SOCIAL ASPECTS OF STRATEGIC MANAGEMENT

Strategic mgmt involves decision making aimed at providing futuristic direction to an enterprise and
therefore has a range of social implications as well apart from the economic ramifications. An enterprise
survives in and because of the society and thus has a responsibility towards the society as well. Each and
every decision that an organization takes has a social side to it and hence must be given due consideration
from this perspective. The doctrine of social responsibility is the most important guiding factor for an
enterprise while taking its decisions with regards to its social side. It emphasizes the consideration of the
social criteria along with the familiar economic criteria in the development of corporate strategy.

CONCEPT OF SOCIAL RESPONSIBILITY

The great expansion in the scope and domain of enterprises has accentuated the importance of the concept
of corporate social responsibility. With growing businesses and growing social awareness because of
education the interaction amongst the organizations and the public at large has grown considerably. It is
because of these reasons that management now a days wants to behave in a socially responsible manner as
any anomaly is very evident and has serious ramifications due to better populace awareness. In a
competitive world being loyal to your social responsibility is a matter of survival as public opinion and
expression of public opinion through legislation and govt policies hold the ultimate power. Thus the
corporate world today pays special attention to the social prong of their strategies as a whole.

The classical economic position – views against social responsibility as an

objective of business -:

Classical economists have not subscribed to the concept of csr with an

argument of a free society. Milton Friedman has rejected the concept while
asserting that the only responsibility of a business is to ensure effective
utilization of resources that it has and engage activities designed to generate
profits. He sanctifies his assertion by stating that in a free enterprise a
corporate executive is an employee of the owners of the business and thus has
a direct responsibility towards his owners. Hence his pimary responsibility is to
act as per their desire and generate the max profit for them while confirming
to the basic rules of the society i.e. legal, ethical and custom.

He further argued that if the corporate discharges the social responsibilities on

priority as compared to organizational profit then he is not a corporate as he is
acting like a civil servant and hence doesn’t fit into the garb of a corporate.
 THE MODERN VIEW – CASE FOR CSR
The case for CSR has been potently put forward by various modern economists including various executives
from a range of corporate houses.

• Peter Drucker
• The very nature of mgmt is putting different responsibilities on the manager from the past’s
business.
• He says that mgmt being a leading group shall assume responsibilities greater than the business
domain.
• Business must be managed such that the public good becomes the organizational good.
• Being an organ of the society the business must evaluate each of its decision from a social
perspective.

LIST OF SOCIAL RESPONSIBILITIES OF MANGEMENT AS PER DRUCKER

• TO OPERATE AT A PROFIT AND ENSURE GROWTH OF THE ORG AS A WEALTH

CREATING AD WEALTH PRODUCING ORGAN OF THE SOCIETY.
• ENSURING THE COMPETENCE OF FUTURE MANAGEMENT IN ORDER TO AVOID
MISMANAGEMENT OF RESOURCES.

• ENSURING COMPLIANCE TO THE SOCIAL BELIEFS AND COHESION. EX

PROVIDING OPPURTUNITY TO THE POWER RANKS TO GROW IN AND OUTSIDE
THE ORG.

• DEVLOPING A CPAITAL EXP POLICY SUCH THATIT CAN COUNTERACT THE

EXTREMES OF THE BUSINESS CYCLE.

• TO DEVELOP POLICIES THAT CAN ERADICATE AND PREVENT THE CAUSES OF

LOW OR PROFITABILITY ON THE WHOLE FOR THAT MATTER.

Drucker advocated the fact that any organization that aims at growing in the future must
comply to its social responsibilities with complete dedication. Being a social organ the org
must look to convert all the demands that the society makes into opportunities rather than
perceiving them as threats to the org’s economic profitability. It is a duty of the management
 to ensure that all the legitimate demands of the society are given due consideration in
correspondence to the economic feasibility of such demands for the org. legal constraints
and social obligations must not be the impetus behind the org’s compliance to its csr but the
management must perceive its csr as an opportunity to grow into a more socially effective,
enriching and fancied organization.
On the other side the economic effects of csr compliance have been a source of
discontentment for the adversaries of the csr. But the fact remains that today the largest
growing companies whether it is Microsoft, O.N.G.C or any other gigantic company for that
matter, give special consideration to the csr as they not only consider it as their
responsibility but as an opportunity to enhance their consumer base and social recognition
as a socially responsible company.

Lets take the example of Indian Oil Corporation Ltd which has enlisted the following points
into its csr -:

1. To ensure quality products through potent distribution at reasonable prices to the

people.
2. To develop techno-economically viable products for the people.
3. To encourage indigenous development of products in order to limit imports.
4. To prevent pollution of ever sought from their manufacturing facilities by taking
effective measures.
5. Improve the condition of sc/st in pursuance of national policies.
6. To facilitate all round development of villages by providing help to the educated
unemployed to earn a living.

There have been numerous other examples of other Indian companies that have shown great
compliance to their csr. For ex the tatas have been the vanguards for the Indian companies in this
field, they had special provisions for employing the native adivasis in of the Jamshedpur area where
there manufacturing facility is located. They have taken various other initiatives for the development
of that area like building up requisite infrastructure, educational and medical facilities as well as
stated on their website.
DIMENSIONS of CSR -:

The realm of the csr for a company basically extends to the

following parties-:

1. Responsibility towards owners-:

o Fair and reasonable rate of return

o Fair dividend to the shareholders
o Transfer the benefits of capital appreciation in the form of bonus
shares etc to the invest

2. towards employees

• fair wages and remuneration along with other benefits

• productivity, prevailing rates, industry capacity shall be the
parameters of wage fixation.
• Maintaining harmonious relations with the employees by ensuring
unbiased treatment, grievance handling etc
• Ensuring good atmosphere in the working places.
• Ensuring requisite measures for the security of the employees
• Provide equal opportunity of development to all .

3. towards consumers

• satisfying consumer needs in the long run

• supplying good quality products
• reasonable prices
 • abstain from black marketing

4. towards government
o compliance to law of the land
o payment of taxes and other duties
o abstaining from corrupt practices
o abstaining from buying political support from money and other undue
practices.

5. towards the community and the society

• providing employment to the weaker sections of the society
• environmental protection
• protection of the social resources including roads, water ,air
etc
 Environmental analysis: dynamic setting of
business
Environmental analysis is the process by which corporate planners,
monitor the economic, governmental, supplier, technological and market
settings to basically determine the threats and opportunities available to
the enterprise.