Ethics and Social Responsibility for Entrepreneurs

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1. https://www.district205.net/cms/lib07/IL01001003/Centricity/Domain/116/Chapter_5-W.pdf

2. https://ecestudy.files.wordpress.com/2015/02/ethics-and-social-responsibilities-of-entrepreneurs.pdf

3. https://www.robeson.k12.nc.us/cms/lib/NC01000307/Centricity/Domain/2825/Ch_24.ppt

Business ethics for entrepreneurs

For entrepreneurs, ethical behavior is often overlooked as the chaos of everyday business obscures the philosophical side of your company. But fear not, it is far easier to reconnect to a solid ethical footing than it is to attempt an "ethics transplant."

Many business experts treat ethics like a sermon on the mount. Although it's hard not to preach a bit when it comes to ethics and morals, I've tried to identify some things to think about, in addition to recommendations on how to behave ethically. It's interesting to consider how good ethical behavior reflects smart business practices, but maybe that's exactly why the great companies are just that.

Consider these eight elements that comprise the ethical bedrock of an awesome organization:

Respect:

As an entrepreneur building a business, you need to respect yourself and surround yourself with people you can respect. Remember, strong respect doesn't mean you can fly on auto-pilot. While you can assume your people will do their job as well as they can, they do need coaching, training and direction, but respect and trust make it easier for you to avoid micro-managing them.

Do not hire or do business with people you don't respect, or who don't respect you. These are the types of people who ultimately don't respect their colleagues, customers, vendors, or themselves. When existing relationships weaken, take action. Do your best to rebuild mutual respect, but it can no longer be rebuilt, let the person go.

Honor:

Good people are a fundamental part of good ethics. They are also great ambassadors for doing things right. Give special attention to strong performers and people who exemplify the spirit of your organization. Most companies recognize top achievers and producers. Go beyond quotas and sales figures. Point out, and show your gratitude to the people who exhibit exemplary behavior, and who have made sacrifices on your behalf. These are people who have helped you be successful, and you need to acknowledge and honor their contributions publicly, as well as privately.

Integrity:

hen it comes to integrity, it is impossible to avoid sounding preachy or parental. Do not lie, steal, or cheat. Make your word your bond and always stand by your word. When you are wrong, own up to it and make good on the deal. Treat others as you'd want to be treated.

Do not hire or retain people who do not have integrity. Other employees, customers and vendors will not trust them. That lack of trust is like a virus; eventually they will not trust you either.

Make sure no one is selling the company's values short to make a quick buck. After all, making a bad deal to meet a quota or target is not only unethical, it's often unprofitable in the end.

Customer focus:

A company is nothing if it does not have customers. More to the point, if a company does not produce what people want and will pay for, there is no point to that company. A focus on your customers reinforces the responsibility you have to the market. Your decisions affect your people, your investors, your partners and ultimately, your customers. Serving all of these people is part of your ethical responsibility. Selling your customers short not only risks compromising your ethics, it also risks the long-term health of your company.

Results-oriented:

You wouldn't be an entrepreneur if you weren't focused on results already, but ethics factor into results too. Don't aim for results at any cost. Work on achieving your results within your company values. Results should be attained in the context of developing something that customers want, and producing and delivering it at a price that is fair to all the parties involved.

Good managers clearly identify the results they expect, then support their employees and help them achieve those results. They provide feedback on performance in an effort to help the employee achieve their potential, and the results the company needs for success. In a good company (and an ethical company), results are more than just numbers. They are benchmarks and lessons for the future as well as goals for the present.

Risk-taking:

So far, you might be feeling that ethical companies are timid and mousy, scared of doing the wrong thing. That is simply not true. Organizations that thrive, prosper and grow do so by taking risks. They do not stick to the safe path. Great companies innovate, they think "out of the box", and they try new things. They re-invent themselves and they reward the risk-takers. As long as you stick to your philosophical guns, risk-taking poses no threat to your ethics.

Great companies attract employees who are willing to take risks, and they encourage, support and reward them for taking calculated risks. When the risks pay off, they share the rewards with those who produced. When the risks do not pay off, they take the time to analyze what went wrong, and learn what to do better next time.

