmental consequences of our consumption. We should recognize our individual and social responsibility to conserve natural resources and protect the earth for future generations. 11.2.2 Exploitation of Consumers Meaning of consumer exploitation When a producer is doing selfish deeds for his/her own benefit and the decision is a purpose giving more than mental happiness for only the producer and having adverse effects on consumer who may be illiterate or unaware, etc. Cause of Consumer Exploitation Illiteracy and Ignorance: Consumers in India are mostly illiterate and ignorant Unorganized Consumers: In India consumers are widely dispersed and are not united. Spurious Goods: There is increasing supply of duplicate products Consumers are, however, by and large, practically denied most of these rights. They are exploited by a large number of restrictive and unfair trade practices. A situation has developed in science is extensively applied to marketing to ruthlessly, exploit the consumers by stimulating the weak points and soft corners of their mind. Misleading, false or deceptive advertisements are quite common. Many a time the advertisements deliberately give only half truths so as to give a different impression than is the actual fact. Thus, advertisements may, be misleading because things that should be said have not been said, or, because advertisements are composed or purposefully presented in such a way as to mislead. Although nowadays consumer is the king pin of market but then also there is lot of exploitation of consumers as businessmen use various unfair trade practices to cheat and 231 CU IDOL SELF LEARNING MATERIAL (SLM)
exploit consumers. Consumer protection provides safeguard to consumers from such exploitation. Problems Faced by Consumers Consumers may be deceived in various ways by unscrupulous businessmen including traders, dealers, producers and manufacturers as well as service providers. Some of the following unfair practices must have come to your notice sometime or the other: 1. Adulteration that is, adding something inferior to the product being sold. This is a practice we come across in the case of cereals, spices, tea leaves, edible oil, petrol, etc. For example, mustard oil may be adulterated with rape seed oil or argemone oil, black pepper is known to be adulterated with dry papaya seeds, petrol is mixed with kerosene oil, vanaspati may be mixed with ghee/butter. Sometimes, the inferior material used with the product may be injurious to health. 2. Sale of spurious products, that is, selling something of no value instead of the real product. This is often found in the case of medicines and drugs or health care products. Cases have Consumer Protection 155 been reported where ampoules for injections contained only water or glucose water in bottles contained only distilled water. 3. Use of false weights and measures is another malpractice which some traders adopt while selling the goods. Goods which are sold by weight (kg.) like vegetables, cereals, sugar, etc., those sold by measures (meter) like textile fabrics, suit pieces, are sometimes found to be less than the actual weight or length. False weights (Kg, 500 grams, 250 grams, etc) or measuring tapes or sticks having false markings are used for the purpose and buyers are cheated. Sometimes packaged goods and sealed containers (tins) contain fewer quantities, than what is stated on the label or packet. This cannot be easily verified. Sweets are often weighed along with the card board box which may weigh up to 50-100 grams. You pay for it at the same rate as the sweets. 4. Sale of duplicates, that is, goods that indicates a mark which shown it is of superior quality than what it actually is. For example, goods which are locally made are sold at a higher price as imported items expected to be of superior quality. Certain products like washing soap, detergent powders, tube lights, jams, edible oil, even medicines, carry well-known brand names although these are made by others. 5. Hoarding and black-marketing is another problem that consumer often face. When any essential commodity is not made available in the open market and stocks are intentionally held back by dealers it is known as hoarding. Its purpose is to create an artificial scarcity, to push up the prices. Black marketing is the practice of selling hoarded goods, secretly at a higher price. These practices are sometimes adopted when there is short supply of any 232 CU IDOL SELF LEARNING MATERIAL (SLM)
product. You may have read in the newspapers sometime back about scarcity of onions in the open market in some states and high prices being charged by traders who had stocks. 6. Tie-in-Sales: Buyers of durable consumer goods are sometimes required to buy some other goods as a pre-condition to sale or may be required to pay after-sales service charges for one year in advance. You may have heard about tying up of new gas connections with the sale of gas stoves (burners). Also TV sets are sometimes sold on the condition that the buyers will make advance payment of a year’s service charge. 7. Offering gifts having no additional value or coupons to collect a gift on the next purchase of some product are practices aimed at alluring consumers to buy a product. Often gifts are offered after the price of the product on sale has been increased. Dealers also announce contests or lottery among buyers of a product without the intention of awarding any prize. 