MODULE-1

BUSINESS
ENVIRONMENT

GROUP F

MBA TOURISM
 CONTENT

Sl.No Topic Page No

1.1 Introduction 3

1.2 Concept of Business 4

1.3 Understanding the Environment 5

1.4 Environment Influence On Business 8

1.5 Business and Society 12

1.6 Business and Culture 12

1.7 Demographic Trend And Social Structure

In India 14

1.8 Significance Of Growing Middle Class 20

1.9 Inter-face Between Society And 21

Management
1.10 Social Changes And Development 23

1.11 Role of Managers in Social Context 28

1.12 Conclusion 32

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BUSINESS ENVIRONMENT

Done by,
Akhila B Balan
Karthik Krishna U
Malathy R S
Manu Gopal
Sarath S
Syamlal S

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1.1. INTRODUCTION
Business is an organization or enterprise engaged in producing goods and services for
profit motive. It is a collective effort where a firm is engaged in commercial,
industrial or professional activities. The main aim of business is to satisfy the needs of
customer. The success of every business depends on adapting itself to the
environment within which it functions. For example, with changes in the government
policies, the business needs to adapt itself with the new policies. Similarly, any
technological advancement may render the existing products obsolete, such as the
introduction of smartphones has replaced the telephone to a great extent. Therefore, it
is very important to have a clear understanding of the basic concept of business
environment and the nature of its various components

Business environment includes those external factors and institutions over which it
does not have any direct control. These factors affect the functioning of an
organization directly or indirectly. These include customers, competitors, suppliers,
government, and the social, political, legal and technological factors etc.

The set of external factors, economic factors, social factors, political and legal factors,
demographic factors and technical factors, etc., which are uncontrollable in nature and
affect the business decisions of affirm, is called business environment.

Business - meaning
Business is an economic activity, which is related with continuous and regular
production and distribution of goods and services for satisfying human wants. All of
us need food, clothing and shelter. We also have many other household requirements
to be satisfied in our daily lives. We get these requirements from the shopkeeper. The
shopkeeper gets them from the wholesaler. The wholesaler gets them from
manufacturers. The shopkeeper, the wholesaler, and the manufacturer are doing
business, and therefore they are called Businessmen.

Definition of Business
Stephenson defines business as, "The regular production or purchase and sale of
goods undertaken with an objective of earning profit and acquiring wealth through the
satisfaction of human wants."

Features of Business
The characteristics or features of business are discussed in the following points:

1. Exchange of goods and services: All business activities are directly or

indirectly concerned with the exchange of goods or services for money or
money's worth.

2. Dealing in numerous transactions: In business, the exchange of goods and

services is a regular feature. A businessman regularly deals in a number of
transactions and not just one or two transactions.

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 3. Profit is the main Objective: The business is carried on with the intention of
earning a profit. The profit is a reward earned for the services of a
businessman.

4. Business skills for economic success: Not everyone can run a business. To be
a good businessman, one needs to have good business qualities and skills. A
businessman needs experience and ability to run a business.

5. Risks and Uncertainties: Business is subject to risks and uncertainties. Some

risks, such as risks of loss due to fire and theft, can be covered with insurance.
There are also uncertainties, such as loss due to changes in demand or fall in
price which cannot be insured. These must be borne by the businessman.

6. Buyer and Seller: Every business transaction has a minimum of two parties, a
buyer and a seller. Business is nothing but a contract or an agreement between
the buyer and the seller.

7. Connected with production: Business activity may be connected with the

production of goods or services. In this case, it is called an industrial activity.
The industry may be primary or secondary. An example of a primary industry
is farming. An example of a secondary industry is car manufacturing.

8. Marketing and Distribution of goods: Business activity may be concerned

with marketing or distribution of goods, in which case it is called a
commercial activity

9. Dealing in goods and services: Business deals in goods and services. Goods
may be divided into two categories,

A. Consumer goods: Goods which are used by a final consumer are called
consumer goods, e.g., furniture, soap, paper, etc.
B. Producer goods: Goods used by producers for further production are
called producer goods, e.g., machinery, equipment, wood, etc.

Services are intangible but can be exchanged for value, like providing
transport, warehousing and insurance services, etc.

10. Satisfying human wants: The businessman desires to satisfy human wants
through the conduct of business. By producing and supplying various
commodities, businessmen try to promote consumer satisfaction.

11. Social obligations: Modern business is service oriented. Modern businessmen

are conscious of their social responsibility. Today's business is
service-oriented rather than profit-oriented.

1.2. CONCEPT OF BUSINESS

A business concept is the foundational idea behind a business. An idea for a business
that includes basic information such as the service or product, the target demographic,
a unique selling proposition that gives a company an advantage over competitors. A
business concept may involve a new product or simply a novel approach to marketing
or delivering an existing product. Once a concept is developed, it is incorporated into
a business plan.
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Business objective
Business objectives are the specific and measurable results companies hope to
maintain as their organization grows. Entrepreneurs and business leaders must track
performance in every part of their business to make sure they‘re moving in the right
direction.

Business objectives act as a compass for the company, dictating how the organization
should allocate strengths, weaknesses and opportunities that may be available. Most
of the time, objectives remain the same until the company‘s circumstances change.
Examples of popular business objectives include:

1. Revenue objectives: Maintaining consistent profitability is essential for any

business. Companies cannot be profitable without consistent profit. Measuring
revenue is a great way to track the sustainability of a firm.

2. Operational objectives: Operational objectives include making sure that the

logistical elements of your business are up to scratch. For instance, it might
mean ensuring your supplies will arrive from a manufacturer at the same time
each month. These objectives keep the company running smoothly.

3. Productivity and performance: Employees are the lifeblood of a business.

Making sure that employees remain productive drives revenue and improves
customer satisfaction. Measuring employee satisfaction and setting goals for
each team ensures efficiency and productivity.

4. Customer satisfaction: The customer is always a top priority in any business.

Some organizations regularly survey their clients to ensure that they‘re making
the right impression and driving loyalty.

5. Growth: Companies measure growth over the long-term and short-term.

Growth appears in the form of website traffic, social media followers, turnover
and product sales and much more.

1.3. UNDERSTANDING THE ENVIRONMENT

Meaning of Business Environment

Business Environment consists of all those factors that have a bearing on the business,
such as the strengths, weaknesses, internal power relationships and orientations of the
organization; government policies and regulations; nature of the economy and
economic conditions; sociocultural factors; demographic trends; natural factors; and,
global trends and cross-border developments.

Definition of Business Environment

―The total of all things external to firms and industries which affect their organization
and operation‖—Bayard O. Wheeler

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According to Arthur M. Weimer, business environment encompasses the ‗climate‘
or set of conditions, economic, social, political or institutional in which business
operations are conducted.

The term ‘business environment’ means the sum total of all individuals, institutions
and other forces that are outside the control of a business enterprise but that may
affect its performance.

―The sum total of all individuals, institutions and other forces that are outside the
control of a business enterprise but the business still depends upon them as they affect
the overall performance and sustainability of the business.‖

The forces which constitute the business environment are its suppliers, competitors,
consumer groups, media, government, customers, economic conditions, market
conditions, investors, technologies, trends, and multiple other institutions working
externally of a business constitute its business environment.
These forces influence the business even though they are outside the business
boundaries.

According to Keith Davis,‖ Business environment is the aggregate of all conditions,

events and influences that surround and affect it‖.

Nature of Business Environment

The business environment of an organization usually poses threats as well as
opportunities. To grasp the opportunities and reduce the threat, it is important to know
the nature of business environment. Following are some points which describe nature
of business environment:

1. Internal and external environment: Every business is surrounded by

internal and external environment. Internal environment can be controlled by
an organization, like men, money, material, machine and method, whereas
external environment is uncontrollable like political conditions, technologies,
legal regulations, etc.