Think about this; Who would you rather be surrounded by when you are taking risks: people who you trust and respect, or the sharks and snakes?

Passion: 

Great organizations are comprised of people who have a passion for what they are doing. These are people who are working for you for the thrill and challenge, not merely putting in time to collect a pay-check. They are excited, driven, and believe that their work and efforts can make a difference.

Without the passion burning within them, people put in a minimal effort, getting paid and going home. These people are role models to others: why work so hard when you can come in late and leave early?

People can demonstrate their excitement in many ways, so be aware that extra effort on a project or working on the weekend shows passion as much as enthusiastic cheerleading.

Persistence:

People in awesome organizations have the will to persist. They will keep working even when results are not what they hoped, or when customers refuse to buy. Their persistence is tied to their passion for what they are doing and a belief that this group of people, this company, has the best chance of "making it" of any company they could join. And so, they work harder, They continue to take risks. They behave with honor and integrity. They keep their focus on the customer's needs and wants. And, they are not satisfied until they achieve the goals and results that are expected.

You, as the leader, need to put a lot of time and effort into hiring people who share these values. Talk to your team about the importance of these values to the strategy, plans and decisions made. You need to clearly draw the line which separates "what's allowed" from "what's not allowed" in the company. And, when someone steps over the line, the leader needs to tell them they stepped over. Depending on the person (and the incident), give them another chance and get them to change their behavior, or let them go. Taking no action is unacceptable.

Sticking to your beliefs might be the ultimate representation of good ethics. And not surprisingly, it doesn't just make good sense from an ethical standpoint, but it makes great business sense.

Digitalisation in Business

What is Digitalisation of Business

In today’s world, everything has become digitalized. Customers are demanding from companies in many industries a radical overhaul of business processes. The feature of digitalization like:

• Intuitive Interface;
• Around the clock availability;
• Real-time fulfillment of needs
• Personalized treatment;
• Global consistency;
• Zero Errors; has become increasingly accustomed.

The experience of digitalization is a superior user experience. However, digitalization also works in favor of business person if used in a right way as it will help in offering more competitive prices because of the reason like lower cost, better operational control & fewer risks.

To meet the demands of their customer all the business are trying to accelerate the digitization of their business process. Digitization often requires that old wisdom is combined with new skills.

Meaning of Digitalisation:

Digitalisation is an integration of digital technologies into everyday life. In simple words, it can be said to be computerization of systems and jobs for better ease and accessibility.

It is a use of technologies and data to create revenue, improve business, transform the business process and create an environment for digital business. It is a process of converting information into digital format.

Swot Analysis of Digitalization:

SWOT stands for strength weakness opportunities and threats. Applying SWOT to the business plan:

Strength:

Strength is the internal characteristics. The strength of digitalization can be:

• As by digitization cost can be cut up to 90%.
• Replacing paper and manual process with software allows business to collect data automatically.
• It also helps in better understanding process performance, cost drivers and causes of risks.
• It also helps in addressing problems before they become critical.
• Digitized information is easier to preserve, access and share.

Weakness:

• The lack of content specialist.
• The fact that the web team is busy doing minor updates and not thinking strategically.
• Limitation on the type of content published.
• The content on the website is out of date, unfocused.
• Low R&D expenditure of both business and government

Opportunities:

The Government of India is also making continuous efforts to make digitalization a successful plan. For that Government of India has launched a campaign DIGITAL INDIA. The main aim of this campaign is to ensure that the Government service is made available to all the citizens by improved online infrastructure. Digital India consists of three core component:

• Universal Digital Literacy.
• Delivering Government service digitally.
• Development of secure and stable digital infrastructure.

The concept of Digitalization will create an enormous opportunity for IT Companies. At present also there are not a large number of competitors so there is a lot of scope for success.  The new generation is ready to adopt Technology Enhanced Learning. Research excellence in complementary topics like intelligent information management. Positive GDP growth forecast in economies.

Threats:

• When planning for any digital transformation, organizations must factor the cultural changes they are going to face as workers.
• Organizational leaders adjust to adopting and keep on relying on unfamiliar technologies.
• Digital transformation has created a unique marketplace as well as challenges and opportunities because of this organizations have to face many competitors who take advantage of the low barrier to take entry in the existing market.
• Ageing population not being able to tackle the contemporary technology and usage.
• Due to the high importance is given to technology today & widespread use of those technologies the implication of digitalization for revenues, profits and opportunities have a dramatic upside potential.