8. Misleading advertisement is yet another practice by which consumers are deceived. Such advertisements falsely represent a product or service to be of superior quality, grade or standard, or falsely assert the need for or usefulness of a product or service. A pharmaceutical company advertised that use of its paracetamol tablet did not have any side effects like aspirin, but it suppressed the experts’ report that the use of paracetamol had adverse effect on the liver. A company announced in its advertisement that it was manufacturing 150 cc. scooters in technical collaboration with a foreign company, although no such collaboration had been entered into. In another case, a company used the trademark Business Studies 156 of a well-known company ‘Philips’ in its advertisement for TV sets. On enquiry it was found that the company did not have the necessary permission from Philips for the use of its trade mark on TV sets. It was a case of misrepresentation of facts although that company was authorized to use the trademark ‘Philips’ on its audio products (radio sets) only. 9. Sale of sub-standard goods i.e., sale of goods which do not conform to prescribed quality standard particularly for safety. Such products include pressure cookers, stoves, electric gadgets (heaters, toasters, etc.), and cooking gas cylinders. 11.3 LEGAL PROTECTION TO CONSUMERS A number of laws have been passed by the Government of India over the years to protect the interest of consumers. A brief outline of the purpose of these laws in given below: Agricultural Products (Grading and Marketing) Act, 1937: This Act provides for grading and certifying quality standard of agricultural commodities which are allowed to be stamped with AGMARK seal of the Agricultural marketing department of the Government. Industries (Development and Regulation) Act, 1951: This Act provides for control over production and distribution of manufactured goods. According to this Act, the central government may order investigation of any industry, if it is of the opinion that there has been substantial fall in the volume of production, or a marked decline in the quality of a product, Consumer Protection 159 or any unreasonable rise in price. After due investigation, the 233 CU IDOL SELF LEARNING MATERIAL (SLM)
government may issue directions to set things right. If the directions are not acted upon, the government may take over the concerned undertakings. Prevention of Food Adulteration Act, 1954: This Act provides for severe punishment for adulteration of food articles. In the case of sale of adulterated food which is injurious to health and likely to cause death, life imprisonment with a minimum fine of Rs 3000 may be payable. Food inspectors are appointed and they have powers to lift samples and send them for analysis. Penalties are also provided under the act for offences committed by persons with regard to manufacture, import, storage, sale and distribution of adulterated food articles. Essential Commodities Act, 1955: Under this Act, the Government has power to declare any commodity as essential in the public interest. Thereby the government can control the production, supply and distribution of the trading of such commodities. It also provides for action against anti-social activities of profiteers, hoarders and black-marketers. The Standards of Weights and Measures Act, 1956: This Act provides for the use of standard weights and standard measures of length throughout the country. ‘Metre’ has been specified as the primary unit for measuring length, and ‘kilogram’ as the primary unit for measuring weight. Before this act came into force, different system of weights and measures were used in different parts of the country like ‘pound’, ‘Chhatak’ and ‘Seer’ as weights, yard, inch and foot for length, etc. These differences provided opportunities for traders to exploit the consumers. Monopolies and Restrictive Trade Practices Act, 1969: Under the provisions of this Act, as amended in 1983 and 1984, consumers and consumer groups can exercise their right of redressal by filing complaints relating to restrictive and unfair trade practices. The government has constituted the MRTP commission which is empowered to deal with consumer complaints after due investigation and enquiry. The Commission has power to award compensation for any loss or injury suffered by consumers. Prevention of Black-marketing and Maintenance of Essential Supplies Act, 1980: The primary objective of this act is to provide for detention of persons with a view to prevention of black-marketing and maintenance of supplies of commodities essential to the community. The maximum detention for persons acting in any manner against the intention of the act can be imprisonment upto 6 months. Bureau of Indian Standards Act, 1986: The Bureau of Indian Standards has been set up under this Act, replacing the Indian Standards Institution (ISI), to protect and promote consumer interest. It has two major activities : formulation of quality standards for goods and their certification through the BIS certification marks scheme by which manufacturers are permitted to use the standardization mark (ISI) on their products after due verification of conformity with prescribed quality standards of safety and performance. The Bureau has set up a consumer affairs department to create quality consciousness among ordinary consumers. There is also a public grievances cell to which consumers can make complaint The MRTP 234 CU IDOL SELF LEARNING MATERIAL (SLM)
