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SYLLABUS:
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Social responsibility is the idea that businesses should balance profit-making activities with
activities that benefit society. It involves developing businesses with a positive relationship to the
society in which they operate. It is a concept whereby organizations serve the interests of society by
taking responsibility for the impact of their activities on customer, employees, shareholders,
communities and the environment in all aspects of their organizations.
Social responsibility means sustaining the equilibrium between the two. It pertains not only to
business organizations but also to everyone whose any action impacts the environment. This
responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing
activities that directly advance social goals.
Example: “Starbucks Corporation and Ben & Jerry's Homemade Holdings Inc.” have blended social
responsibility into the core of their operations. Both companies purchase Fair Trade Certified
ingredients to manufacture their products and actively support sustainable farming in the regions
where they source ingredients. Conversely, big-box retailer Target Corporation, also well known for
its social responsibility programs, has donated more than $1 billion in grants to the communities in
which the stores operate, including education grants, since 2010.
SOCIAL AUDIT
It is a way of measuring, understanding, reporting and ultimately improving an organizations social
and ethical performance.
Example: Infosys Foundation established in 1996. Areas of companies are healthcare, education,
culture, rural development and IT.
BUSINESS ETHICS
• It is a set of standards worked out from human reason and experience by which human actions
are determined as ultimately right or wrong, food or evil.
• It is the study of proper business policies and practices regarding potentially controversial
issues such as corporate governance, insider trading, bribery, discrimination.
CORPORATE GOVERNANCE
Corporate – It is defined as a business or organization formed by a group of people and it has rights
and liabilities separate from those of the individuals involved.
Governance - It is defined as the Act of governing. It relates to decisions that define expectations,
grant power, or verify performance. In the case of a business or non - profit organization, governance
relates to consistent management, cohesive policies, and guidance, process and decision rights for a
given area of responsibilities.
Corporate Governance - is the system by which companies are directed and controlled by the
management in the best interest of the shareholders and others ensuring greater transparency and
better and timely financial reporting. It refers to combination of laws, rules and regulations,
procedures and voluntary practices to enable the companies to maximize the shareholders long term
value. In simple words, corpora governance is a set of relationship between a company’s management,
board, shareholders and stakeholders.
The main feature of the corporate governance is to manage the company by the
Board of Directors and not by the owners.
7. Globalization: Desire of more and more Indian companies to get listed on international stock
exchanges also focuses on a need for corporate governance. In fact, corporate governance has
become a buzzword in the corporate sector. There is no doubt that international capital market
recognizes only companies well-managed according to standard codes of corporate
governance.
IMPORTANCE OF CORPORATE GOVERNANCE
1. Changing Ownership Structure: In recent years, the ownership structure of companies has
changed a lot. Public financial institutions, mutual funds, etc. are the single largest shareholder
in most of the large companies. So, they have effective control on the management of the
companies. They force the management to use corporate governance. That is, they put
pressure on the management to become more efficient, transparent, accountable, etc. The also
ask the management to make consumer-friendly policies, to protect all social groups and to
protect the environment. So, the changing ownership structure has resulted in corporate
governance.
2. Importance of Social Responsibility: Today, social responsibility is given a lot of importance.
The Board of Directors have to protect the rights of the customers, employees, shareholders,
suppliers, local communities, etc. This is possible only if they use corporate governance.
3. Growing Number of Scams: In recent years, many scams, frauds and corrupt practices have
taken place. Misuse and misappropriation of public money are happening every day in India
and worldwide. It is happening in the stock market, banks, financial institutions, companies
and government offices. In order to avoid these scams and financial irregularities, many
companies have started corporate governance.
4. Indifference on the part of Shareholders: In general, shareholders are inactive in the
management of their companies. They only attend the Annual general meeting. Postal ballot is
still absent in India. Proxies are not allowed to speak in the meetings. Shareholders
associations are not strong. Therefore, directors misuse their power for their own benefits. So,
there is a need for corporate governance to protect all the stakeholders of the company.
5. Globalization: Today most big companies are selling their goods in the global market. So, they
have to attract foreign investor and foreign customers. They also have to follow foreign rules
and regulations. All this requires corporate governance. Without Corporate governance, it is
impossible to enter, survive and succeed the global market.
6. Takeovers and Mergers: Today, there are many takeovers and mergers in the business world.
Corporate governance is required to protect the interest of all the parties during takeovers and
mergers.
