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NCRDs

Sterling Institute Of Management Studies

A REPORT

ON

Business EthicsSocial Economic Values & Responsibilities

Trusteeship Management

Submitted To: Submitted By:

Prof. Tasnim Swati Jadhav (19 )

Sumit Jagtap (20)

Ankur Jain (21)

Mohnish Joshi (22)

Vaidehi Joshi (23)

Sameep Kadakia

(24)

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Managerial Ethics

Managerial Ethics is a major factor affecting how socially responsive an enterprise will

be in the long term. Manager's ethical standards in the enterprise determine the type ofresponse it will make as it reacts to the tension between the; forces for change and

stability. Proactive responses are likely to be more ethical since they will go beyond

minimum legal requirements. They are more consistent with the high social expectations

as discussed earlier. Reactive responses on the contrary either conform only with the

minimum legal requirements or even attempt to avoid legal requirements through long

court cases, lobbying efforts to avoid responsibility and so forth. The ethics of an

enterprise's managers are a key factor in decision making and may be formed by many

forces.

The feed back can be classified into two types:

Positive feed back

Negative feed back

Positive feed back serves to reinforce and establish a tendency toward special

responsiveness firmly with an enterprise's mode of functioning. It indicates that the

type .of response action chosen was correct and effective. Negative feed back tends to

cause an enterprise to limit or withdraw further efforts at social responsiveness.

The feed back that an enterprise receives on its social responsiveness will help to

determine:

The type of response option chosen (including the choice to be primarily proactive or

reactive) The relative strength of forces for change and stability. An enterprise's current

capacity to respond.

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The various key stake-holder groups for an enterprise are:

Society

Suppliers

Owners

Governments

Competitors

Community

Customers

Employees

Society as a whole responds to events through :

Protests

Increasing expectations for enterprise social responsibility

Public policy debates

Changing or enacting new laws

Deregulation or new governmental regulations

In all the above, the owners of the enterprises involved are

concerned about economic viability and return on investment (on their

own). As far as the managers are concerned, the major result of the conflict between

stake holders' pressures for social responsiveness and for economic performance results

in increased complexity in decision taking. They can no longer concentrate on pursuing

a single goal for themselves or enterprise owners and consider the many and often

conflicting interests of all stake holders. These stake holder groups are directly linked to

the model of social responsiveness and form the major? Elements that comprise forces

for change or stability. Pressure a large stake-holder group does not always produce the

exact change that was intended. The government and its various regulator}* bodies

which comprise a major stake-holder in most enterprises, usually Serve as forces for

change in the direction of more social responsiveness. Other stake holders, such as

owners, are usually forces for stability hence less responsive. Managers serve as a major

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stake holder 5roup internal to an enterprise. Managers use corporate resources to Protect

themselves from public criticism. Their resistance to change the unwillingness to admit

potential problems shows that they are 'Kely to serve as major sources of enterprise

stability.

Four-Stage Continuum:

Archie B-carroll views social responsibility as a four-stage continuum.

Economic responsibility

Legal responsibility

Ethical responsibility

Discriminatory responsibility

Ethical responsibilities are additional behaviours and activities that are not necessarily

codified into law but nevertheless are expecte of business by society's members;

discriminatory responsibilities are not legally required or even demanded by ethics.

Corporations accep them in order to meet society's expectations.

Ethical responsibilities are additional behaviors and activities that are not necessarily

codified into law but nevertheless are expected of business by society's members;discriminatory responsibilities are not legally required.

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Social Responsibility

Social responsibility is an ethical or ideological theory that an entity whether it is a

government, corporation, organization or individual has a responsibility to society. This

responsibility can be "negative," in that it is a responsibility to refrain from acting

(resistance stance) or it can be "positive," meaning there is a responsibility to act

(proactive stance). While primarily associated with business and governmental practices,

activist groups and local communities can also be associated with social responsibility,

not only business or governmental entities.

There is a large inequality in the means and roles of different entities to fulfill their

claimed responsibility. This would imply the different entities have different

responsibilities, in so much as states should ensure the civil rights of their citizens, that

corporations should respect and encourage the human rights of their employees and that

citizens should abide with written laws. But social responsibility can mean more than

these examples. Many NGOs accept that their role and the responsibility of their

members as citizens is to help improve society by taking a proactive stance in their

societal roles. It can also imply that corporations have an implicit obligation to give back

to society (such as is claimed as part of corporate social responsibility and/or stakeholder

theory).