Act in going to be repealed when the Competition Act, 2002, comes into force. The Competition Commission to be set up under the new Act will also replace the MRTP Commission. Business Studies 160 about the quality of products carrying ISI mark. Consumer Protection Act, 1986: This Act provides for consumer protection more comprehensively than any other law. Consumers can seek legal remedy for a wide range of unfair practices not only with respect to goods but also for deficiency in services like banking, insurance , financing, transport, telephone, supply of electricity or other energy, housing, boarding & lodging, entertainment, amusement, etc. This Act also includes provision for the establishment of consumer protection councils at the centre and the state. For the settlement of consumer disputes, the act has provided for a semi-judicial system. It consists of District Form, State Commission and National Commission for redressal of consumer disputes. These may be regarded as consumer courts. Consumerism Concept Of Consumerism: According to McMillan Dictionary (1985) \"Consumerism is concerned with protecting consumers from all organizations with which there is exchanged relationship. It encompasses the set of activities of government, business, independent organizations and concerned consumers that are designed to protect the rights of consumers\". The Chamber's Dictionary (1993) defines Consumerism as the protection of the interests of the buyers of goods and services against defective or dangerous goods etc. \"Consumerism is a movement or policies aimed at regulating the products or services, methods or standards of manufacturers, sellers and advertisers in the interest of buyers, such regulation maybe institutional, statutory or embodied in a voluntary code occupied by a particular industry or it may result more indirectly from the influence of consumer organizations\" In the current day scenario, the consumer is the focal point of any business. Consumers' satisfaction will benefit not only business but government and society as well. So consumerism should not be considered as consumers' war against any business. It is a collective consciousness on the part of consumers, business, government and civil society to enhance consumers' satisfaction and social welfare which will in turn benefit all of them and finally make the society a better place to live in. Components of Consumerism There are various components of consumerism. First and foremost is self-protection by consumers. Consumer must be aware of his rights, raise voice against exploitation and seek redressal of his grievances. Consumers' consciousness determines the effectiveness of consumerism. It is the duty of the consumer to identify his rights and to protect them. Voluntary Consumer Organizations engaged in organizing consumers and encouraging them to safeguard their interests is another important element of consumer movement. The success of consumerism lies in the realization of the business that there is no substitute for voluntary 235 CU IDOL SELF LEARNING MATERIAL (SLM)
self-regulations. Little attention from the business will not only serve consumers interest but will also benefit them. Some businesses in India have come together to adopt a code of conduct for regulating their own activities. Regulation of business through legislation is one of the important means of protecting the consumers. Consumerism has over the time developed into a sound force designed to aid and protect the consumer by exerting, legal, moral and economic pressure on producers and providers in some of the developed countries 11.4 CONSUMER PROTECTION ACT, 1986 “An Act to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumers' disputes and for matters connected therewith.”(According to Consumer Protection Act, 1986) Consumer Protection Act, 1986 seeks to promote and protect the interest of consumers against deficiencies and defects in goods or services. It also seeks to secure the rights of a consumer against unfair or restrictive trade practices. This act was passed in Lok Sabha on 9th December,1986 and Rajya Sabha on 10th December, 1986 and assented by the President of India on 24th December, 1986 and was published in the Gazette of India on 26th December, 1986. 11.4.1 Jurisdiction and Objective The judicial system set up under the Consumer Protection Act, 1986, consists of consumer courts at the district level, state level and national level. These are known as District Forum, State Consumer Disputes Redressal Commission (State commission) and National Consumer Disputes Redressal Commission (National Commission). Any individual consumer or association of consumers can lodge a complaint in writing with the district, state or National level forum, depending on the value goods and claim for compensation, if any. The district forum has the jurisdiction to deal with all complaints where the value of the goods or services or the compensation claimed does not exceed Rs 20 lakhs. The state commissions are empowered to deal with cases where the value or amount involved exceed Rs 20 lakhs but does Consumer Protection 161 not exceed Rs One Crore. The State commissions also deal with appeals and against orders of the district forum. The National commission has the jurisdiction to take up all claims and grievances exceeding the value of Rs. one crore. It has also appellate jurisdiction, that is, power to deal with appeals against orders passed by state commissions. An aggrieved party can appeal to the Supreme Court against the orders of the National Commission 11.5 CONSUMER PROTECTION COUNCILS 11.5.1 Three – tier Enforcement machinery 236 CU IDOL SELF LEARNING MATERIAL (SLM)