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State Finance Corporations (SFCs)

The State Finance Corporations (SFCs) are the integral part of institutional finance structure in the country. SEC promotes small and medium industries of the states. Besides, SFCs are helpful in ensuring balanced regional development, higher investment, more employment generation and broad ownership of industries.

At present there are 18 state finance corporations (out of which 17 SFCs were established under SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. established under Company Act, 1949, is also working as state finance corporation.

Organisation and Management:

The State Finance Corporations management is vested in a Board of ten directors. The State Government appoints the managing director generally in consultation with the Reserve Bank and nominates three other directors.

The insurance companies, scheduled banks, investment trusts, co-operative banks and other financial institutions elect three directors. Thus the majority of the directors are nominated by the government and quasi-government institutions.

Functions:

he important functions of State Finance Corporations are:

(i) The SFCs grant loans mainly for acquisition of fixed assets like land, building, plant and machinery.

(ii) The SFCs provide financial assistance to industrial units whose paid-up capital and reserves do not exceed Rs. 3 crore (or such higher limit up to Rs. 30 crore as may be specified by the central government).

(iii) The SFCs underwrite new stocks, shares, debentures etc., of industrial concerns.

(iv) The SFCs provide guarantee loans raised in the capital market by scheduled banks, industrial concerns, and state co-operative banks to be repayable within 20 years.

Working of SFCs:

The government of India passed the State Financial Corporation Act in 1951 and made it applicable to all the States. The authorised Capital of a State Financial Corporation is fixed by the State government within the minimum and maximum limits of Rs. 50 lakh and Rs. 5 crore and is divided into shares of equal value which were taken by the respective State Governments, the Reserve Bank of India, scheduled banks, co-operative banks, other financial institutions such as insurance companies, investment trusts and private parties.

The shares are guaranteed by the State Government. The SFCs can augment its fund through issue and sale of bonds and debentures, which should not exceed five times the capital and reserves at Rs. 10 Lakh.

Advantages and Limitations of Planning

Advantages of Planning:

Planning is one of the crucial functions of management. It is basic to all other functions of management. There will not be proper organization and direction without proper planning. It states the goals and means of achieving them.

Above all other things, planning is important for the following reasons:

1. Attention on Objectives:

Planning helps in clearly laying down objectives of the organization. The whole attention of management is given towards the achievement of those objectives. There can be priorities in objectives, important objectives to be taken up first and others to be followed after them.

2. Minimizing Uncertainties:

Planning is always done for the future. Nobody can predict accurately what is going to happen. Business environments are always changing. Planning is an effort to foresee the future and plan the things in a best possible way. Planning certainly minimizes future uncertainties by basing its decisions on past experiences and present situations.

3. Better Utilization of Resources:

Another advantage of planning is the better utilization of resources of the business. All the resources are first identified and then operations are planned. All resources are put to best possible uses.

4. Economy in Operations:

The objectives are determined first and then best possible course of action is selected for achieving these objectives. The operations selected being better among possible alternatives, there is an economy in operations. The method of trial and error is avoided and resources are not wasted in making choices. The economy is possible in all departments whether production, sales, purchases, finances, etc.

5. Better Co-ordination:

The objectives of the organization being common, all efforts are made to achieve these objectives by a concerted effort of all. The duplication in efforts is avoided. Planning will lead to better co-ordination in the organization which will ultimately lead to better results.

6. Encourages Innovations and Creativity:

A better planning system should encourage managers to devise new ways of doing the things. It helps innovative and creative thinking among managers because they will think of many new things while planning. It is a process which will provide awareness for individual participation and will encourage an atmosphere of frankness which will help in achieving better results.

7. Management by Exception Possible:

Management by exception means that management should not be involved in each and every activity. If the things are going well then there should be nothing to worry and management should intervene only when things are not going as per planning. Planning fixes objectives of the organization and all efforts should be made to achieve these objectives. Management should interfere only when things are not going well. By the introduction of management by exception, managers are given more time for planning the activities rather than wasting their time in directing day-to-day work.

