Chapter -4
Impact of Technology on business making decisions
Introduction
Decision making is one of the most important and sifnificant activities of a busines
It involves various processes influenced by technology
Information Technology provies the business with the decision support system [DSS] AND Artificial Intelligence System [ AI]
The combination of these helps in the creation of the information through online Analytical Process[ ALAP ]to facilitate
decision makig tasks which requires significant effort and analysis.
• Importance of IT
• 1. Data aprocessing Capabilities technology
helps helps to make quick decisions by slicing
and dicing massive amount of information
• 2. it helps in processing vast amount of
information
• 3. supports group decision makimg using
[DSS]
• Information technology and decision support systems :-
[Link] and Support sysytem [DSS] –highly flexible and interactive
designed to support decision making when the problem is not structured.
[Link] Decision Support System [ GDSS ] facilitates the formulation and
and solution to problems by a team.
[Link] information systems (GIS) – This is a decision support
system designed specifically to work with spatial information.
4. Artificial intelligence (AI) – the science of making machines imitates
human thinking and behavior.
5. Expert systems – This is an artificial intelligence system that applies
reasoning capabilities to reach a conclusion.
6. Neutral network – This is an intelligence system which is capable of
learning to differentiate patterns.
• 7. Genetic algorithm – This an artificial intelligence system that mimics the evolutionary, survival-
of –the-fittest process to generate increasingly better solutions to a problem.
Considerations for making decisions;-
• 1. Intelligence: Find or recognize a problem, need, or opportunity. This phase involves detecting
a situation which needs attention like include customer requests for new product features, the
threat of new competition, declining in company sales, rising costs of operation, and so on….
• Design: Find and fix issues. It’s a stage of considering possible ways of solving the problem, filling
the need, or taking advantage of the opportunity. In this phase, possible soltions are drawn.
• Choice: Examine and weigh the merits of each solution, estimate the consequences of each
solution, and choose the best one.
• Implementation: Carry out the chosen solution, monitor the results and make adjustments as
necessary
Social Responsibility of Business
Meaning of corporate social responsibility :-
It can simply be defined as a business enterprise’s obligation , beyond that required by the law and economics
, to persue long-term goals that are good for society.
Corporate Responsibilty can also be referred to as ‘’ Corporate Citizenship ‘’ and can involve incurring short
term costs that do not provide an immediate financial benefit to the company , but instead promote
positive social and environmental change.
Definition :-
According to World Bank Group, ‘’ Corporate Social Responsibility is the commitment of business to contribute
to sustainable economic development by working with employees , their families, the local community and
society at large , to improve their lives in ways that are good for business and for development’’
Corporate social responsibility thus, means open and transparent business practice that are based on ethical
values and respect for employees, communities and the environment.
CSR is also about business transforming their role from merely sellling products and services with a view to
making profits and increasing their revenue to the development of a society through their abilities of
generating capital and investing it for social empowerment
Core Elements of CSR Policy
• 1. Care for all stakeholders [shareholders, employees, customers, suppliers, society at large ]
• 2. Ethical functioning [ in terms of transparencyand accountability and business practices that
are not unfair, abusive, corrupt or anti-competitive ]
• 3. Respect for Worker’s Rights and Welfare
[ in the form of safe, hygienic and humane environment, dignity of empolyees, training and
development, career advancement opportunities ]
4. Respect for Human Rights
5. Respect for Environment
6. Activities for Social and Inclusive Development [ education, skill building for livelihood of
people, health, cultural and social welfare etc, for disadvantaged sections of the society]
Approaches to CSR
1. Community based Development Approach
[ working with local communities to better themselves ]
2. Philanthropy Approach
[ monetary donations and aid given to local organisations]
3. Incorporate CSR strategy into the Business Strategy of an organisation
[adoption of business practices like green products, animal friendly products
prohibiting emplooying child labor etc]
4. Increasing Corporate Responsibility Interest Approach
[also known as Creating Shared Value or CSV which is based on the idea that
corporate success and social welfare are interdependent]
Model of corporate social responsibility
1. The Stakeholder Model
A stakeholder of a corporation is an individual or a group which is either harmed or benefited from the working of the
corporation
Companies have multiple stakeholders which are classified as primary stakeholders and secondary stakeholders.