The Consumer Protection Act provides for setting up of a three-tier enforcement machinery at the District, State, and the National levels, known as the District Consumer Dispute Redressal Forum, State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission. While the National Commission is set up by the Central Government, the State Commissions and the District Forums are set up, in each State and District, respectively, by the State Government concerned. National Supreme Commission Court District State Forum Commission Fig 11.1 Three – tier Enforcement machinery as per Consumer Protection Act, 1986 1. District Forum: District forum consists of a president and two other members. The president can be a retired or working judge of District Court. They are appointed by state government. The complaints for goods or services worth Rs 20 lakhs or less can be filed in this agency. The agency sends the goods for testing in laboratory if required and gives decisions on the basis of facts and laboratory report. If the aggrieved party is not satisfied by the jurisdiction of the district forum then they can file an appeal against the judgment in State Commission within 30 days by depositing Rs 25000 or 50% of the penalty amount whichever is less. 2. State Commission: It consists of a president and two other members. The president must be a retired or working judge of high court. They all are appointed by state government. The complaints for the goods worth more than Rs 20 lakhs and less than Rs 1 crore can be filed in State Commission on receiving complaint the State commission contacts the party against whom the complaint is filed and sends the goods for testing in laboratory if required. In case the aggrieved party is not satisfied with the judgment then they can file an appeal in National Commission within 30 days by depositing Rs 3500 or 50% of penalty amount whichever is less. 237 CU IDOL SELF LEARNING MATERIAL (SLM)
3. National Commission: The national commission consists of a president and four members one of whom shall be a woman. They are appointed by Central Government. The complaint can be filed in National Commission if the value of goods exceeds Rs 1 crore. On receiving the complaint, the National Commission informs the party against whom complaint is filed and sends the goods for testing if required and gives judgment? If aggrieved party is not satisfied with the judgment then they can file a complaint in Supreme Court within 30 days. 11.5.2 Consumer Disputes Redressal Agencies Procedure for redressal of consumer grievances As stated in the previous section consumer complaints can be filed by an individual consumer or association of consumers. The complaint may be filed before the District Forum for the district where the cause of action has arisen or where the opposite party resides, or before the State Commission notified by the state government or the union territory, or it can be filed before the National Commission at New Delhi. There is no fee charged for filing a complaint. The complaint may be filed by the complainant or his/her authorized agent in person, or it may be sent by post. Five copies of the complaint are generally required to be filed along with the following information. Name, description and address of the complainant; Name, description and address of the opposite party or parties, as the case may be; Facts relating to the complaint and when and where it arose; Documents, if any, in support of the allegations contained in the complaint (like cash memo, receipt, etc.) The nature of relief which the complainant is seeking. The complaint should be signed by the complainant or his/her authorized agent. It has to be addressed to the president of the District Forum or State Commission or National Commission. A complaint is required to be filed within a period of two years from the date on which the cause of action arose. If these are delay and it is excused by the concerned Forum/Commission, the reason must be on record. Complaints are expected to be decided, as far as possible, within three months from the date of notice received by the opposite parties. For those complaints which require laboratory analysis or testing of products, the period is extended to five months. Depending on the nature of complaint and relief sought by the consumer and facts of the case, the redressed Forum/Commission may order one or more of the following reliefs: (a) Removal of defect in goods/deficiency in services. (b) Replacement of the goods/restoration of the service. (c) Refund of the price paid for goods or excess charge paid for service. 238 CU IDOL SELF LEARNING MATERIAL (SLM)