2. Dynamic and ever- changing: Business environment keeps on changing

frequently in terms of technologies, government rules and regulations,
socio-economic conditions, etc., which make business dynamic.

3. Complexity of the environment: Business environment cannot be easily

analyzed because of too much complexity involved. Environment consists of a
number of factors, events, conditions and influences, generating from different
sources which impact business, thus, making the business complex.

4. Inter-relatedness: Factors of business environment are related to each other.

For example, change in political parties will result in changing the government
rules, fiscal policies, market conditions, technology, etc. So, all the factors
need to be scanned properly because these factors are inter-related to each
other.

5. Uncertainty: It is difficult to predict the changes going to take place in future

because environment keeps on changing. These changes are uncontrollable. So,
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 business can only try to combat from these challenges. For example, in case of
fashion industries, changes take place so frequently, economy could collapse
any time.

6. Impact: Impact means the effect of environment on business. Business

environment has both long-term and short-term impacts on business. For
example, different firms may get influenced differently from change in
monetary policy.

7. Inter-dependence: A business firm and its environment are mutually

interdependent. The economic status of a country affects the development of
technology or it may change the lifestyle of people.

Scope of Business Environment

The aspects which fall under business environment are as follows:

1. Internal and external environment: Internal environment includes all those

factors that are within an organization and impart strength or cause weakness
in business. For example, inefficient human resource, superior raw material,
etc. External environment includes those factors which are beyond the control
of business and are outside the organization. They provide opportunities and
pose threat to business. For example, change in political conditions,
technological change, etc.

2. Specific and general environment: Specific environment include external

forces that directly impact or influence organizations decisions and actions and
are directly relevant to the achievement of organizations goals. The main
forces that make up the specific environment are customers, suppliers,
competitors and pressure groups.

3. Micro environment and macro environment: Micro environment impacts

the working of a particular business. It has direct impact on business activities.
It includes customers, suppliers, market intermediaries, competitors, etc.
These factors are controllable to some extent.
Macro environment is general environment that impacts the working of all
business. It is uncontrollable and influences indirectly. Political conditions,
economy, technology, etc., come under macro environment.

4. Controllable and uncontrollable environment: All these factors which are

governed by business, comes under controllable environment. Internal factors
are treated as controllable factors, like men, material, machine, money, etc.
Uncontrollable factors are external and are beyond the control of business like
technological change and law related change.

Importance of Business Environment

1. Enables to Identify Business Opportunities

All changes are not negative. If understood and evaluated them, they can be
the reason for the success of a business. It is very necessary to identify a
change and use it as a tool to solve the problems of the business or populous.

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 For example, Mr. Phanindra Sama was troubled by the ticket booking
condition in India. He used to travel a long distance to his travel agent to book
his ticket but even after traveling this distance he was not sure if his seat was
confirmed. He saw the opportunity to establish an app in the face of the
problem and co-founded the online ticket booking app called ‗RedBus‘.

2. Helps in Tapping Useful Resources

Careful scanning of the Business Environment helps in tapping the useful

resources required for the business. It helps the firm to track these resources
and convert them into goods and services.

3. Coping with Changes

The business must be aware of the ongoing changes in the business

environment, whether it be changes in customer requirements, emerging
trends, new government policies, technological changes. If the business is
aware of these regular changes then it can bring about a response to deal with
those changes. For example, when the Android OS market was blooming and
the customers preferred Android devices for its easy interface and apps, Nokia
failed to cope with the change by not implementing Android OS on Nokia
devices. They failed to adapt and lost tremendous market value.

4. Assistance in Planning

This is another aspect of the importance of the business environment. Planning

purely means what is to be done in the future. When the Business
Environment presents a problem or an opportunity, it is up to the business to
decide what plan would it have to come up with in order to address the future
and solve the problem or utilize the opportunity. After analyzing the changes
presented, the business can incorporate plans to counteract the changes for a
secure future.

5. Helps in Improving Performance

Enterprises that are thoroughly scanning their environment not only deal with
the changes presented but also flourish with them. Adapting to the external
forces help the business to improve the performance and survive in the market.

1.4. ENVIRONMENT INFLUENCE ON BUSINESS

Business environment is not concerned with a single factor. It comprises of several
factors and each factor influences the business firm in its own way. Some factors
influence the performance of the firm directly while the influence of some other
factors is only indirect. These factors provide opportunities, threats and challenges to
the firm. Thus, environment is multi-dimensional and very complex in nature. At the
same time, each factor should be studied individually.

Types of Environment
The business environment poses threats to a firm or offers immense opportunities for
potential market exploitation. The business is determined by two factors namely:

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1. Micro environment or internal factor or endogenous factor.
2. Macro environment or external factor or exogenous factor.

Micro Environment
These are the factors which have direct impact on business. The various constituents
under micro environment are as follows:

1. Suppliers of inputs: These suppliers of inputs are important factors in the

external micro environment of a firm. Suppliers provide raw material and
resources to the firm. A firm should have more than one supplier for proper
inflow of inputs.

2. Customers: They are the buyers of firm‘s products and services. Customers
are an important part of external micro environment because sales of a product
or services are critical for a firm‘s survival and growth, so it is necessary to
keep the customers satisfied.

3. Marketing intermediaries: Intermediaries play an essential role of selling

and distributing its products to final customers. Marketing intermediaries are
an important link between a business firm and its ultimate customers. Retailers
and wholesalers buy in bulk and sell business products and services to the
ultimate consumer.

4. Competitors: Competitors are the rivalry in business. Competition can based

on pricing of products or based on competitive advertising. For example,
organizations may sponsor some events to promote the sale of different
varieties and models of their products. Business formulates strategies after
analyzing their competitor.

5. Public: Public or groups, such as environmentalists, media groups, women‘s

associations, consumer protection groups, are important factors in external
micro environment. Public, according to Philip Kotler, is any group that has an
actual or potential interest in or impact on the company‘s ability to achieve its
objective.

Macro Environment

1. Demographic environment
2. Economic environment
3. Geographical and ecological environment
4. Legal environment
5. Technological environment
6. Social environment
7. Cultural environment
8. Political environment

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Demographic Environment
This refers to the size and behavior of the population in a country. Suppose a country
has a huge size of population, then, the country would provide extensive business or
marketing opportunities for all types of business organizations. On the other hand, a
country with low size of population would force the business organizations to seek
external market for their products or services. Similarly, if the population in a country
is well - tuned to ‗use and throw concept‘ then there would be limited scope for repair
shops. The employment scope in that segment would be almost nothing. But
alternatively this would give wide marketing opportunities for manufacturing
organizations. On the other hand, if the population is averse to ‗use and throw‘
concept, then the business opportunities would be limited for manufacturing
organizations. But the repair shops, self-employed technical persons and spares
manufacturers, would have roaring business. Hence, the size and quality of population
emerge as vital factors in a business environment.

Economic Environment
There is close relationship between business and its economic environment. Business
obtains all its needed inputs from the economic environment and it absorbs the output
of business units.
 Fiscal policy
 Monetary policy.
 Foreign policy.

Geographical and Ecological Environment

Geographical environment refers to climatic conditions and natural resources, which
determines the manufacturing scope and the nature of the products that could be
marketed. For example, a country like Kenya has to manufacture more of products
based on forest resources, while the gulf countries can produce only crude, japan can

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have business on fish, fruits, etc., Countries in the tropical region would produce
products from largely available geographical resources in that region, organizations in
Mediterranean countries have a different business scope, Scandinavian countries have
scope in dairy products and so on. On the other hand, steps towards balanced eco-
system are taking place at an alarming rate in the world today. Deforestation and
hunting of rare species of animals for food have been prohibited. Hence, while
identifying the business opportunities, business organizations have to be conscious of
the limitations posed by the geographical and ecological considerations.