Primary stakeholders are :-
Shareholders
Employees
Customers
Business partners
Communities
Future Generations
The Natural Environment
Secondary stakeholders:-
Local, State and Federal Government
Regulatory Bodies
Civic Institutions and groups
Special Interest Groups
Trade and Industry Groups
Media
competitors
Pyramid Model
As per this model the CSR is categorised into four layers
namely:
Economic [do what is required by global capitalism]
Legal [do what is required by global stakeholders]
Ethical [ do what is expected by global stakeholders]
Discretionary responsibilities [ do what is desired by global
stakeholders]
Benefits of CSR/ Arguments for CSR
1. Favourable public image
2. Goodwill and loyalty of the stakeholders including empolyees
3. Better neighbourhood and employment opportunities for society
4. Satisfaction of changed consumer needs and expectations
5. Social involvement reduces the need for legal and governmental interference
6. Helps minimise ecological damage
7. Improved financial performance
8. Reduced operating costs
9. Decrease in crime
10. Reduced empolyee turnover and absenteeism
11. Increased sales and customer loyalty
12. Increased productivity and quality of work life
13. Increased ability to attract and retain employees
• Arguments against CSR
• [Link] of social work [ results in increase in
business expenses ]
• 2. Businessman is not expert in social work
• 3. social responsibility is not legal
responsibility
• 4. International competition
• 5. Ignore Business aim
Theories of Business Ethics
• There are two broad categories namely
• 1. Teleological Theories
(a) Theory of Utilitarianism
(b) Theory of Justice and Fairness
(c ) Theory of Virtue
2. Deontological Theories
(a ) Duty Theory
(b) Rights Theory
(c) KantianTheory of Duty
(d) Ross’s Duty Theory
• Teleological Theories :-
It is one which judges the rightness of an action based on its consequences in terms of ends, goals and
purposes
Theory of utilitarianism :-
Based on the principle of utility , an action is ethically right that produces the greatest benefits to the
greatest number of people [ produces the best consequences overall]
Theory of Justice and fairness :-
It states that actions prescribed shold be quite fair to all those involved in the action. It also prescribes
fair and just distribution of social benefits among its members. It also says that a defaulter should be
awarded some form of punishment to prevent him from doig similar type of wrong activity. It is
concerned with the compensation to a person who has suffered harm or loss in any from.
Theory of Virtue :-
It is a branch of moral philosophy that emphasises character as the key elements of ethical thinking .
There are many virtues like honesty, kindness prudent, etc , one should develop and practice to excel
in life.
• Deontological Theories :-
According to this theory , actions are morally right when they are done out of duty and obligations.
Duty Theory:-
According to this theory there are three kinds of theories-
Duties to God
Duties to oneself
Duties to others
Rights Theory:-
According to this theory, there are four natural rights given by the God- not harm anyone’s life, health,
liberty and possessions.
Kantian Theory of Duty :-
Morality of actions can be determined by appealing to the single principle of duty.
Ross’s Duty Theory :-
He considers human duties as the part of the fundamental nature of the universe.
• Scope of business ethics :-
Ethics in compliance :-
this is about obeying and adhering to rules and authority like companies
Act, Income Tax Act SEBI, etc
Ethics in Finance:-
In Accounting _ window dressing, misleading financial analysis.
Related party transactions not at arm’s length
Insider Trading, securities fraud leading to manipulationn of the financial
markets
Executive compenstion
Bribery, kickbacks, overbilling of expenses
Fake reimbursements
• Ethics in Human Resouurces :-
Discrimination issues
Sexual harassment
Privacy issues like workplace surveilllance
Occupational safety and health
Privacy of the employer like whistle blowing
Performance appraisal issues
Downsizing and Restructuring ( Mergers )
Issues in dismissals and layoff
• Ethics in marketing:-
• pricing issues like price fixing, price
discrimination, price skimming, predatory
pricing
• Anti-competitive practices like manipulation of
supply, exclusive dealing arrangements, etc
• Misleading advertisements
• Black markets and grey markets
• Ethical issues in Information Technology
plagiarism
Piracy
Hacking
Computer crime
Viruses
Vendor-client issues
• Corporate Governance
It is the system by which companies are directed and
controlled.
It is the way a corporation is governed .
It is the technique by which companies are directed
and managed’
It means carrying the business as per the stakeholder’s
desires
It is all about balancing individual and societal goals, as
well as , economic and social goals
• Objectives :-
1. To promote a healthy enviroonment for long
term investment.
2. To create trust and confidence in the
corporate and its abilities
3. To promote business develoopment
4. To promote the effeciency of the capital
markets
• Importance of corporate Governance
• 1. True and fair financial statements
• Disclosure of interest
• Disclosure of Remenuration
• Code of Governance
• Timely and balanced disclosure
• Risk management & Internal controls
• Independent Directors
• Formal evaluation of all directors
• Code of ethics
• Drawbacks of corporate governance:-
1. The separation of ownership and
management
2. Insider trading
3. Misrepresentation of information
4. Monitoring costs
5. Corporations governed by statues
Key roles of BODs
• Establish vision, mission and values
• Set strategy and structure
• Delegate to management
• Exercise accountability to shareholders and be responsible to
relevant stakeholders
• Selecting , compensating, monitoring and replacing key executives
• Ensuring a formal and transparent board nomination and election
process
• Overseeing the process of disclosure and communication
• Monitoring the effectiveness of the company’s governance
practices and making changes as needed.
Modes of entering International business
continued