(d) Compensation for loss or injury suffered. 11.5.3 Consumer Complaints Department of Consumer Affairs has been receiving a very large number of complaints from the consumers regarding shortfall in the supplies/expectations of the consumers. The complaints cover a wide range of subjects like supply of defective refrigerators, T.V. Sets, use of poor material by the builders in the construction of flats, non-refund of fixed deposit amounts by companies on maturity and complaint against unfair trade practice against service providers, etc. Consumer Grievance Redressal Cell (CGRC) and Consumer Coordination Council (CCC) The department had set up a Consumer Grievance Redressal Cell (CGRC) in February 2002, for providing services for redressal of complaints of the consumers belonging to the following categories: Sale of defective goods or deficient services and charging of higher prices, etc. General grievances including those received from the Cabinet Secretary and the PMO related to consumer matters. Attending to the consumer complaints appearing in the columns of the newspapers to the extent possible. Also, complaints regarding delay in disposal of pending cases with the various districts/States/National Commission were received and processed and necessary follow up action were taken up as pro-active measures in order to redress their grievances to their satisfaction. The Redressal Cell had received 2272 complaints up to 31st March 2007. These complaints were forwarded to the Consumer Coordination Council (CCC) for redressal regarding replacement of goods, re-installation of telephone/electricity, rectification of wrong bills, possession of allotted flats, payment of amounts due to the investors on maturity, etc. The Consumer Grievance Redressal Cell and Consumer Coordination Council do not have any statutory powers to take action on the complaints of consumers. Hence, they forward the complaints to the concerned authorities to get the redressal. 11.5.4 Remedial Action Redressal Mechanism as per the Consumer Protection Act Who Can File a Complaint? A complainant in relation to any goods or services may be filled by- A consumer or Any voluntary consumer association registered under the Companies Act, 1956 (1of 1956) or under any other law for the time being in force or The Central Government or any State Government; or 239 CU IDOL SELF LEARNING MATERIAL (SLM)
One or more consumers, where there are numerous consumers having the same interest or In case of death of a consumer, his legal heir or representative A power of attorney holder cannot file a complaint under the Act. What Constitutes a Complaint? A complaint means any allegation in writing made by a complainant that- An unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider The goods bought by him or agreed to be bought by him; suffer from one or more defects The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect A trader or service provider, as the case may be, has charged for the goods or for the service mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods or displayed on the price list exhibited by him by or under any law for the time being in force or agreed between the parties Goods which will be hazardous to life and safety when used or being offered for sale to the public Services which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by the service provider which such person could have known with due diligence to be injurious to life and safety. How to File a Complaint? A complaint can be filed on a plain paper. It should contain- The name description and address of the complaints and the opposite party The Facts relating to complaint and when and where it arose. Documents in support of allegations in the complaint The relief which the complainants is seeking The complaint should be signed by the complainants or his authorized agent. No lawyer required for filing the complaint and Nominal court fee Where to File a Complaint? (Depends upon the cost of the goods or services or the compensation asked) District Forum: if it is less than Rs. 20 lakhs State Commission: if more than Rs. 20 lakhs but less then Rs. 1 crore National Commission: if more than Rs. 1 crore 240 CU IDOL SELF LEARNING MATERIAL (SLM)
11.5.5 Penalties Penalties and administrative fines Any person convicted of an offence is liable for a fine or imprisonment for a period not exceeding 12 months, or both a fine and imprisonment. The NCT may impose an administrative fine in respect of prohibited or required conduct. An administrative fine imposed may not exceed the greater of 10 per cent of the respondent's annual turnover during the preceding financial year, or Rs 1000000. Clearly, non-compliance with the Act will result in regulatory risk for any business that transacts with consumers. However, the reputational risk of non-compliance could be as severe. Businesses would be well advised to actively prepare for the Act to mitigate these risks. This will protect their business interests as well as their reputations and help them to avoid negative public opinion and potential loss of business arising from, for example, damaging media reports about their non-compliance with the Act or complaints by consumers about their disregard for consumerrights in general and for the purposes of the Consumer Protection Act. 11.6 SUMMARY Rights of the consumers are (i) Right to safety (ii) Right to be informed (iii) Right to choose (iv) Right to be heard (v) Right to seek redressal (vi) Right to consumer education Consumer protection refers to the steps necessary to be taken or measures required to be accepted to protect consumers from business malpractices. Nature of problems faced by consumers Adulteration of goods Sale of spurious products Business Studies 164 False weights and measures Sale of duplicate items Hoarding and black marketing Tie-in-sales Offering gifts Misleading advertisements Sale of substandard goods 241 CU IDOL SELF LEARNING MATERIAL (SLM)