Legal Environment
It is well known that every country has a number of legal regulations to ensure that
the interests of business organizations do not run counter to national interests. Right
from the stage of incorporation of organizations, their listing in stock exchange,
redress of customer complaints, payment of tax to government, manufacturing
practices, human resources development to pricing of products and services, a number
of legal regulations have to be fulfilled. For example, in USA and several western
countries, consumer protection is very active, that even a medical practitioner is
subjected to huge liabilities in times of deficiency in services. In India and other
countries, very rigorous legal provisions are in place to prevent hunting of rare species.
Hence, any organization, which manufactures products based on such species, have to
get legal sanctions. In case of failure to honor cheques issued, organizations are now a
days made to pay hefty compensations. Hence, the deterrence in terms of legal
provisions has become the order of the day. All organizations have to first of all
address these provisions become coming in to steam.

Technological Environment
Technology is understood as the systematic application of scientific or other
organized knowledge to practical tasks. Technology changes fast and to keep pace
with it, businessmen should be ever alert to adopt changed technology in their
businesses.

Political Environment
It refers to the influence exerted by the three political institutions viz., Legislature,
executive and the judiciary in shaping, directing, developing and controlling business
activities. A stable and dynamic political environment is indispensable for business
growth.

Natural Environment
Business, an economic pursuit of man, continues to be dictated by nature. To what
extend business depends on nature and what is the relationship between the two
constitute an interesting study.

Social and Cultural Environment

It refers to people‘s attitude to work and wealth; role of family, marriage, Religion
and education; ethical issues and social responsiveness of business. According to

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Geert Hofstede, culture is ―the collective programming of the mind that distinguishes
the members of one category

1.5. BUSINESS AND SOCIETY

Business & Society aims to be the leading, peer-reviewed outlet for scholarly work
dealing specifically with the intersection of business and society. The study of society
helps in deciding on the type of product, market, and the like. Now, we discuss
various aspects of society

1. Age Distribution

Age distribution, also called Age Composition, in population studies, the

proportionate numbers of persons in successive age categories in a given
population. Age distributions differ among countries mainly because of
differences in the levels and trends of fertility.

2. Buying Habits

The products that particular customers usually buy and the places where
they buy them.

3. Comfort With Technology

Comfort became an important concept in nursing, as patients are in need of

support to their bodies and minds, and even social and cultural settings are
influential.

4. Customer Service Expectations

Customer service is about expectations. And the expectations that

customers have today were shaped by their previous experiences.
Businesses need to meet or exceed these customer expectations.

5. Education Level

A society with educated citizens is more likely to succeed than one that or
even thousands of other fresh graduates for a low-paying entry-level position.
The qualifications that will make companies and employers hire you.

1.6. BUSINESS AND CULTURE

Society and cultural factors in various countries of the globe affects the business.
These factors include attitude of the people to work, attitude to wealth, family,
marriage, religion, education, ethics, human relations, social responsibilities etc.
Culture is, the thought and behavior patterns that member of a society learns through
language and other forms of symbolic interaction ó their customs, habits, beliefs and
values, the common view points which bind them together as a social entity....
Cultures change gradually picking up new ideas and dropping old ones, but many of
the cultures of the past have been so persistent and self-contained that the impact of
such sudden change has torn them apart, uprooting their people psychologically.
The interface between business and culture can be understood from the following
points:
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1. Culture Creates People:

It is the culture which generally determines the ethos of people. It tends to

train people along particular lines which put a personality stamp on them like
Indians, Americans, Britishers, and Japanese etc. There are sub cultures within
a culture. When people with different cultural backgrounds promote, own and
manage organisations then the organisations themselves tend to acquire
distinct cultures like culture of ‗Tata‘ group of companies is different from
that of ‗Birlas‘.

2. Culture And Globalisation:

As one moves from one country to another there comes an element of

‗Cultural shock‘ i.e. confusion, disorientation and emotional upheaval e.g. an
executive transferred from India to Japan will require lot of adjustment to
make. So to overcome ‗Cultural shock‘ there is need for understanding and
appreciating cultural differences across the countries.

3. Attitude to Business:

Businessmen must have some basic set of philosophies to guide their actions.
Beliefs value systems, concerning what is right and what is wrong, are basic to
business activity. Attitude of people towards business is largely determined by
their culture.

4. Attitude to Work:

Now a worker looks at his work depends on his culture. Motivation, morale
and other related aspects of human resource management are based on
worker‘s attitude to work. Japanese have achieved progress because of their
commitment to work.

5. Culture Determines Goods & Services:

The type of clothes people wear, the food they eat, the building material they
use to construct houses vary from culture to culture and time to time within
same culture. Business should realize these cultural differences and bring out
products accordingly.

6. Ambitions:

An ambitious person is highly motivated, has a strong urge to excel and is

prepared to change the organisation. Economy also becomes vibrant if a major
portion of population is of ambitious persons.

7. Education:

In traditional society, education was a preserve of Brahmins. Things have

changed over the passage of time. Education institutions have come up now in
all corners of the country and now we have more number of primary schools
than U. S. S. R and U. S. A. put together. Education benefits business.
Business in turn has responded and started supporting education. This support
is manifested in starting and maintaining educational institutions, sponsoring
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 employees for continuing education and bearing the cost of the education of
employee‘s children.

8. Family:

The family is one of the chief agencies of social life. The family is important
for various reasons such as inheritance, property rights, protection, morality,
care of sick and aged and the transmission of cultural values, nuclear families
have become common now in our society in place of joint family system. With
big families being broken up, family business is slowly turning into limited
companies. All these developments are important to business.

9. Ethics in Business:

Ethics refers to the code of conduct that guides an individual in dealing with
others.

10. Cultural Resources:

Cultural resources means heritage and our country is rich in cultural heritage.
South East Asia and Central Asia received culture from India along with other
things like rice, cotton, sugarcane, spices and even game of chess (Shatranj).
Even decimal system is the invention of Indian mathematician. Sanskrit
literature is one of the greatest contributions India has made to the culture of
mankind. Useless ancient Indian culture has vanished and whole of India is
changing like – animal sacrifices and Sati Pratha are no more in existence now
but cultural tradition of India continues.

1.7. DEMOGRAPHIC TREND AND SOCIAL STRUCTURE IN

INDIA
Demography is the systematic study of population. The term is of Greek origin and is
composed of the two words, demos (people) and graph (describe), implying the
description of people. Demography studies the trends and processes associated with
population including – changes in population size; patterns of births, deaths, and
migration; and the structure and composition of the population, such as the relative
proportions of women, men and different age groups. There are different varieties of
demography, including formal demography which is a largely quantitative field, and
social demography which focuses on the social, economic or political aspects of
populations. All demographic studies are based on processes of counting or
enumeration – such as the census or the survey – which involve the systematic
collection of data on the people residing within a specified territory.

Demography is a field that is of special importance to sociology – in fact, the

emergence of sociology and its successful establishment as an academic discipline
owed a lot to demography. Two different processes happened to take place at roughly
the same time in Europe during the latter half of the eighteenth century – the
formation of nation-states as the principal form of political organization, and the
beginnings of the modern science of statistics. The modern state had begun to expand
its role and functions. It had, for instance, begun to take an active interest in the
development of early forms of public health management, policing and maintenance
of law and order, economic policies relating to agriculture and industry, taxation and
revenue generation and the governance of cities.
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This new and constantly expanding sphere of state activity required the systematic
and regular collection of social statistics – or quantitative data on various aspects of
the population and economy. The practice of the collection of social statistics by the
state is in itself much older, but it acquired its modern form towards the end of the
eighteenth century. The American census of 1790 was probably the first modern
census, and the practice was soon taken up in Europe as well in the early 1800s. In
India, censuses began to be conducted by the British Indian government between
(1867-72), and regular ten yearly (or decennial) censuses have been conducted since
1881. Independent India continued the practice, and seven decennial censuses have
been conducted since 1951, the most recent being in 2011. The Indian census is the
largest such exercise in the world (since China, which has a slightly larger population,
does not conduct regular censuses).