8. Facilitates Control:

Planning and control are inseparable. Planning helps in setting objectives and laying down performance standards. This will enable the management to cheek performance of subordinates. The deviations in performance can be rectified at the earliest by taking remedial measures.

9. Facilitates Delegation:

Under planning process, delegation of powers is facilitated. The goals of different persons are fixed. They will be requiring requisite authority for getting the things clone. Delegation of authority is facilitated through planning process.

Limitations of Planning:

Despite of many advantages of planning, there may be some obstacles and limitations in this process. Planning is not a panacea for all the ills of the business. Planning will only help in minimizing uncertainties to a certain extent.

The following are some of the limitations of planning:

1. Lack of Reliable Data:

Planning is based on various facts and figures supplied to the planners. If the data on which decisions are based are not reliable then decisions based on such information will also be unreliable. Planning will lose its value if reliable facts and figures are not supplied.

2. Time Consuming Process:

Practical utility of planning is sometimes reduced by the time factor. Planning is a time- consuming process and actions on various operations may be delayed because proper planning has not yet been done. The delay may result in loss of opportunities. When time is of essence then advance planning loses its utility. Under certain circumstances an urgent action is needed then one cannot wait for the planning process to complete.

3. Expensive:

The planning process is very expensive. The gathering of information and testing of various courses of action involve greater amounts of money. Sometimes, expenses are so prohibitive that small concerns cannot afford to use planning. The long-term planning is a luxury for most of the concerns because of heavy expenses. The utility derived from planning in no case should be less than expenditure incurred on it.

According to Hainman, “The cost of planning should not be in excess of its contribution, and wise managerial judgment is necessary to balance the expense of preparing the plans against the benefits derived from them.”

4. External Factors may Reduce Utility:

Besides internal factors there are external factors too which adversely affect planning. These factors may be economic, social, political, technological or legal. The general national and international climate also acts as limitation on the planning process.

5. Sudden Emergencies:

In case certain emergencies arise then the need of the hour is quick action and not advance planning. These situations may not be anticipated. In case emergencies are anticipated or they have regularity in occurrence then advance planning should be undertaken for emergencies too.

6. Resistance to Change:

Most of the persons, generally, do not like any change. Their passive outlook to new ideas becomes a limitation to planning. McFarland writes. “The principal psychological barrier is that executives, like most people have more regard for the present than for the future. The present is not only more certain than the future, it is also more desirable. Resistance to change is commonly experienced phenomenon in the business world. Planning often implies changes which the executive would like to ignore, hoping they would not materialize.” The notion that things planned for future are unlikely to happen is not based on logical thinking. It is the planning which helps in minimizing future uncertainties.

Planning

Planning Definition, Characteristics of Planning and Elements of planning:

Planning is a major and primary function of management. No organisation can operate properly without planning.

Planning is a preparatory step for action. It means systematized pre-thinking for determining a course of action to achieve some desired result.

Therefore, planning may be defined as follows:

Planning is the process by which the managers of an organisation set objectives, make an overall assessment of the future, and chart the courses of action with a view to achieving the organisational goals.

Some important definitions of planning, given by the eminent authors are stated below:

According to Koontz and O’Donnell, planning is “an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, facts and considered estimates.”

George Terry writes:

“By means of planning management members try to look ahead, anticipate eventualities, prepare for contingencies, map out activities and provide an orderly sequence for achieving the objective.”

Henry Fayol views:

“The plan of action is, at one and the same time, the result envisaged, the line of action to be followed, the stages to go through, and methods to use.”

Characteristics of Planning:

Planning is concerned with the establishment of objectives of an enterprise and finding out the way of realisation of those objectives. However, without setting the objectives there is nothing to organise, direct or control. Therefore, every organisation is required to specify what it wants to achieve. Planning is basically related with this aspect.

1. Intellectual Process:

Planning is an intellectual and rational process. Planning is a mental exercise involving imagination, foresight and sound judgement. It requires a mental disposition of thinking before’ acting in the light of facts rather than guess. The quality of planning depends upon the abilities of the managers who are required to collect all relevant facts, analyse and interpret them in a correct way.