7. SEBI: Securities and Exchange Board of India (SEBI) has made corporate governance
compulsory for certain companies. This is done to protect the interest of the investors and
other stakeholders.
ISSUES IN CORPORATE GOVERNANCE
1. Distinguishing the roles of board and management
2. Composition of the board and related issues.
3. Separation of the roles of CEO and Chairperson.
4. Should the board have committees
5. Appointments to the board and directors election
6. Director and executives remuneration
7. Disclosure and audit
8. Protection of shareholder rights and their expectations
9. Dialogue with institutional shareholder
10. Should invest have a say in making a company CSR
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The word “entrepreneur” is derived from the French verb enterprendre, which
means ‘to undertake’. This refers to those who “undertake” the risk of new
enterprises. An enterprise is created by an entrepreneur. The process of creation is
called “entrepreneurship”. Entrepreneurship is a process of actions of an entrepreneur
who is a person always in search of something new and exploits such ideas into
gainful opportunities by accepting the risk and uncertainty with the enterprise.
3. Desire to succeed - It's easy in this fast paced, constant info-in-your-face world to
get distracted. This is especially true for start-ups, that often get side-tracked by
shiny object syndrome (i.e. products and services that promise fast results), or
bogged down in unimportant busy work. Successful entrepreneurs are focused on
what will bring results.
8. Hardworking - Entrepreneurs enjoy what they do. They believe in themselves and
are confident and dedicated to their project. Occasionally, they may show
stubbornness in their intense focus on and faith in their idea. But the flip side is
their demonstrated discipline and dedication.
9. Desire to have control over their fate - Entrepreneurs should have ability to
change the mind set from negative to positive when they feel they are in wrong
directions.
10. Risk taking ability - Launching any entrepreneurial venture is risky. Are you
willing to assume that risk? You can reduce your risk by thoroughly researching
your business concept, industry and market. You can also test your concept on a
small scale. Can you get a letter of intent from prospective customers to
purchase? If so, do you think customers would actually go through with their
transaction?
IMPORTANCE OF ENTREPRENEURSHIP
1. Development of managerial capabilities: The biggest significance of
entrepreneurship lies in the fact that it helps in identifying and developing
managerial capabilities of entrepreneurs. An entrepreneur studies a problem,
identifies its alternatives, compares the alternatives in terms of cost and benefits
implications, and finally chooses the best alternative. This exercise helps in
sharpening the decision making skills of an entrepreneur. Besides, these
managerial capabilities are used by entrepreneurs in creating new technologies
and products in place of older technologies and products resulting in higher
performance.
Entrepreneurial Process:
Entrepreneurship is a process, a journey, not the destination; a means, not an end. All
the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway),
Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla,
Jamshedji Tata and others all went through this process.
To establish and run an enterprise it is divided into three parts – the entrepreneurial
job, the promotion, and the operation. Entrepreneurial job is restricted to two steps,
i.e., generation of an idea and preparation of feasibility report. In this article, we shall
restrict ourselves to only these two aspects of entrepreneurial process.
Idea Generation:
To generate an idea, the entrepreneurial process has to pass through three
stages:Germination:
a. This is like seeding process, not like planting seed. It is more like the natural
seeding. Most creative ideas can be linked to an individual’s interest or curiosity
about a specific problem or area of study.
b. Preparation:
Once the seed of interest curiosity has taken the shape of a focused idea, creative
people start a search for answers to the problems. Inventors will go on for setting up
laboratories; designers will think of engineering new product ideas and marketers will
study consumer buying habits.
c. Incubation:
This is a stage where the entrepreneurial process enters the subconscious
intellectualisation. The sub-conscious mind joins the unrelated ideas so as to find a
resolution.
2. Feasibility study:
Feasibility study is done to see if the idea can be commercially viable.
It passes through two steps:
a. Illumination:
After the generation of idea, this is the stage when the idea is thought of as a realistic
creation. The stage of idea blossoming is critical because ideas by themselves have no
meaning.
b. Verification:
This is the last thing to verify the idea as realistic and useful for application.
Verification is concerned about practicality to implement an idea and explore its
usefulness to the society and the entrepreneur.