Social responsibility is voluntary; it is about going above and beyond what is called

for by the law (legal responsibility). It involves an idea that it is better to be proactive

toward a problem rather than reactive to a problem. Social responsibility means

eliminating corrupt, irresponsible or unethical behavior that might bring harm to the

community, its people, or the environment before the behavior happens.

In todays society a business must maintain ethical principles in order to be

successful. (Kaliski, 2001) Businesses can use ethical decision making to strengthen

their businesses in three main ways. The first way is to use their ethical decision making

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to increase productivity. This can be done through programs that employees feel directly

enhance their benefits given by the corporation, like better health care or a better pension

program. One thing that all companies must keep in mind is that employees are

stakeholders in the business. They have a vested interest in what the company does and

how it is run. When the company is perceived to feel that their employees are a valuable

asset and the employees feel they are being treated and such, productivity increases.

A second way that businesses can use ethical decision making to strengthen their

businesses is by making decisions that affect its health as seen to those stakeholders that

are outside of the business environment. (Kaliski, 2001) Customers and Suppliers are

two examples of such stakeholders. If we were to look at companies like Johnson &

Johnson, their strong sense of responsibility to the public is well known. (Hogue, 2001)

In particular, take for instance Johnson & Johnson and the Tylenol scare of 1982. When

people realized that some bottles of Tylenol contained cyanide they quit buying Tylenol,

stocks dropped and Johnson & Johnson lost a lot of money. But they chose to loose even

more money and invest in new tamper resistant seals and announce a major recall of

their product. There was no certain amount for this situation; Johnson & Johnson had

to lose money to be socially responsible. But in the long run they gained the trust of their

customers. Now when people look at other products, there is a sense of faith and trust in

that Johnson & Johnson would not allow a product to harm people just to meet their ownbottom line.

A third way that business can use ethical decision making to secure their businesses

is by making decisions that allow for government agencies to minimize their

involvement with the corporation. (Kaliski, 2001) For instance if a company is proactive

and follows the EPA guidelines for admissions on dangerous pollutants and even goes an

extra step to get involved in the community and address those concerns that the public

might have; they would be less likely to have the EPA investigate them for

environmental concerns. A significant element of current thinking about privacy,

however, stresses "self-regulation" rather than market or government mechanisms for

protecting personal information (Swire , 1997) Most rules and regulations are formed

due to public outcry, if there is not outcry there often will be limited regulation

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CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical,

and discretionary expectations that society has of organizations at a given point in time"

(Carroll and Buchholtz 2003, p. 36). The concept of corporate social responsibility

means that organizations have moral, ethical, and philanthropic responsibilities in

addition to their responsibilities to earn a fair return for investors and comply with the

law. A traditional view of the corporation suggests that its primary, if not sole,

responsibility is to its owners, or stockholders. However, CSR requires organizations to

adopt a broader view of its responsibilities that includes not only stockholders, but many

other constituencies as well, including employees, suppliers, customers, the local

community, local, state, and federal governments, environmental groups, and other

special interest groups. Collectively, the various groups affected by the actions of an

organization are called "stakeholders." The stakeholder concept is discussed more fully

in a later section.

Corporate social responsibility is related to, but not identical with, business ethics.

While CSR encompasses the economic, legal, ethical, and discretionary responsibilities

of organizations, business ethics usually focuses on the moral judgments and behavior of

individuals and groups within organizations. Thus, the study of business ethics may be

regarded as a component of the larger study of corporate social responsibility.

Carroll and Buchholtz's four-part definition of CSR makes explicit the multi-faceted

nature of social responsibility. The economic responsibilities cited in the definition refer

to society's expectation that organizations will produce good and services that are needed

and desired by customers and sell those goods and services at a reasonable price.

Organizations are expected to be efficient, profitable, and to keep shareholder interests in

mind. The legal responsibilities relate to the expectation that organizations will comply

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with the laws set down by society to govern competition in the marketplace.

Organizations have thousands of legal responsibilities governing almost every aspect of

their operations, including consumer and product laws, environmental laws, and

employment laws. The ethical responsibilities concern societal expectations that go

beyond the law, such as the expectation that organizations will conduct their affairs in a

fair and just way. This means that organizations are expected to do more than just

comply with the law, but also make proactive efforts to anticipate and meet the norms of

society even if those norms are not formally enacted in law. Finally, the discretionary

responsibilities of corporations refer to society's expectation that organizations be good

citizens. This may involve such things as philanthropic support of programs benefiting a

community or the nation. It may also involve donating employee expertise and time to

worthy causes.

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Basic Concepts of Economic Value

Economic value is one of many possible ways to define and measure value.