How far into the future a manager can see and with how much clarity he will depend on his intellectual calibre, are chalked out through planning process. In thinking of objectives, alternative courses of action and, above all, in making decision for choosing certain alternatives, the planner goes through an intellectual process.

2. Goal-orientation:

All planning is linked up with certain goals and objectives. It follows, therefore, that every plan must contribute in some positive way to the accomplishment of group objectives. Planning has no meaning without being related to goals and objectives. It must bridge the gap between where we are and where we want to go at the minimum cost.

3. Primary Function:

Planning is said to be the most basic and primary function of management. It occupies first place and precedes all other functions of management which are designed to attain the goals set under planning. This is so because the manager decides upon the policies, procedures, programmes, projects, etc. before proceeding with the work. The other functions of management—organising, direction, co-ordination and control—can be performed only after the manager has formulated the necessary planning.

4. Pervasiveness:

Planning pervades all managerial activities. It is the job of all managers in all types of organisation. It is undertaken at all segments and levels of the organisation—from the general manager to the foreman. Whatever be the nature of activity, management starts with planning. The character and breadth of planning will, of course, vary from one job to another—depending on the level of management.

5. Uniformity:

There may be separate plans prepared in different levels in the organisation, but all the sub-plans must be united with the general plan so as to make up a comprehensive plan for operation at a time. So, uniformity must be there in all levels of planning to match the general plan.

6. Continuity:

To keep the enterprise as a going concern without any break, it is essential that planning must be a continuous process. So, the first plan must follow the second plan and the second plan the third and so on in never-ending series in quick succession.

7. Flexibility:

Plans should not be made rigid. It should be as flexible as possible to accommodate all possible changes in the enterprise with a view to coping with the changing conditions in the market. In fact, planning is a dynamic activity.

8. Simplicity:

The language of the work schedule or programme in the planning should be simple so that each and every part of it may easily be understood by the employees at different levels, specially at the lower level.

9. Precision:

Precision is the soul of planning. This gives the planning exact, definite, and accurate meaning in its scope and content. Any mistake or error in planning is sure to upset other functions of management and, thus, precision is of utmost importance in every kind of planning.

10. Feasibility:

Planning is neither poetry nor philosophy. It is based on facts and experience, and thereby realistic in nature. It represents a programme which is possible to execute with more or less existing resources.

11. Choice among Alternative Courses:

Planning involves selection of suitable course of action from several alternatives. If there is only one way of doing something there is no need of planning. Planning has to find out several alternatives, estimate the feasibility and profitability of the different alternatives, and to choose the best one out of them.

12. Efficiency:

Planning is directed towards efficiency. A plan is a course of action that shows promise of optimizing return at the minimum expense of inputs. In planning, the manager evaluates the alternatives on the basis of efficiency. A good plan should not only attain optimum relationship between output and input but should also bring the greatest satisfaction to those who are responsible for its implementation.

13. Inter-dependence:

The different departments may formulate different plans and programmes for their integration in the overall planning. But sectional plans cannot but be inter-dependent. For example, production planning depends upon sales planning—and vice versa.

Again, planning for purchase of raw materials, employment of labour, etc. cannot be an isolated act apart from sales planning and production planning. Planning is a structured process and different plans constitute a hierarchy. Different plans are inter-dependent and inter-related. Every lower-level plan serves as a means towards the end of higher plans.

14. Forecasting:

Above all, no planning can proceed without forecasting—which means assessing the future and making provision for it. Planning is the synthesis of various forecasts—short-term or long-term, special or otherwise. They all merge into a single programme and act as a guide for the whole concern.

Elements of Planning:

Planning as a managerial process consists of the following elements or components:

1. Objectives:

The important task of planning is to determine the objectives of the enterprise. Objectives are the goals towards which all managerial activities are aimed at. All planning work must spell out in clear terms the objectives to be realised from the proposed business activities. When planning action is taken, these objectives are made more concrete and meaningful. For example, if the organisational objective is profit earning, planning activity will specify how much profit is to be earned looking into all facilitating and constraining factors.