CONCEPTS OF ENTREPRENEURSHIP
Entrepreneurship is the tendency of a person to organise the business of his own and
to run it profitably, using all the qualities of leadership, decisions making and
managerial caliber etc. The term “entrepreneur” is often used interchangeably with
“entrepreneurship”. But conceptually they are different. In a way, entrepreneur
precedes entrepreneurship. It is concerned with the development and co-ordination of
entrepreneurial functions.
The word ‘entrepreneurship’ typically means to undertake. It owes its origin to the
western societies. But even in the west, it has undergone changes from time to time.
In the early 16th century, the term was used to denote army leaders. In the 18lh
century, it was used to denote a dealer who buys and cells goods at uncertain prices.
Towards 1961, Schumpeter, used the term innovator, for an entrepreneur. Two
centuries before, the concept of entrepreneurship was shady. It is only in the recent
years that entrepreneurship has been recognised widely all over the world like in
USA, Germany, Japan and in the developing countries like ours. Gunnar Myrdal
rightly pointed out that Asian societies lack entrepreneurship not because they lack
money or raw materials but because of their attitudes. Till recently, in the west, the
entrepreneurship is mainly an attribute of an efficient manager. But the success
achieved by entrepreneurs in developing countries demolishes the contention that
entrepreneur is a rare animal and an elusive character. In India, the definition of ‘an
entrepreneur being the one who undertakes to organise, own and run a business’ has
been accepted in a National Seminar on Entrepreneurship organised in Delhi in 1975.
Still there has been no consensus on the definition of entrepreneurship and qualities
of entrepreneurship.
CLASSIFICATIONS OF ENTREPRENEURSHIP
Entrepreneurs according to the type of business.
Business entrepreneur: Business entrepreneurs are individuals who conceive an
idea for a new product or service and then create a business to materialize their idea
into reality. They may set up a big establishment or a small business unit. They are
called small business entrepreneurs when found in small business units such as
printing press, textile processing house, advertising agency, readymade garments or
confectionery.
Trading Entrepreneur: The trading entrepreneur is one who undertakes trading
activities and is not concerned with the manufacturing work. He identifies potential
markets, stimulates demand for his product line and creates a desire and interest
among buyers to go in for his product line and creates a desire and interests among
buyers to go in for his product line and creates a desire and interests and buyers to go
in for his product. He is engaged in both domestic and overseas trade. Britain,
due to geographical limitations has developed trade through trading entrepreneurs.
Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who
identifies the potential needs of customers and tailors a product or service to meet the
marketing needs. He is product- oriented man who starts in an industrial unit because
of the possibility of some new product.
Based on Gender:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are
called ‘men entrepreneurs.
2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and controlled by a
woman or women having a minimum financial interest of 51 per cent of the capital
and giving at least 51 per cent of employment generated in the enterprises to women.
TYPES OF ENTREPRENEURS
1. Innovating Entrepreneurs:
Innovating entrepreneurs are one who introduce new goods, inaugurate new method
of production, discover new market and reorganise the enterprise. It is important to
note that such entrepreneurs can work only when a certain level of development is
already achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
These are characterised by readiness to adopt successful innovations inaugurated by
innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such
types of entrepreneurs are particularly suitable for the underdeveloped regions for
bringing a mushroom drive of imitation of new combinations of factors of production
already available in developed regions.
3. Fabian Entrepreneurs:
Fabian entrepreneurs are characterised by very great caution and skepticism in
experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.
4. Drone Entrepreneurs:
These are characterised by a refusal to adopt opportunities to make changes in
production formulae even at the cost of severely reduced returns relative to other like
producers. Such entrepreneurs may even suffer from losses but they are not ready to
make changes in their existing production methods.
INTRAPRENEUR
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who
uses entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a
special idea or project, and they are instructed to develop the project like an
entrepreneur would. Intrapreneurs usually have the resources and capabilities of the
firm at their disposal.
INTRAPRENEUR ENTREPRENEUR
Intrapreneurship is the Entrepreneurship is the dynamic
entrepreneurship within an existing process of creating incremental
organization. wealth.
To increase competitive strength To innovate something new of
and market sustainability of the socio economic value.
organization.
Enhance rewarding capacity of the Innovation, financial gain tad
organization and autonomy. independence.
Direct participation, which is more Direct and total participation in the
that delegation of authority. process of innovation. _
Hears moderate risk. Bears all types of risk.
Organizational employee expecting Free and sovereign person doesn’t
freedom in work. bother with status.