Although other types of value are often important, economic values are useful to

consider when making economic choices choices that involve tradeoffs in allocating

resources.

Measures of economic value are based on what people want their preferences.

Economists generally assume that individuals, not the government, are the best judges of

what they want. Thus, the theory of economic valuation is based on individual

preferences and choices. People express their preferences through the choices and

tradeoffs that they make, given certain constraints, such as those on income or available

time.

The economic value of a particular item, or good, for example a loaf of bread, is

measured by the maximum amount of other things that a person is willing to give up to

have that loaf of bread. If we simplify our example economy so that the person only

has two goods to choose from, bread and pasta, the value of a loaf of bread would be

measured by the most pasta that the person is willing to give up to have one more loaf of

bread.

Thus, economic value is measured by the most someone is willing to give up in other

goods and services in order to obtain a good, service, or state of the world. In a market

economy, dollars (or some other currency) are a universally accepted measure of

economic value, because the number of dollars that a person is willing to pay for

something tells how much of all other goods and services they are willing to give up to

get that item. This is often referred to as willingness to pay.

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The economic concept of value is that value is human driven (i.e., it is

anthropocentric), meaning that goods and services are not considered to have value

unless humans place value on them [willingness to pay].

From a strict economic perspective, there is no such thing as intrinsic or natural

value. Of course, this focus on human-based value leads economists to measure market

and nonmarket values using monetary instruments such as dollars.

In general, when the price of a good increases, people will purchase less of that

good. This is referred to as the law of demandpeople demand less of something when

it is more expensive (assuming prices of other goods and peoples incomes have not

changed). By relating the quantity demanded and the price of a good, we can estimate

the demand function for that good. From this, we can draw the demand curve, the

graphical representation of the demand function.

It is often incorrectly assumed that a goods market price measures its economic

value. However, the market price only tells us the minimum amount that people who

buy the good are willing to pay for it. When people purchase a marketed good, they

compare the amount they would be willing to pay for that good with its market price.They will only purchase the good if their willingness to pay is equal to or greater than

the price. Many people are actually willing to pay more than the market price for a

good, and thus their values exceed the market price.

In order to make resource allocation decisions based on economic values, what we

really want to measure is the net economic benefit from a good or service. For

individuals, this is measured by the amount that people are willing to pay, beyond what

they actually pay. Thus, two goods that sell for the same price may have different net

benefits.

The economic benefit to individuals is often measured by consumer surplus. This is

graphically represented by the area under the demand curve for a good, above its price.

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The economic benefit to individuals, or consumer surplus, received from a good will

change if its price or quality changes. For example, if the price of a good increases, but

peoples willingness to pay remains the same, the benefit received (maximum

willingness to pay minus price) will be less than before. If the quality of a good

increases, but price remains the same, peoples willingness to pay may increase and thus

the benefit received will also increase.

Economic values are also affected by the changes in price or quality of substitute

goods or complementary goods . If the price of a substitute good changes, the economic

value for the good in question will change in the same direction. For example, wheat

bread is a close substitute for multi-grain bread. So, if the price of multi-grain bread

goes up, while the price of wheat bread remains the same, some people will switch, or

substitute, from multi-grain to wheat bread. Therefore, more wheat bread is demanded

and its demand function shifts upward, making the area under it, the consumer surplus,

greater.

Similarly, if the price of a complementary good, one that is purchased in conjunction

with the good in question, changes, the economic benefit from the good will change inthe opposite direction. For example, if the price of butter increases, people may buy less

of both bread and butter. If less bread is demanded, then the demand function shifts

downward, and the area under it, the consumer surplus, decreases.

Producers of goods also receive economic benefits, based on the profits they make

when selling the good. Economic benefits to producers are measured by producer

surplus, the area above the supply curve and below the market price. The supply

function tells how many units of a good producers are willing to produce and sell at a

given price. The supply curve is the graphical representation of the supply function.

Because producers would like to sell more at higher prices, the supply curve slopes

upward.

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If producers receive a higher price than the minimum price they would sell their

output for, they receive a benefit from the salethe producer surplus. Thus, benefits to

producers are similar to benefits to consumers, because they measure the gains to the

producer from receiving a price higher than the price they would have been willing to

sell the good for.

When measuring economic benefits of a policy or initiative that affects an

ecosystem, economists measure the total net economic benefit. This is the sum of

consumer surplus plus producer surplus, less any costs associated with the policy or

initiative.