2. Forecasting:

It is the analysis and interpretation of future in relation to the activities and working of an enterprise. Business forecasting refers to analysing the statistical data and other economic, political and market information for the purpose of reducing the risks involved in making business decisions and long range plans. Forecasting provides a logical basis for anticipating the shape of the future business transactions and their requirements as to man and material.

3. Policies:

Planning also requires laying down of policies for the easy realisation of the -objectives of business. Policies are statements or principles that guide and direct different managers at various levels in making decisions. Policies provide the necessary basis for executive operation. They set forth overall boundaries within which the decision-makers are expected to operate while making decisions. Policies act as guidelines for taking administrative decisions.

In a big enterprise, various policies are formulated for guiding and directing the subordinates in different areas of management. They may be production policy, sales policy, financial policy, personnel policy etc. But these different policies are co-ordinated and integrated in such a way that they ensure easy realisation of the ultimate objectives of business. Policies should be consistent and must not be changed frequently.

4. Procedures:

The manner in which each work has to be done is indicated by the procedures laid down. Procedures outline a series of tasks for a specified course of action. There may be some confusion between policies and procedures. Policies provide guidelines to thinking and action, but procedures are definite and specific steps to thinking and action. For example, the policy may be the recruitment of personnel from all parts of the country; but procedures may be to advertise and invite applications, to take interviews and offer appointment to the selected personnel.

Thus, procedures mean definite steps in a chronological sequence within the area chalked out by the policies. In other words, procedures are the methods by means of which policies are enforced. Different procedures are adopted in different areas of business activities. There may be production procedure, sales procedure, purchase procedure, personnel procedure etc.

Production procedure involves manufacturing and assembling of parts; sales procedure relates to advertising, offering quotations, securing and execution of orders; purchase procedure indicates inviting tenders, selecting quotations, placing orders, storing the goods in go-down and supplying them against requisition to different departments and personnel procedure is the recruitment, selection and placement of workers to different jobs.

5. Rules:

A rule specifies necessary course of action in a particular situation. It acts as a guide and is essentially in the nature of a decision made by the management authority. This decision signifies that a definite action must be taken in respect of a specific situation. The rules prescribe a definite and rigid course of action to be followed in different business activities without any scope for deviation or discretion.

Any deviation of rule entails penalty. Rule is related to parts of a procedure. Thus, a rule may be incorporated in respect of purchase procedure that all purchases must be made after inviting tenders. Similarly, in respect of sales procedure, rule may be enforced that all orders should be confirmed the very next day.

6. Programmes:

Programmes are precise plans of action followed in proper sequence in accordance with the objectives, policies and procedures. Programmes, thus, lead to a concrete course of inter-related actions for the accomplishment of a purpose. Thus, a company may have a programme for the establishment of schools, colleges and hospitals near about its premises along with its expanding business activities.

Programmes must be closely integrated with the objectives. Programming involves dividing into steps the activities necessary to achieve the objectives, determining the sequence between different steps, fixing up performance responsibility for each step, determining the requirements of resources, time, finance etc. and assigning definite duties to each part.

7. Budgets:

Budget means an estimate of men, money, materials and equipment in numerical terms required for implementation of plans and programmes. Thus, planning and budgeting are inter-linked. Budget indicates the size of the programme and involves income and outgo, input and output. It also serves as a very important control device by measuring the performance in relation to the set goals. There may be several departmental budgets which are again integrated into the master budget.

8. Projects:

A project is a single-use plan which is a part of a general programme. It is part of the job that needs to be done in connection with the general programme. So a single step in a programme is set up as a project. Generally, in planning a project, a special task force is also envisaged.

It is a scheme for investing resources which can be analysed and appraised reasonably and independently. A project involves basically the investment of funds, the benefits from which can be accrued in future. Examples of such investment may be outlays on land, building, machinery, research and development, etc. depending upon the situation.

9. Strategies:

Strategies are the devices formulated and adopted from the competitive standpoint as well as from the point of view of the employees, customers, suppliers and government. Strategies thus may be internal and external. Whether internal or external, the success of the plans demands that it should be strategy-oriented.

The best strategy of planning from the competitive standpoint is to be fully informed somehow about the planning ‘secrets’ of the competitors and to prepare its own plan accordingly. Strategies act as reserve forces to overcome resistances and reactions according to circumstances. They are applied as and when required.