Demographic data are important for the planning and implementation of state policies
specially those for economic development and general public welfare. But when they
first emerged, social statistics also provided a strong justification for the new
discipline of sociology. Aggregate statistics – or the numerical characteristics that
refer to a large collectivities consisting of millions of people – offer a concrete and
strong argument for the existence of social phenomena. Even though country-level or
state-level statistics like the number of deaths per 1,000 population – or the death rate
– are made up by aggregating (or adding up) individual deaths, the death rate itself is
a social phenomenon and must be explained at the social level. Emile Durkheim‘s
famous study explaining the variation in suicide rates across different countries was a
good example of this. Durkheim argued that the rate of suicide (i.e., number of
suicides per 100,000 population) had to be explained by social causes even though
each particular instance of suicide may have involved reasons specific to that
individual or her/his circumstances.

Sometimes a distinction is made between formal demography and a broader field of

population studies. Formal demography is primarily concerned with the measurement
and analysis of the components of population change. Its focus is on quantitative
analysis for which it has a highly developed mathematical methodology suitable for
forecasting population growth and changes in the composition of population.
Population studies or social demography, on the other hand, enquires into the wider
causes and consequences of population structures and change. Social demographers
believe that social processes and structures regulate demographic processes; like
sociologists, they seek to trace the social reasons that account for population trends.

Common Concepts and Indicators

Most demographic concepts are expressed as rates or ratios – they involve two
numbers. One of these numbers is the particular statistic that has been calculated for a
specific Geographical -administrative unit; the other number provides a standard for
comparison. For example, the birth rate is the total number of live births in a
particular area (an entire country, a state, a district or other territorial unit) during a
specified period (usually a year) divided by the total population of that area in
thousands. In other words, the birth rate is the number of live births per 1000
population. The death rate is a similar statistic, expressed as the number of deaths in a
given area during a given time per 1000 population.

These statistics depend on the reporting of births and deaths by the families in which
they occur. In fact, in most countries including India, people are required by law to
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report births and deaths to the appropriate authorities – the local police station or
primary health center in the case of villages, and the relevant municipal office in the
case of towns and cities.

The rate of natural increase or the growth rate of population refers to the difference
between the birth rate and the death rate. When this difference is zero (or, in practice,
very small) then we say that the population has ‗stabilized‘, or has reached the
‗replacement level‘, which is the rate of growth required for new generations to
replace the older ones that are dying out. Sometimes, societies can experience a
negative growth rate – that is, their fertility levels are below the replacement rate. This
is true of many countries and regions in the world today, such as Japan, Russia, Italy
and Eastern Europe.

The fertility rate refers to the number of live births per 1000 women in the
childbearing age group usually taken to be 15 to 49 years. But like the other rates
discussed on the previous page (the birth and death rates) this is a ‗crude‘ rate– it is a
rough average for an entire population and does not take account of the differences
across age-groups. Differences across age groups can sometimes be very significant in
affecting the meaning of indicators.

That is why demographers also calculate age-specific rates. The total fertility rate
refers to the total number of live births that a hypothetical woman would have if she
live through the reproductive age group and had the average number of babies in each
segment of this age group as determined by the age-specific fertility rates for that area.
Another way of expressing this is that the total fertility rate is the ‗the average number
of births to a cohort of women up to the end of the reproductive age period (estimate
don the basis of the agespecific rates observed during a given period)‘ (Visaria and
Visaria 2003).

The infant mortality rate is the number of deaths of babies before the age of one year
per 1000 live births. Likewise, the maternal mortality rate is the number of women
who die in childbirth per 1000 live births. High rates of infant and maternal mortality
are an unambiguous indicator of backwardness and poverty; development is
accompanied by sharp falls in these rates as medical facilities and levels of education,
awareness and prosperity increase. One concept which is somewhat complicated is
that of life expectancy. This refers to the estimated number of years that an average
person is expected to survive. It is calculated on the basis of data on age-specific
death rates in a given area over a period of time.

The sex ratio refers to the number of females per 1000 males in a given area at a
specified time period. Historically, all over the world it has been found that there are
slightly more females than males in most countries. This is despite the fact that
slightly more male babies are born than female ones; nature seems to produce roughly
943 to 952 female babies for every 1000 males. If despite this fact the sex ratio is
somewhat in favour of females, this seems to be due to two reasons. First, girl babies
appear to have an advantage over boy babies in terms of resistance to disease in
infancy. At the other end of the life cycle, women have tended to outlive men in most
societies, so that there are much older women than men. The combination of these
two factors leads to a sex ratio of roughly 1050 females per 1000 males in most
contexts. However, it has been found that the sex ratio has been declining in some
countries like China, South Korea and specially India. This phenomenon has been
linked to prevailing social norms that tend to value males much more than females,
which leads to ‗son preference‘ and the relative neglect of girl babies.
16
The age structure of the population refers to the proportion of person in different age
groups relative to the total population. The age structure changes in response to
change in levels of development and the average life expectancy.

Initially, poor medical facilities, prevalence of disease and other factors make for a
relatively short life span. Moreover, high infant and maternal mortal literates also
have an impact on the age structure. With development, quality of life improves and
with it the life expectancy also improves. This changes the age structure: relatively
smaller proportions of the population are found in the younger age groups and larger
proportions in the older age groups. This is also referred to as the ageing of the
population.

The dependency ratio is a measure comparing the portion of a population which is

composed of dependents (i.e., elderly people who are too old to work, and children
who are too young to work) with the portion that is in the working age group,
generally defined as 15 to 64 years. The dependency ratio is equal to the population
below 15 or above 64, divided by population in the 15-64 age group; the ratio is
usually expressed as a percentage. A rising dependency ratio is a cause for worry in
countries that are facing an ageing population, since it becomes difficult for a
relatively smaller proportion of working-age people to carry the burden of providing
for a relatively larger proportion of dependents. On the other hand, a falling
dependency ratio can be a source of economic growth and prosperity due to the larger
proportion of workers relative to non-workers.

This is sometimes referred to as the ‗demographic dividend‘, or benefit flowing from

the changing age structure. However, this benefit is temporary because the larger pool
of working age people will eventually turn into non-working old people.

Size and Growth of India’ Population

India is the second most populous country in the world after China, with a total
population of 121 crores (or 1.21 billion) according to the Census of India 2011.

As can be seen from Table 1, the growth rate of India‘s population has not always
been very high Between1901–1951 the average annual growth rate did not exceed
1.33%, a modest rate of growth. In fact between 1911 and 1921 there was a negative
rate of growth of – 0.03%. This was because of the influenza epidemic during 1918–
19 which killed about 12.5 million persons or 5% of the total population of the
country (Visaria and Visaria 2003: 191). The growth rate of population substantially
increased after independence from British rule going up to 2.2% during 1961-1981.
Since then although the annual growth rate has decreased it remains one of the highest
in the developing world. .

Before 1931, both death rates and birth rates were high, whereas, after this transitional
moment the death rates fell sharply but the birth rate only fell slightly.

17
Demographic trends
India's population 1s young. Its birth and death rates are both near the global average.
More than half the population is under age 30 and less than one-fourth is age 45 or
older. Life expectancy is about68 for men and 70 tor women.