Need for consumer protection- the necessity of adopting measures to protect the interest of consumers arises mainly due to their helpless position and the unfair business practices. Parties to consumer protection Consumers Businessmen Government Legal protection to consumers Industries (Development and Regulation) Act, 1931 Essential Commodities Act, 1955 Prevention of Food Adulteration Act, 1954 Prevention of Black-marketing and Maintenance of Essential Supplies Act, 1980. Bureau of Indian Standards Act, 1986 Agricultural Products (Grading and Marketing) Act, 1937 The Standards of Weight and Measures Act, 1956. Monopolies and Restrictive Trade Practices Act, 1969 Consumer Protection Act, 1986 11.7 KEYWORDS Grievance:an official statement of a complaint over something believed to be wrong or unfair. Redressal: a setting right again Penalty: a punishment imposed for breaking a law, rule, or contract. Consumerism: the protection or promotion of the interests of consumers Adulteration: to corrupt, debase, or make impure by the addition of a foreign or inferior substance or element. 11.8 LEARNING ACTIVITY 1. Educating Consumers regarding their rights and responsibilities is one of the best ways of empowering consumer. Support this statement with necessary arguments. ___________________________________________________________________________ 242 CU IDOL SELF LEARNING MATERIAL (SLM)
___________________________________________________________________________ 2. I had purchased seeds from a party. The seeds did not germinate. The other party took the plea that I was not a consumer. Whether purchase of seeds for the purpose of agriculture is purchase for commercial purpose? ___________________________________________________________________________ ___________________________________________________________________________ 11.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is meant by consumer protection? 2. Why should consumers be protected? 3. Describe the various problems faced by consumers in their daily life? 4. Write a note on Penalties and administrative fines. 5. What is Consumerism? Long Questions 1. What information is required to be filed before the consumer courts while filing any complaint? 2. State how consumer court may order in favor of consumers. 3. State the procedure to be followed for redressal of consumer grievances 4. Enumerate the various Acts passed by the government for protection of consumer’s interest. 5. Who can file a complaint? Discuss the eligibility. B. Multiple choice questions 1. In which year consumer Protection Act was enforced? a. 1972 b. 1982 c. 1986 d. 1995 2. How many rights of consumers are provided under the Consumer Protections Act 1986? 243 CU IDOL SELF LEARNING MATERIAL (SLM)
a. 6 b. 8 c. 7 d. 4 3. Responsibility of Consumer includes: a. Proper use of Product/Service b. Right to Education c. Must fight for its rights d. Should always visit consumers courts 4. Consumerism refers to movement by a. Government b. Society c. Producers d. Consumers 5. Which right provides due compassion to consumers? a. Right to be informed b. Right to seek redressal c. Right to be heard d. Right to choose Answers 1-c, 2-a, 3-a, 4-d, 5-b 11.10REFERENCES Text Books: Francis Cherunilam , Business and Environment, Text and Cases, [Himalaya Publishing House], C. Fernando, Business Environment Kindle Edition, Pearson 244 CU IDOL SELF LEARNING MATERIAL (SLM)
K.Aswathappa, Essentials Of Business Environment, Himalaya Publishing House SHAIKH SALEEM, BUSINESS ENVIRONMENT, Pearson Ian Worthington, Chris Britton, The Business Environment, Financial Times/ Prentice Hall. Justin Paul, “Business Environment”, Tata McGraw Hill Publications P.K.Ghosh : “Business Environment”, Sultan Chand Publishers, New Delhi Reference Books: Dr. Durga Surekha, 2010, Consumers‟ Awareness about Rights and Grievance Redressal, Abhijeet Publications. Akanksha Rana, Consumer Claims, Eastern Book Company Morrison J, The International Business Environment, Palgrave MISHRA AND PURI, Indian Economy, Himalaya Publishing House, New Delhi Business Environment Raj Aggarwal Excel Books, Delhi Strategic Planning for Corporate Ramaswamy V McMillan, New Delhi Open Text Source: www.yourarticlelibrary.com https://courses.lumenlearning.com/ 245 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT 12: TECHNOLOGICAL ENVIRONMENT STRUCTURE 12.0 Learning Objective 12.1 Introduction 12.2 Technology & Technological Environment: Meaning 12.2.1 Technology and Competitive Advantage 12.2.2 Levels of Technology 12.3 Impact of Technology on Business 12.3.1 Impact of Technology and Society 12.3.2 Technology and Economy 12.3.3 Plant Level Implications 12.3.4 Technology and Globalization 12.4 Status of Technology in India 12.5 Summary 12.6 Keywords 12.7 Learning Activity 12.8Unit End Questions 12.9References 12.0 LEARNING OBJECTIVES After studying this unit, Students will be able to State the concept of Technology and Technological Environment Explain the relationship between Technology and Competitive advantage Comprehend the impact of Technology on Society, Economy, Plant level implications and Globalization Outline the concept of time lag in Technology Introduction and Absorption List the Management of Technology Appreciate the Status of Technology in India Appreciate the Science and Technology Policy, 2003 and Strategies to realize its objectives 246 CU IDOL SELF LEARNING MATERIAL (SLM)