5 types of Economic Values

Direct Use Value - Output of forest products, from timber to animal furs

Indirect Use Value - Ecological functions of the ecosystem like watershed protection

and carbon sequestration

Option Value - Something like an insurance policy premium which people are

willing to pay in order to insure the supply of something, the availability of which would

otherwise by uncertain

Bequest value - A willingness to pay to preserve a resource for the benefit of one's

descendants

Existence value - Values conferred by humans on the ecosystem regardless of its use.

The sum of the above five values is the Total Economic Value of the ecosystem.

A) Understanding economic models of natural resource utilization.

Natural resources provide many goods and services for our society. Forests provide

lumber for building houses and natural ecosystems for hiking and picnics; soil provides a

medium for growing agricultural products; fisheries provide food and recreation. The

first part of this course concentrates on reviewing how economic systems allocate these

resources to potential users. After covering how markets are supposed to work, the

course then focuses on market failure. Markets often fail to incorporate aesthetic or

recreational values when allocating natural resources. In many cases, these market

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failures cause environmental conflicts. By understanding how markets work, and how

they fail, we can begin to see the advantages and disadvantages of using market systems

to improve environmental conditions.

B) Understanding market failures.

We will focus on four main types of market failure in this course:

1. Failure due to the presence of common property resources

2. Failure due to the presence of externalities

3. Failure due to the presence of public goods

4. Failure due to unaccounted for risk and information asymmetries

It is important to understand where markets fail and how they fail before asking what

should be done to eliminate the results of market failure.

C) Understanding the potential and limitations of economic policy to correct market

failure.

With an understanding of how markets operate and how they fail, the course turns to

a discussion of how policy can incorporate economics. Here we will learn about thefollowing ways in which economics is used in environmental policy:

Valuation of environmental or non market resources: Contingent valuation, travel

cost, and hedonic approaches.

Benefit-Cost analysis: What is it and how is it done?

Mechanisms for correcting market failures: Command and control regulation,

taxes, and tradable discharge permits.

D) Understanding how concepts apply to environmental problems.

Case studies -- or examples from the real world -- will be used throughout the web

units. They will provide you with an opportunity to learn about actual environmental

problems and how economics might be used to help solve these problems. Through these

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examples you will learn what questions are important to ask, what analysis must be

performed before policies are enacted, and what policies are best for a given situation.

Objectives

At the end of this course, students should be able to:

Identify critical economic factors in environmental issues

Detail the social benefits and costs of environmental policy

Understand economic methods for valuing social benefits and costs

Apply environmental valuation studies to policy

Critically analyze an environmental benefit-cost analysis

Understand several contemporary environmental issues

The framework of natural resource and environmental economics

The science of economics is concerned with the allocation of resources, and

especially those resources that are scarce or limited in their availability. If a resource is

not scarce, then there is no need to ration, or allocate, it among economic agents.

Economics provides a framework for allocating scarce resources efficiently, where

efficiency is defined in a very specific way (to be discussed later). From this

perspective, economics is well suited to addressing environmental issues becauseenvironmental quality, like many other goods and services, is now considered to be a

scarce resource. And, because many environmental issues involve complex tradeoffs

between degradation (such as air or water pollution) and other economic goals (such as

economic growth and job creation), economics can be used to help determine the

efficient allocation.

In short, the science of economics is built around the idea that it can evaluate the

potential tradeoffs among different goods and services in terms of monetary units,

including environmental goods and services. It is important to realize that nearly all our

decisions in life involve the evaluation of tradeoffs, whether small and simple (as in

example 1 below) or large and complex (as in example 2). The principles behind how

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economists evaluate problems are generally the same no matter how complex the

problem might be -- its just the specifics of the quantitative analyses that might.

How is economic value measured?

The economic concept of value is that value is human driven (i.e., it is

anthropocentric), meaning that goods and services are not considered to have value

unless humans place value on them. From a strict economic perspective, there is no such

thing as intrinsic or natural value. Of course, this focus on human-based value leads

economists to measure market and nonmarket values using monetary instruments such as

dollars.

Philosophers, environmentalists, and recently even some economists, have

suggested that a complete focus on anthropocentric valuation may be an improper way to

value environmental resources. Their argument is that environmental resources have

value regardless of whether or not humans place values on them. This is often referred

to as intrinsic value. This debate is likely to continue for some time, although the vast

majority of economists continue to agree that natural resource values arise primarily

from anthropocentric sources

Using dollars as a common measure to value environmental resources provides

an opportunity to make the comparisons between very different objects or courses of

action. This approach provides a common reference point, allowing policy makers to

compare alternatives in terms of the values they are familiar with.