A population explosion in India commenced following the great influenza epidemic

of 1918- 19. In subsequent decades there was a steadily accelerating rate of growth up
to the census of 1961 after which the rate leveled off (though it remained high). The
totalnpopulation in 1921 within the present borders of India excluding what is now
Pakistan and Bangladesh) was 251 million, and in 1947 at the time of independence, it
was about340 million. India's population doubled between 1947 and the 1981 census,
and by the 2001 census it had surpassed one billion. The increase between 1991 and
2001 alone -more than 182 million-was greater than the total present-day population
of all but the world's most populous countries, and that value was matched by the
increase between 2001 and 2011.
Although there has been a considerable drop in the birth rate, a much more rapid
decline in the death rate has accounted for the rise in the country's rate of population
growth. Moreover, the increasing proportion or females attaining and living through
their childbearing years continues to inhibit a marked reduction in the birth rate. The
effect of emigration from or immigration to India on the overall growth of population
has been negligible throughout modern history. Within India however, migration from
relatively impoverished regions to areas, especially cities, offering some promise or
economic betterment has been largely responsible for the differential growth rates
from one state or region to another. In general, the larger a city, the greater its
proportion or migrants to the total population and the more cosmopolitan its
population mix. In Mumbai, for example, more than half of the population speaks
languages other than Marathi, the principal language of the state of Maharashtra. The
rates of migration to Indian cities severely tax heir capacity to cope with the
newcomers' needs for housing, safe drinking water, and sanitary facilities not to
mention amenities. The result is that many migrants live in conditions of appalling
squalor in basis or, even worse, with no permanent shelter at all.

Social Structure of Indian Society

Social structure denotes the network of social relationship. The social relationship is
created among the individuals when they interact with each other according to their
statuses in accordance with the patterns of society. In a social structure, individuals
having common object organize themselves into associations.

18
Social Structure of Indian society
Social structure is an abstract phenomenon. It denotes external aspects of society.
Each society has a pattern of organization, which has structures that result from
association of individuals with one another. It may be a group, institution, an
association, community, or an organization all of which are parts of social structure
through which it functions.

Features of Social Structure of Indian Society

The following are the important features of social structure of Indian society

1. Complex Society

Indian society is characterized as a pluralistic society because it

possesses complex social order. It suffers from multitude of ethnic,
linguistic, religious and caste divisions.

2. Rural Society

About 70% of the Indian people live in villages. Indian villages

continue to be underdeveloped. Even rural areas suffer from lack of
infrastructural facilities. The gains of industrialization and
technological breakthrough which once enjoyed by urban areas not yet
reached the rural areas. Only now our Government has started giving
due importance to the objective of rural development.

3. Economically Backward Country

India has made considerable progress in the fields of agriculture and

industrialization. But still it continues to be an economically backward
country. Even now it remains 64th poorest nation in the world. Major
part of our population continues to live below the poverty line.

4. Illiteracy

Illiteracy and ignorance among the people of India is another important

feature of the social system in India. About 60% of the population
continues to be illiterate in India. Illiteracy creates many social
problems. Concerted Governmental action and strong social support
are needed in removing the rate of illiteracy.

5. Diversified Languages

Diversity in languages is another feature of the social environment in

India. The Constitution of India recognizes 22 languages as the major
languages, which are spoken by 87% of the population. Of them Hindi
is spoken by 31% of the population. Linguistic diversity and love and
affection of people towards their regional languages have made the
Government to reorganize Indian states on the basis of languages.
Hence, language has emerged as a key actor of social and political
climate in India.
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1.8. SIGNIFICANCE OF GROWING MIDDLE CLASS

The middle class is a class of people in the middle of a social hierarchy. Its usage has
often been vague whether defined in terms of occupation, income, education or social
status. The definition by any author is often chosen for political connotations. Writers
on the left favor the lower-status term working class.[citation needed] Modern social
theorists—and especially economists—have defined and re-defined the term "middle
class" in order to serve their particular social or political ends.

Within capitalism, middle-class initially referred to the bourgeoisie;[citation needed]

later, with the further differentiation of classes as capitalist societies developed, the
term came to be synonymous with petite bourgeoisie.

The middle class is important because it drives transformation and innovation. ... As
for the lower class, while they may be willing to innovate, the opportunity to do so is
limited. Think about the financial and human capital necessary to transform a
scientific discovery into an economic innovation. The middle class promotes efficient
and honest delivery of government services, as well as forward-looking public
investments—in education and infrastructure, for example—that benefit all of society
rather than only special interests. Such good governance sets the stage for economic
growth.

The middle classes of all countries have been the key drivers of the global economy in
the last century. During the past several decades, world economic growth has
occurred, mostly because of increased consumption in the middle classes of the
United States, Europe, and other advanced countries. This class has been considered a
thriving and vibrant catalyst for economic growth .It provides a strong base that drives
productive investment and is a critical factor in encouraging other social
developments that also stimulate growth and foster expansion of elements that
contribute to a healthy society.
The middle classes constitute a critical market for most goods and services. A sizable
portion of any nation‘s tax revenue is collected either directly or indirectly from this
group, and they also have an important role in any relative political stability that a
country experiences. The significance of this class was best elucidated by the late
Lester Thuruw, the eminent MIT economist: ―A healthy middle class is necessary to
have a healthy political democracy. A society made up of rich and poor has no
mediating group either politically or economically.

The middle class falls in the middle of the social hierarchy and occupies a
socioeconomic position between the working and upper classes. The measures of
what constitutes members of this class differ significantly among nations because of
international cultural and economic variations.

Examples of what constitute the ―middle class‖ in a given nation are dependent upon
purchasing power, educational levels, perceptions of who constitute ―the wealthy,‖
and levels of social services, as well as other factors. According to most organizations,
like the World Bank and the Organization for the Economic Cooperation and
Development(OECD), people living on less than US $2 a day are considered poor.
For those in the middle classes, the earnings typically lie in the range of US $10 to
$100 per day, as expressed in the 2015 purchasing power parities.

20
The US $10 lower threshold is preferred because it is five times the poverty line and
individuals are less likely to fall back to poverty from this level of income. According
to the World Bank, in 2015, 15 percent of the global population was considered poor,
56 percent in the low-middle income category, 13 percent in the middle income, 9
percent in the upper middle income, and the remaining 7 percent in the high income
categories. Earlier, in February 2009, The Economist declared that over 50 percent of
the world‘s population had entered the middle class, primarily because of explosive
growth in emerging markets. This was mostly because of access by foreign (and some
domestic) companies to cheaper labour in these countries as a result of liberal
international trade laws. Many countries also experienced rapid urbanization when
subsistence farmers left their farms to work in factories for guaranteed wages. In
developing economies, distribution of socioeconomic classes can best be graphically
represented by a heavily skewed distribution to the left of a distribution curve (with
most people belonging to the lower classes).

In developed economies like the United States, the social classes distribution more or
less approximate a bell curve. The middle class in such societies has been defined as
those with incomes between 75 percent to 125 percent of the median income. Some
analysts have used a broader middle income range of 60 percent to 225 percent of the
median income. Using the former benchmark, demographic studies indicate the
percentage of American middle-class households declined from 28.2 percent in 1967
to 23.7 percent in 19834; while using the latter benchmark, the decrease in the US
was from 62.4 percent to 55.9 percent over the same time span.5 More recent studies
have pointed to further polarization in the United States and some polarization in
Canada that now appears to have reversed course or at least stabilized.

Compared to the 2009 Economist report, other reports cite a more conservative
estimate of the total number of people in the middle classes—OECD estimated 1.8
billion individuals in this group in 2010, while Credit Suisse‘s Global Wealth Report
2014 had a smaller number (one billion) in the global middle class, with wealth
anywhere between US $10,000 and $100,000. Between 1990 and 2005, the middle
class grew from 15 percent to 62 percent of the population in China. In India, 50
percent of the population reached this status in 2015.