12.1 INTRODUCTION Technology is a very critical factor in economic development and transfer of it is an important preoccupation for both industrialized and developing countries because of the progress in global system of communication, the increasing economic subordination among different nations, and the serious undersupply of vital natural resources. Many industrialized countries have been witnessing the changes in the technological environment over the last 30 years particularly in areas like chemicals, drugs, information technology and electronics. Technological upgradation and adoption are vital that helps organization to stay abreast of environmental changes – that will provide a strong base for anticipating and competing organization’s counterparts. In today’s aggressive and constantly changing business environment, companies has deeply modified their strategies to integrate technology into the business planning process as follows: Products Development This type of technology can reduce the duration required for products to get into the market. The simple reason behind it is that majority of companies are now able to create a database of product requirement which has been gathered using best market intelligence from customers, sales representatives and proprietary records. Also with the help of manufacturing software and associated computer software it is easy to speed up the decision making process. Thus, this technology-oriented platform also updates regarding the changes in the customer requirement which businesses are enjoying at their liberty. Process Improvement Enterprise resource planning systems (ERP) is an example of real time based IT business solution popular among business that makes it easier for managers to review costs, sales and any other types of operating metrics on a software platform which is fully integrated. Improves Communication: Nowadays employee’s communication involves much more than phone calls or inter-office mail as they can send instant messages and share important work-related files, documents and reports through intranet messengers which are customized as per the business operation. Also, technology-based platforms and internet had improved the communication with business partners, clients and customers. Human Capital: Technology had changed the Human Resource function and had improved the performance of screening, recruiting and hiring potential candidates. Also, it is easy to attract the talent pool for various job openings through Job portals, social networks and online advertising. Also, digital platform had made the manager’s job easy to carry out the recruitment process 247 CU IDOL SELF LEARNING MATERIAL (SLM)
smoothly. IT enabled screening tests, personality assessment and psychometric test had improved the screening process and results in figuring out the appropriate fit for an organization. Efficiency: Technology had also improved the performance and reduced the cost like digital filing systems that helps to save space, paper and printing costs. The huge database, required information and corrections can be figured out with the click of a button. Mobility: Technology had made the world very small also for global businesses or MNC’s. It is practically possible that any organization’s head office is connected all the time with its branches or SBU’s operational in various countries and also there whole work functions are integrated in same system with the help of technology applications. The business heads does not require to travel across different SBU’s for meeting that can be arranged through video conferencing or virtual meeting system which also facilitates the sharing of important documents, reports, files, etc. through internet enabled applications. Fusion of Stakeholders With the help of integrated websites, the organizations are able to convey direct message or information to the research analysts, shareholders and other important market holders for the purpose of staying ahead in the business. Globalization: Businesses are not existing merely to earn profits or customer loyalty of one country, they are moving on global platform for acquiring a huge market, brand recognition, sky limit profits, stakeholder’s belief and socially responsible existence. So, technology is helping the businesses to achieve such big goals in a competitive environment by integrating the functions across SBU’s which results in improved efficiency, product quality and cost saving systems. Thus, technology is proving as a competitive edge for businesses which enables them to be in a forefront in a competitive environment. 12.2TECHNOLOGY AND TECHNOLOGICAL ENVIRONMENT MEANING Concept: Technology: Usually, technology is defined as the entities, both relevant and irrelevant, built by the application of intellectual and actuals effort for achieving utility and benefits. In general sense, application of technology refers to use of gimmick and gizmo to construct, repair, maintain and solve many problems of physical world. It is a radical term which includes 248 CU IDOL SELF LEARNING MATERIAL (SLM)