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Trusteeship management of assets

Nowadays it is a vital issue not only to save but also multiply the previously earned

capital.

The most simple way to accumulate funds is the bank deposit. However the bank rate

is lower or at the best case can be compared with the current inflation.

By investing money on the stock market one may receive the earning yield

considerably outstripping the inflation, however individual control over the securities

portfolio requires professional knowledge which far not everyone can command and

considerable consumption of time.

It is appropriate to avail of such services as individual trusteeship management of the

investment company OEMK-Invest. This line of activity has been mastered by the

Company since 1999.

Trusteeship management is preferred by those who are lack of sufficient experience

for taking decisions on control over the portfolio independently.

Both natural persons and legal entities, residents and non-residents can become

Clients of our Company.

The main priority of the Companys work is to minimize risks of the trusteeship

management promoter by investing money.

Having submitted assets to trusteeship management you trust the Company to make

operations of purchase/sale of securities in your interests. All deals decisions are taken

by the trusteeship manager, but the main direction of his actions is set by the trusteeship

management promoter, making the investment declaration. Here the trusteeship

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management promoter can stipulate the securities list and securities shares in the

portfolio managed by the trusteeship manager, and also can specify other requirements.

All deposited funds of the trusteeship management promoter is kept on the separate

account of the trusteeship manager separately from the Companys internal funds, and

used only in conformity with the investment declaration.

Paper investment is an uneasy task, demanding special knowledge and

professionalism. The Client who has solved to work on the stock market independently,

should devote almost all time to it, after all the investment efficiency depends on

timeliness of decision-making and correctness of situation estimation. Trusting funds

management to our Company, the Client frees himself to solve other problems, besides

he receives professional control over assets, regular reports on investment situation,

investment confidentiality.

The Company adheres to an individual approach to each Client, discussing

investment strategy in details, developing the very approach that fully suits to the

Clients representations about admissible risks.

Today this line of the companys activity is developing dynamically. As of the end of

2006 more than 1000 trusteeship management agreements have been concluded.

Need to be mentioned following benefits of the trusteeship management: Potentiality of high income receipts;

Opportunity to choose investment strategies which satisfy Clients requirements at

the best;

Opportunity to choose simultaneously number of investment strategies and validity

periods;

Comprehensive reporting of all actions carried out by the trusteeship manager;

Depositing and withdrawal of funds at any time in course of the trusteeship

management.

As of the end of 2006 volume of funds invested in the trusteeship management

increased 12,7 times and amounted to RUR 6 781 million which has been an all-time

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high since 1999. For comparison in 1999 it was submitted RUR 36 million to trusteeship

management provided by the Company.

Volume of funds submitted to trusteeship management

Specialists in the trusteeship management using their working experience make

operations on investment of Clients funds in the most perspective securities both on the

leading exchange floors and on the over-the-counter market with consideration of

Clients individual requirements to reliability, earning yield and liquidity of investments.

The main objective of Clients funds management is their saving and incrementing.

Net earning yield from funds in trusteeship management in 2006 was in the range of

12-20 % for natural persons and 8-13 % for legal entities depending on the chosen

investment strategy minus commission charges and taxes.

Revenue earned in process of Clients funds management in form of dividends,

interests and realized profit are invested into market instruments.

Owing to their high liquidity the return of funds is always possible. In managing the

property we provide absolute transparency and give regular reports to Clients regardingperformed operations.

Trusteeship, on the other hand, involves the administration of resources already

under control. Trustee management tends to become more essential as the organization

becomes more successful and its resources increase, such that these resources become

established and must be managed more effectively. In reconciling the vision with the

realities of surviving in the health care market, academic nursing centers must combine

elements of both entrepreneurial and trustee management wisely and effectively.

Emergent strategic action, based upon the premise that the environment is not

controllable and indeed chaotic, is typical of entrepreneurial management, because it

allows for organizations to respond to this chaos. Emergent strategy is a critical method

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for organizations to adapt to unexpected plans and opportunities because it encourages

action, allows opportunities for learning from these experiences, and transfers lessons

learned to other components of the organization. Typically, academia has focused on the

more traditional method of deliberate strategy characteristic in trusteeship management,

and is often uncomfortable with the faster pace of decision making demanded by the use

of emergent strategy characteristic of entrepreneurial management. Emergent strategy is

a critical method for organizations to adapt to unexpected plans and opportunities

because it encourages action, allows opportunities from learning from these experiences,

and transfers lessons learned to other work within the academic enterprise.