1.9. INTER-FACE BETWEEN SOCIETY AND MANAGEMENT

Every human being is social in nature. Human beings come together and constitute a
society. A society can be understood as a ―web of social relations‖. In a society,
people perform various tasks. Organizing is a process by which tasks are allocated to
various people. Thus organization is essentially a part of the society. Every
organization exists within the society itself. An organization is essentially influenced
by the society.

The term ―management and society,‖ in its broadest sense, encompasses not only the
societal context of management actions, but also issues such as governmental policy
with respect to labor, industrial psychology, industrial sociology, personnel
administration, worker education, and human resource management.

Management and Society

Management is a life giving element of an organization. Perhaps no organization can
survive without performing the functions of management. The functions of

21
management includes: planning, organizing, decision making, staffing, coordination
and controlling-all these functions are to be performed by keeping in mind the society.
The impact of society on organization and management can be analyzed, as follows:

1. Goals of the organization

Every organization comes into existence to achieve specific goals. Such goal
must be framed by considering the needs of the society.

2. Managerial decisions

The decisions made by managers are obviously influenced by the society. The
styles of decision making process and the approach adopted are guided by the
policies and norms of the society.

3. Human relations

Maintenance of cordial human relations is an important task of any

organization. The ability of a manager to maintain sound human relations
depend on his cultural background, family background, socialization process
etc. Thus we can find that various, aspects of society such as values, norms,
attitudes, family background, cultural heritage, influence the organisation.

Indian Society and Organization

Indian society is a complex entity. It has a rich social, cultural, economic and political
heritage. Various elements of Indian society exerts influence on Indian management
practices. They can be analyzed as follows:

1. Impact on behaviour

Aspects of social heritage such as culture, socialisation and family background

of employees determine their behaviour in the organisation. Human beings are
considered the most valuable assets of any organisation. The behaviour of
human beings in the oganisation determine various aspects of management
such as communication, interpersonal relations etc.

2. Impact on practices and policies of the organization

Management policies are devised on the basis of social aspects. For instance
most organisations in India follow holidays for important festivals such as
Deepavali, Dussehrra, Christmas, Ramzan etc.

3. Cultural Symbols and rituals

In most of the organisations rituals and cultural symbol are followed. For
instance, in most organisations the important events such as seminars and
conferences or other functions are inaugurated by lighting a lamp. Important
festivals like Ayudha pooja are celebrated in business organisations.

22
 4. Control techniques

The control techniques adopted for regulation of behaviour of employees in an

organisation is highly influenced by the practices and policies of society,
particularly HR practices of the organization particularly disciplinary action.
Particular disciplinary action are based on social policies and guidelines.
Social norms often determine the control techniques.

5. Group dynamics

Social change exerts influence on group dynamics. It refers to various forces

which operate within a group. Formation of informal groups is unavoidable in
any formal organisation. Whenever social change occurs it affects the
interactions within the formal as well as informal group. For example:
Communal cashes may affect the interrelations among a trade union.

6. Industrial democracy

India has a rich political heritage. Democracy is adopted as a form of

government in India. Democratic ideas are also adopted in the organisational
context. Workers‘ participation in management is recognised by all
organisations. Various schemes like collective bargaining, peaceful
negotiations have been adopted by business organisations.

Thus in brief it can be stated that every component of Indian society such as—cultural,
economic, religious, political —directly influence the functioning of an organisation.
In factno Indian organisation can survive without understanding the structure of
Indian society.

1.10. SOCIAL CHANGES AND DEVELOPMENT

Social Change
There are various social change models. These all require public awareness and
learning, and consensus building (building critical mass), before policy change can
effectively be implemented and enforced.
We found the following social change model applicable and relevant to living benings
welfare.

 Official structures – the development of departments or individuals dealing

with the issue (when there is a need to put the issue on the agenda)

 Legislation – when the need for official policy change is accepted

 Enforcement – when the authorities accept the need to enforce change

 Transmission by education – when it is accepted that this needs to be an issue

for society

 Cultural transmission by family – when the issue is generally accepted, and

grassroots education takes place within families

23
The last two stages can be grouped together as ‗public awareness and support‘, which
is a long-term process beginning with education and ending with final acceptance in
the family unit.

The social change does not occur until all stages of the social change model have been
accomplished. It is a common mistake to view policy change in terms of obtaining
policies/laws alone, without considering the structures and enforcement needed to
implement these. A policy or law is not worth the paper it is written on if it is not put
into practical effect. In fact, policy change objectives may be seen as an intermediate
aim, with change in practice being the end point that brings real improvements in the
situation of the animals.

The problem for various social change movements is how to press their movement‘s
concerns up the ladder of people‘s own ‗hierarchy of needs‘. That is how to make the
issue become a priority to people, This is a real problem for animal welfare, as the
suffering does not impact directly upon individual humans (i.e. it is not a personal
problem, and requires altruism and empathy to be considered important). Increased
awareness can accelerate this process. But to become a burning issue, there needs to
be emotional engagement, intellectual challenge, and/or a real sense of justice (a
strong ethical perspective).

The process of discovery expands human consciousness. The process of application

enhances social organization. There should be a practical demonstration of how
positive change can take place (and both national and international ‗best practice‘ case
studies can be used). It also explains why capacity building is necessary – providing
necessary skills along with mindset that positive change is achievable.
Development occurs when pioneering individual initiatives are imitated by others,
multiplied and actively supported by the society. Society then actively organizes the
new activity by establishing supportive laws, systems and institutions.

There are various causes of social change. Culture can be a cause, and there are said
to be three main sources of cultural change:
The first source is invention, Inventions produce new products, ideas, and social
patterns. The invention of rocket propulsion led to space travel, which in the future
may lead to inhabitation of other planets.
The second source is discovery. Discovery is finding something that has never been
found before, or finding something new in something that already exists.
The third source is diffusion. Diffusion is the spreading of ideas and objects to other
societies. This would involve trading, migration, and mass communication.
The ‗mass media‘ is a vital factor in the speed of social change.

Role of the Individual in Social Change

Society has no direct means to give conscious expression to its subconscious
collective aspirations and urges. That essential role is played by pioneering conscious
individuals - visionary intellectuals, political leaders, entrepreneurs, artists and
spiritual seekers who are inspired to express and achieve what the collective
subconsciously aspires to and is prepared for. Where the aspiration and action of the
leader do not reflect the will of the collective, it is ignored or rejected. Where it gives
expression to a deeply felt collective urge, it is endorsed, imitated, supported, and
systematically propagated. This is most evident at times of war, social revolution, or
communal conflict.

24
The process of skill formation involves acquiring mastery over our physical-nervous
energies so that we can direct our physical movements in a precisely controlled
manner. In the absence of skill, physical movements are clumsy, inefficient, and
unproductive, like the stumbling efforts of a child learning to walk. Whilst the
energies are the motivating force, it is strategic ability and professional skills that turn
energy into effective action. Strategic advocacy helps to direct this energy, focusing it
in directions where change can most effectively be triggered.
Imitation of successful pioneers eventually attracts the attention and overcomes the
resistance of conservative forces in society, leading the society to accept and embrace
the new activity.

The potentials for development always far exceed the initiative of society to exploit
them. The actual achievements of society depend on the measure that it is ready to
actively respond to new opportunities and challenges. That response is the real
determinant of development. Three fundamental conditions determine a society‘s
level of preparedness: energy, awareness and aspiration.