equipment’s as easy as a crowbar or wooden spoon and as composite as a space station or particle accelerator. Technology covers dimension of internet, operating system of computers, android of smart phone, business software beyond normal instruments. W. Brian Arthur defines technology in a similarly broad way as \"a means to fulfil a human purpose\". Technology refers to collection of methodology that has great scope of application which involves human’s know-how to combine different forms of inputs to make and develop such products which will satisfy the needs and wants. It includes supplies, tools, methodologies, and operations. When technology is referred in specific aspect like \"medical technology\" or \"space technology\", it represents know-how and application in that relevant field to. \"State- of-the-art technology\" relates the application of technology in any domain and easily approachable by humanity. The development of Modern Computer was started as soon as formulation of integrated circuits and the microprocessor came into existence (i.e., in 1971 – Intel introduced 4004 chip). Culture is always influenced by Technology. Now-a-days we often check tech-savvy skill (people who are comfortable to work with computers and software’s) of new joinee’s in an organization. Technology is based on combination and application of various subjects like science, math and arts and it is meant for improving the life. As now, we have adopted digital economy which is the result of technology that has become part of our daily lives. But we cannot deny the misuse of technology that is mostly used by violent groups. Not all technology enhances culture in a creative way; technology can also help facilitate political oppression and war via tools such as guns. Technology foreshadows the dimension of science and engineering in cultural aspects, that are its building blocks to an extent. Collectively the methodologies, operations or activities utilized for production of goods or services or in the attainment of goals in some research work constitutes technology. It can be the know-how of procedures, methods, blueprint, etc. or it can be submerged in appliances, computers, devices and business units, which are managed by employees or professionals without having working knowledge of such applications. We can categorize Technology into five divisions as: Tangible: blueprints, models, operating manuals, prototypes Intangible: consultancy, problem-solving, and training methods. High: entirely or almost entirely automated and intelligent technology that manipulates ever finer matter and ever powerful forces. Intermediate: semi-automated partially intelligent technology that manipulates refined matter and medium level forces. Low labor-intensive technology that manipulates only coarse or gross matter and 249 CU IDOL SELF LEARNING MATERIAL (SLM)
weaker forces. Technological Environment: External factors in technology that impact business operations is termed as Technological environment. Changes in technology affect how a company will do business. The strategies adopted and functional aspect of a business will get change to respond the changes in the technological environment. The different factors which improve the operational efficiency and quality of business by application of advanced technical know- how will be termed ass Technological environment. For instance, use of ERP modules in various function of business-like ERP-Inventory Management, ERP- Tally, etc. Different technological matter related to supply chain management of an organization will be considered in Technological environment. There are various matters like development in technology, the life cycle of current technology, the role of world wide web, Funds allocated for technological research in the country, amendments and modification in current technology policy and anticipation of after effects of potential technology. Other important aspect is the expectations of the millennials from the current and potential technology who are the current and potential user of it. 12.2.1 Technology and Competitive Advantage: When core competency and strengths of an organization are utilized with environmental opportunity that results in increase in market share and profits is termed as Competitive advantage which is result of continuous efforts and operational efficiency that helps to outperform in market. The core competency components can be developed because of numerous reasons like quality ores, skilled and trained workforce, less cost of production because of improved methods and process. Even the smart phones, variety of digital interventions, software and so on can prove a contributing factor in developing competitive advantage. There are numerous benefits that organization can enjoy because of Competitive advantage like market leadership, improved performance, increase in Managers and employee’s motivation, development of more prominent strategies. When Business strategy are clubbed with technology that manoeuvre the resources and create competitive advantage, but proper control system needs to be added to ensure the stability of competitive advantage. Exemplary and excellent performance is the main goal of the efforts taken by organization which is achieved by Competitive advantage and that’s why technology and its factors are of utmost importance for an organization. Porter admitted the importance of technology in bringing about modification and advancement in existing business and development of new industries. Changes in technological environment has an important implication for business functions and 250 CU IDOL SELF LEARNING MATERIAL (SLM)
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