Keeps risky projects secret unless it Recognizes mistake and failures so
is prepared due to high concern for as to take new innovative efforts.
failure and mistakes.
Collaborative decisions to execute Independent decisions to execute
dreams. dreams.
Organization and intrapreneur Customers and entrepreneur
himself. himself.
May not have or a little Professional or small business
professional post. family heritage.
Authority structure delineates the Basic relationship based on
relation. interaction and negotiation.
Self-imposed or organtzauonally There is no time bound.
stipulated time limits.
Technology and market. Increasing sales and sustaining
competition.
Follows self-style beyond given Adaptive self-style considering
structure. Structure as inhabitants.
Strong self-confidence and hope Strong commitment to self-initiated
for achieving goals. efforts and goals.
Operates from inside the Operates from outside the
organization. organization.
CHARACTERISTICS OF INTRAPRENEUR
Entrepreneurs bridge gap between inventors and managers.
They have vision and courage to realise it.
They can imagine what business prospects will follow from the way customers
respond to their innovators
They have ability to plan necessary steps for actualisation of the idea
They have high need for achievement
They take moderate risk
They are dedicated to there work that they take it up
MYTHS OF ENTREPRENEURSHIP
ENTREPRENEUR ENTREPRENEURSHIP
Person Process
Visualiser Vision
Creator Creation
Organiser Organisation
Innovator Innovation
Technician TEchnology
Initiator Initiative
Decision maker Decision
Planner Planning
Leader Leadership
Motivator Motivation
Programmer Action
Risk taker Risk taking
Communicator Communication
Administrator Administration
Stimulatory
1 Entrepreneurial Education.
2 Planned publicity for entrepreneurial opportunities.
3 Identification of potential entrepreneurs through scientific methods.
4 Motivational training to new entrepreneurs.
5 Help and guidance in selecting products and preparing project reports. J
6.Making available techno-economic information and product profits.
6 Evolving locally suitable new products and processes.
7 Availability of local agencies with trained personnel for entrepreneurial
counselling and promotions.
8 Organising entrepreneurial forum.
Support
1 Registration of unit
2 Arranging finance
3 Providing land, shed, power, water etc
4 Guidance for selecting and obtaining machinery
5 Supply of scarce raw materials
6 Getting licenses/import licenses
7 Providing common facilities
8 Granting tax relief or other subsidy
9 Offering management consultancy
10 Help marketing product
Sustaining
1 Help modernisation
2 Help diversification/ expansion/substitute production
3 Defining repayment/interest
4 Define repayment/interest
5 Diagnostic industrial extension/consultancy source
6 Production units’ legislation/policy change reservation/Creating new avenues
for marketing
7 Oath testing and improving services
8 Need-based control facilities centre
1st Stage:
In this initial stage, for the development of entrepreneurial, education is
provided to them. Then they provide different opportunities through planned
publicity. Than identification of potential entrepreneurs is done through
scientific method .Special training is provided to them to motivate them. They
also help and guide them to select product and preparing project reports. They
also make available Techno-Economic Information and Product Profits to them
as well as Local agencies with trained personnel to them. It creates an
entrepreneurial forum. And helps them to recognise entrepreneurial skills.
2nd Stage:-
After getting educated, motivated and trained, in this stage financing,
marketing and other steps are performed by entrepreneurs. Here, registration of
unit is done along with arrangement of finance. It also provides land, shed,
power, water, scarce raw materials, different information, common facilities etc
to them. They guide entrepreneurs for selecting and obtaining machinery, for
importing the licenses and also for marketing the product.
3rd Stage:-
After marketing the product in market n above stage, this stage helps in
modernisation, accepting diversification, expansion and substitute production.
Additional financing is done for full capacity utilisation. There is differing
repayment or interest. There is a diagnostic and different industrial extension or
consultancy source. There is Production unit’s legislation that is policy can be
change. Product is copyright and patent or reserved and creating new avenues
for marketing. After this quality is tested and try to improve the services and to
provide best quality product in the market. Needs-Based Centres are provided
with common facilities.
In this way entrepreneurial cycle contributes to the development of
entrepreneurs step by step. Initially by providing education, training,
motivation then by making proper allocation of resource and finance and
proper marketing of the product and then by accepting modernisation,
changing policies, new technologies advancement.
It leads to a successful, well trained, motivated entrepreneur.