Role of the Pioneer in Social Change

Social progress is stimulated by pioneering individuals who become conscious of new
opportunities and initiate new behaviors and activities to take advantage of them.
Pioneers are the lever or spearhead for collective advancement. Pioneers give
conscious expression to the subconscious urges and readiness of society.
When society is subconsciously prepared for change, it still needs an agent through
which to express this preparedness in action. In natural development, that is the role
of pioneering individuals. Once society is prepared, sooner or later it gives rise to the
initiative of one or more pioneering individuals who break out from the existing mold
and attempt something new. Although exceptional and eccentric individuals may
initiate new activities in any society, these activities usually disappear with the
passing of their founder or give rise to isolated imitation that never acquires
significant momentum. The social change pioneer is a conscious product of the
society whose aspiration and initiative give expression to the subconscious aspiration
of the society in which he lives.

Every new developmental activity is initially conceived and introduced by one or a

few pioneers. The pioneer is one who sees, believes in and acts upon an opportunity
that others fail to see or believe in; or lack the energy or courage to pursue. The
pioneer exhibits a new understanding, new attitudes, new skills and behaviors
different from those prevalent in the community at the time. If the pioneer‘s initiative
is in tune with the social aspiration and social preparedness, it inspires and encourages
other dynamic individuals to imitate or improve upon the new initiative.
The role of the pioneer is vital to social change, because the next stage of social
progress almost always remains unseen by the collective. It is the free thinking, far
seeking individual who dares to imagine or conceive what the popular mind is
unaware of and then translates that vague possibility into a reality that all can see. By
acquiring one new or different attribute or behavior, he charts a new course and
reveals a new possibility, all the time basing him or herself on the society‘s present
accomplishments and in most cases moving in a direction that the society has already
indicated.

25
Social Development
Social Development encompasses a commitment to individual and societal well-being,
and the opportunity for citizens to determine their own and their society‘s needs and
to influence decisions that affect these. Social change incorporates public concerns in
developing social policy and economic initiatives.

Until relatively recently, social development was conceived in terms of a set of

desirable results - higher incomes, longer life expectancy, lower infant mortality,
more and better education etc. Recently emphasis has shifted from the results to the
enabling conditions, strategies and public policies for achieving those results. But still
little attention has been placed on the underlying social process of development that
determines how society formulates, adopts, initiates, and organies; and few attempts
have been made to formulate such a framework.

Key Social Development Principles

Social development is defined in the broadest social terms as an upward directional
movement of society from lesser to greater levels of energy, efficiency, quality,
productivity, complexity, comprehension, creativity, choice, mastery, enjoyment and
accomplishment. Growth and development usually go together, but they are different
phenomena subject to different laws. Growth involves an expansion of existing types
and forms of activities. Development involves a qualitative enhancement. Social
development is driven by the subconscious aspirations of society for advancement or
progress. Society (and individuals) will seek the progressive fulfillment of a
prioritized hierarchy of needs.

Motivation is complex and highly individual. The motivation to work can be physical
(earning money for food or shelter), psychological (seeking social satisfaction or
security) or more unconscious and instinctive – which applies particularly to altruistic
and self-fulfillment reasons. One of the most popular theories explaining motivation is
Maslow‘s ‗hierarchy of needs‘, which categorizes human motivations as follows:

The theory works on the basis that needs are only motivators when they are
unsatisfied. The lower order needs (physiology and safety) are dominant until
satisfied, when the higher needs come into being.

26
This theory is important in terms of social development theory, as it helps to explain
why more altruistic concerns (such as animal welfare activity) are often not burning
social issues until society has developed to a level that meets individuals‘ lower order
needs (personal, shelter, security etc.).

As can be seen, in the course of social development, society is moved by a range of

different psychological motives. Self actualizing motives (wanting self-development
and social progress for altruistic and ethical reasons) are normally the last to be
fulfilled. However, the globalization of culture and information is bringing such
concerns more rapidly into public consciousness. The revolution of rising
expectations represents a new and more powerful motivating force for development;
which by its nature is not limited, as all the others have been, to a specific class or
section of society.

Development of society occurs only in fields where the collective will is sufficiently
strong and seeking expression. Development strategies will be most effective when
they focus on identifying areas where the social will is mature and can provide better
means for the awakened social energy to express itself. Only those initiatives that are
in concordance with this subconscious urge will be likely to succeed and gain
‗critical-mass‘.

Every society possesses a huge reservoir of potential human energy that is absorbed
and held static in its organized foundations - its cultural values, physical security,
social beliefs, and political structures. At times of transition, crisis, and opportunities,
those energies are released and expressed in action. Policies, strategies, and programs
that tap this latent energy and channel it into constructive activities can stir an entire
nation to action and rapid advancement.
The theory of critical mass was expounded by Nobel Prize winner Thomas Schelling
(back in 1969-1971), and is explained in further detail in a new book of his ‗Game
Theory‘ by Dodge (2012). It is also known as the ‗bandwagon effect‘. The success or
failure of many things is determined by whether ‗critical mass‘ is achieved; so
increasing numbers are encouraged to join movements as they gain attention and
impact. Schelling also introduced the concept of the ‗tipping point‘, which is the exact
point at which a movement becomes self-sustaining.
[Take the example of the ‗Arab Spring‘ in 2011 – what seemed like a sudden and
spontaneous wave of protests actually had its roots in revolts dating back to the 1800s.
The catalyst for the current escalation of protests was when a Tunisian set himself
alight and died as a protest. This brought various disaffected groups together, forming
the Tunisian Revolution.]

However, social change requires an enormous investment of energy to break existing

patterns of social behavior and form new ones. Change is triggered when societal
energies accumulate beyond the level required for functioning at the present level.
The social energy may be released in response to the opening up of a new opportunity
or confrontation by a severe challenge. Where different cultures meet and blend,
explosive energies for social evolution are released.
The rate and extent of development is determined by prevalent social attitudes, which
control the flow of social energies. Where attitudes are not conducive, development
strategies will not yield results. In this case the emphasis should be placed on
strategies to bring about a change in societal attitudes - such as public education and
awareness, demonstration, and encouragement of successful pioneers.
The implications of this for the animal welfare movement can be that if the ‗time is
not ripe‘ for the animal movement to ‗take off‘ as a social movement in its own right
27
in certain countries, then tapping into other burgeoning social change concerns may
be necessary (whilst always building the capacity, models, awareness and moral force
needed to grow the animal welfare movement).

1.11. ROLE OF MANAGERS IN SOCIAL CONTEXT

The relationship between manager and subordinate is important to the overall
workplace dynamic. If the employees do not trust the manager, productivity suffers.
The social interaction between managers and employees happens inside and outside
of the office. Managers who learn their role in a social context both inside and outside
the office are efficient at maintaining employee productivity.

Balance

The manager needs to establish the proper balance of personal and professional needs
with each employee early in the manager-subordinate relationship. The manager is
expected to abide by company guidelines when it comes to employee personal issues,
but to maintain a productive staff the manager needs to take each problem on a
case-by-case basis. The manager needs to learn when to get involved in an employee
personal issue and when it is time to alert human resources to a problem

Rumours

Each office develops its own culture that can be affected by rumours. When rumours
begin to circulate, the company hierarchy often is ignored. To dispel rumours, a
manager needs to gain the personal respect of each of her employees without seeming
to favour one over another. If employees hold a high level of personal respect for a
manager, then the social circles within the company can more easily accept the
manager's explanation of a situation and stop a rumor from spreading.

Discipline

The need for discipline to run an effective workplace affects how managers react
socially to employees inside and outside the office. Managers are expected to be fair
but strict with discipline. If a manager is seen as being friendly with an employee,
then any leniency shown that employee can be interpreted by the rest of the staff as
favouritism. Managers must maintain their social balance with subordinates at all
times to uphold corporate discipline.

Outside the Office

An effective manager understands that authority is established inside and outside the
office. If a manager socializes with subordinates outside the office, the repercussions
could affect his authority in the workplace. For example, if a manager meets with
subordinates at a party and speaks negatively about the executive team, that
information will affect how the subordinates view the executives and could cause the
staff to lose respect for the manager's authority.

Boss & Employee Relationships

The boss and employee relationship is important to company productivity. A

relationship that is built on trust and understanding can make the employee and
manager more efficient. A poor relationship that lacks cohesiveness will dampen
28
productivity and can lead to high rates of employee turnover. There are several
elements that make up a boss and employee relationship that need to be understood by
both parties for the relationship to be effective.
Teamwork
Both the boss and employee need to commit to the concept of teamwork if a group is
going to work together effectively. Additionally, the roles for each party need to be
well-defined. The employee is expected to follow instructions, give input when
needed, and meet or exceed performance measurement criteria. The manager is
expected to provide the employee with the necessary resources and training to do the
job, be the person who handles team administrative duties and provide leadership to
meet company goals. If either side of the boss and employee relationship does not
hold up their end of the teamwork requirements, then productivity suffers and
teamwork cannot be established.

Company Guidelines

Many companies have policies on personal relationships within the organization.

While friendships are allowed, and even encouraged, romantic relationships are
sometimes forbidden by a company and there are good reasons for this. If the
relationship goes bad, then the employee can claim sexual harassment on the manager
and say that the manager was asking personal favors in exchange for keeping the staff
member employed. If the rest of the staff finds out about the relationship, then the
manager can be accused of favoritism and morale will suffer. In small, family-owned
businesses, however, the boss and employee relationship can offer a different
dynamic. Regardless, any boss and employee duo should be discouraged from getting
involved in a romantic relationship while employed with the company.

Mentoring

A boss can become an employee's mentor, which can be a help to both the company
and the employee. When a boss mentors an employee, she offers daily advice and
career training that the company may not normally be able to provide. This insures
that future company managers will adhere to the same vision and maintain the same
company culture that currently exists. The employee gets the benefit of personalized
manager training and receives important career development guidance.

Cronyism

When a manager hires friends or family members who are not qualified for the
positions they are filling, that is known as cronyism. This differs from hiring a friend
who is qualified for the position because, ideally, that candidate offers positive value
to the company. Cronyism can lead to a drop in productivity because the new
employees do not possess the skills to do their jobs. It can also lead to a drop in
morale as other employees find out that some staff members were hired just because
they were friends with the manager. One way of preventing cronyism is to support a
committee approach to interviewing that requires the input of several managers or key
employees before a candidate can be hired.

Management Tips & Techniques

The success of any business venture is directly tied to the quality and success of its
management. Managers can take many simple steps toward ensuring a peaceful,
productive work environment for everyone involved. Developing an atmosphere of
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understanding, cooperation and encouragement in the workplace is the first step
toward this goal.

Understand

When employees feel truly valued and understood by the company they work for,
they are more likely to be happy, productive workers. Management should actively
build a relationship with employees to create a cooperative work environment where
people feel satisfied and appreciated. Host a periodic team lunch where employees
and managers are encouraged to intermingle and talk. Managers should ask about
each employee's dreams, aspirations and fears. Each manager should be aware of his
or her strengths and weaknesses in order to build an effective team. When a manager
takes time to get to know employees, employees are more likely to trust the manager
and think favourably of him. This makes management's job easier as employees
become more cooperative.

Encourage

Use positive motivation instead of punitive forms of reinforcement. Fear-based

motivation is superficial and does not bring positive, lasting effects. Encourage
questions and discussions. Respectfully address employees and look them in the eye
when speaking with them. Employees who feel threatened, punished or unappreciated
are likely to move to a workplace that is more positive, uplifting and appreciative of
their skills. Micromanagement can leave employees feeling distrusted, unqualified
and unproductive. Management needs to step back and empower employees to do
their jobs. While supervision is required, managers should encourage employees to
perform their work successfully without interfering with the details. Delegation
requires trust.

Set the Example

Management that is separate, divided and otherwise "above" employees automatically

sets a tone of hostility and superiority. Actively participating with the employees
encourages feelings of equality, hard work and motivation. Employees react
favourably when they see their managers as hardworking, dedicated leaders instead of
lazy, bossy tyrants. Ensure that employees see their managers actively working and
striving toward company goals. Managers should embody the ideal characteristics of
an employee. An upbeat attitude, excellent customer service and interpersonal skills
and a solid work ethic are absolute requirements of effective managers.

How to Draw the Line Between Supervisor & Subordinate?

Supervisors and subordinates don't always have a rocky relationship. Some

supervisors or employers identify with their subordinates and develop close
friendships with people who work under them. While this contributes to a happy work
environment, the line between supervisor and subordinate can become blurred,
wherein employees might lose respect for their employer.

1. Establish guidelines and avoid mixing business with pleasure. Determine

acceptable interaction between yourself and employees. For example, you
might occasionally have lunch with your subordinates but shy away from after
hour drinks or partying. Close association with subordinates outside of work
can create problems in the workplace.
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 2. Clearly define what's expected of the employee. Create office rules and
policies and distinctly outline acceptable behaviour in the workplace. Oversee
or manage employees to ensure that everyone remains productive throughout
the day. Don't focus too much attention of trying to be everyone's friend.
Maintain a take-charge attitude to avoid being taken advantage of by your
subordinates.

3. Maintain professional behaviour. Subordinates tend to imitate their supervisor

or employer. Set the bar for professionalism to distinguish yourself from your
employees. Practice good customer service, avoid foul language or
inappropriate speech, dress appropriately and maintain a good work ethic.

4. Address issues early. When the line between supervisor and subordinate blurs,
employees might speak to you inappropriately or stop following your
directions. Put an end to this type of behaviour immediately. Reprimand the
employee in private. Be calm and respectful but firmly explain why this
behaviour is unacceptable.

Effects that Bosses Have on Morale

A boss can be a nurturing coach interested and actively involved in the success of his
staff. A boss can also be a closed-door individual who offers little positive feedback
and can bring down the morale of his entire group. To be a productive manager you
need to understand the effects that bosses have on morale.

Attitude

A boss who continually ignores the input of his staff can create a feeling of
worthlessness among the group, according to online educational resource academy.
Over time this translates into an overall poor attitude. Productivity suffers and morale
sinks to low levels. The group does not feel motivated and new ideas for solving
problems are not offered. A proactive manager that seeks out and values employee
input can cultivate a positive attitude. This will cause employees to feel as though
their input matters, and can create an influx of new ideas to help solve company
problems.

Communication

A close employee-boss relationship can create an open line of communication,

according to Entrepreneur magazine. This allows management to understand the
staff's stand on issues, create effective forms of motivation, and create a positive and
productive work environment. When the boss shuts down communication, employees
have no say in company directives and that can create a large disconnect between
management and employees. The boss begins to enact policies that he feels will
motivate employees but, in reality, the policies have little effect on creating positive
morale because the employees have not been given their chance at offering an
opinion.

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Teamwork Development

An effective manager works with employees to strengthen the teamwork bond within
the staff, and the bond between boss and employee. According to employment
website Human Nature at Work, it is important for managers to discuss the progress
of the group with the group itself to help develop the relationship and learn how to
work better as a team. A strong team develops a sense of confidence and high morale
within the company. When the manager shuts out his team and does not look to work
on teamwork development, the morale drops and the group become ineffective.

Productivity

The business magazine "Alaska Business Monthly" points out that your staff is the
machinery of your company. For it to be productive, it needs to be finely tuned. The
element that helps to fine tune a staff is high morale. An attentive manager can help to
increase morale and make his staff more productive. A manager who prefers to dictate
rather than manage can see a drop in production as morale suffers.

1.12. CONCLUSION
Business environment has a great impact on the working of business. It may also lead
to it‘s failure or success. The factor affecting may be internal or external. It needs to
be analyze timely so that measures can be taken and type of lose or resentment among
interested parties is prevented.

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